What is energy storage?

National Grid is responsible for ensuring that the amount of power generated is matched to the amount demanded on the UK’s grid. This happens in real-time, so that the electricity supply remains at a safe frequency and household electrical appliances function properly. As such, there are peak usage times, which put considerable strain on the grid and this is set to get worse in the future. In response, National Grid is looking to commission energy storage facilities that smooth the flow and help match supply and demand. The benefits for National Grid are:

  • Lower overall energy costs, as the need for high peak energy prices is reduced
  • Investment in new generating capacity and network expansion to cope with peak demands is not then required
  • Less risk of negative prices during times of low demand, when the energy system is dominated by “must run” nuclear and renewables
  • Better balance of local supply and demand
  • Reduced dependence on imported fossil fuels
  • Allows more use of renewable energy generation

Who operates energy storage?

Rather like renewable technologies, the providers range from household names such as EDF, E.On and Vattenfall to smaller operators seeking to create a business. In late 2016, National Grid awarded £66m of contracts for eight new battery storage projects to a number of providers.

All very interesting, but what’s in it for me?

A number of well-funded independent operators in the sector are seeking sites for energy storage and depending on the site’s ability to match their criteria, then potentially an attractive long term contract.

What are the criteria?

Typically, they are looking for sites that meet the following requirements, however there may also be a few exceptions:

  • Size – between 0.25 and 1 acre, to house an industrial structure typically containing two 20MW storage facilities.
  • Within 1km of an 11kV/33kV substation
  • Existing planning consent for industrial or storage uses, or good potential to secure consent, meaning away from areas such as AONB, SSSI etc.
  • Close proximity to multiple PV plants is preferred
  • The exception can be if the land is situated near a business park or industrial unit that have reasonable power requirements

How do I find out if I qualify?

E-mail UKAF with the details of your potential site and we will put you in touch with well-funded operators, who should be quickly able to let you know if your land would be suitable.

So I qualify – what now?

The operator will look to take an option on the qualifying land and start the planning and development phase – typically with site dependent planning (including grid connection) this could take up to eight months.  All the costs are borne by the operator for the entire project.

We have planning and good grid connection – next?

Construction takes around three months, with another month for the interconnection, so the total project from start to finish is around 12 months.

All good, what do they want and what are they offering?

As they are spending considerable capital on the energy storage facilities they need comfort that they can secure a long term lease, which could be similar to:

  • A starting rent of up to £50k per annum
  • Annual RPI linked rent reviews for the duration of the term
  • 25 year term (tenant only break at 15 years)

Anything else?

They might also offer the opportunity to have a solar facility on adjacent land, and this would be more leased acres and more rental income. This is an add on and not a tied package and so optional.

Why don’t I just do this myself?

The units are expensive, costing multiple millions, with a level of specialist expertise and monitoring required over the life of the project. However, you might be able to partner with one of the operators in which case they would expect an element of capital at risk alongside theirs. If this is of interest and you might like a loan to fund this, give UKAF a call.

Conclusion

This initiative is being driven by the requirements of the Grid. All good things eventually come to an end and at some point the Grid will have sufficient capacity and the opportunity will disappear. If you think that you land could be qualify, call us sooner rather than later, and we will make the introduction.

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