Hydrostor Inc. has landed another big-name investor, Canada Pension Plan Investment Board, as the Toronto-based energy storage developer gets close to building the first major commercial facilities employing its technology.
CPP has agreed to invest US$25-million in the company, known for long-duration air-compression energy storage, a system designed to help utilities add more wind and solar generation to grids by smoothing out their variable power supply.
The investment follows a US$250-million commitment from the asset management arm of financial giant Goldman Sachs at the start of this year. Hydrostor’s other investors are ArcTern Ventures, Lorem Partners, Canoe Financial and Business Development Bank of Canada.
“They saw the potential. They’re not designed to invest and manage smaller companies like us in the growth stage. CPP just doesn’t do that. But now that they know Goldman is in, they wanted to put some money in, knowing that Goldman’s watching the investment. Then, come five to 10 years, we could be at the scale where they could take an active management and oversight role,” said Curtis VanWalleghem, the company’s chief executive officer.
Proceeds from the new financing will help Hydrostor develop its projects globally, but the company will also benefit from CPP’s own US$7.6-billion worth of renewable energy projects around the world, Mr. VanWalleghem said. He said CPP has begun making introductions at its portfolio companies.
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Hydrostor is working to advance three projects worth a total of $2.5-billion – two in California and one in Broken Hill, New South Wales, Australia. It aims to have one or all of them in service by 2025 or 2026. It has yet to make final investment decisions, but has interconnections with grids established, rights-of-way confirmed and feasibility studies completed. The company has a demonstration plan in operation in Goderich, Ont.
Its Advanced Compressed Air Energy Storage system works by pumping compressed air into a cavern deep underground. The rush of air pushes water up to a reservoir at the surface. When the power is needed, the water is released back into the cavern, sending the air out and driving turbines that generate power. The energy can be stored over a period of days, and the system can run on either excess or off-peak power from the grid or from renewable sources.
Some of CPP’s portfolio companies are employing lithium-ion batteries, which are commercially proven but have shorter cycle times. It sees long-duration storage as a key addition to the grid, especially in North America, said Bruce Hogg, head of sustainable energies for CPP Investments.
“We see the market for long-duration energy storage to be about US$130-billion by 2040 in the U.S. alone. So obviously that’s significant and as we build out our renewables pipeline, which currently sits at about 20 gigawatts, we’ll see very good opportunities to fit the two together,” Mr. Hogg said.
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Jeffrey Jones