Across California, New York, and Hawai’i, Los Angeles-based startup Swell Energy, is networking smart technology together to form strong, resilient, and efficient virtual power plants (or VPPs).
Swell is building out 600 megawatts of VPPs by deploying and aggregating 26,000 energy storage systems in homes and businesses throughout the country.
The company's ability to roll out services so aggressively comes from mountains of financing it has received from a number of venture capital investment firms.
In the company’s latest funding round to accelerate the transition to clean energy, Swell raised $120 million. In all, Swell has raised over half-a-billion dollars in equity and debt financing to develop and deploy its vast energy storage and renewable power systems service, according to data on Crunchbase.
As the U.S. Energy Information Administration reports, power outages in the U.S. are steadily increasing due to major events. Years 2017 through 2020 saw almost 27 hours per a customer of outages with major events, compared to the total of about 15 hours from 2013 to 2016. These major events include natural disasters like snowstorms, wildfires, and hurricanes.
While power outages in the U.S. remain a problem even without major events, the increase in outages aligns with the global and domestic rise in natural disasters, with the last two decades seeing nearly ten times that of the last century’s average.
This year, the U.S. alone saw a 67% increase in weather-related major outages since 2000. According to the Department of Energy, our nation's aging power system is “ill-equipped” to keep up with the change in weather patterns.
That’s where renewables and storage technology comes in. In the words of the DOE, “to face this growing threat, we must build in a smarter, more sustainable way by incorporating home-based renewable power and storage systems that can withstand increasingly frequent climate hazards.”
Startups like Swell Energy are working to provide virtual power plants for this very reason. From small neighborhoods to entire cities, VPPs can control individual solar and battery systems to turn their collective energy flexibility into megawatt-scale resources for utilities and the grid.
From a residential and commercial standpoint, clean energy use is on the rise. In 2016, the U.S. hit the one million mark for solar installations. In 2022, that number has swelled to 3.5 million. In Texas, specifically, the reason for the increased embrace of renewables ranges from concerns about climate change and increased weather, to a want to cut energy bills and utility costs.
Swell Energy creates VPP by linking utilities, customers, and third-party service providers together. Through their underlying software platform, the startup aggregates distributed energy resources to create a cohesive network of solar-powered batteries, which according to the company, supports overall grid reliability and stability, while potentially reducing grid operating costs.
“By coordinating distributed energy resources across the grid to intelligently meet fluctuating demand, Swell’s AI- and machine learning-driven platform helps address a major challenge of the energy transition, while also lowering customers’ bills,” Ben Parton, Director at SoftBank Group, said in a statement. “We are excited to support Swell’s team as they accelerate clean energy adoption.”
SoftBank Group’s Vision Fund 2 and Greenbacker Development Opportunities Fund led the round, with an Ares Infrastructure Opportunities fund and Ontario Power Generation Pension Fund also participating in the Series B raise. In addition to capital, Swell has up to $450 million in project financing available from a 2020 agreement with Ares Management Corp. and Aligned Climate Capital to back the 350 megawatt-hours of VPPs Swell has in development from coast to coast.
In addition to making the grid more resilient in the face of climate disaster, Swell’s VPP programs help reduce our reliance on fossil fuels by integrating solar, energy storage, and electric vehicle charging with the utility to provide a more reliable and carbon-neutral grid, while working toward a carbon-free future.
For conventional generators like coal plants, a megawatt of energy produces electricity that equates to approximately the amount of electricity consumed by 400 to 900 homes in a year. By developing 600 megawatts of electricity, Swell can power hundreds of thousands of homes across the country, in a way that reduces carbon emissions and precludes further investment in new fossil fuels.
According to the company, by participating in their VPP programs, homeowners and businesses also reduce the risk of power outages by lessening the strain on their local grid. In California, specifically, Swell is working with multiple utilities to expand residential participation in capacity bidding programs. In addition to its existing projects, Swell has undisclosed projects which CEO Suleman Khan told Canary Media will be delivered between the end of next year and 2027.
Swell is also pursuing development in what they call underserved markets where critical grid services are necessary to strengthen and modernize infrastructure. Stretching the status quo of what a VPP means, the startup is taking on larger projects in these areas, one being through a partnership with Nimiipuu Energy, the “tribe-to-tribe energy cooperative” launched by the Nez Perce Tribe in Idaho. The project would allow tribes across the Pacific Northwest to establish their own solar and storage systems while remaining connected to a central grid.
While the details of the plan are still being developed, Khan told Canary that aggregating across tribes could create the largest VPP our country has ever seen.