HEN CEO discusses buildout of standalone storage portfolio in ERCOT

HEN Infrastructure is expected to develop 500 MW of storage projects through 2023 as it looks to capitalize on a hot ERCOT market. HEN is the result of a collaboration between Hunt Energy Network and Manulife Investment Management.

HEN already has about 30 MW of storage assets in operation in ERCOT with an additional 70 MW in “advanced stages of development” according to CEO Pat Wood that will be operational by July 2022. All of these projects, which are being tracked by NPM data, are 10 MW, which Wood says will remain the target size moving forward. The remaining 400 MW is to be deployed over the next 36 months.

The Texas storage market was the perfect place to start due to the demand for storage on the ground there coupled with the company’s experience navigating the Texas regulation environment. Wood said this venture is a culmination of the work the firm has been doing since 2018 when it began “looking for opportunities of the introduction of utility-level storage technologies in Texas,” said Wood in an interview with NPM.

“The energy storage market in ERCOT is in its nascent stage and we have been working with ERCOT and the utilities to define the market rules and processes to interconnection distribution level batteries,” Wood said. “Batteries are the third wave of technology expansion behind solar and wind and are a perfect complement to the large amount of renewables coming to ERCOT.”

Although some developers have found securing financing for standalone storage development challenging, particularly without national tax incentives enjoyed by both solar and wind, Wood says HEN Infrastructure’s experience bringing on Manulife as a partner in this venture was not difficult.

“Manulife saw what we saw, a now cost-effective technology available to a market exploding with new renewable power generation investment,” Wood said.

Manulife’s Head of Private Markets Steve Blewitt said the venture fits into the firm’s “ongoing priority to strategically invest in private market assets.”

Despite this early success, however, Wood says he expects HEN’s focus to remain on ERCOT storage development for the “near and mid-term, as we seek to leverage our local market and regulatory knowledge.” He says the current at play in ERCOT make it particularly well-suited for companies like HEN to make headway.

“What makes ERCOT particularly attractive is its strong quarantine of the regulated utility business apart from the competitive market where batteries are,” Wood said. “We don’t have to compete against a utility in Texas; instead, the utilities are our collaborators.”

However, Wood says the firm “would consider expansion to other markets in the foreseeable future.”

*This story was originally published exclusively for NPM subscribers earlier this month.


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