Podcast Summary: Currents Ep314 - Navigating Cost, Risk and Regulation in Energy Storage

Date: September 4, 2025
Host: Todd Alexander (Norton Rose Fulbright, Partner)
Guest: Chris McKissick (CEO, Fullmark Energy)
Duration: ~27 minutes

Episode Overview

This in-depth conversation explores the current landscape of energy storage in the U.S., specifically focusing on how developers and independent power producers like Fullmark Energy navigate the evolving challenges and opportunities around cost, risk, regulation, and technological innovation. Chris McKissick shares informed perspectives on project development, market trends, regulatory changes, and Fullmark’s unique approach to building a storage-centric business.

Key Discussion Points & Insights

1. Why Focus Exclusively on Energy Storage?

[00:26–01:50]

• Chris and Fullmark’s team intentionally focus solely on energy storage rather than pairing with generation assets like solar or wind.
• Rationale:
  • Storage is highly complex and fundamentally different from generation technologies.
  • Mastery requires dedication. "Until you've become really, really great at one thing, you shouldn't really start to take on other things." (Chris, 00:57)
  • The market and technology are both quickly evolving.
  • Singular focus allows for depth of expertise—key to operating successfully in a crowded and dynamic sector.

2. Trends and Volatility in Storage Costs

[03:03–04:59]

• The storage cost curve has generally declined over the past decade, however, the path has been erratic—marked by market spikes tied to commodities, tariffs, and supply chain disruptions.
• Shift from older chemistries (lead acid, NMC) to LFP (lithium iron phosphate) has unlocked better reliability, resilience, and cost management.
• Technological advances, especially in energy density, reduce the need for physical materials.
• Expectation that costs will stabilize at a predictable level, even as incremental improvements continue.

3. Reliability, Safety, and Battery Longevity

[04:59–07:04]

• Significant improvements in battery safety through better testing, QA, system controls, and monitoring.
• Real-world degradation is consistently less severe than conservative engineering models predict.
• Owners and operators are adjusting augmentation reserves downward as empirical data supports better performance.
• Quote: "People have been pleasantly surprised that the batteries have not degraded as far as fast as they were anticipating." (Chris, 05:58)

4. Market Evolution and Project Siting

[07:04–08:16]

• As technology improves and costs drop, prime development opportunities ("lowest hanging fruit") are harder to find.
• Increased competition for grid interconnections and financing pushes developers to be more selective and strategic.
• Success now hinges on smarter project selection, optimal siting, and operational excellence.

5. Misconceptions in the Financial Community

[08:16–09:50]

• Biggest myth: Storage is a "set it and forget it" business, like traditional renewables.
• Storage operations are highly dynamic: require careful market participation, real-time dispatch optimization, and constant vigilance.
• Quote: "This isn't ‘P times Q’ that you would find in wind or solar...It really becomes a complex equation." (Chris, 08:36)

6. Market Impact—Will Storage Dampen Price Spikes and Become Less Profitable?

[09:50–13:51]

• As batteries smooth out grid volatility, arbitrage spreads will inevitably compress—but that’s a sign of success, not failure.
• Storage will remain essential as price swings won’t disappear; markets are inherently dynamic.
• Ancillary services markets, capacity payments, and nimbleness in capturing multiple revenue streams are crucial for sustainable returns.
• Quote: "If you are effective at capturing those major spikes, then they will eventually erode. That being said, you are never going to have flat base load looking price in the energy markets." (Chris, 11:06)

7. Policy and Regulatory Landscape: Reaction to the Reconciliation Bill

[13:51–16:58]

• The bill’s treatment of storage could have been worse—sector remains largely unscathed.
• Onshoring supply chains was already underway; legislation induces only manageable challenges and adds some bureaucratic burden.
• Bipartisan support for storage recognized as crucial for grid reliability and handling massive expected load growth.
• Quote: "At the end of the day, storage really, I would say, came through largely unscathed." (Chris, 15:22)

8. Fullmark’s Investment Strategy and Growth Plans

[16:58–19:00]

• Careful capital allocation is key; avoid spreading too thin despite market abundance.
• Focus on California (CAISO) and ERCOT, with projects maturing in these regions and plans to enter PJM.
• Risk management is central: careful vendor partner selection, staff training, and operational diligence.

9. Contract Structures: Balancing Risk and Upside

[19:00–20:21]

• Fullmark typically employs a mix: mostly contracted, some merchant exposure.
• Flexible offtake, resource adequacy, and tolling agreements are all part of their toolkit.
• This hybrid approach provides locked-in base returns while allowing for upside via merchant activities: "We're pretty well versed in commercializing these facilities." (Chris, 19:54)

10. Regulatory Reform: Challenges and Opportunities

[20:21–21:11]

• Regulatory change is happening faster than ever; flexibility, stakeholder engagement, and adaptive strategy are essential.
• ERCOT’s ancillary services market alone has changed four times in five years—a historical anomaly.

11. Financing Model & Lenders

[21:11–22:44]

• Sponsored by Infrared Capital Partners, using a combination of portfolio financing and letters of credit to support development.
• This structure enables Fullmark to move swiftly and compete for grid access and contracts.

12. Battery Duration Choices & Market Suitability

[22:44–24:06]

• Market requirements for battery duration (from 1hr to 4hr) are changing, especially in ERCOT.
• Determining optimal battery duration is increasingly about balancing merchant risk, capital cost, and market opportunity.

13. Geographic Market Outlook

[24:06–25:43]

• California and ERCOT remain dominant, but potential is seen in PJM (especially now that capacity prices are rising).
• MISO and SPP markets have yet to deliver on development promises.
• Quote: "I think PJM capacity-based battery storage projects might be a way of the future." (Chris, 24:47)

14. Fullmark’s Vision for the Next 2–3 Years

[25:43–27:00]

• Two business lines emerging:
  1. Wholesale Market Participation: pure market-facing projects.
  2. Customer-Based Solutions: collaborative approaches with end-users to optimize savings and market access.
• Active development behind the scenes with expected public announcements "shortly."

Memorable Quotes

• "Focus is just really, really key for me." (Chris, 01:19)
• "I think safety is the first word that comes to mind for me. And the safety has improved just tenfold." (Chris, 05:25)
• "Being forward looking and responsive and sophisticated about how you dispatch the system is a full time set of jobs." (Chris, 09:11)
• "At the end of the day, storage helps keep the lights on by enabling more intermittent resources." (Chris, 12:53)
• "We're effectively in the risk management business." (Chris, 17:52)

Notable Timestamps

| Timestamp | Topic/Quote | |------------------|------------------------------------------------------------------------------------------------------| | 00:26 | Why focus on storage exclusively? | | 03:03 | Evolution of battery tech and cost volatility | | 05:25 | Major improvements in safety and reliability | | 07:26 | Market maturation makes competition tougher | | 08:25 | Common misconceptions in financial community | | 09:50–11:06 | Will storage erode market spreads and become less profitable? | | 14:07 | How the reconciliation bill (and IRA) affects the storage industry | | 17:31 | How Fullmark approaches market selection and project screening | | 19:16 | Mix of contract structures for risk and upside | | 22:50 | Changing battery duration to meet new market realities | | 24:47 | "I think PJM capacity-based storage projects might be a way of the future." (Chris) | | 26:11 | Fullmark’s strategic direction for the next few years |

Final Thoughts

The episode offers a candid, informed snapshot of what it takes to succeed in today’s rapidly evolving U.S. energy storage market. Chris McKissick shares actionable insights on adaptation, risk management, and the unique rewards (and challenges) for hyper-focused storage developers as both the technology and regulatory frameworks continue to mature.