GSM Energy LLC (GSM) is seeking an equity partner to help grow a pure-play battery energy storage systems (BESS) IPP in the ERCOT region, with an initial near-term development portfolio of 1.5 GW, according to a source familiar with the situation.

The company is working with financial advisor DNB Markets to identify an investor to acquire either 80% of the company to support its operations and growth as a platform, or up to 80% of the equity in the initial 10-asset development portfolio through a joint venture structure, the source said.

The company expects capex plus development expenses for the portfolio to be USD 1.2bn. GSM is currently assessing contracting alternatives for the portfolio for the first five years that contemplate approximately 50% contracted and 50% merchant capacity profile during this timeframe.

DNB Markets circulated marketing materials for the process in mid-September with a view to receiving non-binding offers from interested parties in early November. GSM anticipates closing a transaction with an investor in January 2025, reaching notice-to-proceed stage for the first project in 1H25, followed by the funding of required securities for interconnection and tolling agreements, as well as project construction.

GSM has secured land control for the sites in the initial portfolio and is advanced in the interconnection process, the source said. The projects’ position in the interconnection queue will allow them to begin operating in 1Q28, thereby benefiting from higher price volatility in the ERCOT market in the short- and medium-term, while avoiding increased interconnection costs and longer application timelines compared to early-stage projects, according to the source.

GSM is led by three co-founders: company CEO GP Manalac, who is the co-founder and COO of gas-to-liquids development company Energy Security Partners and of energy and asset management company Fulcrum Power Services; COO Matt Held, who is also COO of power infrastructure construction and project management company Saxet Infrastructure Group, and founding partner of developer of midstream and grid resilience infrastructure company Bootstrap Energy Partners; and President Steve Quisenberry, the CEO of Saxet Infrastructure Group and Bootstrap Energy Partners.

In addition to the three cofounders, the C-suite is rounded out with CFO Osman Qureshi, who was the CFO of Mubadala Infrastructure Partners from 2008-2017 and who was a managing partner at First Alpha Energy Capital LLP and Groemium Capital.

In addition to the initial development portfolio, GSM has additional growth opportunities including through Manalac’s other Texas-based battery storage developer Navitas Energy LLC. Navitas owns a pipeline of nine sites totaling 1.155 GW that can be purchased by the IPP platform.

DNB Markets and GSM did not respond to requests for comment.