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Zenobe, VEST Energy and CF Partners sign ‘world first’ Virtual Battery Option deal

Zenobe's Hill Farm battery storage site. Image: Zenobe.

Zenobe's Hill Farm battery storage site. Image: Zenobe.

Zenobe, VEST Energy and CF Partners have signed the “world’s first ever” Virtual Battery Option (VBO).

The deal will allow suppliers and renewable generators to increase their green electricity output, whilst lowering supply costs for end-consumers, the companies said.

It is designed to hedge the risk of increased balancing and settlement costs for suppliers and generators, by providing optionality to bridge the gap between supply and demand. This allows battery asset owners to benefit from having a contracted source of revenue through VBO.

"Battery storage is key to ensuring we see a higher penetration of renewables assets operating efficiently on the grid,” said Aaron Lally, managing partner at VEST Energy. “By innovating market-based solutions like this VBO, we can help to de-risk battery storage as an investment and accelerate the move towards net zero.”

With the increase in renewable generation in the UK – with 2020 hailed by many as the greenest year ever as renewables overtook fossil fuels for the first time and wind and solar alone contributed 30% of the energy mix – the system is increasingly reliant on intermittent sources. The VBO is designed to manage the risk of low renewable generation coinciding with peak demand, which currently can push up prices dramatically.

Creating the right market mechanisms for low-carbon investment is “crucial to the energy transition” added Steven Meersman, founder and director at Zenobe.

“Renewable energy also needs to be reasonably priced to make it a viable option for customers, which is why we’re thrilled to deliver a product that provides a benefit to all parties involved.”

In January, we saw the impact of low generation and high demand, when freezing cold temperatures coincided with low winds. This pushed power prices up to record highs, with day ahead prices hitting £1,500/MWh and the imbalance price hitting £4,000/MWh.

“We hope this is the first of many green electricity derivatives to come, and we’re delighted to be working with industry-leaders like Zenobe and VEST to begin rolling out these Virtual Battery Options in the UK and Europe,” said Christian Coles, head of trading at CF.

The VBO follows cleantech trading house VEST Energy signing a long term battery trading and offtake arrangement with Infra Balance New Energy last week (24 March). This was the company’s first deal since it was launched back in September 2020, thanks to funding from risk management, supply and investment firm CF Partners.

In November 2020, Zenobe announced that it was to further expand its battery energy storage portfolio, targeting an additional 500MWh, following a £150 million investment from Infrascapital, the infrastructure equity investment arm of M&G.

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