Jupiter Power pursuing storage tolling agreements in ERCOT and beyond

In an interview with NPM, Jupiter Power VP of Origination Gian Paul Handal said the firm is interested in pursuing follow up deals to its tolling agreement with Hatch EQ for output from the Crossett I storage project in Texas.

The tolling agreement announced last month between Jupiter Power and Hatch EQ provides a fixed multi-year revenue stream from Hatch to Jupiter in exchange for the rights to dispatch and collect market revenues for the project.

Although tolling agreements are not uncommon for projects, Handal says they are typically with utility offtakers in vertically integrated markets. Such an agreement in the merchant ERCOT storage market with a non-utility offtaker is much more unique and the first deal of its kind for Jupiter Power. Handal says he believes it to be the largest such agreement in ERCOT with a non-utility offtaker.

Crossett I reached COD last year and, according to Handal, was in the works far before a tolling agreement or another storage contract structure was considered as a possibility. It was one of three major projects Jupiter completed last year in the state in a portfolio that also included the 100 MW Flower Valley II and 100 MW Swoose II projects. But these projects are a drop in the bucket compared to the 4 GW of projects Jupiter has in the ERCOT queue.

“We have a very strong set of operating assets and from that we’ve gotten a lot of interest from different counterparties that want to get storage exposure,” Handal said.

One of these interested parties was Hatch EQ. Handal says conversation about a potential tolling agreement had been in the works “for a while.” Crossett I was chosen based on a risk-benefit assessment from both parties.

“Given this was a deal with an already operating asset, we were able to move very quickly once we agreed on the contract structure,” Handal said

Handal says he is hopeful Jupiter will close similar deals with Hatch EQ now that the relationship has been established through this deal and says the team is also exploring options from “other highly qualified counterparties” to work with on similar deals.

Beyond ERCOT, Handal says Jupiter is also pursuing other contract structures on projects as it expands beyond its Texas base. Right now, NPM is tracking 2 GW of projects from Jupiter Power in the queue in NYISO and 350 MW in MISO. Handal says the firm is looking at opportunities in PJM and CAISO, as well, and that this expansion to new markets is being driven by interest from potential counterparties as well as benefits from the IRA including the recently cemented tax transferability guidance issued by the IRS.

While Handal says he “absolutely” thinks the tolling agreement structure can work with counterparties in markets beyond ERCOT, he says Jupiter is willing to stay flexible.

“A tolling agreement was the right fit for this project, but we’re open to discussing other contract structures,” Handal said.

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


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