NiSource Unit Agrees To Pay About $2.2 Billion For A 2,400 MWh Battery AGP Group Will Build
The 8-K describes a tolling deal with an option for NiSource's generation arm to buy the project, which still needs construction and grid contracts.
NiSource's generation subsidiary expects to pay AGP Group about $2.2 billion in total storage payments under a battery tolling agreement signed Thursday, according to an 8-K filed Friday. AGP Group will build and run the 600 MWAC / 2,400 MWh project on the Midcontinent Independent System Operator (MISO) grid, and the subsidiary gets the right to buy it.
What the 8-K says
NiSource Generation Company LLC, called GenCo, signed the Battery Storage System Tolling Agreement with Atlas Storage 1 LLC, an indirect subsidiary of AGP Capital Holdings Pte. Ltd. (AGP Group). A tolling agreement lets one party pay for the use of another's facility. AGP Group will develop, construct, own and operate the stand-alone battery.
GenCo will supply, at its own expense, the electricity that charges the battery. It will also direct dispatch and receive the economic benefits of the project's capacity, discharged energy, storage and ancillary services and, if applicable, environmental attributes, including revenue from MISO market sales.
In return, GenCo will make regular storage payments based on a fixed rate, subject to certain adjustments, and the project's actual power capacity. The delivery term is expected to run about twenty and a half years, starting on the commercial operation date of the first phase, expected by December 1, 2027.
The agreement also gives GenCo an exclusive and irrevocable option to buy the project at specified intervals during and at the end of the delivery term.
What it changes
The company expects to account for the deal as a finance lease obligation under FASB ASC Topic 842, so the payments are treated as a financing commitment. The filing was made under Item 2.03, which covers the creation of a direct financial obligation.
NiSource shares closed at $41.25 at Thursday's close, the day the agreement was signed.
What to watch
The agreement is not yet effective. It depends on AGP Group signing an engineering, procurement and construction contract and an interconnection agreement, in each case by January 31, 2027.
The filing's risk list also names regulatory approval of the agreement, supplier and contractor performance, tariffs, severe weather and public intervention or litigation.
The next checkpoint is January 31, 2027, the deadline for AGP Group's construction and interconnection contracts.
Sources
- 8-K Filing — NISOURCE INC. (NI) — SEC EDGAR
