Key Capture Energy the company closed a $300 million financing deal with Standard Chartered to support its portfolio of battery energy storage systems (BESS) and advance projects in strategic U.S. electricity markets. The transaction will provide resources to support various development phases as the company focuses its growth plans on the regions served by NY-ISO and MISO, where it seeks to expand its presence through infrastructure designed to strengthen the flexibility and capacity of the electricity grid.
Key Capture Energy receives US$300 million from Standard Chartered
Key Capture Energy (KCE) closed a documentary credit line for US$300 million with Standard Chartered this operation is intended to support the advancement of its portfolio of battery energy storage systems (BESS) in the United States. The US developer is focusing part of its activity on markets administered by the New York Independent System Operator (NY-ISO) and the Midcontinent Independent System Operator (MISO).
Standard Chartered is the sole provider and arranger of the transaction, according to KCE. Access to this financing will strengthen its capacity to take storage projects through the various stages of development. Seungyong Oh, CFO of Key Capture Energy, emphasized the additional capacity the credit line provides the company to move forward with these projects.
Key Capture Energy is targeting the NY-ISO market
Although a significant portion of KCE’s operational capacity is located in Texas, New York occupies a relevant place within its strategy energy storage the company has an operating portfolio of 623 MW, of which approximately 580 MW are located in the ERCOT market from Texas. However, KCE has prior experience in NY-ISO and was one of the first companies to develop network-scale storage in New York.
In 2019, the developer brought a grid-scale BESS system into commercial operation in the state. Since then, the deployment of new projects has faced obstacles related, among other factors, to the characteristics of the New York electricity market. Now the scenario is evolving with the Bulk Energy Storage Program managed through the New York State Energy Research and Development Authority (NYSERDA).
New York City is looking to hire 6 GW of energy storage capacity by 2030 this objective was established within its state energy strategy. Key Capture Energy has submitted projects to the program that would utilize the so-called Index Storage Credit Mechanism, a formula designed to provide greater revenue predictability through an exercise price linked to operations in the wholesale electricity market.
MISO gains importance in KCE’s storage strategy
On the other hand, MISO represents another of the growth areas envisioned by the company, this operator manages the electrical system in territories that encompass all or part of 15 US states, as well as the Canadian province of Manitoba. KCE has been identifying this market for years as an opportunity to deploy energy storage systems in areas where there is a growing need for electrical flexibility, but historical BESS development has been more limited.
Michigan is one of the markets that has attracted particular interest, the state has set a specific energy storage target, while KCE has also identified opportunities in Indiana and Illinois. Furthermore, the growth of data centers and electrification is altering electricity demand forecasts in the United States.
Brian Hayes key Capture Energy’s chief executive, previously noted that activity was increasing at MISO, especially due to the expansion of data centers and applications related to artificial intelligence. According to the executive, storage can help reduce the time needed to provide the electricity required by these new loads.
KCE is moving towards an owner-operator model
The funding also comes as Key Capture Energy moves from a primarily developer-focused profile towards a model of independent power producer (IPP) based on the long-term ownership and operation of assets. This shift implies greater capital requirements during the development and construction of projects before generating recurring revenue through contracts and transactions in the electricity markets.
KCE’s business situation has also attracted attention due to the moves of its owner, the South Korean conglomerate SK Group SK Innovation E&S previously announced it was exploring strategic options to bring in a financial partner for Key Capture Energy. The company was acquired by the group in 2021.
Subsequently, PassKey, the US investment arm of SK Innovation E&S, reiterated the parent company’s commitment to Key Capture Energy and to the expansion of battery storage aimed at strengthening grid reliability and resilience. With the new line of US$300 million KCE gains additional financial capacity to advance its portfolio while NY-ISO and MISO gain prominence within its growth strategy in the US market.
Source: Energy Storage News
Photo: Shutterstock
