Hydrostor, a firm that uses compressed air in underground caverns to store excess electricity from power grids, has announced a US$250 million investment from Goldman Sachs Asset Management. Hydrostor's chief executive officer says the financing is "transformational" as the Toronto-based firm looks to deploy the technology globally.
Demand for energy storage is on the rise as utilities phase out fossil-fuel power generation in favour of renewables such as wind and solar.
Hydrostor's advanced compressed air energy storage (A-CAES) projects use excess energy from electricity grids to pump compressed air into giant underground caverns. The air displaces water up to a surface-level reservoir. When power is needed, the water is released back down into the cavern, pushing the air past turbines that generate electricity as it exits.
"The need for utility-scale long-duration energy storage is clear, and Hydrostor's A-CAES solution is well-positioned to become a leading player in this emerging global market," Charlie Gailliot, partner and head of energy transition private equity investing at Goldman Sachs Asset Management, said in a news release on Monday.
Hydrostor says Gailliot will join its board, along with Goldman Sachs colleagues Sebastien Gagnon and Gunduz Shirin. They will replace Tom Rand, managing partner at Toronto-based venture capital firm ArcTern Ventures, as well as Elisabeth Hivon, Canada executive director at Meridiam Infrastructure, an arm of the Meridiam financial firm based in Paris.
Hydrostor says the funds from Goldman Sachs will first go towards its projects underway in Australia and California.
CEO Curtis VanWalleghem told Yahoo Finance Canada in September that unlike other long-duration storage solutions, Hydrostor's system uses proven technologies and equipment from the oil and gas and mining sectors, and is therefore more cost-effective and reliable.
"I view it as a real advantage to be able to piggyback and stand on the shoulders of those giant industries," he said in an interview. "The more facilities we build, the more we unlock low-cost wind and solar, and shut down more coal and gas."
In September, Hydrostor received $10 million from BDC Capital to support its pipeline of projects. The company also received $4 million last April from Natural Resources Canada's Energy Innovation Program and Sustainable Development Technology Canada to develop an up to 500-megawatt project in Ontario. ArcTern Ventures, Lorem Partners, Canoe Financial have also invested in the company.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.