The distributed storage developer is entering PJM Interconnection, a US regional transmission organisation, through Illinois. This is funded by a $33 million Series B, and is done to sell capacity to data centres under the grid operator’s new bring-your-own-capacity rules.
Branch Energy has said it is moving into PJM via Illinois. The move follows PJM’s recently opened pathway for large energy users to bring their own capacity. Under that framework, a data centre can finance new capacity, including distributed capacity, in order to connect faster. The new capacity can sit anywhere in the PJM system and still count.
Piva Capital and Clean Energy Ventures led the $33 million Series B. Branch develops and operates behind-the-meter battery fleets for commercial customers, then aggregates them into virtual power plants. The company guarantees its commercial and industrial customers savings on their energy bills, while earning money on the front of the meter.
A different way to finance batteries
In Texas, Branch earns through energy arbitrage and demand-charge management in ERCOT’s energy-only market. It charges batteries when prices are low and discharges when they spike. So far it has financed that fleet largely off its retail business and earlier funding rounds.
PJM works differently. Branch will still own and operate the batteries, but it is shifting to traditional project finance. Long-term deals with hyperscalers would underwrite the assets. The company uses minimum 10-year terms with five-year auto renewals in Texas, and plans to repeat that model in PJM.
Lee Larson, a principal at Piva Capital, said the financing change is critical to scaling beyond Texas. With data centre offtakers, Branch can secure project finance term sheets rather than funding deployments with equity from its balance sheet.
Who buys the capacity
In the near term, Larson expects Branch to act as a capacity provider alongside an existing aggregator, with the hyperscaler as the ultimate buyer. Sunrun took that route last month, agreeing to supply capacity to Voltus’ portfolio in PJM. Voltus pioneered the framework and has already agreed to provide 100 megawatts of capacity for Google data centres in the region.
Branch has not announced any PJM partnerships. Nor has it said whether it expects to contract directly with hyperscalers. It does already work with Voltus in Texas, where Voltus aggregates some of Branch’s customer-sited batteries for ERCOT grid services.
“There’s going to be lots of different structures [of BYOC],” said Alex Ince-Cushman, co-founder and chief executive of Branch Energy. The Voltus and Google arrangement is “proof that you can directly turn hyperscalers’ desire for compute into deployed capacity,” he added. “There’s going to be a huge amount of money flowing through it over the next five years.”
Comparisons with Base Power
Branch’s model resembles a commercial and industrial version of Base Power, the home battery startup that also expanded into PJM via Illinois. Base is likewise chasing data centres interested in the capacity framework. The differences lie in scale and in vertical integration.
Base has raised far more, including a $200 million Series B and a $1 billion Series C inside a year. That latest round valued the company at $13 billion. Base also manufactures its own batteries, which demands heavy up-front capital. Branch is vertically integrated only down to the energy management system.
Larson sees the commercial approach as a more efficient use of capital. Each Branch battery is 50 times larger than a typical home battery, so revenue per install is higher and customer acquisition cost per kilowatt is lower. Commercial sites bring more complex electrical and permitting requirements, which he said Branch’s software layer is built to handle.
The size of the prize
Customer acquisition has long held back virtual power plants. In the commercial space it runs mostly through energy brokers, many of whom already manage contracts in PJM as well as ERCOT. So Branch can plug into that network instead of building a sales team.
Ince-Cushman declined to give the size of Branch’s current portfolio. He said the company is targeting “tens of thousands of units over the next several years”, equating to “billions of dollars in annual PPA revenue”. Market penetration of commercial batteries remains negligible, unlike the residential market.
“PJM has well over a million commercial sites…if we run around and we sign up 20,000 sites, we’re a very small fraction…even a multi-billion-dollar-a-year revenue company in this space is still low single-digit market share,” he said. He compared the framework to long-term offtake for solar, and to what that did for developers’ ability to deploy at scale. That, he said, is what is starting to play out in PJM.
