Centrica Invests In Renewable Energy Storage Capabilities To Boost UK’s Energy Security And Accelerate Transition To Net Zero
The title of this post, is the same as that of this press release from Centrica.
These two paragraphs are effectively headings.
Centrica plc announces a strategic partnership and £70 million investment in Highview Power and its first clean energy storage project in Carrington, Manchester.
Centrica’s investment will be a key part of a £300 million funding package to develop the first commercial-scale Liquid Air Energy Storage plant in the UK, which will boost the UK’s energy security and accelerate the transition to net zero.
These four paragraphs give more details on the deal.
The investment, which forms part of our plans to invest between £600m – £800m a year until 2028, will be structured as £25m of convertible debt at Highview Enterprises Limited, being the Highview Power holding company and £45m of debt funding at the Carrington Liquid Air Energy Storage project, phased over the project construction. The investment delivers several benefits to Centrica:
Robust standalone returns aligned with Centrica’s capital allocation framework and returns thresholds
Aligned to our green-focused investment programme targeting assets which complement our existing capabilities, provide balance to the portfolio, and align to the needs of the energy transition
Includes rights to equity participation and energy optimisation from future projects in Highview’s £9 billion project pipeline.
At a first look, it appears to give Centrica robust returns and some security for their £70 million investment.
But it is the last paragraph that I like. Does it mean that Centrica can cherry-pick, the projects that it likes and fit its own objectives and expertise from Highview’s £9 billion project pipeline and take-up some equity?
Whatever it means, It looks like it will be good for Centrica.
Do the other partners have similar rights to equity?
Suppose Goldman Sachs have a long-term client in the Mid-West of the United States, who are an electricity generator, with perhaps half-a-dozen coal-fired power stations.
As the client needs to decarbonise and it is believed that Highview’s long duration batteries can replace small coal-fired power stations, it is likely that a Highview solution will at least be examined.
If the client goes down the Highview route, Goldman Sachs might like to continue their long-term relationship, by taking a share in the equity.
Rio Tinto Punts On British Start-Up To Plug Renewables Gap
The title of this post is the same as that of this article on the Australian Financial Review.
The article is a must-read and these are a few points.
- Highview is readying to take a big punt on the Australian market, with Rio Tinto and the Northern Territory government shaping up as potential customers.
- Highview is very committed to Australia. We think Australia can be as big as the UK for us, given their ambitions,
- Highview is working on concepts with Rio Tinto. And separate from Rio, we are well advanced in the Northern Territory with the government there to provide a solution to decarbonise the power grid.
- The process uses existing hardware from the gas industry, and the plant’s life should be at least 40 years – five times longer than a battery.
- Highview could replace fossil-fuel gas plants in situ, and could also be an alternative to the more complex and capital-intensive option of pumped hydro.
- Highview already had staff operating in Brisbane.
- Highview was negotiating the long-term contract with the government in Darwin, and had engaged Australian banks to start testing the market for a local fundraising.
- In Britain, Highview hopes to be putting four 2.5-gigawatt assets into planning this year – one in Scotland, three with Orsted in England.
As I said, the article is a must-read and it proves to me that Highview is on its way.
The Anonymous Widower 