Electricity storage battery operators are emerging as the rare winners of the UK energy crisis, as the need to prepare for the threat of blackouts this winter intensifies and market volatility increases.
Batteries help the electrical grid function, providing more energy when demand exceeds supply and storing excess energy. Gresham House and Pivot Power are among the companies benefiting from the increased volatility in the electricity market, selling power to the grid when prices are high and charging batteries when they are lower.
“There is a huge upside to being active now,” said James Bustin, investment manager at Gresham House, the UK’s largest battery storage operator. “As a result of the energy crisiswe have had volatility that has reached record levels, and batteries make money on the ups and downs.”
Gresham House and Pivot Power develop and manage battery storage sites. In a sign of the market boom, energy storage batteries are making nearly three times as much money as they did two years ago, according to Modo Energy, a research group that tracks battery storage performance.
Operators can benefit from higher electricity prices, which are set by the marginal cost of the last generating unit switched on to meet demand, which is typically a gas-fired plant. At the same time, they have largely escaped the rising commodity costs that plague the companies that actually make the batteries.
Mikey Clark, chief operating officer of Pivot Power, an energy storage developer acquired by EDF Renewables, said the batteries would help National Grid avoid winter blackouts given the speed of its response.
“Batteries contribute to stability and are an important part of the National Grid arsenal to keep us from getting into that position. [of a blackout],” he said.
National Grid, which will release its own forecast for the balance of demand and supply through the winter in early fall, declined to comment.
The growing importance of renewable energy in the UK in recent years has spurred the use of batteries, which can store the typically more erratic supply of wind and solar power and are designed to help smooth out any imbalance between supply and demand. demand.
Britain has about 1.7 gigawatts of such batteries in operation and the pipeline of future battery-based projects has increased by 65 per cent since the start of 2021, according to RenewableUK, a trade body.
Investors have already backed some of the companies that are likely to enjoy a windfall. Gresham House Energy Storage Fund, a London-listed fund that invests in battery storage, has generated a 93% total return since being listed in November 2018, compared to a 21% gain in the FTSE All-Index. Compartir.
Julian Jansen of Fluence, a battery storage services provider established by German engineering group Siemens and US utility AES, said the energy crisis has introduced market volatility much sooner than many expected.
“We’re getting an accelerated view of the future of what the system would have looked like in a few years when we would have had much higher levels of renewables, more volatility and out-of-service coal plants,” he said.
However, electricity storage batteries are not seen as a silver bullet for a grid that, in the long run, is likely to rely more heavily on renewables, whose supply is less predictable, as their storage capacity is limited.
But with the energy crisis poised to intensify as winter approaches, the companies behind the batteries should do well, said Tom Smout, senior associate for flexible power at Aurora, a consultancy.