Category: News

Investors journey into the ‘grey area’ of energy storage revenues

Investors in renewable energy technologies have had to undergo “a journey” from the fixed revenue offered by traditional solar projects to the “grey area” of energy storage revenues.

That is the view of Chris Pritchett, a contract lawyer and partner heading up the energy and environment practice at Foot Anstey. He recently served as moderator for the ‘Developers and financiers debate’ at the Energy Storage Conference at the Solar & Storage Live 2017, in which fund managers and project developers engaged in a robust discussion around the technologies.

Andy Colthorpe, editor of sister title Energy-Storage.News, caught up with Chris after the session for an in-depth interview on camera.   

“[With the feed-in tariff (FiT), renewables obligation (RO) and PPAs]… you got used to a quite straightforward and really quite easily modelable return. You knew what it was going to be – it was government-backed for 20-25 years. There has been a journey whereby the investment community has had to detach themselves from that way of thinking.

“It’s been taken away from something that’s secured and financed on the basis of a revenue stream that is fixed. That creates a bit of a grey area but there is a market there, it’s not going away and the people who are well placed to take advantage of that market will be those with battery assets deployed and ready to go.”

Read the entire story

Growatt building storage installer base as it looks to drive UK market maturity

Chinese manufacturer Growatt has revealed it is building up a base of accredited storage installers in the UK.

With energy storage still a comparably young industry, Growatt is working to educate both end users and installers of the capabilities and applications of the technology.

“We have been running a series of free training courses for our installers,” said Scott Feng, general manager of Growatt UK. “We want them to be able to install more efficiently and with no mistakes that the end-user then has to have corrected.”

So far Growatt has accredited more than 100 installers and has more than 3,000 systems installed across the UK.

Speaking to SPP at last month’s Solar & Storage Live, Feng said he was confident the UK market will continue to grow, but as with the PV industry before it, greater technical knowledge and support is required to back it up.

“The UK market is very promising. The cost of a storage system is falling drastically, again, like we saw with PV. At the same time, consumers’ electricity bills are only increasing. This will create a good economic case for solar in both the residential and the commercial segments,” said Feng, adding that the opportunity for retrofitting existing solar systems was yielding immediate business opportunities.

“We have already seen one subsidy-free solar and storage project in the UK and I expect that we will see more soon.”

Growatt, an established PV inverter manufacturer has been serving the energy storage market in the UK for three years and has recently introduced AC storage products, a hybrid inverter and high voltage systems.

Storage sector beset by lack of understanding

The efforts of Growatt and others to increase knowledge around storage within the market will be welcomed by the likes of DBS Energy, which has expressed concern over the lack of education and understanding among consumers within the battery storage sector.

Also speaking at Solar & Storage Live, representatives from the company claimed that while knowledge of inverters and other components is established, greater knowledge and product training is needed for battery systems.

Director Paul Anderson said: “It’s the battery that’s going to make the system work; it’s the heart of it. They need to have the basis knowledge.

“The sad thing about it is if something goes wrong they blame the battery whereas the fact is there are so many things that could have gone wrong. It’s always whoever supplied it that gets blamed.

“A lot of it just comes down to a lack of education in this sector and where these applications should get used.”

Read the entire story

Race is on for battery storage developers to take advantage of UK ancillary services, says Sungrow

Energy storage investors in Britain will need to have their projects in the ground by June next year at the latest if they are to take advantage of the lucrative new ancillary services market set to be implemented by National Grid, according to Sungrow’s European managing director.

The Chinese PV inverter supplier and system integrator, which has a partnership to deploy Samsung SDI batteries in stationary storage installations, has said that the UK sector is awash with investors, funds and other financial backers seeking to position themselves ahead of the new tranche of products currently under development by transmission network operator (TNO) National Grid, as well as future capacity market auctions.

Speaking at the Solar & Storage Live event in England earlier this month, Sungrow’s Stephen Wang explained that the company is expecting a mixture of services within the current market – including Triad (a form of time-of-use pricing for commercial entities based on high demand periods during winter) and grid services like firm frequency response (FFR) and enhanced frequency response (EFR), worth a considerable amount in isolation – will be combined into single grid service auctions.

Wang added that the market is expecting this mixture of services to offer an internal rate of return (IRR) between 16.8-21.7%, making it a considerably lucrative – and competitive – market, even compared to the current competitive activity across the varying, isolated service auctions.

He said this potential had already attracted a range of international investors and funding companies, with “big players” in China also seeking to get involved.

Sungrow made 2GWh reservation with Samsung SDI ahead of anticipated demand ramp-up

Sungrow is therefore seeking to make contact with investors and funds looking to deploy storage, particularly as the company reserved 2GWh-worth of raw materials at the start of the year in conjunction with battery provider, Samsung SDI.

With shortages in these materials reported in a number of markets, Sungrow can offer the majority of customers satisfactory delivery of batteries thanks to this move at the beginning of the financial year. However, a small number – around 20% – of projects could have to wait at least three months and as long as six for more materials to become available.

This is due to the increased demand for battery projects heading into winter, when storage units need to be in place to catch Triad periods and follow up on pre-qualification applications to the next capacity market auctions in early 2018.

With the UK market set to become an even more compelling arena for large scale storage, Sungrow is therefore calling on the investment community to move quickly and position themselves for the new financial opportunities to come.

Read the entire story

Vattenfall in discussions over adding grid-scale battery storage at existing UK solar PV farms

Electricity and heat generator and retailer Vattenfall is developing a third party model for energy storage deployment, which will see the Swedish firm deploy batteries alongside UK solar farms.

As the company prepares to deliver its first battery storage project in the UK at the Pen y Cymoedd wind farm in Wales early next year, Vattenfall recently revealed that it is already in talks with a number of solar farm owners.

However, the Swedish state-backed company is finding that a number of solar farm owners are holding on to the additional capacity on their grid connections, originally intended for additional solar build-out under the Renewables Obligation (RO).

With this subsidy now closed, some are thought to be overstating the value of the capacity – effectively now a stranded asset – in an attempt to maximise any potential offer or revenue from Vattenfall or companies like it seeking to develop energy storage.

Still some miles left to be run in UK solar and wind’s ‘cost game’

The model taps into Vattenfall’s development approach of co-locating new projects with existing assets to leverage their grid connection. The company has already praised the potential of co-locating solar with wind after its Parc Cynog site showed good performance within its first 18 months.

However Gunnar Groebler, senior vice president of Vattenfall’s wind business division, explained to our UK sister site Solar Power Portal recently that changes to solar subsidies in Britain, mainly in the form of cuts, meant it was difficult to develop further solar projects.

“[The UK] is not the prime country for solar PV, even with the shared infrastructure the business case is not adding up,” he said.

“It’s a cost game… it’s going to be difficult unless costs come down further. I think they have come down both on solar and wind dramatically but we’re not there yet on a fully merchant project.”

This has led to the developer turning its head to energy storage and while negotiations continue with existing solar farms, Vattenfall is also investigating using the additional capacity of onshore substations built for its offshore wind farms as a route to deployment for its own new energy storage projects.

The company has also entered plans for a new battery project to be located at the Ray wind farm in Northumberland into pre-qualification for the next capacity market auction.

“The co-use of infrastructure is for sure something we’re going to continue with, not only in the UK but across the entire portfolio,” Groebler added.

 In related news, developer Anesco was recently told that three of its large-scale solar farms in Britain would retain its existing financial support under the RO after the retrofit of energy storage systems at the 5MW sites, while the same company recently also unveiled Britain’s first subsidy-free solar farm – part of the value proposition for which is based around its co-location with battery energy storage, which would help the facility earn additional revenue streams.

Read the entire story

Vattenfall reaches out to solar farm owners with battery model in co-location push

Electricity and heat generator and retailer Vattenfall is developing a third party model for energy storage deployment which will see the Swedish firm deploy batteries alongside UK solar farms.

As the company prepares to deliver its first battery storage project in the UK at the Pen y Cymoedd wind farm in Wales early next year, Vattenfall recently revealed that it is already in talks with a number of solar farm owners.

However, the Swedish state-backed company is finding that a number of solar farm owners are holding on to the additional capacity on their grid connections, originally intended for additional solar build-out under the Renewables Obligation (RO).

With this subsidy now closed, some are thought to be overstating the value of the capacity – effectively now a stranded asset – in an attempt to maximise any potential offer or revenue from Vattenfall or companies like it seeking to develop energy storage.

The model taps into Vattenfall’s development approach of co-locating new projects with existing assets to leverage their grid connection. The company has already praised the potential of co-locating solar with wind after its Parc Cynog site showed good performance within its first 18 months.

However Gunnar Groebler, senior vice president of Vattenfall’s wind business division, explained to Solar Power Portal recently that changes to solar subsidies meant it was difficult to develop further solar projects.

“[The UK] is not the prime country for solar PV, even with the shared infrastructure the business case is not adding up,” he said.

“It’s a cost game… it’s going to be difficult unless costs come down further. I think they have come down both on solar and wind dramatically but we’re not there yet on a fully merchant project.”

This has led to the developer turning its head to energy storage and while negotiations continue with existing solar farms, Vattenfall is also investigating using the additional capacity of onshore substations built for its offshore wind farms as a route to deployment for its own new energy storage projects.

The company has also entered plans for a new battery project to be located at the Ray wind farm in Northumberland into pre-qualification for the next capacity market auction.

“The co-use of infrastructure is for sure something we’re going to continue with, not only in the UK but across the entire portfolio,” Groebler added.

Read the entire story

Capacity market de-rating in UK nudges Anesco towards flow batteries

UK energy storage and solar project developer Anesco is investigating how it could adopt flow batteries into future projects instead of lithium as a response to growing uncertainty around the future of storage de-rating in the capacity market, our sister site Clean Energy News revealed this morning.

The country’s government Department for Business, Energy and Industrial Strategy (BEIS) published a consultation in July outlining proposals to alter the current de-rating status of storage assets participating in the market to reflect discharge periods achievable by the batteries.

This would lower the rate from its current 96% to various levels depending of the assets‘ ‘energy limited storage’, which in the consultation varied between 30 minutes – assumed to be the usual capability of batteries currently in the capacity market – and four hours, to address the potential length of a stress event in the UK.

As a result the business case around shorter duration batteries, which are often currently used to bid into the market, will likely be impacted.

Speaking at the Solar & Storage Live show earlier this month, Anesco’s director of connections Daniel Cohen explained that the potential for this regulatory change has meant that the developer is now seeking out battery technologies with longer discharge duration potential. Anesco has been one of the most proactive of Britain’s solar developers in moving into energy storage, retrofitting 10 UK solar farms with 12MWh of batteries in April.

The company then received notice in September that it could retain accreditation for financial support under the government’s Renewables Obligation (RO) scheme for three 5MW solar farms after retrofitting energy storage. It made another significant UK industry first later that month when it unveiled Britain’s first subsidy-free solar farm, with energy storage a key component of the business model under which the facility will earn revenues.

“We’re not just looking at lithium batteries which we use at the moment; we’re looking at flow batteries because of [the] capacity market. It’s all about how we’re going to cope with de-rating so we’re looking at batteries that can last longer than lithium to cope with that mechanism and contract,” he said.

He later clarified to Clean Energy News that the company was visiting sites in the UK to further understand the technical ability of flow batteries and how Anesco could adapt the product.

“We are evaluating everything from two to 10 hours for different applications; this is very much in the development stage at present,” he added.

Uncertainty still reigns over de-rating rules

BEIS has yet to clarify when the de-rating changes could be applied, with concern among some storage developers that it could be brought in soon and affect the upcoming capacity market auctions in January and February 2018, despite pre-qualification windows having already closed.

Describing Anesco’s preparations for the upcoming auctions, Cohen said: “We spent 18-24 months building a portfolio to go into [the] capacity market and suddenly we get a nudge in the back about de-rating.

“It is worrying, hence we’re looking at flow batteries and other technologies. You have to stay flexible and nimble, and work with the decisions that have been made.”

However, he added that initial investigations into flow battery technology had found that the sheer size of the units needed for Anesco’s purposes make development difficult from a planning perspective.

Despite these issues, the company will continue to look at using flow batteries in future should they be needed to suit the capacity market, while also investigating technology being developed for longer duration lithium batteries.

Read the entire story

South Australia plans 100MW battery, dispatchable renewables and 250MW gas plant

In a major energy strategy upheaval, the South Australian government is providing significant funding to support energy storage projects, starting with a 100MW grid-connected battery that will be the largest in the country.

The aim is to modernise the state’s grids and help support the increasing penetration of renewable energy capacity. Blackouts in the region caused a vicious nation-wide debate about what had caused the power cuts last year, with the matter still unsettled in some quarters.

South Australia’s new plan was announced just a few days after Tesla chief Elon Musk confirmed via Twitter that his company could solve South Australia’s grid crisis with a 100MW battery, which he would provide free of cost if not commissioned within a 100 days of being asked.

Following this, John Grimes, CEO of the Australian Energy Storage Council, said that the state government has been “at pains” to stress that there will be an open, competitive tender process to build the 100MW project.

For the overall storage push, the Renewable Technology Fund will provide AU$75 million in grants and AU$75 million in loans for a range of eligible storage projects, including solar thermal, biomass, hydrogen energy and pumped hydro.

The government also cited the ability of storage to help dispatch renewable energy as and when it is needed. It will therefore tender the remaining 25% of its electricity load to technologies that support dispatchable renewable technologies, with new contracts to commence on 1 January 2018.

Gas still prioritised

While the storage funding was welcomed by the industry, solar advocates criticised the revamped focus on gas as the government simultaneously announced plans for a 250MW gas-fired electricity generator, claiming that unclear policy setting had led to stagnation in thermal generation investment. It also said the gas plant could be switched on in times of emergency, therefore adding security to the system. This project will also be tendered soon.

In the interim period, the State government will work with South Australia’s transmission and distribution companies to provide up to 200MW of temporary generation. No more detail was given on how this temporary power would be sourced.

Claire O’Rourke, national director of campaign group Solar Citizens, said: “We have the technology without gas for a reliable, stable and affordable energy supply system, what we lack, as always, is the political will.”       

Clean Energy Council chief executive Kane Thornton said: “The range of measures announced by Premier Jay Weatherill demonstrates that renewable energy and energy storage can contribute toward a more resilient and secure energy system.

“Energy storage is obviously going to be a huge part of Australia’s energy future, and the SA government’s funding for new large-scale battery technology will help accelerate its adoption and start to reduce its reliance on increasingly expensive gas power.”

He said the high-profile Twitter interaction between Elon Musk and Mike Cannon-Brooke, the founder of software firm Atlassian, about storage’s ability to solve the grid crisis had helped to capture attention across the world and had made known that the technology is progressing far faster than people had anticipated.

Energy Networks Australia CEO John Bradley, whose organisation has previously attacked the Renewable Energy Target (RET) and pushed for gas over renewables, welcomed the integrated approach to power system security, including both storage technologies and gas supply development, but said a wider national plan is still required.

He added: “This plan encourages new gas supplies which help to support system security, allows a competitive process for large-scale storage and enables gas-fired generation to support a stable and reliable grid.”

Rest of the plan

The state government will also introduce a new target requiring energy retailers to get more electricity from what it described as cleaner generators that produce their electricity using South Australia’s abundant natural resources, whether this be from gas, solar, wind, biomass or graphite, which is used for batteries.

The aim is also to create more self-sufficiency using local resources, while reducing dependence on coal from Victoria. Retailers will be compelled to source a percentage of energy from local generators rather than from Victorian coal through the state interconnector.

Applicants for new electricity-generation projects of more than 5MW capacity will also be required to demonstrate how they add to local energy-system security.

The state is also drafting new legislation “to ensure that South Australian energy users are not held hostage to unwarranted market behaviour”. It will give the Minister for Energy new powers to direct the national market in the case of an electricity supply shortfall.

In related news, energy storage has also received a big boost in Victoria after its state government announced another AU$20 million for large-scale energy storage, in addition to the AU$5 million already pledged.

Read the entire story

The Global Energy Storage Opportunity – free report available now

From PV-Tech’s publisher comes The Global Energy Storage Opportunity, a special online-only supplement magazine that looks at some of the exciting recent developments in all segments from microgrids and residential to grid-scale and commercial.  

Free to download, The Global Energy Storage Opportunity comes from the Solar Media editorial team and a stellar range of guest contributors, including Fraunhofer ISE, Navigant Research and S&C Electric.

It looks at 15 different products from big names like sonnen, Samsung SDI, Mercedez-Benz Energy and of course the ubiquitous Tesla, taken from the news pages of Energy-Storage.News, technologies including vehicle-to-grid, energy storage software and bromine flow batteries.

For the financially-minded, there’s a feature on why some big solar investors are so far holding back from plunging into energy storage, despite an obvious desire to do so and a fascinating in-depth Q&A with Nancy Pfund of DBL Partners, who probably isn’t yet tired of being described as one of Tesla’s earliest backers – and SolarCity too. Speaking of Tesla (again), there’s also a look at how the first Powerpack project in Europe was financed and developed.

In all, there’s a wealth of material on offer and in addition to informing we hope it will also serve to whet the appetite of those of you who will be joining us at the Energy Storage Summit, in London on 28 February and 1 March.   

To download the special report for free, click here.

Read the entire story

‘Urgent’ government action needed over power system flexibility

The UK government must act urgently to support greater flexibility in the country’s power system or risk escalating system costs, the UK Energy Research Centre (UKERC) has warned.

The UKERC has today updated a decade-old report assessing the added costs and impacts that variable electricity generators such as wind and solar have on the grid, concluding that those costs stand to be restricted by greater network flexibility.

The centre’s initial report in 2006 found that network costs for renewable penetration of around 20% would be minimal at an estimated £10/MWh in 2015 terms.

But these estimates have looked increasingly out of date as countries are forced to adopt more ambitious renewable energy targets. The UK has repeatedly set new records for renewable generation in recent quarters.

As the cost of renewables decreases and their market penetration rises, the costs associated with greater reliance on variable generators does too.

In its updated report the UKERC found that there is no longer an exact science to predicting these added costs, with much of these being hugely dependent on the flexibility of the network they are being added to.

“The findings reveal that the costs of intermittency lie within a wide potential range, and that it is no longer possible to estimate system costs simplistically, for example by adding up the cost estimates for individual categories of impact together,” said Phil Heptonstall, lead author of the report.

Notably the report found a significant difference in the estimates associated with costs of reserve generation, ranging from £5/MWh or less to as much as £45/MWh depending on the amount of renewable penetration and system requirements.

Arrangements such as the capacity market have been established to source reserve capacity and this year welcomed 15-year contracts for battery storage facilities for the first time, however the report’s co-author Rob Gross insisted a far more comprehensive change in tack was required.

“The conversation we have every winter, which is only about whether we have enough spare capacity to keep the lights from going out, is the wrong question. What we should be asking instead is not just how many power stations we need, but whether they’re the right kind of power stations to keep the system flexible enough,” Gross added.

His sentiments were echoed by Jonathann Marshall, energy analyst at the Energy and Climate Intelligence Unit, who said that the report’s most important finding is the need to keep costs down by moving to a flexible, smarter grid.

“If flexibility grows alongside the use of variable renewable sources of electricity, it not only lowers the cost of integrating them onto the system, it also cuts energy waste too.

“It’s worth noting too that studies of Europe generally show lower costs than those in the UK and Ireland, because connecting national grids together gives each one much more flexibility. The obvious conclusion for the UK is that we should push ahead with planned power links to Belgium, France, Norway and elsewhere, making the trade of electricity easier and keeping bills for homes and businesses as low as possible,” he added.

Leonie Greene, head of external affairs at the Solar Trade Association, said that the report was a timely addition that “amplifies” industry calls to open up UK markets for more flexible technologies such as storage and demand side response.

“There has naturally been interest in the cost implications of incorporating new technologies like solar into our grids. This report joins many others concluding the costs of doing so are modest, and will remain so if our system is more flexible going forwards.

“Furthermore, storage is rapidly reducing in price. Solar boasts an extraordinary synergy with storage and the two technologies combined allow output to match demand requirements exceptionally closely, transforming integration costs into a potential net benefit.”

Greene went on to suggest that the report added weight to renewed calls for solar to access wholesale markets.

“There is widespread consensus now across the global energy sector on the direction of travel. The quicker the UK moves to unlock solar and flexibility markets the bigger the potential economic wins. That applies not only at home – UK industries will have a tremendous advantage in what will be a colossal world market if we move early,” she added.

Read the entire story

Copyright 2017 Xevent. All rights reserved