Gresham House Energy Storage thinks new services being brought to market by National Grid could enable battery storage to go mainstream.
The fund now has 215MW of operational batteries on the books and is set to hit 350MW by the year-end. The firm said it could easily double its current portfolio in the next 18 months.
Posting half year results, the company said all of its available assets had capitalised on the £2,242MWh system price on 4 March, when prices soared on the back of low wind. The firm reiterated that the UK market needs 10GW of storage within five years to balance renewable generation.
Fund manager Ben Guest said additional revenue streams from the balancing mechanism and new dynamic containment services being launched next month by National Grid ESO present upside for its assets.
Since lockdown, the firm said it had initially skewed batteries to frequency response, as it offered higher value than merchant markets, where value was affected by the impact of Covid-19.
It is also hoping National Grid ESO moves forward with an availability payment scheme for storage, having also committed to publish the times when it under uses batteries (‘skip rates’) from this month.
The ESO has been trailing an availability payments proposal with Arenko, from whom Gresham recently acquired the 41MW Bloxwich battery. Another trial is set for September. If the ESO moves forward with the programme, it could see batteries paid to be available to deliver reserve services instead of CCGTs.
“We are therefore hopeful that National Grid will introduce this as a revenue generating service in coming months. In our view, this could transform the use of batteries, and put them on the path to mainstream adoption,” stated chairman, John Leggate.
Fund manager Ben Guest added that “if it turns into a permanent service, it is likely to lead to significantly higher revenues for the fleet”.
Meanwhile, Leggate stated that the 500MW pool for dynamic containment, a new frequency product launching in October that will double the demand for frequency response is “a further sign that battery storage is becoming increasingly integral to the UK power grid.”
Another 100MW from Arenko
Battery optimiser Arenko has sold development rights for two 50MW storage sites to Gresham House. The deal includes optimisation agreements.
The two firms know each other well. Gresham House recently acquired the 41MW Bloxwich battery from Arenko, which the firm developed and operated to refine its optimisation software platform.
The projects, Monet’s Garden and Lister Drive, will connect directly to the transmission system. They are expected to be commissioned in Q1 2022.