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Swell Energy reveals 80-megawatt virtual power plant contract win with Hawaiian Electric

Swell Energy sells utilities a ‘Virtual Power Plant in a box’ built with customer batteries and solar.

swell energy vpp

Swell Energy’s 80-megawatt virtual power plant contract with Hawaiian Electric just won approval from the Hawaii Public Utilities Commission. The contract sets Swell up to aggregate and dispatch a fleet of about 6,000 mostly residential solar-powered batteries as a single grid resource.

It’s a $25 million contract for capacity and fast frequency response grid services across Oahu, Maui and Hawaii Island — and one of four virtual power plants (VPPs) totaling over 200 MWh of aggregated distributed energy storage that Swell is launching with other load serving entities in the U.S.

The program is aimed at HECO customers looking to install solar power with back-up capability, as well as those who already have solar-plus-storage systems. The contract was awarded in response to Hawaiian Electric’s request for proposals for dispatchable and renewable generation to provide capacity and ancillary services.

This is not a pilot. In an interview, Swell CEO Suleman Khan said, “This is the procurement arm of the utility securing capacity from the marketplace.”

In order to finance these utility-backed VPPs, Swell recently created a $450 million capital partnership alongside Ares Management Corporation and Aligned Climate Capital.

Hawaiian homeowners interested in adopting solar-plus-storage solutions and enrolling in the VPP can learn more here.

Swell’s business pillars

Swell partners with local installers to help get solar-plus-storage systems deployed, while working with utilities to dispatch these distributed energy resources to benefit the grid.

Since the energy storage market is new and unique, Swell’s business has had to cut across traditional silos to include:

  • Customer acquisition and project fulfillment: Swell has a call center and does direct marketing and sales. Swell works with solar installers and other channel partners to upsell storage and cross-sell and install solar and storage.
  • Energy storage project finance: Khan noted that this is the first energy storage finance tool to make use of “a high-rated and secure utility revenue stream.”‎ “We prefer to own the batteries, the perfect model is to own the asset,” said the CEO, “but we are totally open to customers owning their battery.
  • Grid services: Swell works with utilities to design, develop, aggregate and operate virtual power plants.

Getting utilities to accept DERs

Electric utilities, by and large, have been less-than-enthusiastic supporters of residential rooftop solar and the way it is valued. (See the dozens of net energy metering battles across the U.S.) Utilities seem to be less hostile about networked and aggregated behind-the-meter storage that solves actual grid problems. Khan said that utilities can now view aggregated behind-the-meter storage as a real resource in their portfolio.

The CEO said, “Our approach to utilities has been to provide ‘a VPP in box.’ We can show utilities the real value of these Distributed Energy Resources.”

Although the CEO worked for Tesla’s battery group before joining Swell and maintains a corporate partnership with Tesla, he claims the the startup is “the United Nations of batteries” and battery agnostic. The CEO sees the company as a hub for customers, utilities and OEMs, saying, “Unlike PV — you need a central intelligence system.”

Khan said, “There’s so much talk about VPPs, but I’d rather call it a ‘distributed power plant.’ There’s nothing virtual about this. As for DERs (Distributed Energy Resources), he’d prefer “Dispatchable Energy Resources,” instead.

These projects at Swell, as well as projects at PG&E, Sunrun, Southern California Edison and Green Mountain Power indicate that VPPs are moving from pilot project purgatory to contracted utility-grade dispatchable power.

Swell had 45 MWh of residential and 15MWh of commercial sales in 2020 and its current installed capacity of batteries is “closer to 30 MWh.” Cumulative DER capacity in the U.S. will reach 387 gigawatts by 2025, according to Wood Mackenzie.

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