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Approved: First BESS to share existing generator grid connection in Australia’s NEM

CWP Renewables signed a PPA with Fujitsu for Sapphire Wind Farm in April. Image: CWP Renewables via Twitter.

Approval has been granted in Australia for the first battery storage project that will share a grid connection point with an existing generation asset in the National Electricity Market (NEM).

Developer CWP Renewables announced this morning that it has received approval for the performance standards for its proposed 30MW/30MWh battery energy storage system (BESS) to be connected at the site of a wind farm in New South Wales (NSW).

CWP Renewables’ Sapphire BESS project will be co-located at the company’s 270MW Sapphire Wind Farm in the New England region of northern New South Wales. The largest wind farm in the state, its main off-taker is the state government of the Australian Capital Territory (ACT) along with corporates like Nestle and Fujitsu.

The BESS will charge up with surplus energy generated by the wind farm as well as from the grid at off-peak times, outputting at times of low generation and high demand. The fast-responding battery asset will also participate in frequency control ancillary services (FCAS) markets and other revenue opportunities in the NEM.

“The transition to renewable energy requires the likes of firming projects such as Sapphire Battery, which can help smooth out the variability of wind and solar generation,” CWP Renewables CEO Jason Willoughby said.

“We have agreements with a large range of corporate customers who want to source firmed renewable energy to match their usage and this project brings us another step closer.”

Approval of grid connection performance standards was granted by the Australian Energy Market Operator (AEMO), which oversees the NEM, and grid operator TransGrid.

CWP claimed Sapphire BESS is the first project under AEMO’s National Electricity Rules to get its approval, which was applied for under the rules’ Clause 5.3.9, which is the procedure to be followed by generators seeking to alter an existing generating system.

Willoughby said that getting connection approval was a “technically challenging” process, but that CWP was able to get through it with the collaborative assistance of AEMO, TransGrid, wind operations contractor Vestas and TransGrid’s commercial project services arm Lumea.

The project is being supported by the NSW government’s Emerging Energy programme, which set aside AU$75 million (US$51 million) grant funding for dispatchable electricity projects. As such, learnings from it will be shared to further the advancement of battery storage in the state.

Other projects awarded funding through the programme include one of Australia’s largest solar-plus-storage power plants to date, also in New England. Construction began in 2021 on New England Solar Farm near Uralla, which will pair 720MW of solar PV with a 50MW/50MWh BESS, with further details given in a progress update offered in March this year.

CWP Renewables has approval for another NSW BESS project at a wind farm, this time a 150MW battery storage system for connection at Uungula, a 414MW wind site.

The company said Sapphire BESS will be operational in 2024 and construction will begin early next year pending financial close. Planning approval has been given.

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.

Philippines’ Aboitiz Power commissions 49MW BESS on floating power barge

The 100MW diesel power plant and floating BESS in Davao de Oro. Image: AboitizPower.

A 49MW battery storage system has just been commissioned at a floating diesel power plant in Mindanao, Philippines.

The battery energy storage system (BESS) has been integrated with the 100MW power barge’s diesel engines to raise their efficiency, reducing their ramping time from 15 minutes to just three. The BESS will save fuel costs and lower emissions for the power plant’s owner and operator Therma Marine Inc (TMI), which is contracted to provide ancillary services to the local grid.

TMI is a subsidiary of Aboitiz Power, a generator, distributor and retailer of electricity in the Philippines from a portfolio of hydroelectric, solar PV and thermal power plants, with renewables comprising about a quarter of its 4GW capacity.

Having said in a recent earnings call that the project, in Mindanao’s Davao de Oro province, was nearing completion as part of a long-term plan to deploy 248MW of battery storage at 12 sites, Aboitiz Power leadership announced this morning that commercial operations had begun on 30 November.

Finnish energy and marine technology company Wärtsilä was appointed last year to supply and integrate the BESS, using 10 units of the company’s Gridsolv Quantum battery storage solution and GEMS control and energy management system (EMS) platform.

Early concept rendering of the project. Image: Wartsila.

The project was a good example of “creative thinking” around how to use battery storage within the context of the Philippines’ energy market, Frederic Carron, VP for the Middle East and Asia regions at Wärtsilä’s energy business, told Energy-Storage.news.

“This [project] is a good example of how people are thinking creatively to see to find new value in what batteries can provide, depending on the type of market mechanisms that are in place in in different countries,” Carron said in an interview.

“In the Philippines, there are different types of ancillary services contracts which are available. Some people may have no existing assets, and then they will use the battery in a certain way, for people that have existing assets, they may think of the value of combining those assets [with battery storage].

“That’s the beauty of this battery storage technology. It can unlock economic value in different ways and provide value to the system in different ways,” Carron said.

It is part of a wave of large-scale battery systems being built by large power companies in the Philippines for ancillary services delivery, with one expert noting that companies like Aboitiz and others are essentially competing to have the most efficient power plant fleet.

Aboitiz Power today said it sees the floating barge project for TMI as a model for both future battery storage investments and for hybrid renewable energy power plants.

The company kicked off construction of another 24MW BESS project this August, at SNAP Magat, a hydroelectric power plant which is scheduled for completion in 2024.

“Aboitiz Power sees battery technology as a great opportunity to address concerns about the reliability, affordability, and sustainability of energy supply. We respond to the needs of our customers and communities while supporting economic growth by ensuring the stability of the grid,” Manny Rubio, Aboitiz Power president and CEO said.

“We are excited to finally begin commercial operations of our first BESS facility, which will help reinforce the Mindanao grid.”

The Home Depot Signs 100 MW Solar Energy PPA with National Grid

Ron Jarvis

The Home Depot has purchased 100 MW of solar energy from National Grid Renewables at its solar and storage project in Denton County, Texas (known as Noble) will generate the approximate equivalent of nearly 8% of The Home Depot’s total electricity usage. The solar farm is National Grid Renewables’ largest solar energy project to date, and its first utility-scale energy storage project.

The Home Depot has pledged to produce or procure 100% renewable electricity equivalent to the electricity needs for all Home Depot facilities by 2030, expanding the company’s previous commitment to produce or procure 335 MW of renewable or alternative energy by 2025.

“Solar energy is the most abundant energy resource on earth,” says Ron Jarvis, chief sustainability officer for The Home Depot. “With this purchase, we are getting a step closer to our goal to produce or procure 100 percent renewable electricity equivalent to the needs of our facilities. We anticipate about three-quarters of our alternative and renewable energy capacity will come from solar energy by the end of 2023.”

Noble is a 275 MW solar and 125 MWh energy storage project located in the Electric Reliability Council of Texas (ERCOT).

TSO inaugurates 30MW BESS in Brazil

An aerial view of the energy storage system. Image: ISA CTEEP.

A 30MW battery energy storage system has been inaugurated by transmission system operator (TSO) ISA CTEEP in Brazil.

The TSO announced the energising of the BESS yesterday (29 November), which it said made it the first TSO to have a large-scale storage system on the country’s transmission network.

It didn’t disclose the location but said the BESS would be discharged during peak demand periods to support the electricity network, increasing the security and reliability of the service. A press release indicated the system has a two-hour discharge generation, making its capacity 60MWh.

A total of US$27 million was invested in the project and the TSO’s permitted annual income from the unit is approximately US$5 million.

ISA CTEEP is active in 17 of the 26 states in Brazil and transmits approximately 30% of all electricity produced in the country, and is part of the ISA Group, which is active in other LATAM countries.

Juan Emilio Posada Echeverri, president of ISA Group, said: “This project has provided us with great learning and we believe that, due to its pioneering nature, it will be a great laboratory for the sector and for the other ISA companies.

“Precisely, one of the great challenges of the energy transition for ISA is the adaptation of the existing network and achieving a better use of the available capacity. In this sense, batteries are a sample of how technology and innovation enable increasingly flexible and intelligent systems, maintaining reliability and resilience as a priority.”

The project appears to be similar in terms of use case to so-called ‘Grid Boosters’ being launched in Germany by some of its TSOs, including one which system integrator Fluence recently announced it would deploy.

Although a large market, Brazil has been relatively quiet for battery energy storage announcements despite being a relatively early mover in trialling various different battery chemistries, as Energy-Storage.news reported back in 2018. Two years later, BloombergNEF reported that mining giant Vale would deploy a 5MW/10MWh system, the country’s largest.

Read previous Energy-Storage.news coverage of developments in Brazil here.

N.Y. Report Shows Clean Energy Jobs Help Economic Recovery for State

Gov. Kathy Hochul

The number of individuals with clean energy jobs in New York State has reached a record level of 165,000 workers at the end of 2021, Gov. Kathy Hochul states, helping to lead New York’s COVID-19 economic recovery by recouping the clean energy jobs lost in 2020 and exceeding pre-COVID-19 clean energy employment levels by 1,300 jobs.

“This year’s Clean Energy Industry Report shows what I have always known to be true of New Yorkers – that we are resilient, and we keep moving forward in the face of adversity,” Gov. Hochul says. “Although COVID-19 greatly impacted the entire economy over the last few years, we have seen how the clean energy industry has led the way in our recovery. More New Yorkers than ever before are employed with family-sustaining clean energy jobs and are actively helping New York build a workforce that can meet the demands of the future.”

The 2022 New York Clean Energy Industry Report by the New York State Energy Research and Development Authority (NYSERDA) provides data on the state’s clean energy job growth through the end of 2021. The report shows that this sector rebounded faster from the impact of COVID-19 than nearly all other industries in New York and that since 2015, clean energy employment in the state has grown by approximately 17 percent, or over 24,000 jobs.

Key findings from this year’s report include 165,055 New Yorkers had clean energy jobs at the end of 2021, up from 157,686 in 2020. New York’s green jobs grew more than 4.7% from 2020 through 2021 – gaining over 7,000 jobs in 12 months.

This sector experienced a faster recovery compared to other industries in New York including education and retail trade; employment in these industries grew between 1.7-3% between 2020 and 2021.

Employment met or exceeded pre-pandemic levels in almost all technology sectors. Renewable electric power generation, alternative transportation, renewable fuels, and grid modernization and energy storage all reached or surpassed their pre-pandemic employment levels by the end of 2021.

The alternative transportation technology sector saw unprecedented growth between 2020 and 2021. Alternative transportation employment expanded by almost 26% or 2,318 jobs in just 12 months.

Solar accounted for the largest share of job gains in the renewable electric power generation technology sector. While solar firms across New York lost more than 400 workers from 2019 through 2020, they grew by more than 1,000 workers between 2020 through 2021.

The industries with the largest job growth were labor and civic organizations, software publishers, durable goods merchant wholesalers, and machinery, equipment, and supplies wholesalers.

“Establishing a strong clean energy workforce goes hand in hand with advancing the vital work that needs to be done across all industry sectors to meet our ambitious climate goals,” says Doreen M. Harris, president and CEO of NYSERDA. “We certainly can’t have one without the other, and this year’s report shows that we continue to establish the building blocks needed for green jobs so that New York families – all across the state – can participate in and benefit from our transition away from fossil-fuels to clean energy.”

“New York State is building a green economy and reinforcing its infrastructure for a more sustainable future,” states Hope Knight, Empire State Development’s president, CEO and commissioner. “This report shows how our clean energy industry investments and continued focus on workforce development are creating the jobs of tomorrow, and training the talent to fill them.”

To further advance green jobs in New York, NYSERDA has committed more than $120 million to support the creation of a clean energy workforce pipeline and provide new training opportunities for new and existing workers. These opportunities include programs designed to enhance a worker’s skills in clean heating, energy efficiency, and other clean technology sectors and assists businesses with upskilling existing workers, reducing hiring costs, and recruiting and training new employees. More importantly, these efforts prioritize training programs for the state’s most underserved populations – low-income individuals, veterans, disabled workers, single parents, and the formerly incarcerated – and will also help integrate displaced workers into this new promising industry.

As part of its workforce development funding commitment, NYSERDA has already awarded approximately $50 million to support important partnerships with labor, colleges and universities, non-for-profits, manufacturers, trade associations and others, to ensure workers are trained through continuing education courses, certificate programs, degree programs, internships, apprenticeships and on-the-job training.

NYSERDA has awarded $9.5 million to provide over 12,400 New Yorkers with hands-on experience, and job placement assistance in the energy efficiency and clean technology sectors (including HVAC, insulation and air sealing, smart grid, etc.).

Over $7.1 million in wage and on-the-job-training support has been provided to 147 businesses in hiring over 1,150 new workers, 33% of which are from priority populations.

Clean Energy Internship Program: NYSERDA has placed over 1,500 student and recent graduate interns at 262 clean energy businesses across the state.

NYSERDA is currently supporting training for building staff who operate and maintain over 3,000 buildings across the state. The program provides over $10 million to train and upskill over 6,000 building operations and maintenance workers.

NYSERDA is providing $9 million for training initiatives that advance technical skills and prepare workers for jobs in New York’s growing offshore wind industry.

Designed to establish a pool of qualified contractors to deliver training, develop curriculum and/or training tools, and provide market expertise and/or other services related to clean energy workforce development and training.

NYSERDA is partnering with Roadtrip Nation to execute a comprehensive clean energy career awareness initiative to highlight green jobs across the State and the enormous potential for career pathways in the clean energy sector.

These efforts will be critical as New York works to meet the anticipated clean energy workforce demand expected with the implementation of the Climate Act. Results from a 2021 Jobs Study issued by the Climate Action Council’s Just Transition Working Group, show that in the 21 growing sub-sectors total employment will increase by more than 60% from 2019 to 2030 – adding at least 211,000 new jobs in New York State.

“New York State is on its way to delivering a recovery driven by a just transition to a climate economy,” says State Senator Jessica Ramos, chair of the Senate Committee on Labor. “In last session’s budget, I fought hard to ensure the Environmental Bond Act guaranteed prevailing wages, and we were investing in climate job training programs. It is so gratifying to see those fights begin to bear fruit. I hope this encouraging Clean Energy Industry Jobs Report inspires my colleagues as we head into our next budget, and we can continue to invest in green, union jobs that sustain families and build a resilient future.”

“Clean energy jobs are steadily growing and leading all other industries in New York,” comments Assemblymember Michael Cusick. “The latest findings from NYSERDA are promising news for what is needed to meet demand to deliver on our State’s Climate Act goal.”

“The growth of good paying green energy jobs is expanding opportunities for New Yorkers to become part of our state’s economic future,” states LaToya Joyner. “Enhancing our environmental sustainability, these jobs are also contributing to New York being a leader in reducing emissions and ensuring that no community is left behind as we pursue environmental justice.”

“In communities across the state, clean energy jobs are helping to power economic recovery and revitalization,” says New York State Association of Counties Executive Director Stephen Acquario. “Counties have been on the forefront of the transition to clean energy, and we commend New York State for its commitment to connecting workers to skills and training for the green jobs of the future. As we make progress toward achieving the goals established by the Climate Act, we must continue to strategically invest in boosting local economies, building a robust clean energy workforce, and supporting the communities hardest hit by the transition. We look forward to partnering with Governor Hochul and New York State to expand the education and training opportunities that will help ensure a smooth transition to a greener future.”

“WDI applauds NYSERDA’s leadership in growing our state’s clean energy workforce,” mentions Amy Desjardins, executive director of Workforce Development Institute. “NYSERDA continues to support this growth with incisive, practical research like this year’s Clean Energy Industry Report. Just as importantly, it has facilitated access to the resources the state requires to address the training and education needs of vital sectors like construction, utilities, electricity generation, building performance, and transportation. For more than a decade, WDI’s energy and climate program has elevated job quality, equitable career pathways, and in-demand skills to address the clean energy sector’s ever-evolving needs.”

New York State’s nation-leading climate agenda is the most aggressive climate and clean energy initiative in the nation, calling for an orderly and just transition to clean energy that creates jobs and continues fostering a green economy as New York State recovers from the COVID-19 pandemic. Enshrined into law through the Climate Leadership and Community Protection Act, New York is on a path to achieve its mandated goal of a zero-emission electricity sector by 2040, including 70% renewable energy generation by 2030, and to reach economy wide carbon neutrality. It builds on New York’s unprecedented investments to ramp-up clean energy including over $35 billion in 120 large-scale renewable and transmission projects across the state, $6.8 billion to reduce buildings emissions, $1.8 billion to scale up solar, more than $1 billion for clean transportation initiatives, and over $1.6 billion in NY Green Bank commitments. Combined, these investments are supporting more than 165,000 jobs in New York’s clean energy sector in 2021, a 2,100% growth in the distributed solar sector since 2011 and a commitment to develop 9,000 MW of offshore wind by 2035. Under the Climate Act, New York will build on this progress and reduce greenhouse gas emissions by 85% from 1990 levels by 2050, while ensuring that at least 35% with a goal of 40% of the benefits of clean energy investments are directed to disadvantaged communities, and advance progress towards the state’s 2025 energy efficiency target of reducing on-site energy consumption by 185 trillion BTUs of end-use energy savings.

Romania Ministry of Energy to financially support at least 620MWh of BESS deployments

Minister of Energy Virgil Popescu. Image: Virgil Popescu / Ministry of Energy via Facebook.

The Ministry of Energy of Romania will provide just over €103 million in financial support for battery energy storage system (BESS) deployments in the country.

Minister of Energy Virgil Popescu signed an order approving the state aid scheme for investments in battery energy storage systems on Monday, 28 November, announced via his Facebook page.

The total budget of the programme is €103.48 million (US$107 million) and will receive €79 million from Romania’s portion of the EU-wide Recovery and Resilience Plan, the bloc’s programme to mitigate the negative economic effects of the COVID-19 pandemic. The remainder will come from national funds.

The aid will be provided in the form of reimbursement for expenses incurred for the construction and purchase of new battery energy storage capacity or related infrastructure. The aid cannot exceed €167,000 per MWh, which means the budget will go towards at least 619MWh of deployments.

The deadline for project proposals to be submitted for eligibility is December 28, 2022.

In a document on its website, the Ministry said it is aiming for deployments of at least 480MWh of BESS by 2025.

Romania has been relatively quiet for energy storage project announcements, even when compared to other neighbouring Balkans and southeast European countries.

Portuguese utility EDP’s renewables arm EDP Renováveis’ (EDPR) inaugurated the country’s first large-scale battery storage system, co-located with a wind far, back in 2018.

More recently in spring this year, construction began on a 7MW unit in the commune of Moara Vlăsiei, according to local outlet Profit.ro. That project is being launched by owned in equal parts by three Austrian-headquartered or controlled firms: investment fund Core Value Capital, Gerdan Real Estate SRL and renewable deveoper Green Source GmbH.

Romania currently has a target of 30.7% renewable generation in its electricity mix by 2030 but it has made promises to up the figure.

Energy-Storage.news’ publisher Solar Media will host the eighth annual Energy Storage Summit EU in London, 22-23 February 2023. This year it is moving to a larger venue, bringing together Europe’s leading investors, policymakers, developers, utilities, energy buyers and service providers all in one place. Visit the official site for more info.

Powin, SMA America in 2GW deal for BESS components

Rendering of Powin’s Centipede modular BESS platform. Image: Powin Energy.

Powin Energy will source components from SMA America for 2GW of battery storage systems.

SMA America, the regional subsidiary of German solar inverter manufacturer SMA announced the signing of a framework agreement with US battery storage system designer and manufacturer Powin yesterday.

The two-year agreement covers servicing as well as the supply of SMA systems solutions equipment. Putting the multi-year deal in place will give Powin predictability over pricing of projects as well as more certainty over component availability.

SMA’s solutions include string and central inverters including its SMA Sunny Central Storage battery inverter which is configured for system voltages up to 1500V.

The company offers both AC-coupled and DC-coupled solutions, making them suitable for the range of different hybrid and standalone battery storage projects demanded by the US market.

With the US energy storage market entering “a new stage of transformative growth,” the SMA deal would help Powin to “meet the growing demand and provide our customers with more flexibility in choosing their preferred power conversion technology,” Powin president Anthony Carroll said.

Power conversion system (PCS) technology is vitally important to the success of a battery storage project. Earlier this year, Powin executive VP Danny Lu said in an interview with this site that inverters represent a relatively small portion of overall project cost but dictate to a greater extent how well the BESS functions.

As with other battery storage system integrators and manufacturers like Fluence, Powin sources components including inverters and battery cells from a range of different providers, maintaining a technology agnostic stance on selection.

In September, Powin acquired EKS Energy, a Spain-headquartered inverter, PCS and power plant controller manufacturer, which the US company said would enable it to create a complete AC energy storage platform that can interface with multiple generation assets and meet the different grid code requirements in multiple territories.

Danny Lu said that EKS Energy’s experience on working on projects in a variety of different markets meant that the Seville-headquartered company had valuable know-how in making systems adaptable to perform different applications, like islanding from the grid and black starting power plants.

However, Lu and chief product officer KJ Plank were quick to point out that Powin will also continue to work with third-party PCS providers, having to date worked with most of the Tier 1 companies, according to Lu.

As reported by Energy-Storage.news yesterday, Powin is in talks with Kontrolmatik, a Turkish company looking to set up lithium iron phosphate (LFP) battery cell and pack manufacturing in the US, for a possible multi-gigawatt off-take deal. Powin leadership has previously said it welcomed efforts to establish battery cell manufacturing capabilities in the country and also nearshored its North American BESS assembly to contract OEM Celestica in Mexico.

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.

Tesla EV battery packs repurposed into energy storage systems in Finland and California

Smartville’s co-founders Mike Ferry and CEO Antoni (Shijie) Tong, centre, with employees at the firm’s first commercially operating system. Image: Smartville Inc.

Finland and California-based second life energy storage firms Cactos and Smartville Inc have raised nearly US$10 million to commercialise systems using repurposed Tesla EV batteries – we talked to both companies’ founders.

San Diego-based Smartville Inc recently received a US$6 million grant from the Department of Energy’s (DOE) US$74 million for domestic battery recycling and reuse programme, co-founder and president Mike Ferry told Energy-Storage.news.

The money will go towards productising the firm’s enclosure system into second and third iterations, certify its product to thermal runaway test certification UL 9540A and its manufacturing facility to UL 1974, a certification specifically for second life energy storage systems (ESS), he added.

Its current product, MOAB, is a 250kW/500kWh system that uses either repurposed EV battery packs from Tesla and Nissan’s Leaf. The first commercially operating system, made up of two enclosures, one Tesla and one Nissan, recently went online at the UC San Diego library annex in Mira Mesa (pictured). Unlike most second life ESS firms, Smartville uses fully battery packs.

“We believe focusing on battery packs rather than disassembly and modules allows us to scale. For this market to reach the MWh and even GWh projects it does not make sense from a labour or financial perspective to disassemble,” Ferry said.

Energy-Storage.news was previously told by other second life ESS companies that it was hard to work with Tesla, because it did not work with third parties and its battery pack enclosure system was hard to disassemble.

Smartville gets its Tesla EV battery packs from the third-party vehicle salvaging market, while working directly with Nissan and other automakers for theirs – we wrote about which companies were leaders in doing this recently.

That is also the case for Finland-based Cactos which just this week raised €2.5 million (US$3 million) in equity and debt to commercialise its 100kWh behind-the-meter ESS product, also made up of repurposed Tesla EV batteries.

CEO Oskari Jaakkola told Energy-Storage.news that these are received from a battery recycling company in Norway and disassembled into modules.

The company is agnostic about using second life or new batteries, however, as Jaakkola explained.

“We started as a pure play second life firm and our first operational systems have been entirely second life, but going forward we’ll also supplement them with systems made of new batteries. Second life modules are not materially cheaper now but the delivery times are much, much quicker.”

Superhero Capital led the fundraise round, which came a few months after Cactos’ first commercially operating system was installed at a small factory in August, and the firm has done a few residential deployments since then, Jaakkola said.

The company was officially launched earlier this year and will use the funding to double its factory size which should allow for a 10-fold increase in unit production. For the financial year to April 2024, he expects to ship 100 units, i.e. 10MWh of energy storage.

Smartville meanwhile anticipates deploying 50-100MWh of energy storage in 2024, Ferry said.

Energy-Storage.news will be publishing a more in-depth interview with the California-based firm in the coming weeks.

Cactos’ second life energy storage system. Image: Cactos / San Francisco Oy.

But before that, Solar Media will also host the eighth annual Energy Storage Summit EU in London, 22-23 February 2023. This year it is moving to a larger venue, bringing together Europe’s leading investors, policymakers, developers, utilities, energy buyers and service providers all in one place. Visit the official site for more info.

Batteries earn big in European ancillary services, but investors warned of high expectations

Harmony Energy’s Pillswood project in northern England. At 196MWh it is the largest capacity BESS in Europe so far. Image: Harmony Energy.

Europe’s energy crisis has resulted in high frequency regulation ancillary services revenues for battery storage, with some assets earning up to four times more money than had been expected.

However, prospective investors should not see this year’s unlikely situation as a guide for how the market will operate in the long-term, and battery assets will have to diversify their applications beyond ancillary services in the coming years.

That was the estimation of Corentin Baschet, lead analyst at energy storage consultancy Clean Horizon. Baschet analysed revenues available for energy storage across multiple European geographies, with a particular focus on the eight-country frequency containment reserve (FCR) market, the UK’s Dynamic Containment Low service and secondary reserve, or aFRR in Belgium.

In FCR, Baschet found that the energy crisis led to battery energy storage system (BESS) projects earning “in a year, about three to four times the expected cashflows planned initially”.

High gas prices or low availability of nuclear generation – as has been the case in France – result in higher prices on wholesale markets. That means a higher opportunity cost for conventional generators to provide ancillary services.

From January 2021 to the end of September this year, the average FCR price was €24.6/MW/h (US$25.48/MW/hr).

By comparison, in 2015 it was around €26/MW/hr, €17/MW/hr in 2017 and at a low of €5/MW/hr in early 2020.

High prices are unlikely to persist, Baschet said, and events like the crisis this year are difficult if not impossible to accurately factor into revenue forecasting models.

“When things go back to normal, we will see prices of ancillary services reduce drastically. We recommend investors not to make investment decisions based on current market prices which should not last very long, according to the forward curves we provide with [commodities market consultancy] KPLER,” Baschet said.

FCR auctions in the eight countries – which include France, Germany and Switzerland – equate to a total volume of 1500MW procured by transmission system operators (TSO). Yet in just France and Germany alone, there are 1,100MW of installed battery storage systems, 400MW in France and 700MW in Germany, with more on the way.

Fast energy storage deployment in those two countries is about to saturate the FCR market, and Clean Horizon expected the next few months will prove those high prices to have been short lived.

“This auction is currently pay-as-clear, so the marginal asset is the price maker. However fast storage deployment across Germany and France is about to saturate the FCR market, therefore resulting in the marginal asset to be kicked out of the merit order and making batteries the marginal assets therefore soon resulting in much lower prices,” Baschet said.

‘Revenue cannibalisation is real’

Similarly, in Great Britain, the Dynamic Containment Low frequency regulation product launched a year or two ago by TSO National Grid is the single biggest source of BESS revenues but is running close to saturation.

Revenues for the ancillary service averaged out at £19/MW/hr (US$22.79/MW/hr) across the period surveyed. Clean Horizon modelled that while the revenue stack for a UK battery asset typically comprised five different revenue streams, Dynamic Containment revenue accounted for around £141,700/MW/year of a £155,100/MW/year total.

Meanwhile, National Grid procures between 500MW and 2,000MW of Dynamic Containment through auctions, in a country which has already come close to the 2,000MW mark of installed BESS.

In continental Europe as well as in the UK therefore, BESS asset owners will have to diversify their route to market strategies to maximise revenue and market share, Baschet said. In the UK, BESS assets are already starting to shift to doing more energy arbitrage, while FCR asset owners in Europe will also have to be able to provide different applications to what their BESS system or potfolio was planned for.

“Typically, it is clear that batteries will have to move from power revenues, associated with FCR or DC, to energy revenues associated to trading on the day ahead or intraday or imbalance markets as these markets are deeper,” Baschet said.

“Revenue cannibalisation for storage is a real thing.”

Investors ‘can be comfortable with merchant business case’

Last year, Clean Horizon discussed the introduction of automatic frequency restoration reserve (aFRR), successor to the European secondary reserve ancillary service market. Belgium, along with France and Germany is one of the earlier countries to join a coordinated market that will span most of the continent by 2024.

With Clean Horizon having spoken previously of the potential for high returns for battery storage in Belgium, Corentin Baschet pointed out that the marginal price of monthly auctions for aFRR has been “very high, linked to high price of gas and the opportunity cost of gas assets to participate in the wholesale markets”.

Yearly average prices in Belgium for aFRR have been €142.2/MW/hr, according to figures taken from the country’s grid operator, Elia. Corentin Baschet previously told Energy-Storage.news in March that Clean Horizon believed battery storage could capture a third of the total aFRR market across Europe which is estimated to be around 1.5GW to 2GW.

Energy storage’s great strength lies with being able to support the electricity system in times of both normal and challenged operating conditions. Helping to balance volatility on the grid can therefore be more lucrative during those challenges.

Investors like to have steady expectations of their cash flows and building a business case around energy storage in Europe is still difficult due to the merchant nature of opportunities, Baschet said.

“However, it is possible to be comfortable with price forecasts if the assumptions of the models are well understood as well as their impact on the results,” the analyst said.

Energy-Storage.news’ publisher Solar Media will host the 8th annual Energy Storage Summit EU in London, 22-23 February 2023. This year it is moving to a larger venue, bringing together Europe’s leading investors, policymakers, developers, utilities, energy buyers and service providers all in one place. Visit the official site for more info.

Rio Tinto to deploy US$400 million solar, battery storage at iron ore operations in Australia

1.6MW solar PV array at a Rio Tinto mine in Queensland, Australia. Image: Rio Tinto.

Multinational mining corporation Rio Tinto has announced the latest steps in its plan to deploy 1GW of renewable energy for its operations in Pilbara, Australia.

The company said yesterday that it will invest AU$600 million (US$402 million) into large-scale solar PV and battery energy storage system (BESS) technology for its iron ore excavation in the mineral-rich Western Australian region.

The announced investment will fund the construction of two 100MW solar PV plants, and 200MWh of BESS. That will add to 34MW of solar PV already installed at Rio Tinto’s recently opened Gudai-Darri iron ore mine.

The new resources will be online by 2026, while the mining company’s board has approved investment in another 100MW solar PV plant in the region which will come online a year earlier.

Other companies are investing in green energy in Pilbara as a region with abundant solar and wind resources, coupled with the need to decarbonise mining operations. As well as being polluting, refuelling and maintaining fossil fuel generators at off-grid extraction sites has high costs and challenging logistics associated with it.

In June, bp acquired a 40.5% stake in a green hydrogen project that could see 26GW of combined solar PV and wind generation paired with electrolysers for the production of green hydrogen or ammonia for domestic use and export. The Asian Renewable Energy Hub (AREH) project would be sited in a 6,500-square-kilometre site in the Pilbara region.

In February, Fortescue Metals Group unveiled plans for a 5.4GW renewable energy hub in the region which could include up to 9,100MWh of battery storage, according to planning documents filed with local authorities.

Rio Tinto wants to halve its greenhouse gas (GHG) emissions in Pilbara by 2030, and will invest about AU$3 billion on “installing renewable energy assets as well as transmission and storage upgrades” in the Pilbara by that time, according to the company’s chief executive of its iron ore business, Simon Trott.

“The Pilbara is extremely well-positioned to take advantage of renewable power with land, access to people, and abundant wind and solar resources. Our Pilbara electricity grid is the largest privately-owned grid in Australia, ensuring that we have the initial infrastructure required to enable a transition to renewable energy.”

Indeed, the AU$3 billion Rio Tinto plans to invest on installing a 1GW renewable energy system in the Pilbara is a significant portion of its total planned AU$7.5 billion spend on halfway decarbonisation by the end of this decade.

Last year, the company announced that it would seek 6GW of renewable energy for its operations in Australia, and in June launched a request for proposals (RFP) for developers of large-scale wind and solar in Central and Southern Queensland, seeking up to 4GW of power for aluminium smelting and refining operations.