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New joint venture offers no money down battery offer to businesses

Stem

Image: Stem.

A new joint venture has been launched today by renewables investor Thrive Renewables and project developer Aura Power, offering UK businesses a no money down model for commercial and industrial energy storage.

The partnership will target businesses spending £500,000 a year or more on electricity with an offer to install batteries on site for free, ranging from 500kW up to around 5MW.

Once installed, savings accrued from premium-cost peak energy charges will be combined with revenues from local and national grid services into a single pot to be shared between the joint venture - split equally between the companies - and the host business.

The partnership says it is already in advanced talks with several clients including a large dairy, a food processor and a tile manufacturer, and is nearing agreement with one of two aggregators to take on the grid services responsibilities of the portfolio.

Speaking to Current ahead of today’s launch, Aura Power director Simon Coulson explained: “Our approach is to have a single revenue pot where we aim to maximise revenues, be it from savings or services.

“The battery business should be focusing on maximising that revenue, whether it's from savings or it's from in front of the meter services, and because everyone is sharing from the same pot everyone's aligned.”

Matthew Clayton, managing director of Thrive Renewables, added: “We're showing commitment by making the capital expenditure but further than that we're demonstrating that we're all in this together by using that model.”

The pair estimate that customers with a mid-range 2MW battery could save more than £1 million over a 15-year standard contract.

Coulson continued: “We are offering businesses a straight forward solution. We take the investment risk, manage the development, and operate the battery to maximise mutual returns. We agree a contract with the customer, they can get on with their core business and save tens of thousands from year one.”

Building strength through diversification of revenues

The companies have moved into behind the meter (BtM) storage in an effort to diversify their revenues in the face of continuing financial uncertainty across the market, as Coulson explained.

“We see the BtM battery business model as being a way to diversify your revenue streams to get a more stable, portfolio-based revenue stack. So while you're not going to build a 50MW BtM battery, you can certainly assemble a portfolio of 50MW that allows you to access additional revenues, well above what you could in front of the meter,” he said.

“While that comes with its own challenges in that you’re engaging with additional counterparties compared to the stand-alone model, the strength of a portfolio of BtM battery sites is significant. From our point of view, what's exciting is being able to access that savings market and do it in a way that doesn't put us in conflict with the customer.”

With a background in onshore renewables, owning and operating ~105MW of wind, solar and hydroelectric assets, Clayton explained that Thrive Renewables is seeking new opportunities as subsidies diminish. However, he added that energy storage also offers a key facilitating route to the higher levels of flexibility that will be needed in the system to accommodate increased penetration of renewables.

The joint venture has opted for BtM storage to hedge against where the value of this flexibility could lie in the shadow of rapid market changes brought about by the ongoing regulatory and market services work being conducted by National Grid and Ofgem.

Aura Power has previously developed large scale energy storage projects such as the 15MW Lockleaze project in Bristol and the recently completed 10MW Enhanced Frequency Response (EFR) backed Nevendon battery for Foresight, and will now turn to BtM deployment.

“There is volatility in battery storage revenue streams and the way to ensure you have a relatively stable income is to diversify; each of the individual streams is open to change and new ones will open up where they didn't exist before. The important thing for the customer and for us is that we are nimble and flexible and can take advantage of new revenue opportunities as they arise,” Coulson explained.

Clayton added: “The attractive element of the business model is that it can be dynamic with those revenue streams and depending on which way policy goes and the frequency incentives go, we aim to be able to work with our hosts to make the best of the situation.”

The duo expect to make a ‘modest’ start over the next 18 months with expectations of deploying around 40MW of new BtM energy storage at up to 30 sites, depending on the scale of each project which are expected to range from £1 million to £3 million investments.

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