WEATHER
Compelling Data
WEATHER
All ARB-HOUSEs will be established in Texas. This area is known for its weather and temperature fluctuations which puts great stress on the electric grid resulting in price swings which can range from $1/megawatt hour (MWh) up to $4,000/MWh, depending on the weather and the general load on the grid.
Because of this, each ARB-HOUSE is ass
All ARB-HOUSEs will be established in Texas. This area is known for its weather and temperature fluctuations which puts great stress on the electric grid resulting in price swings which can range from $1/megawatt hour (MWh) up to $4,000/MWh, depending on the weather and the general load on the grid.
Because of this, each ARB-HOUSE is assembled to store power at a low cost and then sell it back to the grid at a time when the price is higher. With the advent of battery storage, the ability to do such transactions is now available.
Compelling Data
WEATHER
We have sourced a highly-efficient, reliable, battery storage and management system, which will trickle charge when the cost per MWh is the least, usually in the middle of the night when the average cost is $1-$30/MWh. Then, the batteries can be discharged into the grid when the power authority comes calling for the extra power.
The syst
We have sourced a highly-efficient, reliable, battery storage and management system, which will trickle charge when the cost per MWh is the least, usually in the middle of the night when the average cost is $1-$30/MWh. Then, the batteries can be discharged into the grid when the power authority comes calling for the extra power.
The system size we intend to establish initially is a 100 MW, 1-hour-discharge system. Expected installation cost is ~$50M. Each ARB-HOUSE will be designed efficiently so that heating and cooling can maintain a 75° temperature within each building. Under these conditions the battery manufacture estimates their batteries will remain efficient for more than 20 years.
Compelling Data
Compelling Data
Compelling Data
A retrospective 3-year (2019-2022) study of Texas, using the actual electricity prices, in 10-minute intervals, illustrates that there are approximately 65-75 days per year when pricing was above $100/MWh. The ability to trickle charge batteries at $1-$30/MWh and sell for over $100/MWh offers obvious demand-pricing margin.
Furthermore,
A retrospective 3-year (2019-2022) study of Texas, using the actual electricity prices, in 10-minute intervals, illustrates that there are approximately 65-75 days per year when pricing was above $100/MWh. The ability to trickle charge batteries at $1-$30/MWh and sell for over $100/MWh offers obvious demand-pricing margin.
Furthermore, the market continues to tighten. In the last 3 years Texas has retired 3 coal fired power plants, and this year a North Texas 700 MW coal-fired power plant in Oklaunion, TX will also shut down. Currently, prior to this plant being shuttered (scheduled for August), the grid of Texas only has an extra 4% of electricity capacity. Electricity demand is growing too as Texas is expanding at a brisk rate. All of this combines for tight grid conditions. Adding in the dynamic weather means significant price swings are expected to continue.
A Guaranteed Revenue Stream
The mainstay of this business model is ARB-HOUSE ‘s access to the Rapid Response System (“RRS”) program through ERCOT (Electric Reliability Council of Texas)–a program that generates a consistent guaranteed revenue stream throughout the year.
Under ERCOT, ARB-HOUSE would become a member of the RRS program. ERCOT is a membership-based 501(c)(4) non-profit corporation subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. The RRS program was introduced to help maintain the security and reliability of the electrical grid with a goal of alleviating the potential for blackouts by delivering additional capacity resources. For being a member of their system, ARB-HOUSEs would stand ready to add electricity to the grid on a MWh basis as needed. ARB-HOUSE earns payments regardless of whether its load is discharged, provided its load is available for the full duration of its commitment. For that service, ARB-HOUSE will be paid RRS pricing of $20/MWh (please note for the purpose of our model, we used $16.60, a 17% discount from current rates to be conservative). This should secure revenue of $14.5M per year for each 100 MW system ($101.5M total project revenue). We will have the choice to sell electricity on a demand-pricing basis when the financial windfall is greater than the RRS payments for the day.
Scalability
Our expectation is to run on RRS revenue the entire year. If strong demand-pricing presents, we will take that opportunity at that time. At a $50M approximate cost, payback is fast as return-on-invested-capital is high.
The above scenario is scalable. Each ARB-HOUSE can be replicated. The ARB-HOUSE project consists of 7 100MWh ARB HOUSES (similar to the structures shown above). This can be established on the land currently available.
The Ultimate Hedge
Since this project is based on the current strong and ever-growing power demand in Texas, and has a guaranteed revenue stream, few moving parts, and involves little labor, we believe it could be a preferred vehicle to other investors seeking income generating investments. We believe it would be an attractive acquisition candidate for those seeking a stable income stream. Two large battery storage project purchases by major investment funds have already occurred.