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Friday, Oct 7, 2022

Swell, Ares Plan $450 Million in Financing for Solar Energy

Santa Monica-based residential energy company Swell Energy Inc. has partnered with Century City-based asset manager Ares Management Corp. and sustainability-focused asset manager Aligned Climate Capital to create a $450 million financing vehicle. 

The funds will be used to finance construction of four “virtual power plants” serving utilities in three states.

Swell develops and aggregate
s distributed energy storage systems. Such systems connect participating homes and businesses with solar energy installations to larger utility grids. During peak energy usage hours, the local batteries activate and reduce demand on the central grid. 

Established in 2014, Swell has sold or leased more than 65 megawatt hours of energy storage systems to homes and businesses to date, according to the company’s Chief Executive Suleman Khan. 

The new virtual power plants to be financed through the $450 million vehicle will consist of 14,000 solar energy generation and storage systems representing more than 200 megawatt hours of energy storage and 100 megawatts of solar energy capacity, according to Swell. One megawatt hour can power roughly 1,000 average U.S. homes, although this number can drop sharply during periods of peak demand.

As part of the new partnership with Ares and Aligned, Swell will also allow customers to finance their energy systems through Swell. Customers will pay for the solar batteries in installments, according to Khan, while utility companies will provide Swell with ongoing contract payments for helping manage grid loads.

“Given that (virtual power plants) financed by Swell capture the ongoing value for both the homeowner and the utility, the (virtual power plant) financing vehicle is structured to receive revenue from both sides,” Khan said in an email.

This approach, Khan said, has allowed his company to access “broader sources of capital” through asset managers like Ares and will help Swell offer lower interest rates to its customers. 

Swell plans to begin delivery of its new systems on Jan. 1, according to the company, and ramp up to the full 200-megawatt hours of energy storage capacity by June 2023.


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