Developer SMT Energy has successfully secured US$135 million in funding for its 160MW/320MWh battery energy storage system (BESS) located in Houston, Texas. This project, known as SMT Houston IV, will operate within the wholesale market and provide ancillary services in the Electric Reliability Council of Texas (ERCOT) market, with an expected operational date in Q2 of 2026.
Macquarie Group and KeyBanc Capital Markets served as joint lead arrangers for the US$100 million project financing. Additionally, Macquarie’s Commodities and Global Markets division provided a preferred equity investment and is tasked with selling the project’s investment tax credits (ITCs), estimated to be around US$62 million.
In an interview with Energy-Storage.news, David Spotts, co-founder and managing partner of SMT Energy, credited system integrator FlexGen Power Systems for the exceptional uptime experienced in these projects. FlexGen is responsible for procuring the necessary equipment for the BESS, and its energy management system, “HybridOS,” will deliver integration, site control, and analytics services.
FlexGen has also made headlines by being the first major system integrator to announce a partnership with a non-lithium-ion battery company, having entered into a joint development agreement with Eos Energy Enterprises in December 2024. This initiative aims to create a fully integrated BESS solution utilizing Eos’s zinc batteries alongside FlexGen’s EMS.
Kelcy Pegler, CEO of FlexGen, previously discussed the potential challenges and growth opportunities in 2025, noting that the explosive growth of data centers is driving unprecedented energy demand and accelerating the deployment of diverse power generation sources.
The energy storage market in Texas continues to expand, fueled by population growth and the increasing presence of major companies like Tesla, Oracle, and Hewlett Packard. The rising energy demands driven by AI and data centers underscore the critical need for energy storage solutions in the state. ERCOT has emerged as the second-largest BESS market in the U.S., following California, largely due to its substantial ancillary services market.
William Derasmo, a partner at U.S. law firm Troutman Pepper Locke, emphasized the importance of securing 24/7 dispatchable clean energy to prepare the grid for the demands posed by the hyperscale data center boom, highlighting the pivotal role that grid-scale storage can play.
FlexGen has reiterated the importance of system reliability in adapting to this evolving market, a sentiment echoed by Spotts regarding FlexGen’s capabilities. With the financing for SMT Houston IV finalized, SMT Energy now boasts a total of eighteen utility-scale BESS assets, amounting to approximately 500MWh currently in operation or under construction. Furthermore, the company has a pipeline of BESS projects totaling 2GWh in ERCOT and the Southwest Power Pool, aimed for commercial operation by 2030. SMT has also partnered with investor SUSI Partners on various projects in the state, as reported by Energy-Storage.news.
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