Iberdrola Looking To Sell 49 Pct Stake In UK Offshore Wind Farm – Report
The title of this post, is the same as that of this article on offshoreWIND.biz.
This is the sub-heading.
Iberdrola has begun exploring the sale of 49 per cent of its East Anglia Two offshore wind farm project in the UK, according to a report by the Spanish media outlet Cinco Días citing unnamed sources.
These four paragraphs give more details.
The renewable energy developer has already engaged Bank of America and BBVA as financial advisors to assist with the potential transaction, Cinco Días writes.
Iberdrola’s interest in selling a nearly half stake in East Anglia Two mirrors previous deals in the East Anglia portfolio, where the company has brought in financial partners in two other phases, East Anglia One and East Anglia Three.
The 714 MW East Anglia One offshore wind farm is owned by Iberdrola’s UK arm ScottishPower Renewables and Macquarie’s Green Investment Group (GIG), with Octopus Energy having acquired a 10 per cent stake from GIG this April. East Agnlia One has been in operation since 2021.
In July this year, Iberdrola and UAE clean energy company Masdar announced what the companies said was the largest offshore wind transaction of the decade as they signed an agreement to co-invest in the 1.4 GW East Anglia Three project, currently under construction.
But then being bought and sold is the way of life for an offshore wind farm.
In 2018, I wrote World’s Largest Wind Farm Attracts Huge Backing From Insurance Giant, which contains this extract from the Times says this about the funding of wind farms.
Wind farms throw off “long-term boring, stable cashflows”, Mr. Murphy said, which was perfect to match Aviva policyholders and annuitants, the ultimate backers of the project. Aviva has bought fixed-rate and inflation-linked bonds, issued by the project. While the coupon paid on the 15-year bonds, has not been disclosed, similar risk projects typically pay an interest rate of about 3 per cent pm their bonds. Projects typically are structured at about 30 per cent equity and 70 per cent debt.
Darryl Murphy is Aviva’s head of infrastructure debt. The article also says, that Aviva will have a billion pounds invested in wind farms by the end of the year.
I wonder how long it will be before individual investors can fund their pensions, with a direct investment in a wind farm?
- The wind farm would surely be a better investment if it had an integrated battery to supply power, when the wind didn’t blow.
- It would probably also be a safer investment, if it had been generating electricity for some years.
After all, at the present time, you can invest in batteries through companies like Gresham House and Gore Street.
Are Goldman Sachs Stitching Together A Large Deal On Energy Storage?
In UK Infrastructure Bank, Centrica & Partners Invest £300M in Highview Power Clean Energy Storage Programme To Boost UK’s Energy Security, I talked about a deal to invest £300 million into energy storage company; Highview Power.
These three paragraphs are from the Highview Power news item, on which I based my post.
Highview Power has secured the backing of the UK Infrastructure Bank and the energy industry leader Centrica with a £300 million investment for the first commercial-scale liquid air energy storage (LAES) plant in the UK.
The £300 million funding round was led by the UK Infrastructure Bank (UKIB) and the British multinational energy and services company Centrica, alongside a syndicate of investors including Rio Tinto, Goldman Sachs, KIRKBI and Mosaic Capital.
The investment will enable the construction of one of the world’s largest long duration energy storage (LDES) facilities in Carrington, Manchester, using Highview Power’s proprietary LAES technology. Once complete, it will have a storage capacity of 300 MWh and an output power of 50 MWs per hour for six hours. Construction will begin on the site immediately, with the facility operational in early 2026, supporting over 700 jobs in construction and the supply chain.
Note.
- The UK Infrastructure Bank is a is a British state-owned development bank.
- Centrica plc is an international energy and services company.
- Rio Tinto is a leading global mining group that focuses on finding, mining and processing the Earth’s mineral resources.
- The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm.
- KIRKBI is the Kirk Kristiansen family’s private holding and investment company founded to build a sustainable future for the family ownership of the LEGO Group.
- Mosaic Capital are an American investment firm.
With six partners, that is just £50 million per partner.
As that sum is very much small change for the likes of these guys and the question of taking an equity stake is not mentioned in Highview Power’s news item, it looks like this deal could be a try-before-you-buy deal with some of the partners or a simple investment with others.
Consider.
- Gresham House, Gore Street and others have proven that investing in lithium-ion batteries give a good return on investment.
- The Carrington long duration energy storage facility will be located near to the 884 MW gas-fired Carrington power station. I suspect that Centrica and Rio Tinto will be interested to see how the hybrid power-station performs.
- Could the Lego Group owners be looking at using solar power, wind power and a LDES to reduce the carbon footprint of their stores?
I would assume, that all the investors would get full details on the performance of the batteries.
Someone To Build The LDES
In Bilfinger Drives Highview Power’s Innovative Storage Project, Accelerating The Energy Transition, I describe how German company will build the Carrington LDES.
The Advantages Of An LDES over a BESS
This is only a short list, of the advantages I see.
- An LDES is easily recyclable.
- The LDES has less exotic materials.
- An LDES can be built from zero-carbon steel.
- Highview are claiming a 40-year life for their LDES.
- Highview is already talking about 200MW/2.5GWh LDES systems.
- Two 200MW/2.5GWh systems working together with a wind or solar farm, can replace a 400 MW gas- or coal-fired station.
- I suspect one of Highview’s LDES systems could be placed offshore, if needed.
I also believe that Highview’s LDES systems could be incorporated into complex chemical plants to increase the efficiency.
Are Goldman Sachs Stitching Together A Large Deal On Energy Storage?
Everything now seems to be in place to build these LDES one after the other, to accelerate the energy transition.
With a good supply of orders and enough money to build each system, I cab see no reason, why several systems a month cannot be built and installed.
I have worked with companies like Goldman Sachs in the past, and I wouldn’t be surprised to find, that they have created the consortium, so that all members get the returns and recognition, they disserve.
Adding Lego Group To The Consortium Could Be A Masterstroke
The Lego Group has lots of stores and theme parks worldwide and a reputation for good design and environmental standards.
Last year, I wrote Bedford Depot’s Massive Solar Roof Helps Thameslink On Way To Net Zero. This was putting a solar roof on a rail depot, but surely buildings like this would be suitable for a Highview LDES.
Aura Power Secures £10 Million Funding From Novuna
The title of this post, is the same as that of this article on Solar Power Portal.
These two paragraphs introduce the deal.
Aura Power has announced the successful closing of a £10 million debt facility with Novuna Business Finance. Novuna is a part of Mitsubishi HC Capital UK PLC, designed to support projects from early development through to the operational phase.
Bristol-based Aura Power is developing an active pipeline of utility-scale solar PV and battery energy storage of about 12GW in the UK, Europe and North America. The funding will help progress global development for Aura, covering expenditures like grid payments, planning fees and legal land costs.
These two paragraphs describe some of Aura’s projects.
In December 2023, Aura was granted planning permission for a 100MW/400MWh battery energy storage (BESS) project in Capenhurst, Cheshire. It was the third UK project to receive planning permission last year, alongside Aura’s 49.9MW Horton Solar Farm located in East Devon and its 49.9MW Hawthorn Pit Solar Farm in Durham.
Aura has been active within the solar and battery industries, with a pipeline in development in excess of 20GW. Last week (2 May), following an appeal, the developer secured planning permission for an Essex solar farm that will have an export capacity of 30 MW.
Nearly, forty years ago, I started a finance company in Ipswich with a friend. Our financing was mainly directed towards truck leasing for companies moving containers to and from the Port of Felixstowe.
Before, I committed my money to that venture, I built a large mathematical model of the proposed business. I found, that there were some unique financial properties to leasing quality trucks, that meant losing large sums of money were difficult.
I wouldn’t be surprised that leasing battery energy storage (BESS) systems have a lot of things going for them, if you have the right contract.
This may explain, why there a large number of companies in the market of providing grid batteries.
- At the top end; Centrica, Rolls-Royce and SSE will supply you with one.
- Funds like Gore Street and Gresham House and others allow you to invest in batteries.
- At the other end of the market are companies like Aura Power.
I suspect, that as with truck-leasing company, the financial flows are very stable and investor-friendly, if you get the model right.
Octopus Energy Creates GBP 3 Billion Offshore Wind Fund
The title of this post, is the same as that of this article on offshoreWIND.biz.
This is the sub-heading.
Octopus Energy’s generation arm has launched a dedicated fund with Japan’s Tokyo Gas to invest GBP 3 billion (approximately EUR 3.5 billion) in offshore wind globally by 2030.
This is the first paragraph.
The fund, set up with a GBP 190 million (about EUR 217 million) cornerstone investment from Tokyo Gas, will invest in the development, construction, and operational stage offshore wind farms, as well as companies creating new offshore wind, with a focus on Europe, said Octopus Energy.
It’s almost as if Octopus Energy are planning to do for offshore wind power, what Gore Street and Gresham House Energy Storage Funds have done for battery storage.
It strikes me that a detailed purpose-built financial model, as I have built several times could give a lot of insight into the wind farms and their financing.
There is also a lot of technology coming on stream, that will help this sort of wind fund.
- In-farm energy storage will happen and this will be the obvious place to use energy storage to smooth out the power from offshore wind farms.
- Floating wind farms are becoming mature technology and appear to offering higher capacity factors.
- Floating wind farms may offer lower maintenance costs.
- Multi-Purpose Interconnectors are starting to be installed and will allow power to be sent to more than one destination in different countries.
- Wind farms are increasingly being linked to battery storage to smooth out the power from offshore wind farms.
- Electrolysers are being built offshore.
- Data analysis is playing its part in improving operational efficiency.
Now could be the time to take the plunge and build that offshore wind farm.
Carlton Power Secures Planning Consent For World’s Largest Battery Energy Storage Scheme
The title of this post, is the same as that of this news story from Carlton Power.
This is the sub-heading.
£750m 1GW Battery Project To Be Built At Carlton Power’s Trafford Low Carbon Energy Park In Greater Manchester
These three paragraphs outline the project.
Carlton Power, the UK independent energy infrastructure development company, has secured planning permission for the world’s largest battery energy storage scheme (BESS), a 1GW (1040MW / 2080MWh) project located at the Trafford Low Carbon Energy Park in Greater Manchester. The £750m BESS scheme will strengthen the security and resilience of the energy system in the North West of England, and support the energy transition and the growth of renewable power generation in the region.
Planning permission for the BESS was granted by Trafford Council, the local planning authority.
Subject to a final investment decision, construction of the battery storage scheme is expected to begin in the first quarter of next year (2024) with it entering commercial operation in the final quarter of 2025. Carlton Power is in advanced talks with companies to finance, build and operate the Trafford BESS.
I have a few thoughts.
It’s A Monster
This Wikipedia entry, lists the World’s Largest Grid Batteries.
- The current largest is Vistra Moss Landing battery in the United States, which has a capacity of 1600 MWh and an output of 400 MW.
- The Trafford BESS will have a capacity of 2080 MWh and an output of 1040 MW.
By both measures the Trafford BESS is larger.
Where Will It Get The Energy?
Consider.
- In Liverpool and Morecambe Bays there is over 5 GW of offshore wind farms either operational, under construction or planned.
- Carrington gas-fired power station has a capacity of 884 MW.
- The Western HVDC Link is a 2250 MW link between Scotland and Connah’s Quay in North Wales.
- I wrote about the proposed Mersey Barrage in Mersey Tidal Project And Where It Is Up To Now.
I can see enough renewable energy being generated to replace Carrington gas-fired power station.
Who Will Finance, Build And Operate The Trafford BESS?
There are two major Energy Storage Funds in the UK.
- Gore Street with 27 projects totalling 1.17 GW.
- Gresham House with 17 projects totalling 425 MW.
Note.
- There are other smaller funds.
- The figures given are cumulative outputs for the portfolios.
- Sourcing the large number of batteries might be a problem.
- As the maths of these batteries are now well-known, I would expect that finance shouldn’t be too much of a problem.
- Local companies like Liverpool Victoria or Peel Holdings could even take a position.
A large American contractor backed by US money could swallow the whole project.
That happened with North Sea oil and gas in the last century.
Is Highview Power’s CRYOBattery Still Planned?
Carlton Power’s news story says this about Highview Power’s plans.
In addition to Carlton Power’s two projects, Highview Power Storage Inc. is planning to build and operate the world’s first commercial liquid air storage system – a £250m 250MWh long duration, cryogenic energy storage system – on the Trafford Low Carbon Energy Park, which was until 1991 the site of the Carrington coal-fired power station. The Low Carbon Energy Park is located close to Manchester Ship Canal and the £750m Carrington flexible gas-fired power station which entered operation in 2016.
It seems that the CRYOBattery is still planned.
Conclusion
Manchester is getting a powerful zero-carbon hub.
Gore Street Energy Storage Fund’s Portfolio Increases To Over 1GW
The title of this post, is the same as that of this article on the Solar Power Portal.
By any measure a GW is a substantial amount of power and the article gives all the figures for the fund.
One thing, I feel, I can say, is that large grid-connected lithium-ion batteries, as deployed by Gore Street, are more reliable than the similar smaller batteries in e-bikes and e-scooters.
The media and especially the financial pages would have had a field day, if a lithium-ion battery caught fire. Certainly Gore Street and others building large batteries, don’t seem to have any planning permission problems from Nimbys.
UK Government Grants £30 Million For Long Duration Energy Storage Projects
The title of this post, is the same as that of this article on Solar Power Portal.
These two paragraphs outline the grants and their recipients.
The UK Department for Energy Security and Net Zero (DESNZ) is providing £30 million in grants for three long-duration energy storage (LDES) projects using novel energy storage technologies.
The three projects awarded funding are from Synchrostor, Invinity Energy Systems and Cheesecake Energy. Synchrostor and Cheesecake Energy are to receive £9.4 million each to fund thermal energy storage systems and Invinity Energy Systems receiving £11 million to develop a vanadium flow battery.
The UK Government seems to give out a lot of these grants for research and development purposes and from feedback I have received from recipients and also by applying my own experience, I am of the opinion, that they are spending tax-payers money more in a wise, rather than a foolish direction.
Cheesecake Energy
I wrote about Cheesecake Energy’s grant in Cheesecake Energy Collects £9.4m Government Funding.
The Government’s press release says this about Cheesecake’s grant.
Cheesecake Energy Ltd, Nottingham, which will receive £9.4 million to test their FlexiTanker technology which stores electricity using a combination of thermal and compressed air energy storage and uses a reversible air compression / expansion train to charge and discharge. They will then install pilot units at 2 sites within a microgrid development in Colchester.
If this project proves successful, it surely is one that can be duplicated in many places.
I have had my eye on Cheesecake Energy for some time and this could be their breakthrough.
Invinity Energy Systems
I first wrote about Invinity Energy Systems in UK’s Pivot Power Sees First Battery On Line By 2021.
The Government’s press release says this about Invinity’s grant.
Invinity Energy (UK) Limited, Scotland, which will receive £11 million to develop and manufacture their 7MW, 30MWh 4-hour Vanadium Flow Battery (VFB), the largest in the UK. Invinity will manufacture the 30 MWh VFB at the Company’s factory in West Lothian, Scotland. The location of the plant will be confirmed in due course.
In this article on renews.biz, which is entitled Invinity Wins Funds For 30MWh UK Battery, these two paragraphs introduce the project.
Invinity Energy Systems plc has today been awarded £11m in funding by the Department for Energy Security and Net Zero to build what it says is the largest grid-scale battery ever manufactured in the UK.
The £11m in funding will come from the Longer Duration Energy Storage Demonstration (LODES) Competition, with funding matched by Invinity’s, as yet unnamed, project partner.
These are other points from the article.
- It will be a fast-response 30MWh battery.
- The battery will be assembled at Bathgate in Scotland.
- It will operate as a stand-alone energy storage asset.
- It will be connected to the National Grid.
- Invinity’s vanadium flow batteries are an alternative to lithium-ion.
The aim is to go live by 2025.
This paragraph indicates the differences between a vanadium flow battery and a traditional lithium ion one.
Invinity said this battery is safer as they cannot catch fire, more durable as they do not degrade with use and are almost completely recyclable at the end of their 25+ year life, reducing environmental impacts and disposal costs for project owners.
I believe that there will come a point, when fully-developed vanadium flow batteries, will become very attractive for financial reasons to the successful energy storage funds like Gresham House and Gore Street.
If the UK government’s funding hastens the day, when energy storage funds feel that these new-fangled vanadium flow batteries are a safe investment, then it is money well spent.
It is not as though the money is going to an early start-up, as this page on the Invinity Energy Systems web site indicates at least a dozen installations.
This project for an as yet unnamed customer, which has a capacity of 30 MWh, is probably much bigger and the Government help is probably very much welcomed.
SynchroStor
SynchroStor was new to me, today.
The Government’s press release says this about SynchroStor’s grant.
Synchrostor, Edinburgh, Scotland, which will receive £9.4 million to build a Pumped Thermal Energy Storage (PTES) grid-connected demonstration plant operating at 1MW, with the ability to charge and discharge for a period of 10 hours, longer than current battery technology.
This page named Technology on their web site, explains their technology, both with words and diagrams.
It is probably the most complex technologies of the three batteries, but I don’t think that will be a problem.
Conclusion
The Government has given grants to three different storage technologies.
If all goes well three good sizable pilot plants will be created and those companies like Centrica, Gore Street, Gresham House, National Grid, Ørsted, SSE and others, will be able to judge, which system is best for their needs.
How Will Highview Power Affect The Lithium-Ion Grid Battery Market?
In this article on the Telegraph, Rupert Pearce, who is Highview’s chief executive and ex-head of the satellite company Inmarsat, discloses this.
Highview is well beyond the pilot phase and is developing its first large UK plant in Humberside, today Britain’s top hub for North Sea wind. It will offer 2.5GW for over 12 hours, or 0.5GW for over 60 hours, and so forth, and should be up and running by late 2024.
The Humberside plant is new to me, as it has not been previously announced by Highview Power.
- If it is built it will be megahuge with a storage capacity of 30 GWh and a maximum output of 2.5 GW.
- Humberside with its connections to North Sea Wind, will be an ideal location for a huge CRYOBattery.
- The world’s largest battery is at Ouarzazate Solar Power Station in Morocco and it is 3 GWh.
- The world’s largest pumped storage power station is Fengning Pumped Storage Power Station in China and it is 40 GWh.
The proposed Humberside battery also has a smaller sibling under construction at Carrington in Manchester.
This will have a storage capacity of 250 MWh and a maximum output of 50 MW.
Factors Affecting The Choice
Several factors will affect the choice between lithium-ion batteries and Highview Power’s CRYOBattery.
Reliability
Reliability is paramount and whilst lithium-ion batteries batteries have a high level of reliability, there probably needs to be more development and quality assurance before CRYOBatteries have a similar level of reliability.
Size
The largest lithium-ion battery, that has been proposed in the UK, is the 320 MW/640 MWh battery that will be installed at the Gateway Energy Centre in Essex.
This size of CRYOBattery should be possible, but this size is probably in range of both lithium-ion and CRYOBatteries.
Safety
The Wikipedia entry for Battery Storage Power Station has this to say about Safety.
Some batteries operating at high temperatures (sodium–sulfur battery) or using corrosive components are subject to calendar ageing, or failure even if not used. Other technologies suffer from cycle ageing, or deterioration caused by charge-discharge cycles. This deterioration is generally higher at high charging rates. These two types of ageing cause a loss of performance (capacity or voltage decrease), overheating, and may eventually lead to critical failure (electrolyte leaks, fire, explosion).
An example of the latter was a Tesla Megapack in Geelong which caught fire, fire and subsequent explosion of battery farm in Arizona, fire of Moss Landing battery farm. Concerns about possible fire and explosion of a battery module were also raised during residential protests against Cleve Hill solar farm in United Kingdom. Battery fire in Illinois resulted in “thousands of residents” being evacuated, and there were 23 battery farm fires in South Korea over the period of two years. Battery fires may release a number of dangerous gases, including highly corrosive and toxic hydrogen fluoride.
The long term safety of a CRYOBattery is probably not yet known in detail, but I suspect in some applications, CRYOBatteries could be safer than chemical batteries.
Environmental Factors
I suspect that CRYOBatteries can be built without any hard-to-mine or environmentally-unfriendly materials like lithium.
Cost
The article in The Telegraph, says this about costs.
Mr Pearce said Highview’s levelised cost of energy (LCOE) would start at $140-$150, below lithium, and then slide on a “glide path” to $100 with over time.
It does look that the all important factor of cost could be the clincher in the choice between the two systems.
For larger batteries, the CRYOBattery will probably have a larger advantage.
Conclusion
I can see Highview Power and their CRYOBatteries putting up a good fight against lithium-ion batteries, especially with larger batteries, where they have a larger cost advantage.
In the UK, we will know they have won an advantage, if the two big battery-storage funds; Gore Street and Gresham House, start to install CRYOBatteries.
Gore Street Energy Storage Fund Seals ‘Landmark’ Acquisition In Germany
The title of this post, is the same as that of this article on Proactive Investors.
This is the first paragraph.
“This is a landmark acquisition with compelling fundamentals which not only demonstrates our entry into new markets but also increases our operational cash generating assets, and further diversifies Gore Street’s portfolio.”
I would assume that this is a quote from someone at Gore Street.
A more engineering approach is taken in this article on Renewsables Now, which is entitled Gore Street Buys 90% Stake In 22-MW/28-MWh Battery In Germany.
Gore Street Energy Storage Fund certainly have ambition.
When Will Energy Storage Funds Take The Leap To New Technology?
This article on the Motley Fool is entitled 3 UK Dividend Shares To Buy Yielding 6%.
This is a paragraph from the article.
The first company on my list is the Gore Street Energy Storage Fund (LSE: GSF). With a dividend yield of just over 6%, at the time of writing, I think this company looks incredibly attractive as an income investment. It is also an excellent way for me to build exposure to the green energy industry.
Just as everybody has a fridge in their house to stop food being wasted, electricity networks with a lot of intermittent resources like wind and solar, needs a device to store electricity, so that it isn’t wasted.
Gore Street Energy Storage Fund is being very safe and conservative at the current time, often using batteries from one of Elon Musk’s companies.
You can’t fault that, but they are only barely making a dent in the amount of batteries that will be needed.
If we are generating tens of GW of wind energy, then we need batteries at the GWh level, whereas at the moment a typical battery in Gore Street’s portfolio has only an output of a few megawatts. They don’t state the capacity in MWh.
There is this statement on their web site, about the technology they use.
Although the projects comprising the Seed Portfolio utilise lithium-ion batteries and much of the pipeline of investments identified by the Company are also expected to utilise lithium-ion batteries, the Company is generally agnostic about which technology it utilises in its energy storage projects. The Company does not presently see any energy storage technology which is a viable alternative to lithium-ion batteries. However, there are a number of technologies which are being researched which if successfully commercialised, could prove over time more favourable and the Company will closely monitor such developing technologies.
They say they are agnostic about technology and are looking around, but they are sticking with lithium-ion technology.
That technology works, is safe and gives a good return.
But they are at least thinking about moving to new technology.
In the rail industry, it is common for rail leasing companies to get together with train manufacturers or remanufacturers to develop new trains.
As an example, Eversholt Rail and Alstom formed a partnership to develop a hydrogen-powered train for the UK, which I wrote about in Alstom And Eversholt Rail Sign An Agreement For The UK’s First Ever Brand-New Hydrogen Train Fleet.
Worldwide, there are probably upwards of a dozen very promising energy storage technologies, so I am very surprised that energy storage funds, like Gore Street and Gresham House have not announced any development deals.
Conclusion
Energy storage funds could benefit from using some of the financing methods used by rolling stock leasing companies.
The Anonymous Widower 