On 17 December LevelTen Energy announced its new RE-Store Energy Agreement, an innovative financial contract that enables corporations and Load-Serving Entities “easier access to the economic and risk-reducing benefits of energy storage projects.” The agreement, developed in collaboration with EnergyGPS, opens the door to billions of dollars of investment in large-scale energy storage projects by providing buyers a practical way to contract with storage developers, and by guaranteeing a revenue stream to developers to support project financing.
LevelTen says its RE-Store Energy Agreement is an important industry breakthrough because storage, at scale, is key to enabling the transition to a grid powered by 100% renewable energy. The agreement was designed with the flexibility to complement a renewable energy power purchase agreement, whether existing or planned, or to be executed independently of any particular energy generation project or PPA. Either use case, says LevelTen, simplifies the storage procurement process and increases buyers’ options by orders of magnitude.
The new Energy Agreement is said to deliver three main benefits to buyers. Reduced portfolio volatility, because the economic value of storage is often inversely related to that of a renewable energy PPA that is, it has a tendency to perform well—or generate a positive cash flow—when a PPA contract does not, and vice versa, so it can serve as a hedge.
There is no operational risk – the developer receives a guaranteed, fixed revenue stream and, in exchange, pays the buyer the difference in value between the highest and lowest hourly prices that occur in the wholesale energy market each day. And thirdly, flexible locations: because the Energy Agreement is settled financially, not physically, the storage project doesn’t need to be co-located with an energy generation project. The structure allows buyers to select storage projects with the best economics, rather than simply accept the storage project that happens to be co-located with their renewable energy project.
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