Escalating project costs and growing demand for energy storage fueled a decision by the founders of Key Capture Energy to search for a buyer.
Five years after starting their Albany battery storage company, co-founders Jeff Bishop and Dan Fitzgerald reached an agreement last week that will bring new ownership and a $1 billion investment into the business.
Key Capture Energy is selling to an affiliate of SK Group to speed up growth and finance more energy storage projects across the United States.
Fitzgerald and Bishop followed a familiar path for many startups: They used their own cash, then raised money from angel investors and venture capital before deciding to take the business to another level.
"Eventually, we realized we would need to consider how we would fund moving forward if we kept growing," Fitzgerald said.
With 54 megawatts of battery energy storage projects in operation and another 200 megawatts under construction, Bishop and Fitzgerald agreed to sell the business to SK E&S Co. Ltd., an affiliate of the Seoul, South Korea, chemical, energy and petroleum conglomerate SK Group.
New York City investment bank Onpeak Capital helped Key Capture narrow a list of potential suitors from 80 to 1. Sidley Austin law firm served as legal advisors.
The acquisition, which is scheduled to close by the end of the year, will allow Key Capture to expand its companywide headcount beyond 50 while maintaining its headquarters in Albany as well as offices in Houston and Salt Lake City, Utah.
"One of the reasons that SK wanted to acquire us is not only ... what we have built and our pipeline, but it's because of our team and our talent," Fitzgerald said.
Fitzgerald, who grew up in Wynantskill and Troy and graduated from the University at Albany, said Key Capture was able to grow because of its participation in the Start-Up NY Program. That program allows participants to hire employees who are exempt from state income taxes for 10 years.
Key Capture established its headquarters in New York four years ago and has worked with 20 interns since then, including five who were hired as full-time employees. About half of Key Capture's staff is based in Albany.
"We will be growing the team to meet the expectations and to keep continuing to expand in the industry," Fitzgerald said.
The company will start construction of an additional seven projects next year with a total capacity of 390 megawatts of battery storage. One of those projects will be located in western New York.
Key Capture was created after Bishop and Fitzgerald spotted a need to store energy as a path to eliminate an intermittency problem that occurs when solar and wind energy projects are not generating power at the highest levels.
The company's first battery storage project was built in Stillwater in Saratoga County three years ago. That 20-megawatt, $9 million project serves as a showroom for prospective Key Capture Energy customers.
"That has been the tourist attraction for people who want to see energy storage in our area," Fitzgerald said.
He and Bishop also are bullish on what the SK acquisition means for the Albany region. SK Group already invested $1.6 billion to purchase nearly a 10% stake in hydrogen fuel cell manufacturer Plug Power this year.
And SK is building a joint venture with Latham-based Plug Power that will sell fuel cells, hydrogen fueling stations and hydrogen electrolyzers in China, Vietnam and South Korea.
Between the SK investments, Plug Power and Key Capture's growth, Fitzgerald sees an opportunity for Albany to attract more energy investments and talent. The region also is on the verge of attracting 350 offshore wind jobs as the Port of Albany prepares to start building a wind tower factory.
"I am hoping this will make the area more of an energy hub," Fitzgerald said.
