French company to acquire Houston-based battery storage startup in $1B deal

M&A Moves

Broad Reach Power's battery storage assets piqued a French company's interest. Photo via broadreachpower.com

A French utility company is buying the bulk of Houston-based Broad Reach Power’s battery energy storage business in a deal carrying an equity value of more than $1 billion.

Engie, has agreed to purchase the majority of the startup’s battery storage business from EnCap Energy Transition Fund I and three investment partners — New York City-based Yorktown Partners, Switzerland-based Mercuria Energy, and New York City-based Apollo Infrastructure Funds.

“This acquisition is fully in line with Engie’s strategy: It will contribute to the development of a low-carbon, affordable, and resilient energy system where flexible assets will play a critical role alongside renewables,” says Catherine MacGregor, the utility’s CEO.

Broad Reach launched in 2019 with backing from EnCap Energy Transition, an arm of Houston-based private equity firm EnCap Investments. Apollo Global Management, an asset manager that controls Apollo Infrastructure Funds, bought a 50 percent stake in Broad Reach in 2021.

The deal includes 350 megawatts of grid-scale battery assets that already are operating and 880 megawatts of assets under construction, primarily in the territory served by the Electric Reliability Council of Texas (ERCOT). It also includes a 1.7-gigawatt pipeline of battery storage projects that are in the advanced stage of development and a significant pipeline of early-stage projects.

In July, Broad Reach said it had lined up $435 million in credit facilities to support the 880 megawatts’ worth of systems under construction in Texas and California.

The Broad Reach acquisition does not include the company’s 1.8-gigawatt portfolio of solar and wind power projects, or its four gigawatt-hours’ worth of battery storage in the Mountain West.

The deal is expected to close in the fourth quarter of this year. The purchase price wasn’t disclosed, but the Bloomberg news service reports the deal will cause Engie to “take a $1.6 billion hit” to it net debt.

Shawn Cumberland, managing partner of EnCap and chairman of Broad Reach, calls Broad Reach “the top battery storage player in the U.S. market.” And Corinne Still, an infrastructure partner at Apollo, refers to Broad Reach as “the leading and most innovative” battery energy storage operator in North America.

“It has been a terrific honor and pleasure to be part of the rapid growth of the U.S. energy storage sector from the very beginning and see our company grow into one of the top developers,” says Doug Moorehead, founder and COO of Broad Reach.

How did the IRA affect energy transition project development? Experts discussed the positive impacts — as well as the challenges still to overcome. Photo courtesy of Renewable Energy Alliance Houston

Houston experts evaluate the impact of the IRA on cleantech project development

one year later

It's been officially a year since the Inflation Reduction Act was enacted, so it's no surprise that looking at the IRA's impact dominated the discussion at a recent industry event.

The second annual Renewable Energy Leadership Conference, presented by Renewable Energy Alliance Houston and Rice Business Executive Education, featured thought leadership from 20 experts on Tuesday, August 22. While some panels zeroed in on hiring and loan options for energy transition companies, the day's program kicked off with a couple panels looking both back and forward on the IRA.

When looking at the IRA's impact, the experts identified a few key things. Here's what they said at the conference.

Going beyond tax credits and regulation

Greg Matlock, EY's global energy and resources industry tax leader, kicked off the IRA discussion after John Berger, CEO of Sunnova, gave a keynote address.

Matlock set the scene for the IRA, explaining that previous legislation incentivizing clean energy changes mostly stayed within regulation and tax credits. Credits as a tax policy fail to incentivize organizations that are, for various reasons, are tax exempt or are already paying insignificant taxes. The fundamental switch of the IRA was to a "want to" rather than a "have to."

"Everyone has had aspirations, but with aspirations without capital, it's hard to get movement," Matlock says. "But what the IRA did was create a liquidity in the market and added access to an investor base. Now you're pairing aspirations and capital, and now you're seeing movement in the market."

The IRA, Matlock continues, also got the ball rolling on expanding requirements for tax incentives. Previously, a specific technology has to be clearly identified to be qualified for a credit. Moving forward, the IRA improved this qualification process and in the future, there will be be technology neutral incentives.

One thing Matlock also highlighted was the limitations of tax credits — dollar for dollar credit.

"Two years ago, if you called an organization that was tax exempt (about) a project that generates tax credits, why would that want that?" Matlock says. "For the first time, you can sell federal tax credits — not all of them — for cash and tax free to businesses who are paying taxes."

Explaining that there are limitations, Matlock says this process had a significant impact encouraging movement in this space — especially from surprising sources.

"We're seeing companies that have absolutely no connectivity to our energy industry making investments through the purchase of tax credits to fund the development of projects," Matlock says.

A focus on carbon capture and hydrogen

Matlock continues to explain how carbon capture and hydrogen became two case studies for the impact of the IRA.

Prior to the IRA, over 16 countries incentivized hydrogen production, he explains, and the United States was not one of them.

"With the signing of the IRA, we went from the worst to the first," Matlock says.

Carbon capture development was directed more at traditional energy industries. The IRA enactment represented a switch for these companies from regulatory moves to incentivization, which has been more effective in general, Matlock says.

Over the past year, according to the American Clean Power Association, more than $271 billion in investment in clean energy projects has occurred since the IRA was enacted. When it comes to jobs, over 170,000 clean energy jobs have been announced since the IRA.

Problematic permitting and pricing volatility

In a subsequent panel, the three thought leaders looked at the IRA a bit more critically. While the IRA spurred momentum, it also shined a spotlight on some of the industry's challenges.

"The IRA for developers has been very positive. It provided certainty and allowed developers and investors alike to plan long term," says Omar Aboudaher, senior vice president of development for Leeward Renewable Energy. "With that comes challenges, including exacerbating some existing problems with permitting."

Aboudaher explains that the IRA-inspired burst of projects has caused a lot more permits for the increase of development. And, he adds, there's not a concentrated effort. It's happening in silos on the various levels of government.

"On the permitting side, there's a big need to streamline permitting," Aboudaher says. "In some parts of the country, it can take 6 to 10 years to permit your project."

On the investor side, it's also a problem, adds Fred Day, managing director of investments at Brookfield Asset Management.

"Even though we have this IRA, a lack of permitting reform does create a bottleneck," he says.

Another challenge is a disconnect between supply and demand. While the IRA has incentivized solar energy generation per hour of energy, meaning that its cheaper than ever to make energy via solar panels, there's not yet the demand infrastructure for this energy. This incentivization structure has already been in place for wind power.

"I think it's going to be a real problem. It's a real problem with wind today," Doug Moorehead, COO of Broad Reach Power, says, explaining that there's volatility in pricing. "When the wind is high, prices are really low. When wind is low, prices are high."

All of this is leading to an imbalance of market demand and supply, he continues. Jessica Adkins, partner at Sidley Austin LLP and moderator, adds that there's built in volatility for solar since solar energy is confined to the time of day when the sun is out.

"Any time you're incentivize to produce regardless of demand, it's going to be an issue," Moorehead says.

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ERCOT approves $9.4B project to improve grid, meet data center demand

power project

The Electric Reliability Council of Texas, which manages the electric grid for 90 percent of Texans, is undertaking a $9.4 billion project to improve the reliability and efficiency of statewide power distribution. The initiative comes as ERCOT copes with escalating demand for electricity from data centers and cryptocurrency-mining facilities.

The project, approved Dec. 9 by ERCOT’s board, will involve building a 1,109-mile “super highway” of new 765-kilovolt transmission lines. One kilovolt equals 1,000 volts of electricity.

According to the Hoodline Dallas news site, the $9.4 billion project represents the five- to six-year first phase of ERCOT’s Strategic Transmission Expansion Plan (STEP). Hoodline says the plan, whose price tag is nearly $33 billion, calls for 2,468 miles of new 765-kilovolt power lines.

STEP will enable ERCOT to “move power longer distances with fewer losses,” Hoodline reports.

Upgrading the ERCOT grid is a key priority amid continued population growth in Texas, along with the state’s explosion of new data centers and cryptocurrency-mining facilities.

ERCOT says about 11,000 megawatts of new power generation capacity have been added to the ERCOT grid since last winter.

But in a report released ahead of the December board meeting, ERCOT says it received 225 requests this year from large power users to connect to its grid — a 270 percent uptick in the number of megawatts being sought by mega-users since last December. Nearly three-fourths (73 percent) of the requests came from data centers.

Allan Schurr, chief commercial officer of Houston-based Enchanted Rock, a provider of products and services for microgrids and onsite power generation, tells Energy Capital that the quickly expanding data center industry is putting “unprecedented pressure” on ERCOT’s grid.

“While the state has added new generation and transmission capacity, lengthy interconnection timelines and grid-planning limitations mean that supply and transmission are not keeping pace with this rapid expansion,” Schurr says. “This impacts both reliability and affordability.”

For families in Texas, this could result in higher energy bills, he says. Meanwhile, critical facilities like hospitals and grocery stores face a heightened challenge of preventing power outages during extreme weather or at other times when the ERCOT grid is taxed.

“I expect this trend to continue as AI and high-density computing grow, driving higher peak demand and greater grid variability — made even more complex by more renewables, extreme weather and other large energy users, like manufacturers,” Schurr says.

According to the Pew Research Center, data centers accounted for 4 percent of U.S. electricity use in 2024, and power demand from data centers is expected to more than double by 2030. Data centers that support the AI boom make up much of the rising demand.

In September, RBN Energy reported more than 10 massive data-center campuses had been announced in Texas, with dozens more planned. The Lone Star State is already home to roughly 400 data centers.

“Texas easily ranks among the nation’s top states for existing data centers, with only Virginia edging it out in both data-center count and associated power demand,” says RBN Energy.

Federal judge strikes Trump order blocking wind energy development

wind win

In a win for clean energy and wind projects in Texas and throughout the U.S., a federal judge struck down President Donald Trump’s “Day One” executive order that blocked wind energy development on federal lands and waters, the Associated Press reports.

Judge Patti Saris of the U.S. District Court for the District of Massachusetts vacated Trump’s executive order from Jan. 20, declaring it unlawful and calling it “arbitrary and capricious.”

The challenge was led by a group of state attorneys general from 17 states and Washington, D.C., which was led by New York Attorney General Letitia James. The coalition pushed back against Trump's order , arguing that the administration didn’t have the authority to halt project permitting, and that efforts would critically impact state economies, the energy industry, public health and climate relief efforts.

White House spokesperson Taylor Rogers told the Associated Press that wind projects were given unfair treatment during the Biden Administration and cited that the rest of the energy industry suffered from regulations.

According to the American Clean Power Association, wind is the largest source of renewable energy in the U.S. It provides 10 percent of the electricity generated—and growing. Texas leads the nation in wind electricity generation, accounting for 28 percent of the U.S. total in 2024, according to the U.S. Energy Information Administration.

Several clean-energy initiatives have been disrupted by recent policy changes, impacting Houston projects.

The Biden era Inflation Reduction Act’s 10-year hydrogen incentive was shortened under Trump’s One Big Beautiful Bill Act, prompting ExxonMobil to pause its Baytown low-carbon hydrogen project. That project — and two others in the Houston region — also lost federal support as part of a broader $700 million cancellation tied to DOE cuts.

Meanwhile, Texas House Democrats have urged the administration to restore a $250 million Solar for All grant that would have helped low-income households install solar panels.

Texas launches cryptocurrency reserve with $5 million Bitcoin purchase

Digital Deals

Texas has launched its new cryptocurrency reserve with a $5 million purchase of Bitcoin as the state continues to embrace the volatile and controversial digital currency.

The Texas Comptroller’s Office confirmed the purchase was made last month as a “placeholder investment” while the office works to contract with a cryptocurrency bank to manage its portfolio.

The purchase is one of the first of its kind by a state government, made during a year where the price of Bitcoin has exploded amid the embrace of the digital currency by President Donald Trump’s administration and the rapid expansion of crypto mines in Texas.

“The Texas Legislature passed a bold mandate to create the nation’s first Strategic Bitcoin Reserve,” acting Comptroller Kelly Hancock wrote in a statement. “Our goal for implementation is simple: build a secure reserve that strengthens the state’s balance sheet. Texas is leading the way once again, and we’re proud to do it.”

The purchase represents half of the $10 million the Legislature appropriated for the strategic reserve during this year’s legislative session, but just a sliver of the state’s $338 billion budget.

However, the purchase is still significant, making Texas the first state to fund a strategic cryptocurrency reserve. Arizona and New Hampshire have also passed laws to create similar strategic funds but have not yet purchased cryptocurrency.

Wisconsin and Michigan made pension fund investments in cryptocurrency last year.

The Comptroller’s office purchased the Bitcoin the morning of Nov. 20 when the price of a single bitcoin was $91,336, according to the Comptroller’s office. As of Friday afternoon, Bitcoin was worth slightly less than the price Texas paid, trading for $89,406.

University of Houston energy economist Ed Hirs questioned the state’s investment, pointing to Bitcoin’s volatility. That makes it a bad investment of taxpayer dollars when compared to more common investments in the stock and bond markets, he said.

“The ordinary mix [in investing] is one that goes away from volatility,” Hirs said. “The goal is to not lose to the market. Once the public decides this really has no intrinsic value, then it will be over, and taxpayers will be left holding the bag.”

The price of Bitcoin is down significantly from an all-time high of $126,080 in early October.

Lee Bratcher, president of the Texas Blockchain Council, argued the state is making a good investment because the price of Bitcoin has trended upward ever since it first launched in early 2009.

“It’s only a 16-year-old asset, so the volatility, both in the up and down direction, will smooth out over time,” Bratcher said. “We still want it to retain some of those volatility characteristics because that’s how we could see those upward moves that will benefit the state’s finances in the future.”

Bratcher said the timing of the state’s investment was shrewd because he believes it is unlikely to be valued this low again.

The investment comes at a time that the crypto industry has found a home in Texas.

Rural counties have become magnets for crypto mines ever since China banned crypto mining in 2021 and Gov. Greg Abbott declared “Texas is open for crypto business” in a post on social media.

The state is home to at least 27 Bitcoin facilities, according to the Texas Blockchain Council, making it the world’s top crypto mining spot. The two largest crypto mining facilities in the world call Texas home.

The industry has also come under criticism as it expands.

Critics point to the industry’s significant energy usage, with crypto mines in the state consuming 2,717 megawatts of power in 2023, according to the comptroller’s office. That is enough electricity to power roughly 680,000 homes.

Crypto mines use large amounts of electricity to run computers that run constantly to produce cryptocurrencies, which are decentralized digital currencies used as alternatives to government-backed traditional currencies.

A 2023 study by energy research and consulting firm Wood Mackenzie commissioned by The New York Times found that Texans’ electric bills had risen nearly 5%, or $1.8 billion per year, due to the increase in demand on the state power grid created by crypto mines.

Residents living near crypto mines have also complained that the amount of job creation promised by the facilities has not materialized and the noise of their operation is a nuisance.

“Texas should be reinvesting Texan’s tax money in things that truly bolster the economy long term, living wage, access to quality healthcare, world class public schools,” said state Sen. Molly Cook, D-Houston, who voted against the creation of the strategic fund. “Instead it feels like they’re almost gambling our money on something that is known to be really volatile and has not shown to be a tide that raises all boats.”

State Sen. Charles Schwertner, R-Georgetown, who authored the bill that created the fund, said at the time it passed that it will allow Texas to “lead and compete in the digital economy.”

___

This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.

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