Enel backs UK energy storage market with first acquisition

Italian energy giant acquires construction-ready battery storage project and confirms plan to invest €20m in building Newcastle facility

Enel has become the latest major company to move into the UK’s nascent energy storage market, hailing the country’s position as one of the “most advanced markets in the world for utility-scale battery storage systems”.

The Italian energy giant yesterday announced it has acquired the construction-ready Tynemouth project, which is expected to deliver 25MW of capacity and boasts a four-year contract with National Grid to provide grid balancing services.

Enel paid an undisclosed sum to developer Element Power for 100 percent of the shares in Tynemouth Energy Storage Limited.

The company confirmed it would invest approximately €20m in delivering the project through its Global Thermal Generation division. The facility is expected to come online in early 2018.

Enrico Viale, Enel’s head of its global thermal generation division, said the deal marked the company’s first step into an attractive new market.

“This transaction marks an important step forward in the growth of our Group in the promising and innovative sector of the stand-alone battery energy storage systems,” he said in a statement. “Due to the increasing role of renewable energy sources, the growing need of grid balancing services and the fast reduction of technology costs, the Battery Energy Storage System (BESS) market is expected to grow exponentially in all geographies in the next years. For this reason, Tynemouth represents for Enel an opportunity to gain experience and strategic knowledge in building such projects, which can then be applied to other markets.”

The project has a four-year Enhanced Frequency Response (EFR) contract in place with National Grid with a price of around £12/MWh. Enel said that after four years the project will participate in tenders for ancillary services and capacity market auctions.

It said that the UK is “one of the most advanced markets in the world for utility-scale battery storage systems and one of the first in having set a frequency regulation tender awarding only stand-alone battery storage projects”.

“The country offers multiple revenues streams opportunities, including both fixed payments and market remuneration schemes, and features good growth potential, with analysts estimating that 700 MW of different kind of storage projects will be installed in UK by 2020,” the company added.

The move will be seen as a significant vote of confidence in the nascent energy storage market, especially given concerns across the energy industry about the potential impact of Brexit.

The UK is developing a significant new pipeline of energy storage projects, with trade body the REA reporting last year that the country boasts over 3GW of storage capacity and a pipeline of over 450MW either in planning or development.

However, industry insiders have warned that in order to maximize the benefits associated with the industry Ministers need to more clearly define the legal footing for storage projects in the energy market and help the sector compete on a level playing field through the capacity market.

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