How Changing Market Dynamics are Impacting Energy Storage M&A

The vast number of energy storage projects now citing in grid operators’ interconnection queues across North America is radically changing the balance of supply and demand, as well as valuations for M &A transactions in the sector. The latest market assessment from energy software and consulting firm Ascend Analytics reveals that the volume of renewables and energy storage projects in the queues of CAISO, ERCOT, SPP, MISO, NYISO, PJM, and ISO- NE now correspond to between 1.8 times and 3.6 times the peaks of demand that their grids experience.

Over-Supply of Capacity

Energy storage capacity in the queues alone amounts to at least 50% of peak demand at all seven ISO's - and as much as 200% in the case of CAISO (see bar chart below). Such totals clearly represent more capacity than will be built under any plausible scenario, and this massive oversupply will reduce the market valuations of projects that are at early stages of development, and which now inevitably carry a commiseration. Commensurately greater risk of never seeing the light of day.

The corollary for this is that most well advanced projects should see significant gains in value, given the huge and still rapidly growing demand for renewable energy storage resources across the US.

Long-Term Drivers

This comes from several long-term drivers that are not going away, including the ambitious clean energy mandates of state governments, corporate decarbonization goals, ESG-focused capital, and substantial growth in grid loads (much of it arising from the electrification of transport).  

Green hydrogen is also expected to add to the demand for clean electricity.

To read the full story, including impact on early-stage and late-stage projects and valuations, login into Voltility.net. Article written by Andrew Cavenagh, November 28, 2023.

To watch the webinar, visit the Ascend Store.