Residential renewable energy developer Swell is raising $450 million for distributed power projects in three states

Swell Energy, an installer and manager of residential renewable energy, energy efficiency and storage technologies, is raising $450 million to finance the construction of four virtual power plants representing a massive amount of energy storage capacity paired with solar power generation.

It’s a sign of the distributed nature of renewable energy development and a transition from large-scale power generation projects feeding into utility grids at their edge to smaller, point solutions distributed at the actual points of consumption.

The project will pair 200 megawatt hours of distributed energy storage with 100 megawatts of solar photovoltaic capacity, the company said.

Los Angeles-based Swell was commissioned by utilities across three states to establish the dispatchable energy storage capacity, which will be made available through the construction and aggregation of approximately 14,000 solar energy generation and storage systems. The goal is to make local grids more efficient.

To finance these projects — and others the company expects to land — Swell has cut a deal with Ares Management Corp. and Aligned Climate Capital to create a virtual power plant financing vehicle with a target of $450 million.

That financing entity will support the development of power projects like the combined solar and battery agreement nationwide.

Over the next 20 years, Swell is targeting the development of over 3,000 gigawatt hours of clean solar energy production, with customers storing 1,000 gigawatt hours for later use, and dispatching 200 gigawatt hours of this stored energy back to the utility grid.

It has the potential to create a more resilient grid less susceptible to the kinds of power outages and rolling blackouts that have plagued states like California.

“Utilities are increasingly looking to distributed energy resources as valuable ‘grid edge’ assets,” said Suleman Khan, CEO of Swell Energy, in a statement. “By networking these individual homes and businesses into virtual power plants, Swell is able to bring down the cost of ownership for its customers and help utilities manage demand across their electric grids,” said Khan. “By receiving GridRevenue from Swell, customers participating in our VPP programs pay less for their solar energy generation and storage systems, while potentially reducing the risk of a local power outage, and keeping their homes and businesses securely powered through any outages.”

Along with the launch of the virtual power plant financing vehicle, Swell is also giving homeowners a way to finance their home energy systems through Swell. They need the buy-in from homeowners to get these power plants off the ground, and for homeowners, there’s a way to get some money back by feeding power into the grid.

It’s a win-win for the company, customers and early investors like Urban.us, which was seed investor in the company.