Swell Energy acquires Renu to help build virtual power plants

The startup aims to combine privately owned batteries into grid resources. Renu, a regional battery installer, will help Swell access new markets.
By Eric Wesoff

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An aerial view of a neighborhood with many houses that have solar panels on their rooftop
(Roschetzky Photography/Shutterstock.com)

Swell Energy, a California-based installer and financier of distributed energy storage, has acquired Renu Energy Solutions, a regional installer covering the Carolinas and Georgia, for an undisclosed sum.

Swell’s business relies on tying together hundreds or thousands of home batteries into an aggregate virtual power plant, or VPP, which can be used by utilities to bolster the grid; homeowners who agree to participate can earn compensation. The addition of Renu gives Swell more rooftops and batteries to work with, as well as an installer network that extends beyond California, currently the biggest solar-plus-storage market.

While the merger and acquisition history of the U.S. residential solar market has been about consolidation and growing networks of independent installers, Swell’s acquisition of Renu is motivated by the need to grow the population of VPP participants — even if it’s in the Southeastern U.S., which tends to have lower electricity rates and less rooftop-solar-friendly policy. 

Renu has installed about 5,000 systems since its founding in 2010. Most are residential, though it has also worked on some larger commercial energy projects like a solar installation at the Charlotte Motor Speedway.

Swell claims that Renu has an exceptional” number of customers who have opted to combine battery storage with their solar rooftops, a metric known as attachment rate.” The firm also has a vertically integrated sales and fulfillment organization that guides the customer through the installation and VPP process from start to finish.

But deals like these can have a human cost. As part of the acquisition, Swell conducted a workforce restructuring,” according to the company, which translates to what one current Swell employee called deep” cuts in personnel. The combined Swell plus Renu team is now approximately 250 employees, which the company says is a larger overall workforce than pre-acquisition. Swell declined to provide details on the number of employees or teams affected.

Swell’s aim to orchestrate the energy management of thousands of homes to create a grid resource does not come cheap. In late 2022, the startup raised a $120 million equity investment round, led by SoftBank and Greenbacker, bringing its total equity funding to $152 million. Swell also has access to up to $450 million in project financing from a 2020 partnership with Ares Management and Aligned Climate Capital, meant to support the development of hundreds of megawatt-hours’ worth of VPPs.

The company is now seeking to raise a Series C funding round to support ongoing VPP development and project finance, new market expansion and technology development.

Swell’s business consists of three parts: a development arm that puts VPP projects together by winning contracts with utilities to deliver future capacity, as well as enrolling new customers; a financing arm that distinguishes between the revenue streams provided by basic solar-plus-storage programs and new VPP services so that Swell can sign up homeowners who already own batteries; and a grid-services group that provides the underlying software and technology to control energy systems from different battery vendors and provide a monetizable value to the grid.

A swirl of factors — plunging battery prices, new federal and state storage incentives, and grid-reliability issues — have made it more compelling than ever for homeowners to install batteries. That’s particularly true in California, which also has a reinvented net-metering regime that strongly rewards battery storage. The state is one of just five where more than 10% of residential solar customers have opted to add batteries to their system, research firm Wood Mackenzie reported last August.

Rewards that homeowners can earn by participating in a VPP, like those offered by Swell and its competitors, could serve to sweeten the deal even further — and help to transform individually owned storage assets into a public good and climate benefit. 

Eric Wesoff is the editorial director at Canary Media.