In an interview with NPM, OCI Energy President Sabah Bayatli discussed the firm’s ongoing shift to a clean energy owner and operator from a develop-and-flip model.

Last year was one of significant change for the firm, which officially rebranded from OCI Solar to Energy over the summer to reflect its shift from solar development to include storage. While Bayatli said during an interview last year that the firm would likely continue to primarily develop projects to sell to various partners, over the latter half of the year he says the firm “started to think seriously about selecting some of these projects and moving them to owned assets.”

“We want to increase the portfolio of operating assets under our belt,” Bayatli said.

Bayatli notes owning and operating select assets is one of two main ways to grow a development firm, the other being purely increasing the pipeline in totality. While he says he would not “necessarily call it a traditional strategy shift,” instead he refers to the move as “more about diversification in terms of the projects we have.”

“This will be the strategy moving forward,” Bayatli said. “I don’t see us moving every project we are developing to be an owned asset, but we will keep some of them.”

Bayatli says the projects that the firm will retain for long-term ownership will be determined on a case-by-case basis ahead of the construction phase “depending on the cash position of the company as well as appetite and revenue streams.” He adds that the firm’s goal is to include a mix of both storage and solar projects in its long-term ownership portfolio, in an effort to capture the benefits of each.

“You want to have a certain percentage of your operating revenue to be contracted to give you more visibility on the cashflow of the company,” Bayatli said. “But you will leave the other percentage as merchant so you can probably capture the upside in future years. That is the name of the game.”

One new example is the firm’s 120 MW, 4-hour duration Alamo City Storage project, for which it signed an offtake agreement with CPS Energy in December. Bayatli notes this project was selected through an RFP process from CPS, which locked it in as a project with a secured revenue stream revenue stream supplied through the tolling agreement.

Bayatli says the firm is also currently planning to maintain ownership of other of its solar projects it is developing in Texas in tandem with other developers through JVs. The company currently has eight solar projects under development in the state. Bayatli says the JV projects are currently in the financing phase and that one of his goals for 2025 is to secure financing for more of the company’s pipeline.

However, Bayatli notes the firm is interested in owning projects outside of Texas, as well, though he says Texas makes sense as a staging ground “because it’s our backyard and we’re very familiar with it.” Outside of Texas, he says the firm is developing projects in Louisiana, Arkansas, Mississippi, and Georgia with plans to both sell and keep portions of the pipeline. He adds he is also eyeing Oklahoma, Colorado, Washington, and California as other new states for expansion.

Another interesting aspect of OCI’s strategy is, while it is developing co-located projects and virtually all of its sites, it separates solar and storage projects to interconnect to the grid separately. Bayatli says this is to give flexibility to both potential buyers and to OCI itself as to whether to pick up both solar and storage projects at a given site or to pick and choose.

Contracted Storage Growth in ERCOT

Bayatli expects contracted storage assets such as Alamo City Storage might be rising in Texas, a state which was built on merchant storage.

On the utility side, he notes the penetration of solar and wind in Texas necessitates longer duration storage to cut into evening demand spikes. And on the development side, Bayatli points out that many already have a number of merchant storage assets and will seek to balance those portfolios with contracted assets as OCI is doing.

“It goes to the principles of balance for pretty much every company,” Bayatli said. “So yes, you will see these companies that own merchant storage assets in ERCOT trying to find contracted storage projects to balance their operating portfolios. And I think we will still see a strong merchant play for new players that do not have as much merchant exposure.”

*This story was originally published exclusively for NPM subscribers.

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