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In brief: Goldman climate fund backs energy storage business

A $250m preferred equity investment has been split between Goldman Sachs Asset Management's nascent Horizon Environment and Climate Solutions Fund and its flagship buyout vehicle.

Goldman Sachs Asset Management has made a $250 million preferred equity commitment to Hydrostor, an energy storage business. The investment is being made from two of GSAM’s funds, according to a source with knowledge of the deal. One of these is the Horizon Environment and Climate Solutions Fund, the debut fund from the bank’s Sustainable Investment Group which is currently in fundraising mode. The other was West Street Capital Partners VIII, the firm’s flagship buyout fund. Goldman Sachs declined to comment.

The investment will be drawn down in tranches tied to project milestones, the company said in a release on Monday.

Hydrostor uses a process called Advanced Compressed Air Energy Storage to allow excess energy to be stored, which is key to scaling the use of renewable energy and securing grid capacity. Excess energy is used to compress air, which can be stored and used later to power turbines and generate power. The GSAM investment will be used to support development and construction of projects in Australia and California and expand the project development pipeline globally.

Further reading: Goldman Sachs nears $1bn for debut impact fund