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Highlights

50 MW addition to Europe's biggest project

Shell offtake agreement for 100 MW

Limejump to optimize, dispatch the asset

London — Penso Power has secured land rights, planning permission and a grid connection offer to extend its 100 MW Minety battery storage project in Wiltshire by 50 MW, the company said Thursday.

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The project, 12 miles northwest of Swindon, is Europe's largest battery storage development to date. Work started onsite in December 2019 with operation of the initial 100 MW asset expected this autumn.

"The additional 50 MW is to be built on adjacent land and will enter operation in 2021," Penso said.

The initial project has commercial agreements with Shell Energy Europe and the energy tech company Limejump, a subsidiary of Shell.

Shell has signed an offtake agreement on the original 100 MW project, while the batteries will be optimized and dispatched by Limejump.

Penso Power is in discussions with offtakers regarding similar arrangements for the 50 MW extension, it said.

"The offtake structure de-risks the returns for infrastructure investors while accessing deep and liquid markets to enable the deployment of battery storage at a very large scale. Scale benefits enable the provision of a range of balancing services on a cost-effective basis," the company said.

"Our focus on large projects means we achieve scale benefits on both procurement and deployment costs, while the offtake structure helps us provide superior risk-adjusted returns to our investors," said Penso CEO Richard Thwaites.

The initial 100 MW project is backed by investments from China Huaneng Group, one of the world's largest power generators, and CNIC, the Chinese sovereign wealth fund.

G2 Energy, the independent connection provider, is acting as principal designer and contractor.

Sungrow is acting as project integrator, providing battery storage systems using Samsung and CATL batteries.

Independent distribution network operator Eclipse Power Networks will connect the system to the SSE/National Grid Minety substation.

Coronavirus impact

The coronavirus would have "some impact, but less than you would imagine" on supply chains, Thwaites told S&P Global Platts.

Battery systems were coming in from South Korea and China, breakers and switchgear from Italy and the US, "but from the notifications we've received so far, there is nothing to indicate a substantial delay."

"At the moment it is a small number of weeks [in delay]," he said.

Penso won capacity market contracts for both 50 MW Minety sites in the initial 100 MW development in the recent T-4 auction for delivery in 2023-2024, Thwaites said.

"There was improved pricing in the auction, which cleared at GBP15.97/kW/year, but at 20% de-rating for a one hour duration battery the contracts are not as significant as they would have been a few years ago," he said.

The initial surge in battery storage projects in the UK had relied on a shallow frequency response market, Thwaites said.

Shell's Limejump would be playing the assets in much deeper intraday, day-ahead and balancing markets, he said.

"And what we get is a contract with Shell with a fixed monthly revenue, that essentially de-risks these merchant revenue streams for our investors," he said.

In essence, Penso's business model is built on scale. "We see much better returns on large sites than on smaller sites," Thwaites said. "Deployment, connection, civil build costs – on a per megawatt basis, there is a definite scale benefit."

Penso has another 100 MW site in development in the south of England which it hopes to be investment-ready in the next two or three months, he said. It had a third 100 MW site, which was earlier in development.