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Octopus Energy group and Gresham House have agreed a “record-breaking” deal which will see the former’s Kraken platform manage a significant portion of the UK’s battery storage market.
The deal, billed as “the biggest of its kind in the world”, will see Gresham House Energy Storage Fund plc (GRID) lease 900MWh of its portfolio management to Kraken, which will charge GRID’s batteries when renewable energy is abundant and discharge them when the grid is under stress.
It is hoped the agreement will help slash the hundreds of millions of pounds paid out in annual curtailment costs, which add to consumer bills.
GRID was launched in 2018 and owns c.20% of the UK battery storage market, making it the country’s largest battery energy storage fund. Octopus will take over half of GRID’s large-scale battery fleet for the next two years.
The 14 batteries can store more than 900MWh of renewable energy which is enough to power 1 million homes for an hour, or a city the size of Birmingham.
Kieron Stopforth, head of flexibility at Octopus Energy, said: “Batteries unlock the clean and cheap energy system, storing green energy when it’s plentiful and providing it back to the grid when energy is expensive – and work even better with brilliant tech to manage that optimisation,
“Through this landmark deal with Gresham House Energy Storage Fund, we’re not only increasing the size of our virtual power plant to over 1.5GW, we’re also unlocking the power of flexibility, aiming to drive down grid costs.”
Ben Guest, fund manager of Gresham House Energy Storage Fund & managing director of Gresham House New Energy, said: “These new contracts with Octopus Energy secure revenues which are above those currently being achieved in the national market, demonstrating the value batteries can provide in balancing supply and demand for retail and wholesale market players.”
A record £920 million was added to customer bills last year to cover the costs of curtailment, according to recent analysis from renewable energy developer Field.
Earlier this year Parliament’s energy security and net zero committee chair Angus MacNeil warned that the ballooning level of payments renewables generators receive to constrain their output is a “landmine” which could explode like the Post Office scandal.
MacNeil urged policy makers to defuse the looming challenges surrounding constraint payments.
Furthermore, according to the Electricity System Operator’s inaugural Balancing Costs assessment, the annual cost of curtailment could rise to more than £3 billion by the end of the decade, before falling when major infrastructure projects unlock bottlenecks on the grid.
Surely this all depends on the physical location of the batteries. They cant soak up ‘excess’ wind generation in the far north if the electrons can’t be transported to the physical location of the batteries
Similarly if they are located behind the meter at wind farms in the far north and are fully charged, they cant discharge to meet a peak demand level in the south east if the electrons cant be transported there
Thus renewables are still curtailed (and paid accordingly) and fossil peaker plants fired up (and paid for both 24/7 availability and actual generation dispatched)