The UK’s largest battery storage fund has warned that funding within the sector is in danger as a result of the best way the nation’s electrical energy system is run means the know-how isn’t used extensively sufficient.
Ben Visitor, managing director of the brand new power division at Gresham Home, stated Nationwide Grid is underusing battery storage that’s already integrated within the system, though it’s seen as an important a part of efforts to chop carbon emissions.
“The underutilisation of batteries by the ESO [National Grid’s electricity system operator] dangers lowering funding,” Visitor instructed the Monetary Instances, including that this was “throttling the event of battery options within the UK . . . to not point out slowing the UK’s authorized dedication to fulfill internet zero[carbon emissions] by 2025.”
Battery builders have additionally been affected by falling energy costs and elevated competitors from a surge in capability, hitting revenues and share costs.
Batteries are an more and more necessary a part of the electrical energy system, as a result of they assist clean out surges and lulls within the provide of electrical energy from wind and solar energy.
Their quantity has grown quickly lately in Britain as renewable energy manufacturing has elevated, with about 130 websites offering 4GW of complete capability, based on business group Regen.
Battery storage services earn income by shopping for and promoting energy within the wholesale market and may also be paid by Nationwide Grid’s ESO to retailer and discharge energy to clean out provide and demand.
Nevertheless, the ESO regularly finally ends up shopping for electrical energy from different sources, akin to gas-fired energy crops, even when batteries can be found. In some instances this has been for technical causes akin to older laptop methods which are ill-suited to working a number of small belongings akin to batteries.
Decrease volatility within the wholesale market has additionally affected battery builders’ revenues, whereas their earnings from offering different providers to ESO have additionally fallen.
Sachin Saggar, an analyst at Stifel, calculates that battery storage revenues had fallen to about £50,000 per megawatt by the tip of 2023, down from £150,000 per MW in 2022.
“If it’s sustained at this degree, they aren’t making sufficient cash [for it] to make sense to construct a brand new battery,” he stated.
Gresham Home, which has a battery storage portfolio of about 640MW, scrapped its fourth quarter dividend in February, and warned it could be “difficult to generate the money required to cowl the dividend this yr”.
Nationwide Grid has been making adjustments to attempt to use batteries extra. Nevertheless, Olly Frankland, an electrical energy storage specialist at Regen, stated that they had been “slightly bit slower than they need to have been”.
“There may be encouraging messaging and good course of journey, however I believe what we’re asking for is a wider function for battery storage.”
The business had been to an extent a “sufferer of its personal success” he stated, with about 1.6GW coming on-line final yr.
“There’s been a number of battery storage approaching to the system,” he stated however famous that demand had not saved tempo.
Nationwide Grid ESO declined to remark.
