In 2023, Ron DiFelice and Edward May started a company called EIP Storage, a project development firm focused on stand-alone energy storage. We sat down with Ron to learn more about his entrepreneurial journey, and how Leyline’s Growth Capital enabled the launch of his new venture.
Question: Ron, many of us know you as an energy storage thought leader, with a long history advising developers and others on energy storage topics. Why did you decide to move from your consulting firm Energy Intelligence Partners and start a project development shop? And how did you connect with Leyline to make that happen?
DiFelice: For years we have been performing energy storage work for partners and clients and the time was right for us to begin developing projects on our own. With the inclusion of the stand-alone energy storage tax credit under the Inflation Reduction Act, we knew that the market for energy storage installations in the U.S. would grow even faster. We understand the industry well and decided to leverage the tailwinds.
My partner, Edward May, and I have known Erik Lensch, Leyline’s CEO, for about a decade. Given their investment focus and with all of us located in North Carolina, it was a natural fit to work with Leyline. The result is a new company called EIP Storage that is purely focused on utility-scale stand-alone energy storage project development.
Question: What did Leyline provide for you to proceed with your new company, and what are your goals?
DiFelice: Leyline has a Growth Capital product that was perfect for us. We had a view of the market and a business plan, and they backed us financially for an amount that will help us be successful. We plan to develop projects throughout the United States and then exit them at notice to proceed (NTP) or prior to construction.
Our goal now is to find sites that are desirable for large stand-alone energy storage projects and prepare them for grid interconnection. With project study timelines stretching out years, we are in this for the long haul but need to execute fast.
We want to eventually sell a portfolio of projects that are ready to build, and that are financially attractive because of the high value that energy storage provides in that location.
Question: Now that you have the financial backing, what is your first step?
DiFelice: So now we are in the process of deciding where to site projects. Some of the factors are obvious, such as proximity to a substation or a transmission line and minimizing interconnection costs, but other factors are more nuanced - like understanding project economics based on future energy and capacity prices and volatility around a location.
We spend a lot of time trying to understand everything that is knowable for a site and how that will translate to building project value – inputs span technical, policy, and regulatory factors. The interconnection study by a transmission owner can derail a project for reasons you are not even aware of beforehand, so it’s important to invest in tools that give you as much visibility as possible. Then, we visit sites and validate assumptions before acquiring site control.
We are fortunate to have April Montgomery join us as our Chief Development Officer. She has a long history of working in the renewable energy development business and is a great fit.
Question: What U.S. markets are you looking at for site development? Is Texas still the primary market?
DiFelice: With so many projects going into Texas, no one knows when it will get oversaturated. Finding good sites there is getting more difficult; energy arbitrage opportunities will continue but the ancillary market in Texas will likely be saturated soon. So, you must look at other markets.
We are looking at areas of the country that are promoting smart energy storage development and have interconnection and permitting rules that minimize project development barriers. Generally, that will mean developing in wholesale markets as opposed to the monopoly/regulated markets. Some vertically integrated utilities want to completely control any projects going up in their territory and have successfully made it very difficult for developers and independent power producers. But it’s a big world, so we are avoiding those markets.
Question: Why are you just doing stand-alone storage as opposed to hybrid projects?
DiFelice: There are a couple of reasons. First, there has been so much solar and wind development that the U.S. needs much more energy storage for firm capacity. There is simply not enough energy storage to address the variability of these resources. In the near-term, we will be in a catch-up phase with energy storage - we need a lot more of it and we need it fast to support the renewable energy build-out.
In addition, we know storage the best. We know solar development, but not nearly as well as we know energy storage. And we can use our knowledge of storage and the markets to hopefully put storage projects where they will be more valuable.
Question: Does this work take a certain kind of personality?
DiFelice: It is a good fit for us. I’ve been working with Edward the past eight years, and we know the industry. April has been a successful entrepreneur and knows development well. Truth be told, there is a lot of risk, but that usually accompanies good opportunities that can have large rewards. There’s a lot of hustling and a lot of uncertainty. The data from wholesale markets tells us that projects that go into the queue in most markets have under a 30 percent success rate in terms of getting built. So, from that point of view, it is a business that can only thrive amongst failure. The keys are being as smart as you can with your resources and working with a great team and good partners.
We certainly have a good partner with Leyline; they have a team that we trust, with deep industry expertise, and it was easy to work with them to get the financing in place. Also, I think we all have a shared sense of responsibility to use our skillsets to help accelerate the energy transition.