Brookfield Asset Management Ltd. expects contracts that pair clean energy generation with battery storage to increasingly replace pure renewables deals, as midday power prices decline and off-takers demand more reliable clean energy.
Why Hybrid Deals Are Gaining Favor
“There’s a lot of renewables being built in many markets, and the attractiveness of these renewable megawatt hours in the middle of the day is declining to a point where many large off-takers no longer want standalone solar,” said Arnaud Jouvin, who leads Brookfield’s global energy storage strategy, in an interview. Instead, the focus is on “the ability to shift these lower value megawatt hours, or lower value energy, to the high-priced hours or high demand areas.” Doing so requires increased deployment of batteries, he added.
Without storage options, wind and solar cannot provide the uninterrupted power that fossil fuels deliver. Investing in ways to bridge that gap is key to the global transition to low-carbon energy. Brookfield, which oversees more than US$1 trillion in assets, is among a growing number of investors dedicating more resources to battery technology to underpin its energy transition bet.
Brookfield’s Growing Storage Portfolio
Brookfield and its portfolio companies have already secured three hybrid purchasing power agreements (PPAs), and Jouvin says such deal structures will be “the main way we’re looking to contract for our upcoming development pipeline.” The firm currently has a pipeline of more than 200 gigawatts of solar, wind, hydro and storage.
Neoen SA, a renewable power producer owned by Brookfield, agreed in September to supply mining giant BHP Group Ltd. with renewable baseload power by combining output from a wind farm in southern Australia with storage from a new battery. Another Brookfield-owned developer, X-ELIO, announced an agreement in April for a solar and storage project for Amazon.com Inc., while a third company in India backed by Brookfield secured funding that same month to deliver round-the-clock renewable power.
Complementary Nature of Solar and Batteries
There are several reasons why pairing generation with storage may be preferable to simply procuring power. Solar and batteries “are perfectly complementary,” Jouvin said. If too much sunshine results in excess solar supply, prices can turn negative and a provider’s earnings suffer. Battery storage offers revenue protection by enabling charging during periods of excess generation. If the sun is not shining, storage can provide supply.
Hybrid deals also increase the availability of renewables, making it easier for companies to meet clean-energy targets. Companies “don’t just value the clean megawatt hours, they value the ability to produce when you need it most,” Jouvin said. They “want the ability to hedge themselves when prices are high during the evening peaks, and storage coupled to renewables provide that.”
Grid Reliability and Future Outlook
Brookfield expects energy storage to play a central role in strengthening grid reliability and enabling continued deployment of low-cost clean power to meet accelerating demand. Its renewables arm has built a global storage portfolio of approximately 3,100 megawatts of installed capacity and a development pipeline of almost 55,000 megawatts.
