Key Capture Energy’s new CEO outlines growth Plans beyond ERCOT's merchant storage market

In an interview with NPM, new Key Capture Energy CEO Brian Hayes says he is focusing on growing the company significantly through various vectors including M&A, additional financing, and wider geographic markets.

Hayes joined Key Capture in January as the new CEO. He previously worked with EDPR for 18 years starting in February 2006 before becoming Executive VP of asset operations in 2010. Hayes says EDPR was “roughly the size of Key Capture today” when he joined that team and that he is targeting a similar growth vector for Key Capture.

Over the course of the interview, Hayes outlines several specific growth vectors for Key Capture with a stronger presence in the M&A market standing out as perhaps the leading focus. Hayes says the firm intends to “move much more aggressively” in M&A on both the acquisitions and sales fronts. While he says much of this activity will likely take place in Texas where the firm has built out a strong portfolio and pipeline, he says he would like to see that extend to other markets, as well.

“We’ve always been engaged in the M&A market, but we haven’t been as active as we would like to be,” Hayes said. “We’re working to strengthen the team to go out and focus on M&A activities. We do greenfield, but you’re always going to have opportunities to fill gaps or trim the pipeline.”

Hayes says he is also seeking to attract greater attention from investors which means an increase in contracted assets on top of the firm’s already strong merchant storage base in Texas. Hayes says he is open to various contract structures including tolling agreements, PPAs and other opportunities that might split the asset base further.

“We’ve been happy with the merchant projects we’ve had in Texas, but moving forward we would like to have more contracts,” Hayes said. “A tolling agreement is the simplest because you’re getting a flat fee, but we’re also open to other contract structures that may be for portions of the asset or that could unlock different revenue streams.”

Ultimately, Hayes says the goal of adding high penetration of offtake contracts is to attract further investment that would support the firm’s growth in both scope and geography.

“Storage is continuing to mature where large investors will come in and support storage, so those are the opportunities we’re looking for,” Hayes said. “Investors like stable revenue and contracts, so if you’re looking to bring in investors for further investment, that’s where these contracts really help.”

Hayes says he is also interested in replicating Key Capture’s recent tax transferability deal with Enhanced Capital. Hayes says the firm has two projects coming online in Texas later this year that will be going through the same process.

“it’s something we’re very much advocates for and will continue to leverage as we build projects,” Hayes said.

Finally, Hayes’ growth plans include building on the firm’s pipeline of projects both in its home base of Texas as well as in new markets outside of the ERCOT market. Hayes claims a 9 GW pipeline for the firm with NPM currently tracking roughly 5 GW of interconnection queue applications from the firm across ERCOT, NYISO and MISO.

Hayes says ERCOT continues to be attractive for storage despite the girth of projects in the queue thanks to Texas’ exponential load and population growth and renewable penetration. He says despite growing interconnection concerns he also views Texas as the best place to get a project through the queue and that Key Capture is not yet seeing the interconnection challenges there that the firm is experiencing in other markets like MISO.

Outside of Texas in MISO and the East Coast, Hayes says it is largely utility interest more so than corporate offtake opportunities that is driving storage opportunity, particularly through utility RFPs. Hayes says he is seeing a larger number of utility RFPs calling out standalone storage specifically including bespoke storage solicitations as well as all-source RFPs.

“Previously, almost all utility storage opportunities were through all-source RFPs, but we’re now moving to where storage is being called out specifically,” Hayes said. “We’re interested in both, but when there’s something specific that matches up with the product we provide, of course it makes us more excited. It means more utilities are getting interested in and understanding storage better, so it does create very good opportunities on the contracting side.”

SK E&S acquired a majority stake in KCE in December 2021 in a transaction which resulted in three SK executives getting seats on the company’s board of directors. Leading the deal team for SK was Kyungyeol Song, who leads PassKey, the US-based transition business entity of SK, according to his LinkedIn page.

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

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