CIP has worked on a range of clean energy projects and technologies, although its early focus was largely on wind energy. Image: SSE Renewables.

Developer Alcemi and investment group Copenhagen Infrastructure Partners (CIP) have partnered for the development, construction and operation of a 4GW portfolio of UK energy storage assets.

The projects are currently in late-stage development and are to be between 300MW and 500MW each, with a storage duration of up to four hours. This makes them some of the largest energy storage projects in Europe, the two companies said.

They are being developed at strategic locations that will support the transmission system by limiting the impact of network constraints, with this to help reduce the overall cost of energy for consumers as well as lower the carbon intensity of the UK power sector, by ensuring better utilisation of renewable energy and therefore limiting the need for fossil fuel power generation during periods of peak demand. 

Alcemi originated the projects, and is to continue to develop the projects with the support of CIP and Alcemi’s founding investor Susgen. Procurement activities are to be primarily led by CIP and initiated later this year ahead of construction of the first project, which is scheduled to start in 2023.

Further projects in the pipeline are expected to go into construction regularly, and then energise throughout the second half of this decade, the companies said.

“We expect these projects to enable a cost-efficient transition towards the low carbon, highly resilient power generation sector in the UK,” Christian Skakkebæk, senior partner at CIP, said.

Copenhagen Infrastructure Partners manages nine funds and has approximately €16 billion (£13.5 billion) of assets under management focused on investments in energy infrastructure, including offshore wind, onshore wind, solar PV, biomass and energy-from-waste, transmission and distribution, reserve capacity and storage, and other energy assets like Power-to-X. 

Other large battery storage projects in the UK include two 400MW/800MWh projects under development by Amp Energy, a 360MW Sembcorp Energy UK project and the 100MW/107MWh Capenhurst project from Zenobē.

Last week the scale and speed of deployment of batteries for the UK grid was highlighted on the site in a Guest Blog from Solar Media Market Research analyst Mollie McCorkindale. In 2021, 446MW of large-scale battery storage was installed in the country, narrowly beating 2018 to make it the year of most deployments on record, McCorkindale wrote.

This story first appeared on Solar Power Portal.

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Estimated number of home storage system installations in Germany. Image: ISEA RWTH Aachen University

The residential segment accelerated its dominance of the German battery storage market in 2021 but new opportunities for grid-scale systems are opening up, according to a new report.

Home storage systems (HSS) accounted for 93% of the 1,357MWh of new energy capacity installed last year, according to ‘The development of battery storage systems in Germany – A market review (status 2022)‘.

The paper was co-authored by a group of RWTH Aachen University-based or spinout organisations, led by the Institute for Power Electronics and Electrical Drives (ISEA) and its findings largely continue the trends noted in its report from two years ago.

The authors define HSS as those under 30kWh, and Germany now has 430,000 total installations after 145,000 totalling 739MW/1,268MWh were installed last year. Its figures roughly match up with research by Energie Consulting commissioned by the Germany energy storage association (BVES), which pegged the 2020-year end figure at over 300,000.

In contrast, only 27MW/57MWh of 30kWh-1MWh industrial storage systems (ISS) were installed while 1MWh-plus large-scale storage (LSS) was even smaller at 36MW/32MWh of new installations. ISS and LSS can be both grid-connected or behind-the-meter commercial and industrial-sited (C&I).

Home installation numbers have been growing since 2013, as have ISS, although at a less rapid rate.

LSS on the other hand has dropped off sharply since a record year of 288MWh installations in 2018 when it nearly matched HSS’ 323MWh. New LSS installations have fallen since to just over a tenth of that high watermark in 2021, and the average installation size also fell by three quarters over the period, from 11.5MWh to just 2.9MWh.

The writers attribute this trend of fewer LSS installations to a saturation of the frequency containment reserve market (FCR) for which utility-scale storage systems were mainly built from 2016 to 2019. Other issues in the German market include double-charging for energy storage assets (for drawing and dispatching power from and to the grid).

Regulatory issues are in fact the number one burden for storage asset operators in Germany when asked, according to a survey by BVES, whose spokesperson told Energy-storage.news last year that “Germany does not consider energy storage as a key element” of its energy transition.

The result of these barriers inhibiting growth is that, by 2021, the residential/HSS sector accounts for 79% of 4,406MWh total installed battery storage capacity in Germany. LSS is 17% and ISS is the remaining 4%. The German battery storage market is, however, evolving to allow more participation for grid-scale storage paired with renewables, explained next.

The vast majority of installations in HSS and ISS last year were lithium-ion while LSS’s 11 installations were exclusively so, though after a fairly diverse deployment of technology in 2017-2019 LSS is the most diverse of the three cumulatively with nearly one-fifth of energy capacity provided by other technologies (mainly lead-acid, redox flow and thermal storage solutions).

New revenue sources in the German battery storage market

Because of FCR’s saturation (notwithstanding a temporary price spike in 2021), last year was the first year when most LSS installations were at large commercial & industrial sites rather than for the FCR market.

But larger BESS are starting to play in other grid services launched by the Federal Network Agency (FNA). One of those is ‘innovation auctions’ which are open to projects that combine two or more clean energy technologies, for example large solar and wind parks that can bid in combination with a BESS, usually above 1MWh.

In the first three innovation auction rounds from September 2020 to August 2021, 62 BESS totalling 250MWh took part. However, the partaking BESS must only be charged from the directly connected renewable energy sources which prevents them from stacking revenues by also participating in the FCR, aFRR or merchant markets.

Massive BESS projects called ‘GridBoosters’ (‘NetzBooster’ in German) are also being launched by grid operators to temporarily relieve grid bottlenecks and save preventive redispatch.

Pilot projects from Dutch-German grid operator TenneT (100MWh) and Baden-Württemberg grid operator TransnetBW (250MWh) are expected to come online in 2023 and 2025, respectively.

Electric vehicle market in Germany doubles in size

The research also found that 340,000 battery electric vehicles (BEV, i.e. pure electric) and 341,000 plug-in hybrid electric vehicles (PHEV) were registered in Germany last year, bringing the total across groups to 1.27 million to-date, roughly evenly split.

The total energy of their combined batteries should be total 40GWh, the report adds, with four-fifths from BEVs. It points to the potential this holds for things like vehicle-to-grid and vehicle-to-home charging solutions:

“The cumulative battery energy of 44 GWh is therefore larger than the 39 GWh of nationallyinstalled pumped hydro storage symbolizing the enormous flexibility potential of battery storage for the future energy system.”

Later adding: “…integrating vehicles to serve the grid would be highly desirable from an economic perspective.”

However, it points out that public charging infrastructure could not follow the growth and only grew ‘linearly’ with 11,700 new installations to 50,000 charging points. EVs per charging point grew from 10 in 2018 to 25 in 2021.

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Planning permission has been granted for Gateway, a battery project which could accomodate up to 900MWh of capacity at a site near London. Image: InterGen.

The UK has found itself in a leading position among the world’s markets for battery storage, with last week’s Guest Blog from Solar Media Market Research analyst Mollie McCorkindale offering insights and putting numbers on its progress.

In this article, experts from advisory groups Lane Clark & Peacock (LCP), Apricum – The Cleantech Advisory and law firm CMS offer their take on the development of financing and investment in UK battery storage.

The British Isles are to utility-scale batteries as the Galapagos Islands are to tortoises: the isolated island home to a curious, outsize, marginal, yet instructive population. However, the somewhat faster evolution of UK BESS merits more frequent study.

In reviewing 2021, LCP’s 2022 UK BESS Whitepaper uncovered a single over-arching theme: the start of the battery storage industry’s transition from solving power to solving energy.

The long-held promise of utility-scale batteries was always energy storage, yet that was never their principal application. They sold ancillary power reserves far more than they traded energy. However, that is starting to change. And it will change how batteries are financed.

The change from power (often discussed as ancillary services, and a “MW” focus) to energy (a.k.a. arbitrage and “MWh”) is subtle, but unmistakeable. The shift is observed in two dimensions: 

RevenuesDuration

Revenues

The de facto trading strategy for most of 2021 was to sit in Dynamic Containment (DC) and collect a steady revenue of £17 (US$22.40)/MW/h. An intraday price spread of £408/MWh would have been required to justify exiting DC arbitrage markets (assuming 1 cycle per day).

At the start of 2021, that seemed improbable. Yet it took just 6 days for this to happen, and ultimately 2021 saw 23 days where batteries could have (and did) outperform the DC cap through wholesale arbitrage. 

Figure 1: Monthly average intraday price spreads, 2016–21. Image: LCP.

The tailwinds underpinning these trading opportunities are growing stronger.

First, price spreads will increase as the system decarbonises, particularly on days where low prices are set by renewables and high prices set by gas.

Second, arbitrage opportunities become more frequent as wind dominates the shape of residual demand, driving further volatility.

Third, absolute price spreads also increase with rising gas prices due to the ranging efficiencies of gas plant in the merit order, and newspapers frequently remind us how susceptible gas prices are to severe spikes (which seem set to continue following Russia’s invasion of Ukraine). 

Duration

The lifting of the 50 MW planning restrictions, and the growing focus on transmission opportunities, mean planned project MW capacities should have surged. Indeed they have. But planned MWh is outgrowing planned MW. This manifested itself most strongly in the recent T-4 Capacity Market results, with a clear market shift to investing in longer duration batteries: fully 50% of cleared new build battery capacity was two hours or longer.

Figure 2: Duration of batteries in 2022 T-4 Capacity Market results. Image: LCP.

Such additional project cost can only be justified if the revenue opportunity from the sale of energy has increased. That is visible in both LCP’s forecasts for higher future Balancing Mechanism (BM) and intraday volatility, and the historic data for 2021, with extraordinary spikes in January 2021 and September through to December (Fig. 1).

LCP’s back-tested data shows the excess returns that longer duration installations now deliver due to the deeper wholesale opportunity: £60/kW pa for 2 hours eclipses £34/kW pa for 1 hour. There is excitement about the recent re-engagement of storage projects in the BM.

However, one aspect is frequently overlooked. Batteries are competitive with gas peakers in the BM due to peakers’ high feedstock costs: gas prices.

These reflect more cyclical than structural factors, meaning a future reversal is likely to some degree. Little analysis has yet been published on the link between gas prices and BESS revenues, but it cannot be questioned.  

However, even if gas prices moderate, batteries should remain more active in arbitrage this year for a second reason: ancillary saturation.

Some already forecast this to be a defining feature of 2022 (e.g. Enhanced Frequency Response expiry, Dynamic Containment Low Frequency reduction, smaller Dynamic Regulation and Dynamic Moderation markets replacing Firm Frequency Response).

As competition grows in these shallow markets, arbitrage opportunities will set the effective price of ancillary provision through its opportunity cost, sealing arbitrage as the key focal area for batteries.

Funding

The funding model for UK BESS is in flux.

BESS 1.0

Even as recently as 2020, BESS investment equity was scarce, forcing under-equitised project developers to seek debt funding at almost any cost.

Efforts to bang a square project finance peg into a round merchant hole, resulted in the bankable ‘floor-price off-take contract’ model, which did little to enhance returns. But it got projects built. 

BESS 2.0

As awareness and installations grew, making track record demonstrable (vs hypothetical), the availability of BESS equity and debt has increased. But not equally. UK BESS debt finance is currently dominated by just two lenders, whereas we now have an abundance of potential equity investors.

The result is that developers are no longer reliant on debt, and can eschew offtake contracts that impede project returns, provided their investors believe in the fundamental business case of merchant batteries. 

Simultaneously, the offtake market improved noticeably in 2021, offering higher floors and better ceiling terms as confidence and competition among offtakers grew. This helped debt LTVs shift rapidly from below 30% to over 50% without ramping borrower spreads (albeit supported by falling equipment capital costs, which will not recur in 2022).

And crucially for developers, the nexus between lenders and offtakers improved as warranties adapted to stacked revenue models. As a result, debt is increasingly competitive as a source of funding, despite bountiful equity. 

BESS 3.0?

There are several, often unclear and conflicting, implications in the shift from power to energy, which will reshape the financing of BESS projects.

The shift to arbitrage represents a shift to a more fundamentally merchant (but no less bankable) model.Longer durations open up longer term bankable revenues (such as the Capacity Market and NGESO pathfinders).Longer durations support greater asset finance capability, so may support yet higher LTVsThe fundamental link between BM spreads and gas prices could even create hedging opportunities that reduce funding risk.

Debt

Industry lenders have worked to create innovative and effective funding structures that are now increasingly attractive. A few future trends are likely. 

First, more lenders will enter the market. Not just at the portfolio level (Gresham House 20 Sept 2021), but at the asset level too. This is as much a necessity as a probability.

As project numbers, capacity and duration increase, and lending exposure accelerates, UK BESS is over-reliant on the pioneering work of the market leading lenders, whose appetite cannot be infinite. Other participants are already eyeing entry.

Second, the blended project/asset finance model may continue to grow in sophistication. The banking industry developed sophisticated products to accommodate the merchant risk inherent in project finance of volatile commodity industries and large-scale CCGTs.

So, the expertise to enhance BESS lending products already exists, albeit elsewhere, and has not yet been integrated in BESS financing structures to enhance them.

Third, as the industry achieves critical mass, mezzanine lenders should emerge to supplement senior lending, as we have observed in the USA.

Equity

Historically, we principally saw project equity seeking seniority in distributions, but equity provision is becoming more competitive, with growing appetite for corporate equity attracted by the exponential potential of a globally scalable industry.

To date, this has principally come from overseas investors, and while that appetite has not abated, there is finally greater interest from domestic equity capital too. 

A countervailing thought

The system tightness, manifest in the high price spikes observed in the balancing market and intraday pricing, has another influence, often overlooked in the current exuberance.

They are symptoms of system strain: market signals of the need for more flexible capacity in the market – including storage.

Until that need is met, and the system is less strained, batteries are a welcome solution for system operators: regulators are unlikely to impede their deployment. It is currently a cottage industry serving an acute system need. It would be a brave regulator who intervened at this stage, but that will not always be the case.

As the storage industry swells and system strain abates, re-regulation of the storage industry becomes more likely, which the BESS industry will ultimately need to navigate, and perhaps welcome. 

Figure 3: System tightness is manifest in day-ahead pricing, 2018–2022. Image: LCP

Conclusions

Some of our expectations for the evolution of UK BESS will prove incorrect, but we have tried to highlight some key trends emerging in business model, revenues, configuration, and funding; there is also sufficient dynamism for the industry to adapt. 

2021 witnessed transformational progress, but the UK BESS industry is still highly immature: its capital providers, data sources, processes and advisors are emerging. Increased maturity will reduce its friction costs, execution times and potentially the cost of capital.

We are confident of further evolution in 2022.

About the Authors

Charles Lesser is partner and head of UK at Apricum – The Cleantech Advisory. Apricum has significant expertise in equity funding and project finance advisory, as well as its strategy teams’ expertise in the industry’s evolution and opportunities.

Rajiv Gogna is partner, energy technology & analytics, LCP. LCP provides the market with data-driven, fundamentals-first, grounded forecasts that are trusted by government, NGESO and key industry players.

Louise Dalton is partner, energy & climate change at CMS, which has been advising developers and investors in relation to the deployment of energy storage in the UK (including equity and debt funding and the full suite of revenue arrangements, construction and O&M documentation) since 2016.

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Rendering of how another AGL battery storage facility, at Torrens Island in South Australia, will look when completed. Construction began in November 2021 with Wärtsilä providing BESS technology. Image: AGL.

Australia’s biggest utility company looks set to be in ownership of the country’s biggest battery storage facility so far.

Integrated energy generation and retail company AGL has proposed the building of a 500MW/2,000MWh battery energy storage system (BESS) as part of a large-scale renewable energy hub in New South Wales (NSW).  

Hunter Energy Hub would be built at the site of Liddell power station, a coal power plant set for retirement by the end of April 2023, with the first units scheduled go offline next month. AGL wants to make it the company’s first example of a ‘rehabilitated’ thermal coal site.

On Saturday (19 March), AGL announced that the grid-scale battery project had been granted approval by the NSW state government Department of Planning and Environment (DPE). 

In megawatt-hour terms, it would be more than four times the size of the Victorian Big Battery, the 300MW/450MWh BESS which went online a few months ago and currently holds the crown for Australia’s largest project of its type, although several other large-scale projects in excess of 100MW are on their way.

As well as the BESS, the Hunter Energy Hub will include wind generation, solar, pumped hydro energy storage (PHES), a waste-to-energy plant and a green hydrogen pilot plant, the company’s chief operating officer Markus Brokhof said. 

“As Australia moves forward and we increase our reliance on renewable generation, batteries will be critical in providing the storage needed to maintain a consistent, reliable and affordable energy system,” Brokhof said. 

“I want to thank NSW DPE for acknowledging the important role that this battery will play in the Liddell energy hub and with approval now granted, the next step will be reaching a final investment decision before construction begins.”

Liddell power station was only acquired by AGL as recently as 2015 but ownership proved problematic immediately and cost the company AU$123 million (US$90.8 million) investment into improving reliability in its first couple of years. 

As early as 2017, AGL leadership said renewable energy with energy storage would be the economic successor to coal as a mainstay of Australia’s National Electricity Market (NEM) and published its first plan to retire Liddell. 

AGL’s ‘Climate statement and commitments’ plan published in 2019 announced that the generator-retailer intends to deploy 850MW of new battery capacity at its thermal power plant sites by the 2024 financial year, including the 500MW Hunter Energy Hub BESS. 

Construction has been underway on a 250MW BESS project at Torrens Island natural gas plant, South Australia, since late last year. Two further large-scale projects at sites in mining town — and latterly renewable energy hotspot — Broken Hill in NSW and at Loy Yang coal power plant site in Victoria are also making progress to their start of construction, AGL said.

The changing economics of the NEM are leading to coal becoming less and less competitive against renewables and energy storage, with other major Australian energy generator-retailer companies Origin Energy and EnergyAustralia outlining plans in the last few weeks to put BESS plants on retiring coal sites.  

While coal may be on the retreat, there was dismay in NSW’s Hunter Valley region however in February when federal government-backed plans to build a new 660MW gas and diesel peaker plant won support from the opposition, despite expert and energy storage industry voices advising that renewables and storage would be the better option economically as well as environmentally.

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Ukraine’s first and only grid-scale battery system is at the site of the now-occupied nuclear power plant in Zaporizhzhya. Image: DTEK.

RePowerEU, the European Commission’s plan to increase energy security and lower dependency on Russian gas imports, needs to focus on pairing renewable energy with energy storage.

The argument has been put forward by the European Association for Storage of Energy (EASE) after the European Commission (EC) revealed the RePowerEU strategy earlier this month.

The invasion of Ukraine begun by Russia in February prompted the commission into making proposals to become independent of Russian gas, which accounts for 40% of imports into the EU. About 45% of its coal and 25% of its oil also come from Russia. 

The plan as proposed would drive forwards development of renewable energy and energy efficiency — sister site PV Tech noted that 420GW of additional solar PV capacity would be deployed in the EU by 2030 — with speedier permitting, encouraging electrification of industry and creating power purchase agreement (PPA) financing structures among measures to be taken.

RePowerEU nonetheless sees gas playing a big role, suggesting a 90% target for filling up underground gas storage before next winter and diversifying suppliers of gas to include higher shares of liquid natural gas (LNG) and pipeline imports from non-Russian sources. 

Europe was already experiencing surging electricity prices before the war began and the EC is looking into how to limit the impact of gas price rises in electricity markets and could work with regulators to figure out changes to electricity market design. 

The plan also includes an emphasis on hydrogen, with EC president Ursula von der Leyen having said that the “quicker we switch to renewables and hydrogen, combined with more energy efficiency, the quicker we will be truly independent and master our energy system”.

However, trade association EASE said last week that the diversification of gas suppliers as a strategy risks locking in dependency on fossil fuels. Instead, RePowerEU should make renewable energy paired with energy storage its major focus, EASE argued. 

Gas plants are increasingly being called on to enable the integration of variable renewable energy generation from solar PV and wind onto the European grid network, providing flexible backup generation as more and more coal retires off the system. 

Therefore, increasing renewable energy targets will not in itself make the EU independent from gas imports — which account for 90% of consumption already — as gas peaker plants will continue playing that grid flexibility role. 

Energy storage however can shift energy from when it gets produced to when it is demanded and EASE said it “must be a pillar of an energy secure, decarbonised Europe”.

The association also noted that the growing procurement of dispatchable backup generation from gas means electricity prices will continue to rise. Renewable energy produced at times of surplus is being curtailed and wasted and in the end homegrown energy is thrown away by Europe, “only to pay [Russian gas company] Gazprom to fill the gap,” EASE said. 

EASE said the humanitarian and climate crises unfolding have to serve as a wakeup call for policymakers in Europe that enabling a true energy transition is the only way to become “truly energy independent”. 

Policy is needed that supports diversification in the profile of energy storage deployed: in particular, market structures do not exist that value long-duration energy storage of the type that can support generation during periods when renewable energy production is low and can enable shifting of energy demand from peak to off-peak.

EASE called for changes in European energy market rules that don’t value decarbonisation and mean that capacity auctions are still won by gas peaker plants. 

A factsheet on the proposed RePowerEU plan can be found here.

Ukraine, Moldova grids synchronise with European network

Meanwhile, Ukraine and Moldova’s power grids have been synchronised to the Continental European Power System in partnership with other national transmission system operators, two years earlier than originally planned.

The European Network of Transmission System Operators (ENTSO-E) has been working with counterparts in the Ukraine-Moldova power system since 2017 on bringing the pair into the Continental Europe Synchronous Area (CESA) — the world’s largest synchronous electrical grid in terms of connected power. 

Ukraine’s Ukrenergo and Moldova’s Moldelectrica made the emergency request to speed up the project, which was meant to be completed in 2024. Successful islanding trials for their grids, which had already been scheduled to take place, went ahead amid the start of the invasion in late February.

It means the pair will share the platform for maintaining grid frequency at 50Hz — which provides common markets for the primary containment reserve (PCR) ancillary service, also known as frequency control reserve (FCR) that battery storage competes in. 

The CEO of DTEK, Ukraine’s largest energy sector investor, described the technical synchronisation as a “key step towards energy independence from the aggressor”. It means Ukraine’s energy sector has an “airbag” to minimise any disruptions, DTEK’s Maxim Timchenko said. 

DTEK inaugurated Ukraine’s first-ever grid-scale battery energy storage system (BESS) project in May 2021, supplied by Honeywell with support from SunGrid and other partners. 

Timchenko has described energy storage as being vital for Ukraine’s energy security and decarbonisation efforts. However the fate of DTEK’s first BESS is uncertain — it is located at the site of the company’s nuclear power plant at Zaporizhzhya, which has been seized and occupied by Russian forces.

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Lithium batteries and packs at a Li-Cycle Spoke facility. Image: Li-Cycle.

Lithium-ion battery recycling specialist Li-Cycle has seen its revenues rise as it commercialises its business, although the cost of expansion to meet expected future demand remains high.

The Canada-headquartered company has claimed its two-step process for battery recycling can recover and process 95% of the materials they contain, including lithium, manganese, cobalt and nickel. 

Li-Cycle’s shares listed on the New York Stock Exchange (NYSE) in August last year after merger with listed special purpose acquisition company (SPAC) Peridot Acquisition Corporation. 

Li-cycle noted in financial disclosures ahead of the transaction that it only began commercial operations during 2020, as it rolls out a network of so-called ‘Hub & Spoke’ facilities, strategically located near to demand and production centres for the growing lithium battery economy. 

Its financial year runs to the end of October and from US$64,000 of revenues in the 12 months to 31 October 2019, by the same period the following year this had grown to just over a million dollars. Meanwhile that full-year performance was equalled in the first quarter of its 2021 financial year, ending 31 January 2021. 

In the first quarter of its fiscal year, revenues were US$3.8 million, a 277% increase year-on-year. Production of ‘black mass’ intermediary materials recovered from spent batteries at Li-Cycle’s existing Spoke facilities in Ontario and Upstate New York increased more than 190% over the year before.

Two further Spokes will come online during this year — in Alabama and Arizona — while a Hub in Rochester, New York, is expected to come online in 2023. The Spokes shred charged, used batteries from different types of applications and create the inert, black mass product, Hub facilities will then hydrometallurgically process cathode and anode materials into battery grade end-products for reuse. 

Each of the two new Spokes will be capable of processing up to 10,000 tonnes of lithium battery input annually, while the Hub should be able to process 35,000 tonnes of black mass — equivalent to 18GWh of Li-ion batteries each year to produce 42,000 to 48,000 tonnes of nickel sulphate, 7,500 to 8,500 tonnes of lithium carbonate and between 6,500 to 7,500 tonnes of cobalt sulphate. 

Cost of expansion and growth to meet recycling demand

The company has some big deals in place with off-takers and feedstock providers and in December announced that LG Chem and LG Energy Solution had agreed to make an equity investment into its business as well as a 10-year deal to buy nickel from its facilities.

Li-Cycle said in its financial results announcement that those commercial agreements are expected to be concluded in April, having extended the timeframe for negotiating contracts past an earlier date set in mid-March. 

Li-Cycle’s SPAC merger raised more than half a billion dollars, including a private investment in public equity (PIPE) commitment from investors and the company said it ended Q1 FY2022 with roughly US$522 million cash on hand.

It also recorded US$28.5 million net profit for the quarter, as opposed to a net loss of about US$6.8 million in Q1 FY2021.

Ahead of its listing, the company had said that expanding its commercial scale and reach was likely to be an expensive endeavour but pointed to a huge addressable market opportunity. In the first quarter of FY2022, that related to operating expenses reaching US$22.6 million, a big jump from US$7.2 million in Q1 FY2021.

Personnel costs have grown, as have professional fees and administrative costs related to operating as a public company, while at the same time increased production of black mass meant higher running and materials costs. 

A quarterly adjusted EBITDA loss of US$16.9 million was reported, considerably higher than US$3.7 million in the previous year’s same period, which again Li-Cycle said was largely in relation to higher staffing and network development costs as the company grew and expanded its business. 

Li-Cycle, which has told Energy-Storage.news it views the stationary energy storage system (ESS) industry as an important off-take as well as input sector, claimed it has a strong balance sheet position to be able to fund its pipeline of Spokes and Hubs. It is advancing further Spoke projects in Norway and in Germany which it aims to be able to commission during 2023. 

The company said it will provide additional detail during this financial year on the approach it will take to financing and that it is “evaluating multiple capital sources, including but not limited to debt-based financing alternatives” as well as optimising the cost of capital and its future flexibility.

Recycling as an integral aspect of the battery value chain is becoming an important consideration for its stakeholders, from politicians to end-customers and the many different industries and segments involved.

Another company, Ascend Elements, is opening the largest single-site lithium battery recycling operation in North America in August this year and recently announced a deal to take manufacturing scrap from two gigafactories being built near its facility in the state of Georgia by SK.

Mercedes-Benz also just announced that its forthcoming battery gigafactory in Germany will include a pilot recycling plant, which is being developed by a newly-formed subsidiary of the luxury automaker, called LICULAR.

The European market could have added impetus for sustainability, with the European Union set to introduce regulations for batteries including minimum recycled content and carbon footprint labelling requirements over the next few years.

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Madison Gas and Electric (MGE), in partnership with We Energies and Wisconsin Public Service (WPS), subsidiaries of WEC Energy Group, received approval from the Public Service Commission of Wisconsin to purchase solar energy and battery storage from the Paris Solar-Battery Park. MGE will own 20 MW of solar energy and 11 MW of battery storage from the 200 MW solar and 110 MW battery storage facility in Kenosha County, Wisconsin.

“We are working every day toward deep carbon reductions and net-zero carbon electricity by 2050,” says Jeff Keebler, MGE’s chairman, president and CEO. “The Paris Solar-Battery Park continues the progress we’ve already made increasing renewable energy, reducing carbon emissions and advancing new technologies to benefit all our customers. MGE’s first addition of utility-scale battery storage is a new and important technology to help us reach our sustainable energy goals.”

Located on about 1,500 acres in the Town of Paris in Kenosha County, the Paris Solar-Battery Park will feature up to 750,000 solar panels.

We Energies and WPS will own the remaining 180 MW of the solar output and 99 MW of battery storage from the project. Construction is expected to begin this year, and the project is expected to begin serving customers in spring 2023. Invenergy LLC is the project developer and will construct the Paris Solar-Battery Park.

MGE has a goal to reduce carbon emissions at least 80% by 2030, consistent with global climate science to limit global warming. MGE continues to transition its energy supply to cleaner sources, with the anticipated addition of nearly 400 MW of wind, solar and battery storage between 2015 and 2024.

Image: Photo by Andreas Gücklhorn on Unsplash

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It is Mitsubishi Power’s eighth BESS project in California. Image: Mitsubishi Power.

Californian investor-owned utility San Diego Gas & Electric has ordered a 10MW, six-hour battery energy storage system (BESS), dubbed Emerald, from Mitsubishi Power.

Mitsubishi is supplying its solution for the Pala-Gomez Creek BESS project announced last month when it was authorised by California Public Utilities Commission (CPUC), as reported by Energy-storage.news. The BESS is set to enter commercial operation on 31 January 2023.

The BESS project Mitsubishi Power is delivering to is one of three being developed for SDG&E totalling 161MW/664MWh which were authorised, with the other two being provided by Fluence and ConEdDev.

It is the Tokyo-headquartered company’s eighth BESS project in California bringing the total in the state to 280MW/1,140MWh. The company’s Emerald storage solution includes full turnkey design, engineering, procurement, and construction, as well as a 10-year long-term service agreement.

The project will repower an existing energy storage site, the company said, and will use its energy management system (EMS) the Emerald Integrated Plant Controller. The BESS is a lithium iron phosphate (LFP) battery system.

The Pala-Gomez Creek BESS is to be located at an existing SDG&E battery storage yard adjacent to the Pala substation in San Diego county. It was the result of efforts by the investor-owned utility to identify potential future energy storage sites that can leverage existing infrastructure.

California is the main driver of the energy storage market in the US, accounting for 90% of utility-scale deployments in 2021. Its three investor-owned utilities have in the last few years been directed by the regulator to procure additional, clean energy resources to bolster the grid in light of fossil fuel retirements but also increased wildfire risk. It plans to have a zero-carbon electricity grid by 2045.

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In U.S. Energy Information Administration’s (EIA) Annual Energy Outlook 2022 (AEO2022) Reference case, which reflects current laws and regulations, EIA projects that the share of U.S. power generation from renewables will increase from 21% in 2021 to 44% in 2050. This increase in renewable energy mainly consists of new wind and solar power. The contribution of hydropower remains largely unchanged through 2050, and other renewable sources of power generation – such as geothermal and biomass – collectively remain less than 3% of total generation.

In the AEO2022 case, EIA projects that the contribution of total solar generation, including both utility-scale solar farms and small-scale rooftop end-use systems, will surpass wind generation by the early 2030s. Early growth in wind and solar is driven by federal tax credits set to expire or significantly decline by 2026, but declining costs for both technologies play a significant role in both near- and long-term growth.

Meanwhile, it projects that the total share of U.S. fossil fuel-fired power generation decreases from 60% to 44% in the AEO2022 case as a result of the continued retirement of coal generators and slow growth in natural gas-fired generation. Although natural gas-fired generation increases in absolute terms, the share of natural gas in the total generation mix decreases slightly, from 37% in 2021 to 34% in 2050.

In the reference case projections, the natural gas share remains consistent despite several projected retirements of coal and nuclear generating units, which cause the shares from those sources to drop by half. Generation from renewable sources increases to offset the declining coal and nuclear shares, largely because existing regulatory programs and market factors incentivize renewable sources.

Energy storage systems, such as stand-alone batteries or solar-battery hybrid systems, compete with natural gas-fired generators to provide electric power generation and back-up capacity for times when non-dispatchable renewable energy sources, such as wind and solar, are unavailable. Because energy storage shifts energy usage from one time to another and is not an original fuel source of energy, EIA did not include it in the generation graphic in this report. Based on planned projects reported to EIA, energy storage capacity is expected to increase in upcoming years.

Image: Photo by Jadon Kelly on Unsplash

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Another RCID Solar project, FL Solar 5, which is part of the RCID Solar Philanthropic Initiative

Maxeon Solar Technologies Ltd. will supply approximately 400 MW of its high-efficiency shingled bifacial Performance line solar modules to Origis Energy for one of its U.S. utility-scale projects. Module deliveries will commence in June of 2023 and will conclude at the end of 2023.

“This 400 MW procurement agreement with Maxeon Solar Technologies is an important component to fulfill the robust Origis solar portfolio,” says Guy Vanderhaegen, CEO and president of Origis Energy. “The Maxeon technology will help ensure our solar plants meet performance goals to provide clean, competitively priced energy to our customers across the U.S. Additionally, Maxeon continues to be a pioneer in sustainability initiatives including its leadership with Environment, Sustainability and Governance (ESG). ESG factors are important to all Origis stakeholders, from investment partners to utilities and corporate energy buyers. “

Produced using proprietary manufacturing processes, the Performance line solar modules leverage Maxeon’s shingled cell technology, protected by 83 granted patents. Utilizing bifacial mono-PERC solar cells made on large format eight-inch G12 wafers, the Performance line offers efficiency along with enhanced shade tolerance and durability to reduce system lifetime energy cost.

“We are pleased to be selected by Origis Energy as a long-term partner,” comments Jeff Waters, CEO at Maxeon Solar Technologies. “Origis’ decision to invest in our Performance line validates the technology’s performance, durability and reliability advantage over conventional solar panels, as well as its competitiveness. Moreover, it proves the confidence utility-scale customers have in our ability to deliver on our commitments.”

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