UK battery storage developer Eelpower signs joint venture deal with Swiss fund

London — UK battery storage developer Eelpower has entered a joint venture agreement with SUSI Partners of Switzerland to accelerate the rollout of Eelpower's UK energy storage portfolio, Eelpower and SUSI Partners said Jan. 25.

A first stage of the JV triggers the start of construction in February of a 50 MW battery storage project at Dunsinane, near Dundee, Scotland, acquired from Gigabox Developments.

No financial details were given on the deal.

"The partnership agreement aims to further contribute to meeting the demand for energy storage capacity in the UK, with substantial potential for additional projects in the near future," SUSI said in a statement.

"We look forward to working with [SUSI] and the best route-to-market counterparties as we construct and operate a portfolio of high-performance grid-connected storage assets on our way to building a 1GW electricity storage utility," said Eelpower chief executive Mark Simon.

SUSI has also bought 40 MW of Eelpower's existing storage assets, which along with new assets would continue to be managed by Eelpower, the developer said.

The acquisition includes two operational assets with a combined capacity of 30 MW and one ready-to-build 10 MW asset.

"Innovative offtake contracts with leading UK utilities (including Centrica in December 2020) underpin the visibility of revenues and enhance the assets' risk-return profile," SUSI said.

SUSI Partners is a regulated private fund manager headquartered in Switzerland. It has Eur1.5 billion ($1.82 billion) in investor funds and is focused on global energy transition assets.

Building investor confidence

"Leverton and Rock Farm remain the highest-earning projects in the UK since the inception of the market," Eelpower's Mark Simon told S&P Global Platts.

"We succeeded in getting some of the most lucrative ancillary service contracts for those sites, which allowed us to come through the last two years, refining our investment story in the face of uncertain returns," he said.

Battery storage investment was not for the faint-hearted.

"These assets are like Swiss army knives – they can be applied to a host of applications, so you need investors with the confidence to recognize that the value of storage lies in a range of possible profitable revenue streams. In light of that, it was great to observe a new level of creativity from National Grid in terms of new offerings during 2020," he said.

The new products, including Optional Downward Flexibility Management and various options in the Balancing Mechanism, had paid well, "but that does not take away from the underlying attraction of having a market where you can go to multiple different places, including local flexibility," Simon said.

This was a reference to the 50 MW Dunsinane project near Dundee, which would be Scotland's first battery project of scale in a region beset with network congestion issues.

The one-hour duration project was a case in point in terms of investor confidence and knowledge, Simon said.

"Frankly, we cannot show how much money this asset will make because a battery this size does not exist in Scotland yet. I believe, however, that as soon as we turn on Dunsinane we will be able to provide a very valuable asset to the local distribution network," he said.

While batteries do not need direct subsidy, Simon said the government must ensure incentives are in place for flexibility to be built in much larger quantities in order to support ambitious wind targets.

"I'm a great believer in some form of flexibility market, without being too prescriptive – that would get batteries out of the capacity market. Right now you'd probably need some flexible gas too, but not in 10 years' time," he said.

Managing the multiple relationships around asset development and operation was Eelpower's core skillset, Simon concluded.

"It's not easy stepping into that central role, bringing all the elements together – whether it be contestable procurement of technology and sites, or contestable route-to-market services. The way you get your partners to perform is a management system in itself," he said.