Sembcorp’s recently completed 200MW BESS on Singapore’s Jurong Island. Image: Sembcorp.

Singapore’s Sembcorp has pulled the plug on a solar project in Indonesia featuring battery storage, just a few months after completing work on Southeast Asia’s biggest battery storage project.

Sembcorp made an announcement and a filing with the Singapore Stock Exchange (SGX) on Monday (27 March) to the effect that its joint development agreement (JDA) for the large-scale integrated solar PV and battery storage project in the Batam, Bintan and Karimum region of Indonesia has been terminated.

The engineering company had signed the agreement in October 2021 with utility company PT PN Batam and renewable energy developer PT Trisurya Mitra Bersama (Suryagen). The project would have included 1GW of solar PV generation capacity with a battery energy storage system (BESS) of as-yet unspecified output and capacity.

According to Sembcorp the parties mutually agreed to the JDA’s termination, which it claimed will have no material impact on Sembcorp’s earnings per share or net tangible assets per share for the financial year ending 31 December 2023.

No explanation was given for the Indonesia project termination in the company’s brief statement and Sembcorp representatives did not elaborate further when invited to comment by Energy-Storage.news.

Sembcorp did say however that it remained committed to supporting the ASEAN region’s energy transition with reliable energy supply solutions, and “continues to develop, and is engaged in a number of initiatives, to import energy from the region”.

The project would have been among various initiatives to generate power from renewables outside the small city-state nation of Singapore and bring it in. Singapore lacks the land and grid infrastructure to meet its demand with domestically generated renewable energy.

As regular readers of Energy-Storage.news will know, shortly before the end of last year Sembcorp brought online a 200MW/285MWh BESS project on Singapore’s Jurong Island, holding an official inauguration event a couple of months ago.

Thought to be just the third BESS of over a megawatt installed in the country so far, the system is the largest BESS in Southeast Asia to date and enabled Singapore’s Energy Market Authority – which awarded Sembcorp the project last May – to reach and exceed the national 200MWh energy storage deployment target for 2025 early. In order to meet strict deadlines, the Jurong Island BESS was brought online in just six months, versus the typical 15-18 month lead time.

In an article published late last year in our quarterly journal PV Tech Power (Vol.33), the Southeast Asia region is seeing a great rise in investment and interest in energy storage, despite various challenges remaining such as a lack of regulatory frameworks.

Energy-Storage.news’ publisher Solar Media will host the 1st Energy Storage Summit Asia, 11-12 July 2023 in Singapore. The event will help give clarity on this nascent, yet quickly growing market, bringing together a community of credible independent generators, policymakers, banks, funds, off-takers and technology providers. For more information, go to the website.

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At 300MW/450MWh, the Victorian Big Battery is Australia’s largest BESS project to date. Image: Victoria State government.

Australia’s national science agency CSIRO has said the country needs to invest into multiple different energy storage technologies at massive scale to achieve its transition to renewable energy.

A new roadmap published today by government agency Commonwealth Scientific and Industrial Research Organisation (CSIRO) highlighted that a 10-14x increase in energy storage capacity will be needed in the National Electricity Market (NEM) in the years 2025 and 2030. Australia is targeting net zero emissions by 2050.

The 200-page Renewable Energy Storage Roadmap discusses how storage can facilitate the uptake of renewable energy, enhance stability and reliability of the grid, and support industries. To do so at the required scale will mean reliance on diverse technologies beyond the accepted duo of lithium-ion battery storage and pumped hydro, it said.

“Over the long-term storage will accelerate the integration of renewables, enhancing grid stability and reliability, and supporting decarbonisation of industries. There is no silver bullet for reaching net zero so we need multiple shots on goal, like from renewables, batteries, hydrogen, thermal storage, pumped hydro, sustainable aviation fuels and a host of new science-driven technologies,” CSIRO chief executive Larry Marshall said today.

Colleague Dietmar Tourbier noted that while battery energy storage system (BESS) technology may be the “best option” for local and short-duration electricity storage, thermal or heat storage such as steam may be a better fit for heat intensive industries, for example.

While both government and industry have realised that storage of energy has a major role to play, there are still “significant knowledge gaps”, while the acceleration of tech commercialisation and scale-up across a “diverse portfolio of energy storage technologies” will require co-investment, Tourbier, CSIRO’s director of energy said.

By 2050, the NEM and Western Australia energy markets will be dominated by utility and distributed solar PV and wind as well as dispatchable energy storage resources, with black and brown coal and event peaking gas plants almost or entirely off the systems.

CSIRO’s roadmap builds on the modelling and assumptions of the Australian Energy Market Operator (AEMO), which has identified a need for 44-96GW/550-950GWh of dispatchable storage in the NEM and 12-17GW/74-96GWh in Western Australia, the other major connected energy market, by the half-Century mark.

In every scenario modelled, there is no getting away from the requirements for energy storage to greatly increase. However one of the major challenges ahead is the lack of bankable mature energy storage technologies beyond lithium-ion and pumped hydro energy storage (PHES) on the market today.

“Reaching net zero is a wicked challenge, we need a robust pipeline of projects that use diverse technologies supported by industry, government, research and community stakeholders to ensure that no industry and no Australian is left behind,” CSIRO CEO Larry Marshall said.

A February report by the AEMO came to a similar conclusion, identifying the “urgent need” for investment in long-duration energy storage (LDES) technologies as well as into new generation resources and transmission infrastructure

The CSIRO ‘Renewable energy storage roadmap’ can be downloaded here.

AU$16.9 billion opportunity for battery value chain by 2030

Marshall identified that a combination of a long-term view and collaboration across industry and with government will be needed to get there. The roadmap was developed with input from government and more than 50 industry organisations.

It also highlights that the role the energy storage industry can play in reaching net zero is not just a social, technical and economic challenge, but also represents opportunities that can be captured.

That resonates with the thrust of another recently published report, ‘Charging ahead: Australia’s battery powered future,’ which was commissioned by the Future Battery Industries Cooperative Research Centre (FBICRC).

Produced by consultancy Accenture, the report found that there is an opportunity for the Australian battery industry to create AU$16.9 billion (US$11.32 billion) economic value by 2030. This will however require decisive action from the likes of government, industry and academic institutions through the country’s National Battery Strategy, it said.

Another Accenture-prepared report, for the government of Queensland, found that that Australian state’s best opportunities for creating a vertically integrated battery value chain lie in the area of vanadium redox flow battery (VRFB) technologies.

With Queensland rich in the metal-based electrolyte’s raw materials, the government has already pushed ahead with supporting companies in that sector and committed to the construction of a VRFB electrolyte production plant – in addition to supporting downstream lithium-ion BESS and PHES developments.

The full FBICRC ‘Charging ahead’ report was published earlier this month and can be found here.

Energy-Storage.news’ publisher Solar Media will host the 1st Energy Storage Summit Asia, 11-12 July 2023 in Singapore. The event will help give clarity on this nascent, yet quickly growing market, bringing together a community of credible independent generators, policymakers, banks, funds, off-takers and technology providers. For more information, go to the website.

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Laura Zapata

Silicon Ranch, an independent power producer and a community-focused renewable energy company, the Paris Board of Public Utilities (Paris BPU) and the Tennessee Valley Authority (TVA) have completed a 6.75 MW AC solar facility in Puryear, Tenn. This solar facility will generate enough renewable, cost-effective energy to power approximately 1,000 homes annually.

The Paris Solar Farm – Puryear was developed as part of TVA’s Generation Flexibility Program. The program is designed to encourage local power companies to develop distributed generation facilities and provide local solutions to the renewable needs of customers.

“This new solar farm is a testament to how carbon solutions can be used to bring big brands and local power companies together to benefit a community for the long-term at scale,” says Laura Zapata, CEO and co-founder of Clearloop. “Rivian and Paris BPU are setting a clear example for other communities on how mutual partnership can benefit parts of the country that can benefit the most by aligning decarbonization and economic opportunity.” 

Silicon Ranch will generate hundreds of thousands of dollars in new tax revenue for the county over the life of the project which will help support infrastructure and other community-identified priorities, while requiring little to no county services in return.

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Panellists on the ‘What is Currently the Biggest Barrier to Deploying Energy Storage in the US?’ opening panel discussion at the Energy Storage Summit USA today. Image: Solar Media.

Adapting transmission infrastructure and accurately valuing energy storage are the major challenges to deployments in the US today, said panellists on the Keynote discussion at Energy Storage Summit USA today.

The two-day event opened with a positive Keynote talk about the bright future of energy storage, from Andy Berke, administrator of the Rural Utilities Service (RUS) at the US Department of Agriculture (USDA), discussing the benefits and drivers of storage today.

The following opening panel session ‘What is Currently the Biggest Barrier to Deploying Energy Storage in the US?’ then brought the tough realities of the sector’s expansion back to the fore.

Energy transmission infrastructure is the biggest barrier to storage deployments according to Ken Webre, COO of solar and storage EPC solutions firm SunGrid. “It’s growing 2% and storage is growing 100 times that,” he said.

That was concurred by Aubrey Johnson, VP for System Planning & Competitive Transmission, at grid operator MISO, and Erika Bierschbach, VP of Energy Market Operations & Resource Planning at utility Austin Energy.

MISO (Midcontinent Independent System Operator) is responsible for overseeing the electrical grid and associated wholesale markets across 15 US states and the Canadian province of Manitoba.

Batteries can help mitigate some of the issues around bringing new resources but they do add load too, which is a challenge, Johnson added. MISO has around 600MW of storage across its system today, and 32GW standalone and 15/16GW of co-located storage in its interconnection queue, he said.

Kevin Lynn, Director of Grid Modernization, Energy Efficiency and Renewable Energy Office at the US Department of Energy, said that making sure all stakeholders recognised the full suite of services that storage can provide is a challenge.

Later in the discussion Bierschbach then said it was hard to justify the cost of battery storage given the value it is providing right now. This is particularly true for smaller projects distributed across its network, she added, and particularly when thinking about long-term value, considering how quickly the sector is evolving.

Regarding value, it will be more and more determined by location-specific benefits, and the timeshifting, capacity and transmission infrastructure investment deferral storage provides, said Will McNamara, Senior Policy Analyst for Energy Storage at Sandia National Laboratories.

The concept of standardisation came up a few times. However, standardisation does not mean one solution fits all, but is more about consistency about how we value storage and around policy, said McNamara. Using the example of mandated energy storage procurement targets, he pointed out that not all states needed to use this route.

The panel was moderated by Helen Kou, Senior Associate, Energy Storage, BloombergNEF.

Energy-Storage.news’ publisher Solar Media is hosting the 5th Energy Storage Summit USA, 28-29 March 2023 in Austin, Texas. Featuring a packed programme of panels, presentations and fireside chats from industry leaders focusing on accelerating the market for energy storage across the country. For more information, go to the website.

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EnerVenue’s energy storage system solution. Image: EnerVenue.

Metal-hydrogen battery company EnerVenue will open a manufacturing factory with a 1GWh annual capacity in Kentucky expected to begin production by the end of the year.

The company expects to invest upwards of US$1 billion to expand to more than 20GWh of annual manufacturing capacity across its domestic manufacturing sites in subsequent phases.

Located in Shelby County, the one-million-square-foot facility will be manufacturing the company’s ‘Energy Storage Vessels’ – for which it recently launched its second generation – with all aspects of design and process validation, manufacturing and testing performed onsite.

The company continues to increase its customer orders and currently has 7GWh of commitments, up from the 5GWh the company announced in July 2022. Among its customers are Pine Gate Renewables, a 250MWh supply deal with Nicon Industries’ Green Energy Renewable Solutions over the next three years, and Sonnell Power Solutions.

As noted in previous coverage on this site, the technology’s advantages include the ability to operate in ambient temperatures from -40°C to 60°C for a 30-year lifespan or roughly 30,000 cycles without degradation and at charge and discharge rates from C/10+ to 5C. It can also cost-effectively provide storage durations between 2 and 12 hours, EnerVenue claims.

“As customer interest in EnerVenue’s storage technology soars, we’re excited to significantly scale battery production with our new state-of-the-art gigafactory in Shelby County,” said Jorg Heinemann, CEO, EnerVenue.

“Following a nationwide vetting process, Kentucky emerged as the ideal fit to build our new facility. The state and county governments were committed to bringing manufacturing and clean energy jobs to the region, and we look forward to working with them as we build out operations.”

The technology for which the company is building a 1GWh factory in Kentucky was originally developed for use in space and brought down to earth and readied for mass production. Last year, EnerVenue’s CEO Jorg Heinemann positioned its nickel-hydrogen batteries as a simpler, safer and more versatile alternative to lithium-ion in a recent interview with Energy-Storage.news.

Energy-Storage.news’ publisher Solar Media will host the 5th Energy Storage Summit USA, 28-29 March 2023 in Austin, Texas. Featuring a packed programme of panels, presentations and fireside chats from industry leaders focusing on accelerating the market for energy storage across the country. For more information, go to the website.

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Bryen Alperin

Summit Ridge Energy (SRE), a commercial solar company, says it has secured a $67 million tax equity commitment from Foss & Company, an institutional investment fund sponsor. The partnership will fund more than 50 MW DC of community solar projects in Maine and Illinois.

The funding will support a development pipeline of 13 projects to provide residential and commercial subscribers with clean energy and an opportunity to support the local renewable economy.

This latest funding builds on the relationships between SRE and Foss & Company. Together, they have closed $122 million in tax equity commitments in two years. SRE first partnered with Foss & Company in April 2021, securing a $55 million tax equity commitment that funded 73 MW of solar projects that achieved commercial operations in late 2021.

This investment utilizes the Inflation Reduction Act’s Qualified Advanced Energy Project Credit program. Once the rulemaking for low and moderate Income community incentives and domestic content requirements program is finalized, the firms expect to expand their partnership and make renewable energy more accessible, both in underserved and traditional energy communities. 

“In addition to targeting robust cash flow and economic returns for our investors, this portfolio is expected to increase access to low-cost clean energy for thousands of families and small businesses in Illinois and Maine,” says Bryen Alperin, managing director, Foss & Company. “This investment will allow us to continue building upon our current partnership with SRE, as well as advance our long-term mission of supporting a renewable energy future for all.”

SRE started construction on the portfolio in early 2023 and expects the projects to achieve commercial operations in 2024. Once operational, the projects will generate clean power and energy savings for residential and commercial customers across six utility service territories. Commercial customers include small, medium and large businesses who will remotely subscribe to the community solar projects.

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An image of battery modules issued by the Valley Center Sheriff Department, which it said are similar to those which were taken: Image: Valley Center Sheriff’s Deptartment.

The Valley Center Energy Storage project in Southern California from where the battery packs were stolen. Image: Terra-Gen.

Cameron Murray talks to industry experts about the physical security risks to battery storage sites, and how the security and insurance aspects of operating BESS sites are evolving.

As battery energy storage technology becomes more widespread and well-known in today’s maturemarkets and, increasingly, new ones, the risk of attack and theft is also likely to grow.

In this report, we talk to those active in emerging markets as well as an energy asset security expert from Sandia National Laboratories (SNL) – one of three research and development labs of the US Department of Energy’s National Nuclear Security Administration – about the main risks versus other types of clean energy assets, and how to mitigate them.

This is an extract of a feature which appeared in Vol.34 of PV Tech Power, Solar Media’s quarterly technical journal for the downstream solar industry. Every edition includes ‘Storage & Smart Power,’ a dedicated section contributed by the team at Energy-Storage.news.

Just before the edition was about to go to press, a high-profile theft incident was reported at a grid-scale battery storage site in California, Terra-Gen’s Valley Center BESS. Energy-Storage.news has since revealed numerous details about the incident, namely that the batteries were decommissioned, placed away from the operational BESS and awaiting transport, as well as why they were taken offline in the first place.

How big is the risk?

Notwithstanding the Valley Center incident, it’s fair to say the risk of battery storage site break-ins for either theft of components or battery modules or for sabotage has been relatively small withfew occurrences to date.

But there is still a risk and this is expected to grow as energy storage becomes more prevalent and, more importantly, grows in importance for the stability of the electricity grid. Jeffrey Hoaglund is project lead at Sandia National Laboratories (SNL) where he focuses on physical protection systems (PPS) analysis and design for critical energy infrastructure.

“Energy storage could increasingly be targeted because it is a critical node in the energy infrastructure pipeline,” Hoaglund says.

Alejandro Fajer, managing director of Mexico-based battery storage solutions firm Quartux, says his main concern is during the transportation and installation process. Similar issues exist in Brazil, says consultancy Harmattan Renewables’s Adam Terry:

“When we’ve done projects there, even getting the staff to site, we run the risk of them getting hijacked. The main advantage with battery storage is that it’s all containerised but there is still a security risk. We don’t travel at night and have not suffered any intercepts yet.”

Hoaglund does expect the security threat of theft to increase. “Some of these battery systems are high value and very technologically advanced, especially the newer ones, so they are critical target areas for sabotage but also for theft. That could be for nefarious use or just to sell those components on the black market.”

“Theft is going to become a more likely target vector in the future as these systems become more advanced whereas sabotage has been historically the vector of choice.”

Terry agrees to an extent: “I think as the technology matures, what you’ll actually find is that the risk might go up because you will be less likely to bother putting people on site when you realise there’s nothing for them to do and that all they’re really doing is being glorified security guards.”

Measures to take

The three core pillars of any battery storage physical security system are detection, delay and response,Hoaglund says.

Detection and assessment about knowing the threat is there and involves layers of security including cameras, infrared sensors, microwave sensors or other detection methodologies at both the outer perimeter of a battery storage site and the inner security area.

These can and should also be on the battery storage containers themselves. The second, delay, is about increasing the amount of time available for the third pillar, response, to take effect.

Insurance

Since these projects are typically insured against the risk of physical theft or sabotage and, as mentioned above, the reputational risk of such events is fairly low, most of the thinking around this is left to insurers.

Charley Grimston, executive director of specialist battery storage insurance firm Altelium, also says that insurance costs are falling because of improving loss experience and a better understanding of the risks involved.

Future

“I have seen a change, especially over the last 10-15 years, where people are taking it (security) more seriously and doing a more systemic analysis of all these sites being interrelated and also the physical security systems at individual sites,” Hoaglund says.

Ultimately, the risk of thermal runaway and other fire events will remain the primary concern for those involved in battery energy storage projects and insurers for some time, well ahead of physical security. But it’s clearly worth giving serious thought to the physical security risks facing the technology, particularly with the most valuable, critical or remote projects being deployed.

Energy-Storage.news’ publisher Solar Media is hosting the 5th Energy Storage Summit USA, 28-29 March 2023 in Austin, Texas. Featuring a packed programme of panels, presentations and fireside chats from industry leaders focusing on accelerating the market for energy storage across the country. For more information, go to the website.

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Barrett Bilotta

Agilitas Energy, an integrated developer, builder, owner and operator of distributed energy storage and solar photovoltaic systems in the northeastern U.S., has agreed to acquire a portfolio of six standalone energy storage system projects in the greater Houston, Texas, area from Gulf States Renewable Energy, a subsidiary of GSR Energy. The deal value approximates $75 million.

The acquisition and new market entry will add 60 MW to Agilitas Energy’s renewable energy and battery storage project pipeline of more than one gigawatt.

The projects will operate in the Electric Reliability Council of Texas, which manages the flow of electric power to more than 26 million Texas customers—representing about 90% of the state’s electric load. 

The battery storage systems will deliver low-cost energy for customers of CenterPoint Energy, a domestic energy delivery company headquartered in Houston. It will enhance the grid’s reliability and resiliency by charging batteries from the grid at low peak when there is excess energy and costs are lower, and then subsequently discharging that energy when demand is high.

“Our strategy is to continue expanding into new geographies, but we’re also planning to bolster our renewable portfolio to include sources beyond solar, partnering with other leading renewable developers to achieve these goals as necessary,” says Barrett Bilotta, president, CEO and co-founder of Agilitas Energy. 

Each of the six projects has an identical design with battery supply from BYD Energy batteries and a system size of 9.96 MW/20.721 MWh. Two of the six projects are expected to begin commercial operation in 2023, with the other four following in 2024. Agilitas Energy expects to purchase each of the six projects in the portfolio when they are fully permitted and ready for construction.

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Eolian made the first use of tax equity financing to get the ITC for standalone BESS projects in February. Image: Eolian

The investment tax credit (ITC) for standalone energy storage is an undoubted game changer for the US industry, but it isn’t easy or cheap to capture its benefits.

The ITC came into effect at the beginning of this year, offering upwards of a 24% reduction in the capital cost of investing in eligible energy storage project equipment. With the addition of various provisions for things like locally produced content and labour being used, or siting a project in a low-income area or one historically associated with fossil fuels, potential reductions can reach as much as 70%.

As such, it’s been widely anticipated to have a transformative positive impact on the business case for energy storage in the US. That remains the case, but according to sources Energy-Storage.news spoke to, the industry is having to be well resourced for both expertise and cash to monetise it fully.

“The investment tax credit for standalone battery storage now puts us on parity with other forms of generation. That has been a very, very long time in the making,” said Jeff Bishop, CEO of developer and asset owner Key Capture Energy (KCE).

In an interview with Energy-Storage.news, Bishop said it was “heartening” to see the first tax equity investment made using the ITC for a standalone battery energy storage system (BESS) project a few weeks ago, for two projects in Texas totalling 429MWh of capacity by developer Eolian.

Calling the start of the ITC-era an “exciting” development, the CEO nonetheless noted that tax equity financing is a lot more complicated than raising project debt, and more expensive to do so.

“The developers that have enough size that can really be able to handle the transaction fees, are going to be the ones that will be able to monetise it in the best way,” Bishop said.

Lawyer Morten Lund of California-based firm Foley & Lardner, a specialist in the energy sector, said that for a typical tax equity financing, transaction costs “frequently exceed US$1 million,” and that even for a “simplified and streamlined transaction,” that cost will be most likely above US$250,000.

Industry ‘staffing up’ to handle complex financings

As Jeff Bishop alluded to, the energy storage and wider clean energy industries had been advocating for a long time, around a decade, for the introduction of the ITC to accelerate the deployment of storage in the way it had successfully done for solar PV in the past.

In addition, it had also been calling for a ‘direct pay’ option to be included, which would make the tax credits easily monetisable and transferrable. This option was eliminated from the IRA legislation as the deal-making to get the policy signed into law went on, and its inclusion “would have made life very, very easy,” Bishop said.

As well as the tax equity option being more expensive, KCE and others across the space are “all staffing up now on our financing teams internally to be able to handle the complexity associated with tax equity”.

That’s an assessment that rang true for lawyer Morten Lund and Foley & Lardner colleague Adam Schurle, who is focused on tax aspects of renewable energy.

Even many of the US’ highly-profitable companies do not have, or are not focused on, the “sophisticated level of tax planning” required for structuring a tax equity deal, the pair said. Complex tax structures are usually needed to monetise non-transferable ITCs, such as partnership “flip and sale lease-back”.

However, as Jeff Bishop pointed out, even with the requirement for tax equity, the ITC changes the game for the energy storage industry and makes utility-scale standalone BESS projects pencil out even against the backdrop of supply chain constraints and rising costs that have hit the industry.

Lund and Schurle were not aware of any specific reason why a direct pay, or cash benefit option was excluded from the ITC scheme, but noted that the US federal government has “a long history of choosing tax credits over cash benefits”.

“This is broadly true across a number of industries,” Lund said.

However, the lawyers also argued that the impact of a cash incentive may be limited since depreciation value would remain. With depreciation not being easily converted into a cash incentive and being “inherently non-transferable,” there would likely still be tax equity financings for larger projects to capture the depreciation benefit, they said.

Energy-Storage.news’ publisher Solar Media will host the 5th Energy Storage Summit USA, 28-29 March 2023 in Austin, Texas. Featuring a packed programme of panels, presentations and fireside chats from industry leaders focusing on accelerating the market for energy storage across the country. For more information, go to the website.

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A render of Britishvolt’s gigafactory in Northumberland, which was thrown into doubt after the company went into administration in late 2022. Image: Britishvolt.

The decision by the new owners of UK gigafactory startup Britishvolt to pivot its initial focus towards energy storage rather than EVs has pros and cons, a senior industry consultant told Energy-Storage.news.

Australia-based Recharge Industries acquired Britishvolt in February after the company startup went into administration at the start of 2023, having failed to secure the additional investor funding to continue trading. Britishvolt has been aiming to build a lithium-ion battery plant near the Port of Blyth in Northumberland, with a required investment of around £4 billion (US$4.9 billion).

Recharge is owned by New York-based investment fund Scale Facilitation. Scale’s CEO David Collard told BBC News in an interview last month that Britishvolt now plans to focus on energy storage and hopes to have the first products available by 2025.

Energy-Storage.news has requested additional comment from both Recharge Industries and Scale Facilitation numerous times about the decision, and how the company views the energy storage system (ESS) market, but has not received a response.

Dr. Nicolo Campagnol, manager of global consultancy McKinsey’s Battery Insights subsidiary, told Energy-Storage.news there are pros and cons to a switch in target market from EVs to ESS.

“Looking at battery cell supply/demand dynamics in Europe today, there is still space for producing non-captive battery cells for OEMs. Of course, your cost/performance etc has to be right, but that’s a problem in every market. A change in tack towards ESS can have some advantages but also downsides,” he said.

“First, you can sell what you produce while you ramp up rather than being closely tied to the OEMs’ production schedule, and you face fewer entry barriers than in the e-mobility market where only 3-4 suppliers at most are selected for each platform.”

“At the same time, in the ESS market the competition is more global than regional, and the market is also comparatively smaller. Pivoting to the ESS market also means you will face the dilemma of whether to integrate downstream with a full ESS solution or not.”

While the vast majority of lithium-ion battery supply goes to the EV sector, there is a growing number of ESS-focused gigafactories being developed in geographies with the more advanced existing energy storage ecosystems, like the US, Europe and China.

Lithium-ion battery OEM LG Energy Solution this week announced it will build a new battery cell factory in Arizona, US, which will have 16GWh of annual production dedicated to the ESS market. Turkish firm Pomega is building a smaller, 6GWh facility in South Carolina which will be entirely dedicated to ESS as will one from new company American Battery Factory (ABF), also in Arizona. All are set to come online between 2024 and 2026.

In Europe, Swedish gigafactory firm Northvolt is setting up a facility in Poland which will manufacture ESS solutions using the firm’s own lithium-ion cells, while China is significantly ramping up its ESS-dedicated gigafactory capacity.

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