Convergent toasts pure-play developer model

Convergent is helping its customers cut costs using storage. Pic: Convergent.

Convergent is helping its customers cut costs using storage. Pic: Convergent.

By Jason Deign

New York, USA-based Convergent Energy and Power is seeing the fruits of sticking to a pure-play developer model after building a 75MW, 200MWh project pipeline.

Johannes Rittershausen, Convergent’s CEO, told Energy Storage Report that behind this pipeline of projects in operation, being built or under contract there was “hundreds of megawatts … of deals we’re working on.”

Even though the company is currently focused on just two countries, the USA and Canada, its business has been doubling every year for the last couple of years.

In the next couple of years, said Rittershausen, “I could easily see a scenario where we could do better than that. We can barely keep up. It’s a great market to be in.”

The most recent addition to Convergent’s portfolio is the 7MW, 7MWh Sault Ste Marie plant in Ontario, Canada, being built to store wind and solar energy under a three-year contract with the Independent Electricity System Operator (IESO). 

GE lithium-ion battery systems

The project, first announced in May 2015, uses GE lithium-ion battery systems and is expected to complete by April and be online by May, Northern Ontario Business reported.

Sault is one of two projects Convergent is building for the Ontario IESO. In April last year the developer signed an agreement to install a 5MW, six-minute Temporal Power flywheel system for frequency response.

Elsewhere, Convergent last year bagged a deal for 35MW and 140MWh of storage in Southern California Edison’s Preferred Resources Pilot solicitation.

The project, due online in 2019, will provide peak shaving and grid balancing in the Orange County region affected by the loss of generating capacity caused by the shutdown of California’s San Onofre nuclear plant in 2013.

Other Convergent wins include a 500kW, 3MWh battery for transmission and distribution network upgrade deferral in Central Maine Power’s service territory and a 10 MW, 40MWh hybrid-zinc battery system for Pacific Gas and Electric. 

A project developer and operator

Part of Convergent’s success lies in acting as a project developer and operator without ties to any particular technology or energy storage system vendor, Rittershausen said. “We are technology neutral,” he commented.

“We have projects now with everything from a six-minute flywheel all the way through to a six-hour lead-acid battery. Whatever the customer is looking for, we will develop.”

Convergent not only works with different storage system suppliers, such as Temporal Power for flywheels or Eos Energy Storage for hybrid zinc batteries, but also different integrators, from GE to Lockheed Martin.

Being supplier agnostic allows Convergent to pick whichever system and integrator can offer the best return for a given project environment.

The company also benefits from creating assets that reduce costs for its customers while at the same time delivering long-term returns for Convergent. 

“They’re buying a financed product”

“What’s brilliant for our customers is there is no ROI,” said Rittershausen. “They’re not putting any capital up. They’re buying a financed product. It’s about them paying us USD$100,000 to avoid $200,000.”

Rittershausen said being able to deliver 50% annual savings on current costs “is not unreasonable” for some customers.

As a minimum, Convergent’s projects had to offer between 10% and 20% savings for customers to be interested, he said.

The sustainable, low-risk, high-growth nature of Convergent’s business has helped attract a flock of investors in recent months.

Last October, US-based CJF Capital and Swiss investor SUSI Partners provided a groundbreaking non-recourse third-party project financing package for Convergent’s two Ontario projects. 

Contracted project pipeline worth $150m

The following month, Great Plains Energy affiliate GXP Investments came on board as a strategic investor, joining early shareholders Fisher Brothers and Ruby Ventures.

At that point, Convergent had a contracted project pipeline worth $150m, Rittershausen said in a press statement. Two strategic investors followed in December, by which point the pipeline had grown to $200m.

One of the new investors has not been named and the other was Statoil Energy Ventures, which acquired a minority shareholding for a double-digit million-dollar sum, Rittershausen said.

Perhaps significantly, Statoil’s interest in Convergent comes amid a rash of European investments into US energy storage companies.

In the last year, French utility Engie has bought OpTerra and Green Charge Networks, EDF has snapped up Groom Energy and Enel has acquired Demand Energy. 

No current plans for expansion

Rittershausen played down the idea that Statoil might see Convergent as a takeover target, although “obviously by virtue of being inside the tent they certainly have better access than any external party would,” he said.

Statoil could also in future help Convergent move into Europe, although here again Rittershausen said there were no current plans for expansion.

The multimillion-dollar cash injection from strategic investors was all about “capability growth,” Rittershausen stated, and “not just about money.”

Most of the money will go on scaling up the Convergent team, currently comprising 10 people, and covering bid development overheads.

The company expects to recruit at least two more project management experts in the coming months. “We needed money from equity contributions to finance the pipeline,” said Rittershausen.

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