Small Texas Microgrid Company Receives $10 Million Boost from Utility Investors

Texas microgrid company Enchanted Rock (ERock) has won $10 million in institutional financing from Energy Impact Partners (EIP), a consortium of global utilities.

The investment comes as the small microgrid company makes its mark with an innovative business model, what it calls Demand Electric Reliability.

ERock aggregates natural gas generators into virtual power plants to serve the electric grid. The generators simultaneously act as low-cost microgrids for commercial and industrial businesses.

“The ERock team has come up with a creative solution to solving customer reliability concerns while generating revenues from power markets to keep costs low,” said Sameer Reddy, the vice president at EIP who led the deal.

While most new microgrids tend to feature renewables, energy storage, and combined heat and power, ERock has honed in on a gas-only model.

The natural gas generators can operate in island mode or connected to the grid. ERock makes its money by selling output from the aggregated generators back to ERCOT, the grid operator for much of Texas. The revenue flow allows the microgrid company to provide the units to customers for only a small fee. In return for hosting the natural gas gensets, the customers receive back-up power during a power outage.

Deals announced by ERock so far have largely been with store chains, specifically Buc-ee’s, a group of convenience stores and fueling stations, and H-E-B, a large grocery store chain. Last year, ERock secured an equity investment from Balfour Beatty Infrastructure Partners (BBIP) to install, own and operate 50-MW of microgrid capacity in Texas.

While it’s been focused on Texas, ERock has made no secret of the fact that it wants to expand its model into other states, particularly those with conducive wholesale power markets.

“We are very excited to have EIP as a partner to help accelerate our reliability microgrid business, both in Texas and beyond,” said Thomas McAndrew, CEO of ERock. McAndrew is a nuclear engineer who worked on Naval ships — in essence floating microgrids – and brought lessons learned about energy reliability at sea to the ERock model.

The $10 million investment comes to ERock from an unusual investment group, a partnership of largely North American utilities. While utilities are notoriously cautious about new technologies, this group is scouting out emerging opportunities through EIP.

EIP says that it prioritizes sectors and technologies important to energy industry transformation, with an eye toward promoting clean, digitalized and decentralized energy.

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The investment partners include Southern Company, National Grid, Xcel Energy, Ameren, Great Plains Energy, Fortis, AGL, Avista and MGE Energy. In addition to ERock, so far they’ve invested in AutoGrid, Opus One, Sense Technologies and SparkFund.

“This transaction is another example of our investment model at work: backing companies with proven solutions and business models at the inflection point of their growth where our network can make a difference,” said Hans Kobler, CEO and managing partner at EIP.

EIP said that it expects to add other global utilities to its coalition soon.

Founded in 2006, ERock has a portfolio of 67 MW of customer microgrids in the Greater Houston Area, and 160 MW of grid reliability distributed generation systems across Texas.

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