Category: News

Lockheed Martin could be about to skip to the front of flow battery queue

Flow batteries will take another major step towards widespread bankability with Lockheed Martin Energy launching its own system before the end of the year.

The company has an established lithium-ion battery energy storage business but will add a long-duration flow battery to its line-up after several years of development.

“We’re in this market already with Li-ion, we know what investors expect so we’re fully prepared to offer long-term warranties, long-term performance guarantees, you have to,” said John Battaglini, director of business development for Lockheed Martin Energy. “We know the requirements, the company has made a sizeable investment and we’re committed to this technology.”

Unlike many venture capital-backed start-ups in the flow battery sector, Lockheed Martin is also extremely bankable as a company with 97,000 employees and a market capitalisation of almost US$100 billion. When the company launched Gridstar, the lithium-ion battery storage system in 2016, the still-to-emerge flow product was branded Gridstar Flow.

In a recent interview for Energy-Storage.News, rival flow battery provider Primus Power’s CEO, Tom Stepien, said that he acknowledged the mass market bankability of lithium is far beyond what flow batteries can currently acheive, but believed the picture will change over time as the market starts to favour longer duration storage, while analysis firm Navigant Research pointed out that of the non-lithium technologies deployed for energy storage, flow batteries are in a leading position.

We acquired [MIT spin-out] Sun Catalytix in 2014 and we have been investing in that product for four years now. We have prototypes up and running at our Massachusetts facility and we are targeting a commercial launch of the product in late 2018,” Battaglini said on the sidelines of the World Future Energy Summit (WFES) in Abu Dhabi.

“It’s a long-duration product and this is part of the evolution of the industry. More of our customers are requesting longer durations. The more they get used to storage the more they see other applications and rather than 2-4 hours they want six, eight or ten hours and that is what flow batteries are great for. We’re seeing more demand for these and we’re currently signing up more launch partners as we get ready for the release in this year,” he added.

Battaglini claimed its flow systems will be price competitive “right out of the gate” and expects that cost to continue to fall. But upfront costs alone don’t offer a fair comparison of storage technologies, he warned.

“We’ve done a lot of education with customers about lifetime cost, not just looking at upfront cost. You have to take a 20-30 year view when comparing lithium and flow. Lithium batteries need replaced perhaps every seven years so you need to make sure you are comparing apples to apples,” he said.

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Lockheed Martin eyes solar partners for new flow battery

Lockheed Martin Energy is looking for development and manufacturing partners in the solar industry as it readies its long-duration flow battery at the end of the year.

The company has an established lithium-ion business but will add a flow battery to its line-up after several years of development.

“We’re in this market already with Li-ion, we know what investors expect so we’re fully prepared to offer long-term warranties, long-term performance guarantees, you have to,” said John Battaglini director of business development for Lockheed Martin Energy. “We know the requirements, the company has made a sizeable investment and we’re committed to this technology.”

Unlike many venture capital-backed start-ups in the flow battery sector, Lockheed Martin is also extremely bankable as a company with 97,000 employees and a market capitalisation of almost US$100 billion.

“The four primary applications we see for long-duration energy storage are wind and solar shifting, T&D deferral and microgrids,” said Battaglini. “As more renewables come online the first two will only increase. We’re targeting wind and solar developers directly but we also want to talk to solar and wind manufacturers, we’re seeing a lot more hybrid systems coming into the market. Not just sharing and interconnect but an integrated system. When you look at these four applications, there is clearly a lot of demand for long-duration storage in the next 5-10 years.”

“We acquired [MIT spin-out] Sun Catalytix in 2014 and we have been investing in that product for four years now. We have prototypes up and running at our Massachusetts facility and we are targeting a commercial launch of the product in late 2018,” Battaglini said on the sidelines of the World Future Energy Summit (WFES) in Abu Dhabi.

Battaglini claimed its flow systems will be price competitive “right out of the gate” and expects that cost to continue to fall. But upfront costs alone don’t offer a fair comparison of storage technologies he warns.

“We’ve done a lot of education with customers about lifetime cost, not just looking at upfront cost. You have to take a 20-30 year view when comparing lithium and flow. Lithium batteries need replaced perhaps every seven years so you need to make sure you are comparing apples to apples,” he said.

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London’s BESS targets 100MW with ‘landmark’ US$40m Santander investment

Battery Energy Storage Solutions (BESS) an independent system solutions and flexibility services provider, has taken in more than US$100 million in outside investment since November, with plans to target 100MW of UK projects.

At the end of last week, a spokesman for BESS emailed Energy-Storage.News to say that the company had netted £28.5 million (US$39.28 million) in project finance funding from an arm of Spanish banking group Santander.

BESS said it wants to become “one of the UK’s largest independent owners and operators of battery storage assets”, with the company, only launched in March last year, setting a target of building and operating a 100MW portfolio of energy storage assets by the end of 2018.

Last November, the company raised £50 million (US$66.18 million) of investment led by Tiger Infrastructure Partners, a New York-headquartered fund focusing on energy, transport and communications. At the time that was announced, BESS co-founder James Basden said the investment demonstrated the “credibility” of the company’s proposition and would be used to fulfil existing behind-the-meter project contracts as well as for grid-scale storage site acquisition.

On the latest investment, which came from Santander Corporate & Commercial, Basden’s co-founder Nicholas Beatty said the pace of the UK’s transition to cleaner energy is posing a second-by-second balancing challenge for transmission system operator National Grid. Beatty said he believed only “new technologies like energy storage” could help Britain meet this challenge effectively.

Santander Corporate & Commercial head of infrastructure and renewable energy, Howard Whitehead, called it a “landmark transaction”.

“We are delighted to have closed this landmark transaction with a new client in a new niche market segment: project finance for battery storage,” Whitehead said.

“We believe we are one of the first senior debt lenders to close a project finance transaction in this space, a fact which underscores Santander’s desire to be a leader in this fast developing sector.”

BESS had targeted the development and completion of 63MW of projects by the end of 2017 originally. The company currently has 14MW of grid-scale batteries owned and in operation and expects the remaining 49MW in that ‘pipeline’ to be up and running by the end of this month. The 63MW is distributed across eight project sites.

Few details were given about projects under development, or being considered. However BESS’ website says the company “provides frequency balancing services today and will soon be financing and operating assets in a range of new applications”. The Santander side of the deal was supported by UK specialist law firm TLT, while BESS was supported by law firm Burges Salmon and corporate and asset-backed financing company Evergreen Capital. 

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Batteries for UK’s Capacity Market stay short duration, despite lower de-rating factors

The vast majority of battery projects set to compete in Britain’s upcoming Capacity Market (CM) auctions will face significantly decreased de-rating factors after it emerged that most projects are still set to use either 30 minute or one hour duration batteries.

The latest update from transmission system operator National Grid’s Electricity Market Reform (EMR) delivery body, which facilitates the CM, has shown the majority (~62%) of batteries proposed for the T-1 (projecs with capacity to be delivered during 2018-2019) offer an hour’s duration, with 36% being 30 minute batteries. Similarly, the T-4 update (for projects to be developed and delivered by 2021-2022), shows a fairly even split across the two most popular duration periods, with ~44% offering 30 minute discharge and 42% an hour.

The longest duration battery in the T-1 offers two hours alongside two 90 minute projects, while the T-4 offers a number of two and four hour duration batteries in addition to a small proportion of six hour pumped hydro projects.

However, with a combined battery storage capacity of 4.5GW across the two schemes, new de-rating factors recently implemented by the Department of Business, Energy and Industrial Strategy (BEIS) mean that developers will only have access to revenues from less than 1.3GW.

The update from the EMR body, published late on Friday (12 January) afternoon, shows the projects left to compete following changes to prequalification decisions, credit cover requirements and outstanding prequalification reasons.

Planning consent status was also included, with the deadline for this extended to this month following the publication of new de-rating factors in early December.

The number of batteries set to compete in the upcoming auctions has fallen significantly since December’s initial results, with 29 prequalified projects lost from the T-1 – down to 74 – and 82 lost from T-4, which now has 145 prequalified battery projects.

This suggests a number of developers opted to cut their losses since December’s initial results and it is now unclear if or how these projects will be brought to market without a CM contract. With many offering short duration capability for frequency response, it is likely many will try to win firm frequency response (FFR) contracts in a rapidly diminishing market as National Grid prepares a new suite of service products.

However, some batteries that failed to secure initial prequalification in the CM, such as Vattenfall’s 22MW EFR battery at Parc y Cymoedd, have returned following the Tier 2 appeals process. Aggregators Kiwi Power and Limejump, which had swathes of capacity rejected in December, have also had projects conditionally approved in both auctions while the UK’s first subsidy-free solar farm Clayhill remains locked out.

These projects remain ‘conditionally prequalified’ as they have yet to post credit cover and must now do so in time to confirm entry into the auctions.

If they do not post credit cover in time, but do post it in the regulated timeline of 15 working days from status change, they will have the opportunity to decide to take an agreement at the clearing price. 

The projects will now compete at the end of the month in the T-1 auction, slated to start on 30 January, before the T-4 process will kick off on 6 February. 

In December, some commentators and industry participants in UK had expressed a belief that de-rating rules could push the sector towards longer-duration batteries, while potentially sparking a shift towards energy arbitrage as a source of revenue for shorter duration applications. Later that month, Solar Media Market Research analyst Lauren Cook blogged for Energy-Storage.News that the pre-qualification register for the Capacity Market had driven the UK’s utility-scale battery storage pipeline up to almost 8GW.

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ENGIE, Macquarie invest in Connected Energy’s ‘2nd life’ EV pack storage

Energy storage provider Connected Energy has secured £3 million (US$4.13 million) of investment from Macquarie Group and ENGIE to fuel its growth plans in the UK and abroad.

The working capital unlocked by the investment will be used to build Connected Energy’s team, with specific positions in sales and operations to be created. The investment will also be used to build the company’s research and development expertise, with chief executive Matthew Lumsden telling our UK sister site Clean Energy News that Macquarie and ENGIE offer more than just cash.

“We’ve spent the last 12 months putting [the investment] together and we were very keen to get people that could add more than money to the business. It’s about expertise and market insight.

“What we’re learning is that it’s a very embryonic market and customers really value some technical expertise – whether it be market expertise or around the engineering – so we’re trying to provide some good support around that,” he said.

“We are delighted that Macquarie and ENGIE have provided this significant financial and management value for our phase of aggressive market growth.”

Since the beginning of 2017 when Connected Energy employed a team of six, the company has added around ten additional staff and will seek a further ten over the next six months.

The new staff will work to further develop the company’s behind the meter commercial and industrial (C&I) solution E-STOR, which is designed to help customers mitigate their network costs and achieve uninterrupted power.

The stationary energy storage system uses second life battery packs from electric vehicles after they have completed their useful lives on-board vehicles. The company, which says the E-STOR is the only commercially available system of its kind to use EV battery packs rather than just the modules, added that this offers the same performance as first life batteries, but at a lower cost and in an environmentally friendly manner.

“We provide the supplier, which in most cases at the moment is Renault, with a specification and then our system talks to their battery management system. Renault has expended an enormous amount of investment in making sure it’s safe and efficient for the EV so we don’t interfere with any of that we just speak to it and use it as it is.

“Our control system then sits on very tried and tested established technologies, we don’t pull it to pieces. We use all of the existing system; we don’t have to put a new battery management system in there but we can do a good diagnostic on the battery so we know exactly what condition it’s in. So we think it’s more cost effective,” Lumsden explained.

Connected Energy currently has up to six small scale systems currently installed, with up to four in the pipeline ranging from small up to 500kW and up to just over 1MW in size. The company will then work with aggregators to take the batteries into the ancillary services market to provide frequency response, with an eye on future capacity market auctions.

Matthew Booth, senior managing director in Macquarie’s commodities and global markets group, said: “The provision of energy storage to support grid stability and create a charging network for electric vehicles will be a major theme in power infrastructure over the coming years. We are pleased to have invested in this innovative company which has developed an environmentally friendly and low cost solution to help meet this need.”

For France-headquartered mega-utility ENGIE, the cash put into backing Connected Energy is the latest investment in energy storage, with the company now 80% majority owner of Green Charge, recently identified by IHS Markit as one of the three leading providers of storage to commercial and industrial (C&I) customers in the US. ENGIE also operates an Energy Storage Park in Brussels, to which Dutch system provider and integrator Alfen recently supplied a system. Macquarie meanwhile invested in a Series B funding round for another of the US’ C&I leaders, Advanced Microgrid Solutions (AMS) in July last year, a year after backing AMS with US$200 million

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Explosive growth in UK energy storage pipeline revealed by Capacity Market register

With the release of the most recent Capacity Market pre-qualification register, the UK’S utility-scale battery storage pipeline has now reached nearly 8GW. Over the last few months we have seen a sharp rise in the number of planning applications with over 1.3GW of battery storage projects being submitted since the beginning of September 2017 alone.

Based on the trend of applications throughout the year it was clear that the Capacity Market register was going to include a lot of battery storage but the number and capacity of projects will have surprised most people.

The applications include a wide range of project sizes and with the Capacity Market making up just one part of a project revenue it opens the auction up to those with different business models. This could include smaller projects located behind the meter and larger projects either co-located with a generator or stand-alone, seeking to use the Capacity Market income as secure additional revenue in addition to the primary income, which could include ancillary services or arbitrage.

However, even with the clear interest in energy storage shown by the participation in the Capacity Market, there remain big question marks about how much of it will compete in the upcoming auctions once the deadline for planning applications passes and the changes to de-rating force some developers to withdraw projects. Research from the Solar Media market research team shows there could be up to 2GW of prequalified projects that have not yet submitted planning applications. There is also the possibility that some of the projects that were rejected will successfully appeal and be able to compete.

It has not proven simple to calculate exactly how much battery storage is participating in the Capacity Market. Anyone who has had a look through the results will see duplicates and multiple applications on some sites, which seems to be a strategy used by some developers and there will be different reasons behind this. In some cases we can see the total capacity of a site in the planning documents split into multiple projects in the Capacity Market. The battery duration is not included in the data released by National Grid and it is likely that this accounts for some of the duplicates, as companies will have different strategies to react to the de-rating changes which were unclear at the time of application.

The graphic below shows that there are around 500MW of projects at the “ready to build” stage, it is likely that the majority of these will be built next year and the number could be even higher based on the results of the T-1 auction. The projects from the Capacity Market register mainly fall into the “in planning” and “proposed” categories. If the developers of these projects decide to compete in the auction these projects are likely to be the ones with a chance of success in the T-1 or T-4. 

The “proposed” category is important at this stage as it shows there is a long-term pipeline developing, although the “on hold” projects show that there is already a significant amount of drop off happening in the pipeline with some speculative projects being mothballed at the early stages before the main investment is made.

The installed capacity of battery storage projects has shot up from the 100MW reported in November with the completion of several large projects and now sits at around 200MW. This will increase in the first quarter of 2018 as the remaining projects with EFR contracts approach the deadline for completion at the end of February.

However, looking further into the year it becomes less clear and the results of the Capacity Market auction, especially the T-1, begin to have much more of an impact. There are around 2GW of battery storage projects prequalified for the T-1, with a delivery year of 2018/2019, which shows a level of confidence that these projects could be developed within a year and therefore are already at an advance stage of development, or are just waiting for the green light to go ahead.

In 2017 we have seen the interest in battery storage in the UK evolve into actual projects and opportunities. In 2018 as the pipeline grows and the regulations become clearer we will see even more projects being completed and successful business models being revealed.

For more information about proposed and operational storage projects, the UK Battery Storage Project Database report from Solar Media market research provides comprehensive details across more than 200 battery storage projects. For more information, click here, or email: marketresearch@solarmedia.co.uk.

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Solar-plus-storage project set for Wales following successful legal appeal

Wales’ largest solar farm, complete with significant energy storage capacity, is to be built on Anglesey after Countryside Renewables successfully overturned a decision in November refusing planning permission.

The 50MW development was originally proposed in February to be built at Llanbadrig in Anglesey, to power around 15,500 homes annually while also using battery storage to act as a “peaker plant” for energy distribution.

Despite planning officers recommending approval for the site, the proposal was refused by the Isle of Angelsey county council on the basis that it was not considered sufficient to allow departure from policy ADN2 of the Development Plan, which limits development of solar farms over 5MW.

However, Countryside Renewables sought legal opinion on the ruling which found that that the planning application was in fact in accordance with the policy and “the reason for refusal is not justified and would not be sustainable on appeal”.

As a result, the planning committee are thought to have reconsidered their position and have permitted the application.

However, the new plans suggest the site may have been moved following an investigation of the region to address council concerns, with the site slated for land just south of the Llanbadrig area.

Neither Countryside Renewables or the council could be reached this morning to confirm the details of the permission, or provide a capacity figure for the energy storage to be installed on site. However, planning shows that 32 containerised battery storage units will be installed, and the developer will have to submit details of the technology to be used in advance of construction beginning.

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BNEF predicts 305GWh of energy storage worldwide by 2030

The rise of energy storage will enjoy a similarly meteoric trajectory to that enjoyed by solar PV deployment in the past and could reach 305GWh of installations by 2030, BNEF has predicted.

The market is set to “double six times” between the years 2016 and 2030, reaching 125GW / 305GWh, Bloomberg New Energy Finance claims. The research group yesterday published a new report, “Energy storage forecast 2016 – 2030”.

BNEF calls the expected rise of energy storage during this time as having a “similar trajectory” to that seen in the solar PV market globally between 2010 and 2015. In those five years solar PV capacity doubled seven times over. It is expected that around US$103 billion could be invested in the technology to facilitate this expansion into the mainstream.

While BNEF considers that that sum will be invested, broadly speaking, equally across the regions of Asia-Pacific, Europe, the Middle East and Africa and in the Americas. Despite this, around a quarter of all deployments are expected to be in the US, with 70% of all installed capacity predicted to be spread across that country as well as in China, Japan, India, Germany, Australia, South Korea and the UK.

“Energy storage, both utility-scale and behind-the-meter, will be a crucial source of flexibility throughout this period and will be essential to integrating increasing levels of renewable energy,” BNEF staff wrote in a statement.

At the beginning of this year, the International Renewable Energy Agency (IRENA) claimed that around 1GWh of battery storage was in use worldwide by the electricity sector, predicting that it could rise to 250GW by 2030 in its “REThinking Energy 2017: Accelerating the global energy transformation” report.

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Ofgem reassures solar developers over subsidy accreditation when adding storage

Ofgem has sought to reassure solar farm owners that it will not withdraw accreditation to subsidy schemes without having a good reason to do so as it continues to work on guidance for co-locating energy storage assets with solar.

In September the regulator made the ‘game changer’ decision to allow solar developments to retain their accreditation under the Renewables Obligation (RO) when supplying electricity to batteries, after Anesco revealed it had done so at three of its 5MW sites.

However, Ofgem was not ready to publish any guidance to the rest of the sector on how this could be achieved while Anesco, which intended to approach investors on its 101-strong portfolio of solar farms, said it would not be publishing its own methodology.

Speaking at Tuesday’s Solar Trade Association (STA) Market Access and Systems Integration conference, Luke Hargreaves, head of renewables at Ofgem, revealed that the guidance was intended to be published this month.

But the regulator has run into issues in allowing sites to retain RO and FiT accreditation due to the absence of energy storage from the legislation.

“The legislative framework for both the FiT and the RO do not make any reference whatsoever to storage. We have the same tools to work with as industry; we do not know the answers. In the vast majority of cases where our team has made decisions and established precedents, we’ve put them into our guidance documents…but very few decisions have been made,” he said.

“The guidance was meant to be out this month…it isn’t straightforward because of the absence of clarity in the statute.”

In the absence of this guidance, Hargreaves added that Ofgem would not seek to revoke accreditation as a first response, instead hoping to work with the sector to reach beneficial conclusions.

“I know there is a lot of nervousness around Ofgem making a determination such that accreditation could be whipped away from you. The legislation makes prescription that for the FiT and RO the authority may withdraw an accreditation but then it goes on to say why in certain circumstances, so we can’t invent eligibility hurdles,” he said.

“If we’re going to take an accreditation away we must have a reason for that. It is a very big decision for us to make as understandably it is laden with legal risk. It’s not a light-touch decision, it’s not one that we make very often at all.”

“We certainly in the context of administering schemes are not here as a block. We operate within the legislative framework and we have to make certain decisions and those decisions can only be made based on [what’s in] the statute,” he added.

Ofgem will be attending a roud table discussion on co-location with renewable generation on Monday (13 November), hosted by the STA, to gain further feedback and grow its guidance further. The regulator told SPP the document will be released before Christmas but was unable to offer more specific information around the publication.

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Hazel Capital bought as Gresham House enters ‘one of the most sought-after market segments’

Hazel Capital has been bought up by investment manager Gresham House through a combination of cash and newly issued shares, which includes new investment in three energy storage projects.

Gresham House New Energy has been set up to take on a strategic focus on renewables and new energy infrastructure, which Gresham House describes as “one of the fastest and most sought-after market segments in the alternatives sector”.

The new division completed the £2.6 million acquisition of Hazel Capital, which manages a number of battery storage projects including the stand-alone 15MW Lockleaze project and the 20MW hybrid battery/engine project in Newcastle-under-Lyme, known as Staunch.

The total consideration initially includes £600,000 in cash for the acquisition of Hazel Capital’s asset management business, which will continue to be headed up by Hazel Capital’s managing partner Ben Guest alongside partners Bozkurt Aydinoglu and Gareth Owen.

The remaining £2 million, comprised of £750,000 in cash and £1.25 million satisfied through the issue of new ordinary shares, includes an investment into three storage projects, one of which is currently under development.

For the financial year ended 30 April 2017 Hazel Capital’s asset management business generated an operating profit of £900,000, excluding all development profits.

Ben Guest commented: “This is a natural next step for Hazel Capital. Our expertise in renewables and battery storage will complement Gresham House’s existing strategies of private equity, infrastructure, strategic public equity and real assets.

“At the same time, we will gain from the experience and skills of the wider Gresham House team and will be able to leverage the resources from being part of the Group’s growing platform for differentiated investment strategies.”

Gresham House Asset Management, a wholly owned subsidiary of the company, has also been recommended as investment advisor for two renewable energy venture capital trusts (VCTs) managed by Hazel Capital.

These VCTs were launched in 2010 and have successfully invested in 19 projects, currently owning and managing six feed-in tariff and two ROC ground-mounted solar projects.

Pending shareholder approval from the VCTs, the new division will have an aggregated AUM (total market value of assets under management) of over £100 million plus a pipeline of development assets.

Anthony Dalwood, chief executive of Gresham House, said: “The Hazel Capital team’s skills and experience will significantly add to the Gresham House group.

“Gresham House New Energy will leverage the specialist technical and investment expertise of the Hazel Capital team to drive organic growth, including new product launches, whilst further diversifying the Gresham House product portfolio.”

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