A project rendering shows plans for Hydrostor's Silver City project, a 200 MW Advanced Compressed Air Energy Storage facility under late-stage development in New South Wales, Australia. The company has secured funding to push through with its development plans in Australia, California and Eastern Ontario.Hydrostor
Hydrostor, the Toronto-based energy-storage developer, has secured $200-million in financing from Canada Growth Fund, Goldman Sachs and Canada Pension Plan Investment Board to push forward with projects planned for Australia, California and Eastern Ontario.
The new capital, in the form of convertible debt, represents the second major investment in Hydrostor by Goldman Sachs and CPP, and brings in Canada Growth Fund – Ottawa’s vehicle for investing in green projects alongside private venture capitalists.
Hydrostor has been trying to get to the construction stage for the past several years on projects worth more than US$2-billion that employ its Advanced Compressed Air Energy Storage technology, though the process has been slower than it had planned. The concept is aimed at encouraging more renewable electricity by smoothing out the variability of generation by storing energy to feed grids when the sun is not shining or wind is not blowing.
The financing includes US$150-million in convertible notes from the group. Canada Growth Fund is offering an additional US$50-million loan facility to fund some of the costs of a planned 500 megawatt/4,000 megawatt-hour development near Kingston called the Quinte Energy Storage Centre project. It has partnered with the Mohawks of the Bay of Quinte for the venture.
Hydrostor plans to make a final investment decision in the third quarter of this year on a 200 MW/1,600 MWh storage project in Broken Hill, New South Wales, Australia, which is estimated to cost about US$640-million. Once completed in late 2027 or early 2028, the venture will have the ability to discharge energy for up to eight hours when fully charged.
It is in the process of negotiating contracts for construction and major equipment, and once that is completed, the lenders will review them before issuing the debt for the venture, Curtis VanWalleghem, Hydrostor’s chief executive officer, said in an interview from Melbourne.
The company is also planning a US$1.5-billion storage project in Kern County, Calif. It has signed supply agreements for about half the capacity of the 500 MW/2,000 MWh development, and is in talks for the rest, Mr. VanWalleghem said.
Hydrostor’s system works by pumping compressed air into a cavern deep underground. The rush of air pushes water up to a reservoir at the surface. When electricity is needed, the water is released back into the cavern, sending the air out and driving turbines to generate power.
The installation can store energy for longer periods than batteries, and the system can run on either excess or off-peak power from the grid or from renewable sources.
A rightward shift in Washington with the election of Donald Trump to the White House has added uncertainty to green subsidy programs in the U.S. In early January, the California project, called Willow Rock, was conditionally approved for a loan guarantee of up to US$1.76-billion from the U.S. Department of Energy.
The company is also counting on tax credits offered under former president Joe Biden’s Inflation Reduction Act, legislation that the Trump administration has placed under review.
Mr. VanWalleghem said the loan guarantee is a legal commitment, and the company is confident that it will survive a review in Washington. Meanwhile, Hydrostor is examining whether the tax credits will be grandfathered should there be a change in policy, given how much has been spent on the project.
“With all of this there’s just a lot of uncertainty, given the new administration, which is never great for investment decisions,” he said. Another risk is inflation, as tariffs and other factors could raise construction costs in the United States.
The political uncertainty in the U.S. highlights the company’s efforts to identify potential storage projects in other parts of the world, such as Canada, Australia and Britain, he said.