The head of Gresham House’s New Energy division has told Utility Week that investors are beginning to grasp the potential of battery storage projects.
Ben Guest said he expected 10GW of battery storage to come online over the next few years and that he could see the potential for Gresham House Energy Storage Fund to account for at least 1GW of this.
The fund announced this week that it had agreed to acquire it largest project to date, a 49MW scheme in on the Red Scar Business Park near Preston, taking its portfolio to 124MW. Two other 50MW projects – in Wickham Market in Suffolk and Thurcroft in South Yorkshire – will come online in the new year as well as a 5MW extension to the Littlebrook scheme in Kent.
With £41.6 million raised in a share placing earlier this month and the prospect of debt raising being considered, Guest said the fund was acquisitive for more.
He said the battery storage market had undergone a similar journey to renewable energy in terms of communicating the benefits to investors, and insisted the message was now being heard.
He said: “We are no longer at the beginning. There were some tough roadshows last year when I felt like I was banging my head against a brick wall.
“There is now a very clear message about the revenue stream for these projects as well as an understanding of the wider context. It’s going to be easier for people to enter the market because the groundwork has been laid. We should have the lowest cost of capital being the earliest to the market.”
He said it was undeniable that the blackout in August and the national conversation about the need for more storage had helped the case but that the investment credentials were also compelling.
“This is an area where there is relatively little regulatory interference, you’re not dealing with subsidies, its mostly ungeared and still asset-backed.
“The direction of travel is clear. We are going to get more downside volatility as more renewables come on and more upside volatility as the gas infrastructure is forced off the grid.
“There is no other technology that is going offer the solution at the scale that is needed.”
On the potential barriers to growth, Guest pointed to the anomaly that battery storage systems have to pay import charges, saying: “It seems strange that energy storage, if it behaves in the way it should do, is generally relieving the local system from stresses rather than adding to them.”