Charging ahead – the grid scale battery revolution

We at Gilson Gray find ourselves riding a new wave of energy transactions – grid scale battery and small scale gas projects. We have a pipeline of around a gigawatt of storage, capacity and balancing projects ahead of us. Their scales range from 1 MW “behind the meter” projects connected to specific end users to 40-50MW grid-connected projects. We’re proud to be doing our part to build a smarter grid.

These projects differ from “traditional” renewable energy projects. Certainly, there are common threads – a project requires land rights, a planning permission, an economical grid connection and a reliable technology delivered by a proven partner. We also see new entrants to the market capitalising on the opportunity and fast moving policy changes from both government and National Grid to cope with the perceived glut. We await the results of both the National Grid’s System Need and Product Strategy consultation (now closed and due to report in September) and the Government’s Capacity Market consultation, still open for responses and closing on 8 September 2017.

So where are the real differences? Here’s our view:

1. Projects are less location driven

A good solar or wind project needs a good microclimate. Positioning to within a few hundreds of metres meant the difference between a good project and a bad one. A battery project need only be in reasonable striking distance of a good grid connection point and preferably near an area of good energy use. For developers, this should mean more of a buyer’s market – if one landowner drives too hard a bargain, on to the next!

2. It ought to be easier to get planning consent

The land required for a project is only a few acres – nothing like that 20 acres or so required for a smallish 5MW solar farm – and their profile means they do not have the huge visual impact nor the substantial ground works required for wind farm projects. Might planners see these as just another industrial use and temporary planning permissions and reinstatement bonds (concepts imported from quarrying into windfarms thence to solar farms) might be less frequent?

3. Income is uncertain.

The beauty of a renewable energy project is that once built it has a guaranteed revenue stream for a lengthy period. That long term income does not exist for capacity projects. With no long term contracts on offer, will there be demand for the services your system offers over its life – especially during the pay back period? Batteries can be used in a number of different ways and may have to be used in a many of them over the life of the project to generate returns. This puts pressure on the selected technology – can it support the charge/discharge cycles demanded of it to keep revenue flowing? These uncertainties mean developers should be cautious about the rents and lease durations they agree with landowners. It also means that the finance houses who supported renewable projects are less enthusiastic about storage projects.

Where does the future lie?

From these three observations, the grid scale battery revolution is not a matter of dusting down the old precedents and processes for renewables projects. The value is not in simply pulling together the project rights, but in knowing how to piece together the project from project rights to operation: the winners in this market will be those who crack this formula. We are delighted to be supporting clients who have that vision and ability.

If you are looking at undertaking energy generation or energy storage projects anywhere in Britain,

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If you are looking at undertaking energy generation or energy storage projects anywhere in Britain, contact:

Andrew Fleetwood
Mobile: 07841 920101
Direct Dial: 0131 516 5365
Email: afleetwood@gilsongray.co.uk

Donna Kelly-Gilmour
Mobile: 07956 177 541
Direct Dial: 0141 530 2043
Email: dkellygilmour@gilsongray.co.uk

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The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.