Ylem Energy is putting gas engines and battery storage onto I&C sites as well as landfill gas operations. The company will fund, own and operate the assets and thinks the business case is strong, whatever regulators decide to do.
Ylem Energy builds standalone gas peaking plant, but then so do lots of others.
More interesting is that the firm is also putting engines and batteries onto landfill gas sites, using the gas to power the peaking plant and the battery to future-proof land rentals for site owners.
It also aims to deploy batteries and gas engines – either separately or together as a hybrid – behind the meter at industrial and commercial (I&C) companies.
Solving MCPD conundrum
For businesses affected by the Medium Combustion Plant Directive (MCPD) and Specified Generator legislation, that could prove attractive, says Simon Mitchell, head of business development – flexibility.
“We can do pure battery, pure gas or a hybrid,” says Mitchell. “We take away the diesel generator and put in a gas engine. It’s a fully MCPD-compliant asset with very low emissions that allows companies to enter or re-enter demand-side response markets straightaway.”
Solving the MCPD issue is “opening doors” for Ylem with industrial and commercial companies, claims Mitchell. But he says any large firm can benefit by cutting grid energy costs, hedging against volatility and boosting resilience. He adds that Ylem will deploy assets from 500kW upwards and will fund the solution.
“Generally, we need a 10-year contract to make it work [behind the meter]. But we do not have one set model,” Mitchell explains. “We create a simplified, asset-backed solution that we manage and operate so that the customer can carry on with their core business.”
Mitchell says Ylem is not tied to any aggregator or supplier and will work with any partner to “enable rather than control” options to provide balancing services. The company has no plans to change that approach by becoming an aggregator.
“It’s a congested marketplace. A lot of aggregators are trying to become suppliers and vice-versa,” says Mitchell, who spent seven years at Eon before joining Ylem.
“We are an engineering company that wants to do what we do best: owning assets and running them very efficiently. That means the customer can get on with what they do best and likewise the aggregator or supplier,” he says.
Ofgem’s charging reviews
Some market participants fear Ofgem’s charging reviews could damage the business case for storage and flexibility. But Ylem is comfortable enough with the situation to put its own money on the line.
“I don’t think it kills the business case,” says Mitchell. “Even with the Targeted Charging Review (TCR) there is still an opportunity to install flexible generation and those that do will be at an advantage,” he suggests.
“There is no stopping the shift to a decentralised world. Regardless of the TCR, there are still opportunities emerging via distribution networks, the balancing mechanism, Terre [the European flexibility market set to go live this year] and all the other things that people are doing to open new markets,” says Mitchell.
“Wholesale market volatility will continue, so having a flexible asset onsite allows companies to protect themselves and take advantage of opportunities as they arise.” Moreover, there is the “added benefit that the asset can be used for resilience as well – and it is much cleaner than diesel.
“We want to fund and own these assets; we are comfortable with where the market is going and are happy to fund on that basis.”
Emerging from Ener-G
Formerly Ener-G Natural Power, Ylem emerged after Centrica bought the Ener-G CHP business and brand name.
The company historically built landfill gas engines and has a 180MW landfill gas portfolio. Waste Directives mean that portfolio can no longer expand in the UK, so Ylem is diversifying into flexibility.
Managing director Ian Gadsby says revenue generated by the landfill gas business helps smooth the transition, and enables the company “to follow our ‘build, own and operate model’ and to share the benefits with the partner business”.
While aiming to prove batteries complement landfill gas sites, Gadsby says the company may also look at co-locating other technologies, such as solar PV.
“We are agnostic and will look at whatever works best given market conditions,” says Gadsby. “You need to be flexible in this sector – and fortunately, we can be.”
Storage and landfill gas
While parties such as Cambridgeshire County Council are planning to deploy solar and storage on landfill sites, Simon Mitchell thinks Ylem is the first company in the UK to co-locate storage with a landfill gas engine. The firm is installing a 1MW battery at Harewood Landfill near York.
As gas volumes from sites decline, Mitchell believes its an interesting area for landfill operators, given they have existing grid infrastructure and will be keen to futureproof revenues.
“Once all the gas goes, we could potentially do what Cambridgeshire is doing and co-locate PV with storage, so there are options for the future,” says Mitchell.
Ylem is funding and delivering the Harewood solution to prove the concept. Mitchell says it should be commissioned by Spring.
“It’s relatively straightforward to integrate: an existing connection and a containerised battery means we can plug in and get going. Then we can show its value and roll out as a font of the meter offering.”
Ylem has a UK exclusivity deal with Chinese battery storage manufacturer Dowell. Mitchell says the arrangement suits both parties – and its first unit is set to ship this month.
“Dowell has a big operation in China and is keen to expand into Europe. It can supply us with what we need, when we need it, and the delivery lead times aren’t too long.”
Mitchell adds that “the value, the technology and the warranties are good,” and Ylem is “putting them on our own sites with our own money”.
This article was first published in The Energyst’s Feb/March print issue. If you have some responsibility for energy within your organisation, click here for a free subscription.