Momentum Energy Storage Partners Co-Founder On Why “Now Is The Time” For Storage

Feb 2, 2021

No matter who you talk to in the industry, it seems everyone agrees that storage is going to play a critical role in the future of the energy transition. But for Momentum Energy Storage Partners co-founder Davion Hill, that future is now.

While many investors, particularly among the banking community, have been hesitant to go all-in on storage funding, Hill and his partner Ed Rode have not only founded a new storage development company, they’ve obtained a USD 2bn funding partnership with Leyline Renewable Capital, which will allow them to fund a 2 GW pipeline of standalone storage and solar+storage projects.

To learn more about how Momentum closed the financial partnership, the benefits and challenges of developing storage in 2021, and how a standalone storage ITC could transform the face of the market, NPM spoke with Hill.

NPM: Why is now the time to go all-in on energy storage?

Davion Hill: “We know this market is going to change. It already has multiple times. When I was President and Chairman of NAATBatt [in 2015 and 2016], we were still thinking ‘when is there going to be a big push toward storage?’ Finally, in the last two to three years there has been a pretty good swing into commercially financed projects that look very much like other renewable projects from a financing perspective. So, it seemed to me that this is the time to get in there.”

NPM: Tell me about your new partnership with Leyline and how that came about?

“Ed and I wanted to have freedom in how we operate our business, but we were kind of worried about getting cornered into a box and only doing certain types of projects. Ed and I had a lot of conversations with Erik [Lensch] at Leyline who eventually offered to fund as a platform rather than on a project-by-project basis. That was when we realized that we could really scale this. So, we came around to it and were really pleased to be able to finally close that deal in January. This gives us the ability to be a little more aggressive on what we’re trying to do, which is great.”

NPM: How significant is this deal for you as a firm and for energy storage development in the U.S. as a whole?

“I think it is significant. We are at what we thought in 2005 would be amazing. In order for us to truly have renewables [at scale] and get to the point where storage is so cheap that you just have a ton of redundancy, we need to get to the point where you put storage anywhere you can and pay for it appropriately.”

NPM: Do you feel optimistic that other investors are going to come around on storage?

“I think so. There is still a lot of confirmation bias in the financial markets. The conversations around financing projects are pretty difficult and as a developer you can spend a lot of time teaching lenders about the market and that can be a big waste of your time if they don’t have any intension of investing or financing your project. We spend time qualifying the people that we speak with, and I think there are a lot of pretty savvy people on the private equity side that understand what they are looking at and may have had some prior experience with merchant exposure in certain markets and are more comfortable with that.”

NPM: How would a standalone storage ITC change the market?

“The ESA’s message is that it’s coming in the first 100 days. That would be amazing. It would really levelize markets across the U.S., which is currently biased toward using storage in a solar ITC play, which is really only viable in the Southwest. It would allow a lot of projects in the congested Northeast that previously would be unable to pencil to be viable and reduce a lot of up-front costs. It really would change a lot, so I’m hopeful.”

NPM: What’s different about developing energy storage when compared to solar and wind?

“Solar is much more difficult because you need more land, which limits you to big parcels with pretty big long-term costs. Permits, in particular, are difficult. The more acreage you’re covering, the more likely you’re disturbing something. And then you’re talking about something that makes about a third of what storage does per unit of time. With storage, your permitting requirements are much less and it’s much more efficient. You can make the same or more money with a smaller storage projects than you can with a solar project.”

NPM: Do you know what the split will be for this 2 GW pipeline between standalone storage projects and solar+storage?

“We really want to be a standalone storage developer so as of right now, that’s what the majority of our portfolio will be. Now that could change depending on the right opportunity. There is some acreage where we’ll add solar and we really want to explore the idea of coupling solar and storage.”

NPM: Where will you be focusing your development efforts going forward?

“We’ll develop anywhere that makes sense. Our first markets are here in PJM and that’s just because it’s local and we understand it. We’re also making a really strong push in Texas. It’s a very exciting market. California is probably the best market in the entire U.S., but we haven’t prioritized it because it’s not local and it’s crowded. We certainly want to play there, but it’s not a place that we’re going to invest a lot of time yet. Maybe when we grow a little bigger.”

NPM: Do you have an average project size in mind?

“That’s one thing that Leyline really changed for us. We were originally looking at doing a bunch of 10 to 20 MW projects. While that’s certainly lots of fun and totally doable, we really want to get as big as we can. 10 MW and up is generally what we say, but when we get into 50 and 100 MW, it gets really exciting. We’re trying to hit more of those; let’s hit some triples and maybe even some home runs.”