The electric grid is transitioning from a centralized system, to one that is more distributed, renewable and accessible. New regulations, renewable energy mandates, tighter environmental regulations, the electrical grid’s evolving load profile, as well as the increased intermittency of our energy supply as more renewable energy comes online all serve to usher in a paradigm shift in the 100 year old energy grid.

The US Inflation Reduction Act (IRA) will dramatically reshape the makeup of electricity production in the US in the coming decades. The new law is a game changer for renewable energy development and energy storage installations; it is estimated that the IRA will more than triple US clean energy production and result in 40% of the country’s energy coming from renewable sources. In order to achieve this rapid transformation an additional 550 GW of electricity must be generated via renewable sources in less than 10 years time. In other words, meeting the emissions reduction goals of the IRA will hinge on the US’ ability to at least double the rate of renewable installations over the record levels observed in 2020 and 2021.

Perfect Power strives to be a next-generation, clean-focused project developer, and is well positioned to serve the electric grid during this critical point in the clean energy transition. Perfect Power’s mission is to acquire, develop, and opportunistically own and operate, a differentiated portfolio of dispatchable low-carbon generating assets which accelerate the transition of the power grid to a faster, safer, more reliable, and lower carbon future.

Solution

Perfect Power acquires, develops or redevelops, owns, and operates electric power generation assets. The company is focused solely on assets that enable the decarbonization of the electrical grid, specifically renewable energy generation and battery energy storage. Perfect Power finds attractive locations to build large solar or battery projects, takes control of those sites, and performs all the development work needed in order to get that project to a point where it has achieved its full “Notice to Proceed” (NTP) milestone and has the green light to proceed with construction/installation. At that point, Perfect Power has the option to either sell that project at a markup to a strategic or larger developer who would then proceed to invest the money necessary to build and operate the solar or energy storage project, or they have the option to build and operate the asset themselves. The buyer would be acquiring an asset that has had the development risk removed and is ready to immediately begin construction or installation.

The company looks to develop a geographically diverse portfolio in markets that are accessible, liquid, tradeable and compensatory such as ERCOT (in Texas) and CAISO (in California). Perfect Power develops utility scale front of the meter assets that have transmission or distribution system interconnection points. It can also opportunistically pursue commercial and industrial (C&I) projects in select markets that require dispatch to obtain payments, as well as distributed front of the meter assets interconnected to participate in the wholesale electric generation market. Perfect Power is able to aggregate and build a portfolio of energy storage projects at a significantly lower entry price and with relatively low overhead expenses given its business model and personnel’s expertise. Perfect Power currently owns, or has exclusivity, on a wide variety of development-stage projects including a pipeline of up to 200 MW of distributed energy storage projects, 300 MW of utility-scale solar projects & 250 MW of utility-scale energy storage projects in ERCOT, as well as a pipeline of up to 325 MW distributed energy storage projects in CAISO.

Why We Invested

Perfect Power has a proven team with deep expertise in power generation, renewable energy and energy storage in key markets, as well as a proven track record of asset development and management. Perfect Power was formed and is wholly owned by SER Capital, who handpicked the company’s leadership team. In addition, the SER Capital team has over 100 years of private equity experience in this space as well as senior executive level operating experience at both private and public companies in the energy industry that will be invaluable as they partner with management to help the company scale and grow.

We were impressed by Perfect Power’s ability to aggregate and build a sizable portfolio of energy storage and solar projects at a significantly lower entry price and with much lower overhead expenses than it would cost to acquire an established platform. We see an opportunity for Perfect Power’s platform to develop a differentiated portfolio of dispatchable low carbon generating assets which accelerate the transition of the power grid to a faster, safer, more reliable, and lower carbon future. As the electric grid is transitioning from high carbon intensity (e.g. coal-fired power plants) to a low carbon intensity; batteries will enable the integration of renewable energy and other resources based on demand instead of simply dispatching when the resources are available. We also were attracted to the flexibility of Perfect Power’s platform to either sell or build its projects, which gives it a distinct advantage.

Impact

In order to achieve the greenhouse gas reductions (GHG) needed to limit global warming to 1.5 degrees Celsius above pre-industrial levels and avoid the worst effects of climate change, we must scale up renewable energy capacity at a rapid pace. Today electricity production makes up about 25% of the United State’s total GHG emissions given that approximately 60% of our electricity still comes from burning fossil fuels - primarily coal and natural gas. Perfect Power’s platform will enable more than 1 GW of renewable energy generation, energy storage, and efficiency improvements to be built and come online, which will help decarbonize the grid by displacing GHG intensive forms of energy generation such as combined cycle gas or coal plants. The environmental impacts of solar generation are immediate and material as a true zero-carbon source of energy. Energy storage plays a critical role in integrating intermittent renewable energy into the grid. Together battery energy storage paired with solar generation forms a strong combination that provides reliable and clean power at scale for the energy grid.