Corre Energy, a Dublin-listed energy storage developer for renewable power firms, is poised for international growth with its first US investment.
The company has entered an agreement with Contour Energy to acquire a further compressed air energy storage (CAES) project in the West Texas region of ERCOT, its first investment in the US market. The 280MW project comprises three pre-constructed salt caverns, and Contour Energy will work with Corre Energy to complete the project.
The company said confirmatory diligence and project finance arrangements for the acquisition are under way, with the transaction expected to close later this year.
“This maiden US project fits squarely with our strategy to build a high-quality portfolio of compressed air energy storage assets, deliver high-teen returns and provide timely equity sell-down opportunities at project level,” said chief executive Keith McGrane. “Our track record and ambitious plans have translated into demand from institutional investors seeking to fund our portfolio and we look forward to choosing the optimal solution to power our future plans.”
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The company said funding for North American acquisitions would run in conjunction with the its wider funding process.
The US has been an important target for the group since the introduction of the Inflation Reduction Act in 2022, including the extension of the investment tax credit to include stand-alone energy projects and the subsequent establishment of Corre Energy’s US subsidiary,” Davy analyst Michael Mitchell wrote in a note.
“West Texas is not expected to be construction-ready until 2025 at the earliest. It will require further development and, of course, funding. However, its successful development should drive a material value uplift for the group. We await a more detailed understanding of the project’s economics, but a standard project is estimated to be worth circa €150-200 million when shovel ready, and almost doubling in value by the time it reaches commercial operation date. Compared to the group’s current fully diluted market cap of €336 million, it has the potential to create meaningful value for shareholders.”
Corre Energy is targeting 1.3GW of storage in construction by 2026 across its portfolio. Last month it moved to secure four existing salt caverns totalling over 500MW in Germany, doubling Corre Energy’s European project portfolio.
The company last month said it had reached commercial close on its key Zuidwending (ZW1) project in the Netherlands on schedule. This includes binding agreements for power companies to take stored energy, grid connections and relevant land use deals. Corre’s 320MW Green Hydrogen Hub (GHH1) project in Denmark is on track for commercial close in the second half of the year, the company said.
