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Road to COP29: Our insights
The 28th Conference of the Parties on Climate Change (COP28) took place on November 30 - December 12 in Dubai.
Energy storage updater
Global | Publication | November 2022
Merchant market milestone for battery energy storage projects
Traditionally, battery energy storage system (BESS) and other similar projects have been either utility-owned, or underpinned by the existence of one or more long term offtake agreements. These agreements are a critical element for securing project financing, providing lenders with long-term financial assurances to support and validate the cash flow forecasts that form the basis of any debt financing. However, in May 2022, Norton Rose Fulbright represented North American Development Bank and Siemens Financial Services, Inc. on the closing of a US$78.2 million debt financing for 330 MWh of standalone BESS projects in California’s San Diego County. EnerSmart Storage is the developer, owner and operator of the projects. The deal marked a milestone in the sector as the first reported financing of fully-merchant BESS projects in the US, perhaps globally, meaning the projects are not supported by any long-term offtake agreements with utilities in place.
Merchant BESS projects operate in the wholesale market, generating all or most of their revenue from the merchant market. In layman terms, in order to maximize revenue from a merchant BESS project, an operator must buy electricity (and charge the BESS) during the lowest priced hours and sell during the highest priced hours each day on the relevant market. The revenue earned from the spread between sale and purchase price in the wholesale merchant market can then be stacked with other income streams such as ancillary services and capacity mechanisms.
Merchant market projects are complex, relying heavily on the use of innovative AI technology to inform the BESS to operate in the wholesale market at the optimum time(s) in order to minimise exposure to prices that can vary at intervals of anything from five minutes to an hourly basis. The complexity and uncertainty associated with modelling these revenues forms one of the key risks for lenders when considering financing a BESS project on a pure or majority merchant basis. How these risks are addressed contractually, who bears the legal risk of technology failure and whether there is any exclusion of liability under the legal framework will need to be carefully considered by the parties.
The advancement of use of AI technology plays an important role in making merchant market BESS projects more palatable for investors, and likewise investors are increasingly alive to the possibilities offered by well-designed, high quality, reliable AI programming. They will also rely heavily on market consultant reports, which are likely to be commissioned to forecast the wholesale market and the potential revenue return on any merchant BESS project in order to help mitigate the risks inherent in investing in projects without the guaranteed revenue streams of underlying offtake agreements. The use of AI, coupled with the expertise of a market-leading, well-respected consultancy, presents a new level of comfort for investors and is an exciting development for storage projects, meaning that perhaps such projects will be less challenging to finance in the future. Indeed, merchant markets are evolving rapidly on a global level, with many being intentionally designed to incorporate more BESS projects.
Although merchant BESS projects are not a new phenomenon, the debt financing of a standalone BESS project in a wholly merchant market marks a watershed moment. Whilst the EnerSmart projects are fully merchant, there has been an increasing trend emerging for BESS projects to be financed at least in part on a merchant basis. For example, in April of this year, Norton Rose Fulbright also represented Jupiter Power LLC on the closing of a US$177.8 million portfolio debt financing for six stand-alone BESS projects with 650 MWh capacity in Texas. Whilst not fully merchant, this project had only one firm offtake contract, with the majority of the projects’ revenue stream arising from the merchant market. As the energy storage market evolves and lenders become more comfortable with the risks of financing a merchant market BESS project and the AI software that ultimately underpins the optimization of these projects, we expect that there will be a significant increase in the number of fully merchant storage projects coming online.
Technology and corporate news
Global
Battery storage supply chain shocks ‘spark interest in non-lithium alternatives’
Acute global supply chain issues have had a detrimental impact on corporates across the energy storage industry, resulting in a widespread shift to alternative lithium ion technologies. Effects have been accentuated following the rapid growth of the US’ domestic market, forcing other countries to scramble to compete. The resulting fallout has been a chain of renegotiations with customers in an effort to pad price shocks through the introduction of raw material indexed pricing and other mitigation strategies.
Mercom: Energy storage corporate funding for first half of 2022 nearly equals 2021 total
According to Mercom Capital, energy storage companies raised almost as much corporate funding in the first half of 2022 as in the whole of 2021. The market research groups quarterly funding and M&A report for energy storage, smart grid and energy efficiency found that US$15.8 billion of corporate funding was raised in H1 2022 for energy storage. In 2021, that figure stood at US$9.6 billion at the half-year mark and at US$17 billion at the end of the year. Mercom Capital’s full report can be seen here.
Global battery energy storage market to approach US$10.84 billion by 2026
GlobalData Energy’s report, ‘Battery Energy Storage Market Size, Share and Trends Analysis by Technology, Installed Capacity, Generation, Drivers, Constraints, Key Players and Forecast, 2021-2026’ estimates that global battery energy storage will grow to US$10.84 billion by 2026. Driving factors for such growth include the fall in battery technology prices and the increasing need for grid stability and resilience of the integration of renewable power in the power market.
Goldman Sachs has invested US$250 million in long-duration energy storage provider Hydrostor
Hydrostor, Inc. has secured a US$250 million preferred equity financing commitment from the Private Equity and Sustainable Investing businesses within Goldman Sachs Asset Management. The investment will be used to support the development and construction of Hydrostor’s 1.1 GW / 8.6 GWh Advanced Compressed Air Energy Storage projects in Australia and California, and to expand Hydrostor’s project development pipeline globally.
Africa and the Middle East
KarmSolar secures US$2.4 million for Egypt solar-plus-storage project
KarmSolar has secured US$2.4 million in financing for a solar-plus-storage project in Egypt which will be Egypt’s first financed solar battery PPA project. Sungrow will provide the battery storage unit, and is similarly providing a 7.5 MW battery storage system to combine with 30 MW of solar PV during a project in Q4 2022. It is expected that the solar-plus-storage project will boost the deployment of battery solutions in Egypt but also across the region.
World Bank guarantees US$24m financing for Malawi solar-plus-storage
The Multilateral Investment Guarantee Agency, an arm of the World Bank, has issued guarantees for US$24 million to JCM Golomoti UK Limited, for equity and shareholder loan investments into Golomoti JCM Solar Corporation Limited for the development, construction and operation of a new 20 MW solar photovoltaic plant in Malawi. The project is the first grid-connected utility-scale co-located project in sub-Saharan Africa and the first utility-scale battery in Malawi.
Kibo to roll out energy storage in Southern Africa
Kibo Energy has joined forces with Hasta Trust to develop a portfolio of long-duration energy storage projects in South Africa, to be held by National Broadband Solutions (NBS), a wholly owned subsidiary of Hasta Trust. As part of the partnership, Kibo Energy will acquire a 51 percent interest in NBS and will appoint three directors to its board, while Hasta Trust will appoint two directors. This project will be a significant step in developing flexible and reliable energy storage systems and will service select business and industry sectors in South Africa.
First-of-its-kind BESS in sub-Saharan Africa commissioned in Malawi
Sub-Saharan Africa’s first grid-connected utility-scale co-located project entered commercial operations in May 2022. The 20 MW Golomoti Solar PV and Battery Energy Storage project in the Dedza district of Malawi pairs a 28.5 MWp solar farm with a 5 MW/10 MWh lithium-ion battery energy storage system (BESS).
Eskom loam signed for SA battery tech
A battery storage project, that has received a US$57.67 million funding from the African Development Bank and international development finance, will increase South Africa’s use of renewable energy, address climate changes and help to meet South Africa’s power demand. The project will provide battery storage at seven sites across South Africa.
Asia Pacific
Maoneng gets investment to fast track some of Australia’s biggest battery projects
Maoneng Group has entered into a joint venture with Gaw Capital Partners which will fast track six energy storage projects including the Mornington and Gould Creek battery energy storage systems. The government’s current policy is enabling the transition to renewable energy to accelerate and the large-scale battery storage market is increasing significantly.
BlackRock-acquired developer awarded 1.4 GWh ‘Super Battery’ contract in New South Wales
The Waratah “Super Battery” project, a 700 MW / 1,400 MWh battery energy storage system is being developed by Akaysha Energy, which was acquired by BlackRock Real Assets. BlackRock Assets have committed to investing AU$1 billion into Akaysha’s development of battery storage assets in Australia. This is being supported by the state government’s 2022-2023 budget and its commitment to fast-tracking transmission system buildout and upgrades to accommodate renewable energy growth.
Shell battery project in New South Wales would add 1GWh energy storage to growing market
Shell Energy Australia is partnering with AMPYR Australia on a 500 MW / 1,000 MWh BESS project in Wellington, which will be connected to an existing substation of high voltage transmission system operator and manager Transgrid at Wellington. It is also adjacent to the Central West Orana Renewable Energy Zone.
Ambri delivering liquid metal battery system to Reliance in pilot project
Reliance is the largest conglomerate in India and is planning to deploy 100 GW of solar generation capacity, as well as gigawatt-scale energy storage manufacturing capabilities at in Jamnagar, Gujarat. Liquid metal battery company Ambri is to deliver a pilot system to Reliance by mid-2023. Ambri’s battery technology provides long-duration energy storage, using anodes of liquid calcium alloy and a molten salt electrolyte with solid particles of antimony in the cathodes, which are arranged into stainless steel containers.
China zinc-iron flow battery company WeView raises US$57 million
Shanghai-based WeView has raised US$56.5 million in financing to commercialize the zinc-iron flow battery energy storage systems technology originally developed by ViZn Energy Systems. Investors include Gaorong Capital, Songhe Capital, Ultrasound Jueng, Dashu Evergreen, ZhenFund and other venture capital firms. Investment will also go towards the construction of gigafactories, with the aim of exceeding a gigawatt of production capacity by the end of 2023. WeView plans to invest around US$1.4bn in its new technology over the next five years, building a 5 GW factory, research & development base and electrolyte production centre.
First phase of 800 MWh world biggest flow battery commissioned in China
Commissioning has taken place for a 100 MW/400 MWh vanadium redox flow battery (VRFB) energy storage system in Dalian, China. The biggest project of its type in the world at the time, the VRFB project’s planning, design and construction has taken six years and a second phase of construction is expected to bring it up to 200 MW / 800 MWh. The system will contribute to lowering the peak load on the grid in Dalian City and could even play a role at provincial level, improving power supply and the capability to connect new renewable generation sources to the grid.
Singapore’s first energy storage system (ESS) has been deployed at Pasir Panjang Port Terminal. The 2 MW / 2 MWh ESS forms part of part of the US$8 million partnership between the Energy Market Authority and PSA Corporation Ltd (PSA) to transform PSA’s energy usage in port operations through the use of smart grid technologies and energy management systems. It is envisaged that when not in use by the port, the ESS will provide ancillary services to Singapore’s power grid and to generate revenue.
Financial Close on the largest approved grid forming battery - Edify Energy
Edify Energy announced in June 2022, that it had reached Financial Close on a 150 MW / 300 MWh battery energy storage system (BESS) in New South Wales, made up of:
- 60 MW / 120 MWh Riverina Energy Storage System 1;
- 65 MW / 130 MW Riverina Energy Storage System 2; and
- 25 MW / 50 MWh Darlington Point Energy Storage System.
The projects represent the largest utility scale grid forming plants in Australia’s National Electricity Market and are supported by offtake agreements with Shell Energy and Energy Australia.
Norton Rose Fulbright advised Federation Asset Management on its investment in the Riverina and Darlington Point BESS.
NRF Press Release: https://www.nortonrosefulbright.com/en-au/news/125530c8/federation-asset-management-invests-in-the-riverina-and-darlington-point-bess-in-nsw
TransGrid revives axed energy storage project
The Silver City Energy Storage Centre, an Advanced Compressed Air Energy Storage project in New South Wales, Australia which, once constructed, will be one of the world’s largest renewable mini-grids, capable of storing up to 200 MW of generation to meet peak demand. It will also be available to the National Electricity Market in Australia to provide dispatchable energy services when required. This is a significant advancement for New South Wales, an area historically constrained by network capacity limitations.
CB&I signs MOU with Korea Gas Corporation to support hydrogen economy in South Korea
McDermott's storage business, CB&I, and Korea Gas Corporation have signed a MOU to explore the development of large-scale liquid hydrogen storage to support Korea's Hydrogen Economy Roadmap.
Southern Grid plans US$28bn pumped hydro and power storage
Southern Grid Power Storage announced that it is contemplating investing in CNY200bn (US$28bn) in power storage projects by 2030.The company is aiming to develop a series of hydropower projects and power storage over the next three years and more by 2035. The company is China’s first listed power storage company, whose portfolio of pumped hydro assets comprises 25 percent of the country’s capacity.
Fluence targets growth potential in India, forming JV with independent power producer ReNew Power
Renewable energy company, ReNew Power, and battery technology developer, Fluence, are launching a joint venture (JV) to serve the energy storage market in India, which the Indian government has forecast to grow to 27 GW / 108 GWh by 2030. ReNew Power awarded the new JV an initial order for a 150 MWh battery energy storage system (BESS) for its 300 MW utility solar Peak Power Project in Karnataka. The new JV is aiming to offer BESS to varied customers including engineering, procurement, and construction and asset management companies.
NTPC awards India renewables project
NTPC Ltd is to build India’s first Green Hydrogen Microgrid Project, one of the world’s largest. Hydrogen will be produced using the 240 kW Solid Oxide Electrolyser, using power generated from a nearby floating solar project. The hydrogen will be stored at high pressure and will be electrified using a 50 kW Solid Oxide Fuel Cell.
Photon Energy is planning to build a 300 MW / 3.6 GWh solar storage project in Australia
In late 2021, Photon Energy N.V. secured 1,200 hectares of land in South Australia to develop one of the world’s largest solar energy storage project. Photon will develop a solar generation capacity of 300 MW using RayGen’s solar technology with a grid connection capacity of 150 MW. The target energy storage capacity is 3.6 GWh, equivalent to 24 hours of full load to the grid from storage. At the time, this represented the world’s largest energy storage capacity of any type, excluding pumped hydro. Photon has commenced the permitting and grid-connection processes and expects to reach ready-to-build stage by the end of 2023.
Total Eren has signed a MOU with the Kazakhstani government to develop, finance, construct and operate hybrid power plants. They will be located in central Kazakhstan deploying 1 GWh of wind energy combined with 500 MW - 1 GWh of energy storage. The project will consist of about 200 wind turbines coupled with a battery energy storage system, provided by Saft. It will produce around 2,800 GWh annually for 30 years, as well as reducing CO2 emissions by roughly 3.2 million tons per year. The project supports Kazakhstan’s target to reach carbon neutrality by 2060, with an intermediary step of increasing the portion of renewable energy to 15 percent by 2030.
Europe
Vattenfall commissions pilot facility in 100 GWh green hydrogen underground cavern in Sweden
Vattenfall, a Swedish state-owned company has commissioned a green hydrogen storage pilot facility within a 100 GWh capacity cavern located in Luleå, north Sweden. A two-year test period has started and will continue until 2024 and equates to 100 GWh of energy storage in green hydrogen form. As the world’s first project to test technology with repeated filling and emptying of hydrogen, the facility will provide valuable knowledge for the continuing work on creating fossil-free value chains across the iron and steel industry.
ESB and dCarbonX explore green hydrogen storage sites off Irish coast
ESB and dCarbonX have entered into a joint venture to develop green hydrogen storage opportunities, having already developed offshore green hydrogen subsurface storage off the Irish coat since Q2 2021. The joint venture will focus on the three opportunities based around proposed decarbonization clusters; the Poolpeg generating station, the Moneypoint power station and Procccccject Kestrel.
Green hydrogen: Netherlands salt cavern, BESS electrolyser in India
Construction and engineering firm, Bilfinger, is supporting Dutch natural gas infrastructure and transport group Gasunie with a large green H2 storage project in Zuidwending. The HyStock project will store hydrogen produced from renewables-powered electrolysers in four underground salt caverns with space for a total of 26 million kg.
Funding decision for hydrogen pilot project in Krummhoern natural gas storage facility received
Uniper, a German power company, has won US$2.43 million grant to construct and operate a hydrogen salt-cavern storage pilot project. The project aims to store up to 250,000m3 of green hydrogen by 2024 at a natural-gas storage facility in northern Germany. Some of the green hydrogen stored at the project will be produced on site by another operator Open Grid Europe in a separate project, KRUH2. KRUH2 focuses on the production of green hydrogen on site using an electrolyser, which stores hydrogen in small quantities to meet a plant’s demand for heat, mobility and electricity.
World's first large-scale 'sand battery' goes online in Finland
Polar Night Energy, a sand based energy storage company and Vatajankoski, a utility company, are partnering on the world’s first commercial sand-based thermal energy storage system in the west of Finland. The project will aim to produce renewable energy to fuel temperatures of 500-600C to provide heat for the Kankaanpää region. To prime the waste heat recovered from its data servers, Vatajankoski will use the heat from the system, before being fed into the district heating network. The system can discharge a maximum of 100 kW of heat power and has a total energy capacity of 8 MWh, equating to up to 80 hours’ storage duration. In recent times, there has been a rise in sand-based energy storage and around 25 GW and 35 GW of long-duration storage is expected to be installed globally by 2025 according to a report by the Long Duration Energy Storage Council.
German EVs open up second use battery market for energy storage
German battery energy storage system (BESS) project developer, Tricera Energy, has been able to build its business thanks to ‘second use’ (meaning unused) battery modules from the country’s automotive sector. Tricera Energy has a 120 MWh pipeline of projects for delivery by the end of 2023 but had to come up with an alternative to sourcing batteries the traditional way. The company repackages battery modules into BESS units starting from 100 kWh in size, which it sources from the country’s EV industry, one of the largest in the world.
Energy dome successfully launches first CO2 battery long-duration energy storage plant in the world
Energy Dome, utility-scale long-duration energy storage (LDES) provider, have launched its first CO2 Battery facility in Sardinia, Italy. The CO2 battery is an LDES system based on a thermodynamic process that stores energy by manipulating CO2 under different state conditions in a closed thermodynamic transformation. Energy Dome claims that the Sardinia demonstration project has used off-the-shelf equipment available from a globally established supply chain, demonstrating that the rapid global deployment of the CO2 Battery is possible.
Eni, Ansaldo Energia partner for Li-ion free batteries
Eni and Ansaldo Energia have signed an agreement to develop projects using innovative technological solutions for energy storage as an alternative to electrochemical batteries. Under the terms of the agreement, these technologies, which are being studied and have already undergone Eni's technology validation process, will be implemented at a number of industrial sites of Eni and its subsidiaries in Italy.
Altelium, TMK launch data-driven warranty for BESS
Insurtech Altelium has partnered with Tokio Marine Kiln to deliver the world's first data-driven battery energy storage system (BESS) warranty program. The intended outcome of this warranty program is to accelerate growth in the battery energy storage market. Altelium's program, supported by the Innovate UK, uses an advanced platform to providing insured warranties for BESS. The warranty program is expected improve 'bankability' of projects, helping to improve the availability and terms of finance due to a lower risk profile whilst decreasing technology and operational risk for customers.
Saft will supply a 6MW/7MWh storage project in the Norwegian Arctic region
Saft, a subsidiary of Total Energies, will provide a new 6 MW/7 MWh lithium-ion energy storage system to Longyearbyen in Svalbard, the world’s most northerly community. The project, due to be delivered by late 2022, will initially operate alongside the town’s coal-fired power station, which is due to close in 2023, to provide reserve capacity to overcome fluctuations and support black start capability.
Iberdrola’s 880 MW pumped hydro plant in Portugal to go online in mid-2022
Iberdola has developed a 1.2 GW Tâmega hydroelectric complex in northern Portugal that combines three hydropower plants with pumped hydro with a storage capacity of 40 GWh. The project, which has taken almost eight years to develop and cost US$1.5 billion, will be capable of providing 11 million people with power for 24 hours.
AMP Energy announced in early 2022 its intention to build two of Europe’s biggest battery storage facilities in central Scotland. The Scottish Green Battery Complex, comprised of two 400 MW battery facilities, each providing 800 MWhrs of energy storage capacity, having received planning consent from the Scottish government energy consents unit earlier in January 2022. The project will be optimized and dispatched by Amp X, Amp's proprietary AI-powered digital energy platform.
Nofar has entered into a joint venture (JV) with Interland to jointly own a dedicated platform for the origination, development, construction, financing, and operation of battery energy storage projects in the UK, that shall be held by the JV. Nofar will hold 75 percent of the JV, and Interland the remaining 25 percent. The first project of this partnership has been announced as the Cellarhead project, UK's largest planned battery energy storage project. Construction of this £214 million project is intended to start in the first half of 2022 and connect to the grid in the second quarter of 2024.
Sembcorp Energy is planning to build a 360 MW battery project in England
In late 2021, Sembcorp Energy UK announced plans to build Europe’s largest battery energy storage system, 360 MW battery at its site Wilton International on Teesside.
Pumped storage to be tested in mines
Voith Hydro and Mine Storage have announced a development partnership in the new market for underground pumped storage (offering so-called mine storages). This technology replicates traditional pumped storage (with upper and lower reservoirs) in underground mines.
North America
Metal-hydrogen energy storage startup Enervenue offers 20-year, 20,000 cycle warranty
Enervenue has developed a nickel-hydrogen battery, based on technology used for outer space applications. Each battery is comprised of ‘Vessels’ which each have 1.2 kWh capacity and are filled with multiple electrode stacks. These can provide between 2-12 hours of storage duration and differ from lithium batteries in the way that they are not subject to degradation or capacity fade over time. The battery systems are expected to last around 30 years, and require little maintenance, compared to lithium batteries which last for around 1/5th of the amount of cycles.
US$150 million financing closed by Qcells for largest standalone BESS in Texas’ ERCOT market
Qcells has closed a US$150 million financing deal for its first large-scale standalone battery energy storage system (BESS) project, the Cunningham Energy Storage Project, located in Texas. The project will be the largest standalone battery storage system operating in the Texas ERCOT grid service area and market, and will be financed through a revolving credit loan facility, and be primarily arranged by BNP Paribas and Crédit Agricole CIB.
Form Energy Unveils Chemistry of Multi-day Storage Battery Technology
Form Energy, an American start-up, has developed a “rechargeable iron-air battery capable of delivering electricity for 100 hours at system costs competitive with conventional power plants and at less than 1/10th the cost of lithium-ion”. The battery works through “reversible oxidation of iron” and Form Energy’s CEO has stated that a 300 MW “pilot” project for Minnesota-based Great River Energy will be commissioned in 2023.
Green hydrogen storage system project launching on NREL campus
Hydrogen storage company GKN Hydrogen, gas utility SoCalGas and the US Department of Energy’s National Renewable Energy Laboratory are collaborating on a new green hydrogen storage solution. The three will work together to deploy two of GKN’s ‘HY2MEGA’ green hydrogen storage subsystems on NREL’s Flatirons Campus in Colorado, US. The three-year project is set to launch by the end of 2022 and has US$1.7 million in funding received from US Department of Energy.
In early 2022, Brookfield Renewable, a Canadian developer, acquired Urban Grid, a US renewable energy developer, and its 20GW solar and energy storage project for US$650 million. As a result of this deal, Brookfield Renewable is set to become one of the leading renewable companies in the US, with 31 GW of capacity under development. Urban Grid has almost 2 GW of capacity under construction or ready to build, which will help Brookfield Renewable extend its US presence.
California utility PG&E proposes 1.6 GW / 6.4 GWh of new battery storage across nine projects
At the beginning of 2022, Pacific Gas & Electric (PG&E), announced plans to add nine new industrial-scale battery energy storage systems (BESS) with nearly 1.6 GW of total capacity to its network. If approved, this project will give PG&E BESS capacity of more than 3.3 GW by 2024. Once completed, the grid will be managed by California Independent System Operator and the project will provide energy and ancillary services. Each facility will have lithium-ion technology, a four-hour discharge duration and a 15-year resource adequacy agreement.
Novus Capital Corporation II and Energy Vault, an energy storage solutions company, entered into a definitive agreement to combine their businesses, with the combined company, Energy Vault Holdings, Inc., to trade on NYSE. The transaction values the combined company at an implied pro-forma enterprise value of US$1.1 billion.
Vistra completed construction on Phase II of its Moss Landing Energy Storage Facility. The 100 MW expansion brings the facility’s total capacity to 400 MW / 1,600 MWh, making it the largest of its kind in the world. The facility will help to bridge the gap between the excess of renewable power produced by California during the day and high demand overnight.
Latin America and the Caribbean
System integrator Quartux deploying largest battery energy storage system in Mexico
Quartux will shortly deploy the largest battery system in the Mexican energy storage market. It received a 3.2 MWh order from Revolve Renewable Power Corp for a battery storage unit, and will also be installing a 25 MWh system at another site. This will be the largest battery energy storage unit in Mexico and the largest commercial and industrial-located system in Latin America.
AES Andes looks to replace coal power plant in Chile with 560 MW molten salt-based energy storage
AES Andes plans to convert a 540 MW coal-fired power plant in north Chile into a molten salt-based energy storage facility. The system would see salts heated to between 310-560°C, before entering a water/salt heat exchanger to release the stored thermal energy, which in turn generates steam to power the turbogenerator.
Policy and regulatory news
Global
US, EU policies prompt BloombergNEF to upgrade global energy storage deployment forecasts
Policy developments in both the US and EU provide an uplift to the global energy storage deployment prospects, with China and the US set to be the biggest markets. The US Inflation Reduction Act has driven such a change, as an Investment Tax Credit for standalone energy storage will be introduced. Comparatively, the REPowerEU policy is the driver in the EU. This article highlights that battery storage is changing, and is becoming more connected to energy shifting whereby energy generated during the daytime from solar will be stored for long enough to contribute to providing peak time energy in an evening.
US and India launch joint energy storage taskforce
The US and India have reviewed progress across energy sector partnerships and want to strengthen the power grid to ensure reliable, affordable and resilient clean energy supply. The Energy Storage Task Force aims to utilize smart grids and energy storage, to support the integration of new renewable energy resources. The taskforce will help to reduce emissions and achieve the climate change mitigation goals of each nation.
According to the new Long Duration Energy Storage Council’s first annual report, between 25 GW and 35 GW of long-duration energy storage (LDES) is reportedly being installed globally, with total investment amounting to about 1 TWh and US$50 billion of investment. According to the report, LDES technologies would benefit from government support to kick-start the market as quickly as the net-zero transition demands. To meet these targets, 1.5-2.5 TWh / 85-140 TWh of long-duration storage would need to be installed by 2040. The report states that short-term funding for these technologies can be viewed as a long-term investment that will pay off in the form of a lower-cost power system. Furthermore, these installations should balance the reliant power grid when there is limited wind or sun. According to the report, the capacity of this scale would require an estimated investment of US$1.5-3 trillion.
BP, Breakthrough Energy Ventures in Long Duration Energy Storage Council, launching at COP26
Long-Duration Energy Storage (LDES) Council has been launched off the back of COP26. The global, CEO-led LDES Council consists of 24 technology companies, users and investors and its mission is stated to be ‘to replace the use of fossil fuels to meet peak demand with zero-carbon long duration energy storage’.
Africa and the Middle East
Tunisian utility planning 600MW pumped hydro energy storage plant
Tunisian utility STEG is planning to build a 400-600 MW pumped hydro energy storage plant, for a 2029 commissioning date. The French Development Agency (AFD), the European Investment Bank (EIB) and the German Development Bank (KfW) are all contributing to the cost of the studies
South Africa’s Eskom confirms contract awards for 1,440 MWh battery storage
South Africa’s utility and electricity grid operator, Eskom has announced) that it intends to have the first 343 MW of a 500 MW national energy storage rollout announced by South Africa’s president Cyril Ramaphosa online by December 2024.
Asia Pacific
Turkey’s energy storage legislation opening new opportunities for renewables and batteries
New legislation is expected to be adopted in Turkey to increase energy storage capacity. Energy laws are being adapted to accommodate energy storage applications which enable the addition of new renewable energy capacity. Additionally, standalone energy storage developers will be able to apply for grid connection capacity at transmission substation level. To add large-scale renewable energy, tenders are used for feed-in tariff licences. However, rule changes could enable this process to become quicker.
EU approves €20 million state aid to energy storage company in Croatia
The European Commission has approved €19.8 million in state aid in Croatia to be granted to IE-Energy to cover around 30 percent of capital expenditure for grid-scale battery energy storage systems. The systems should help to balance supply and demand and also to store energy when needed. One such system is the VE Brda Umovi Battery Storage System, which is a 127 MW wind farm with a 50 MW battery system and a grid connection of 163.5 MW. Croatia is also currently participating in a trial with Slovenia which will determine how a battery system in Solvenia could potentially reap benefits regarding grid flexibility in both countries.
'Super Battery' to benefit from NSW government infrastructure pledge
In June 2022, New South Wales’ Treasurer and Minister for Energy committed AU$1.2 billion (US$0.85 billion) of funding to fast track the buildout and upgrading of transmission networks to accommodate huge, multi-gigawatt Renewable Energy Zones. The first project to benefit will be the Waratah Super Battery, a 700 MW / 1,400 MWh battery energy storage system designed to act as a kind of ‘shock absorber’ and enable power lines to operate at high capacity.
Could China lead the global energy storage market by 2030?
China’s policy proposals to accelerate energy storage deployments and boost the country’s storage capacity to 30 GW by 2025, are seeing bundling requirements or renewable investments with energy storage systems to 5-20 percent of renewable capacity. This pairing policy is expected to see a shift in storage investment towards more state owned developers, given their increased access to low interest rates for project financing. China’s proposed policy also discusses reforms to improve storage project revenue channels.
Europe
UK government to consider cap and floor for pumped storage
The UK government has proposed the introduction of a cap and floor support mechanism for the long-duration electricity storage market and ensure the deployment of sufficient large-scale, to balance the overall system by developing appropriate policy to enable investment by 2024.
UK government cements energy storage's role as generation asset
In July 2022, the UK government entered the new Energy Security Bill into parliament, which amongst other things, defines the role of energy storage as a generation asset. The Energy Security Bill is designed to boost the UK’s energy security in light of recent market volatility. It includes 26 measures across three main areas: reforms to protect customers, leveraging private investment to develop domestic renewable generation, and ensuring the safety and resilience of the UK’s energy system. The Bill also aims to remove obstacles to battery energy storage and pumped hydro storage, by clarifying it as a distinct subset of electricity generation.
Germany finally gives energy storage its own legal definition
The German parliament announced that energy storage now has its own legal definition, which was adopted from Directive (EU) 2019/944 of June 5, 2019. The law on the Federal Requirements Plan, Energy Industry Act and Grid Expansion Acceleration Act have been adjusted to define energy storage as an asset where, “the final use of electrical energy is postponed to a later point in time than when it was generated…”. Prior to this amendment, an energy storage system was defined either as a generation or as a consumer asset based on whether it was discharging or charging. This new definition now clears any ambiguity and allows regulations to be created exclusively for energy storage.
Spanish govt approves public-private funding tool for green energy transition
Over the next two years, the Spanish government plans to invest €6.9 billion (US$7.7 billion) into renewables, green hydrogen and energy storage as part of its COVID-19 recovery plan (Strategic Project for the Recovery and Economic Transformation of Renewable Energies, Renewable Hydrogen and Storage). The government is hoping to attract a further €9.46 billion of private investments. According to the Spanish Cabinet, the quality of renewable resources will provide Spain with a competitive advantage in the development of renewable hydrogen, allowing it to become an international technology hub. €1.55 billion of state funding will be allocated to green hydrogen and a further €3.36 billion will be invested in job training, distributed power generation, and the use of renewable gases in transport. With Spain’s powerful industrial value chain in photovoltaic technology, it will probably continue to promote social innovation and consolidate renewable energy value chains.
North America
Inflation Reduction Act has already transformed energy storage industry thinking
The US’ Inflation Reduction Act facilities the introduction of the investment tax credit (ITC) subsidy for standalone energy storage. This means that, for the first time, energy storage doesn’t have to be paired directly onsite with solar PV generation. This means that battery storage projects can now be sited where they make the most sense. It is expected that the IRA supportive policies will likely double demand for energy storage in the US by 2030.
Department of Energy confirms US$504 million loan to 300 GWh Utah hydrogen energy storage hub
The US Department of Energy plans to lend US$504.4 million to developers working on one of the world’s largest green hydrogen projects in Utah. This project will involve Mitsubishi Power Americas and Magnum Development and aims to employ 220 MW of wind and solar-powered electrolysers, and store the hydrogen in two natural salt caverns, each capable of holding 150 GW-hours of energy with the facility. It will also supply hydrogen to the Intermountain Power Agency's IPP Renewed Project, a power plant in southwest Utah capable of burning 30 percent hydrogen from 2025. As of early September 2022, the storage hub has secured all major contracts including engineer, procurement and construction contractors, major equipment suppliers, and operations and maintenance providers. Haddington Ventures, this projects equity sponsor, is aiming to raise US$650 million for the project.
The California Public Utilities Commission (CPUC) has approved nine battery energy storage system (BESS) facilities proposed by PG&E, in response to an order to procure 11.5 GW of clean energy capacity under the CPUC’s internal resource planning process. The nine BESS projects will amount to a total of 1.6 GW / 6.4 GW and are expected to be operational by June 2024. The CPUC will also partially contribute toward Summer Reliability Targets, a requirement that was enacted in December 2021, following extreme weather events that placed a strain on the grid.
How would a Clean Electricity Standard decarbonize the grid?
In this podcast, Jesse Jenkins, an energy-modelling expert at Princeton, discusses the mechanics of the proposed US national clean electricity standard, as well as details of its inclusion in Biden’s proposed US$3.5 trillion infrastructure plan.
The US Department of Energy announced in July 2021 its intention to reducing the cost of grid-scale, long duration energy storage by 90 percent within the decade. This target will support increased clean energy generation capacity and support the US goal of 100 percent clean energy by 2035.
Latin America and the Caribbean
Chile passes major energy storage bill
The Senate of Chile unanimously passed legislation on 20 October 2022 which will incentivize the deployment of energy storage technology. This bill seeks to utilize energy storage to overcome grid congestion, as 748 GWh of renewable energy has been curtailed already in 2022 and the country currently only has 64 MW of utility-scale battery storage operational. Energy storage systems will be able to receive income from dispatching their energy in the country’s National Electric System market. The conversion of a coal plant into 560 MW of molten salt-based energy storage has additionally been proposed, and Canadian Solar has won a tender to deploy solar-plus-storage with 1 GWh of battery storage.
Industry events
US Energy Storage Market Outlook 2023, Norton Rose Fulbright and Voltility – Agenda here. For more information, please contact Pierelle Eppie. 16 November 2022
Electricity Storage Network Annual Conference 2023 - 24 January 2023
Intersolar North America and Energy Storage North America 2023 - 14 February - 16 February
Energy Storage Summit 2023 -22 February - 23 February 2023
Large Scale Solar Europe 2023 – 21 March - 22 March 2023
8th Energy Storage Summit: Shaping European Energy Storage Deployment, Investment and Policy – 22 March – 23 March 2023
Recent publications
Publication
Country risk in unprecedented times: A precedent for cross-border loan documentation?
While country risk cannot be avoided in cross-border transactions entirely, it can be effectively mitigated through careful transaction structuring and tailored contractual protections.
Publication
The GCR Guide to Life Sciences – Merger control: Procedural issues
Miranda Cole, Julien Haverals and Emma Clarke of our Brussels/ London offices are the authors of a chapter on procedural issues in merger control that has been published in the third edition of the Global Competition Review’s The Guide to Life Sciences. This covers a number of significant procedural developments that have affected merger review of life sciences transactions.
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