Pacific Green has kicked off 2023 with significant advances in the development of its gigawatt-scale UK energy storage portfolio.
Recent weeks have seen Pacific Green Battery Energy Parks 2 Limited, a wholly-owned subsidiary of Pacific Green Technologies, Inc, acquiring 100% of the shares in Sheaf Energy Limited from UK-based energy originator Tupa Energy (Holdings) Limited.
The transaction is a key milestone in the development of Sheaf Energy Park, a 250 MW, 375 MWh energy storage project located next to the Richborough Energy Park in Kent, England, where Pacific Green is already constructing two battery energy parks.
The design and construction of Sheaf Energy Park will begin in the first half of 2023, with the project due to commence its 35-year operating life in April 2025. When operational, Sheaf Energy Park will be one of the largest battery projects in the UK.
Meanwhile, Pacific Green has already installed all the battery containers and power conversion systems for the Richborough Energy Park site.
Construction partner Instalcom is laying down many kilometres of cross-site cabling and work is also underway on the grid connection and supporting buildings. The battery modules for Richborough Energy Park are due to be delivered later this year.
The arrival of the containers follows a period of detailed design during which Pacific Green teams have worked in a virtual environment across international boundaries and time zones.
The project is a prime example of Pacific Green’s global capabilities, with UK personnel working alongside colleagues from the company’s Shanghai office, who conducted quality assurance and witnessed the factory acceptance testing.
The UK team is being supported on the ground by Fan Mingfeng, Liu Dawei, Huang Nan and Xu Mingming from Shanghai Electric and Gotion High-tech (SEG), Pacific Green’s manufacturing partner for energy storage systems.
SEG's support of the project is commendable—and is exemplified by its commitment to visiting the UK despite ongoing travel challenges stemming from a persistent COVID situation in China.
The team will remain in the UK to work with Pacific Green and Instalcom as we progress through the remaining installation phases and onto the crucial commissioning of the project. All components have now passed factory acceptance testing.
Once live, Pacific Green will benefit from a 10-year power purchase agreement with Shell Energy with a revenue floor and trading upside for the Richborough site. The Richborough and Sheaf energy parks are the first in a series of battery plant opportunities being offered by Pacific Green.
Thanks, in part, to the agreement with Tupa Energy, we are hoping to develop 1.1 GW of capacity by the end of 2025, or around 10% of all the battery capacity that the UK might end up installing this decade. This is a tremendous opportunity for investors.
In the UK, we estimate a battery system offering wholesale optimisation and ancillary services, and operating in the Triads and Capacity Market, should generate approximately £59 per kilowatt of capacity in base gross revenues a year.
Adding further applications, such as participation in the National Grid Balancing Mechanism, could deliver an additional £32 per kilowatt, pushing returns to £91 per kilowatt.
For a typical 100 MW battery project, that equates to around £9 million in revenue a year—and, with augmentation, the asset could have a lifetime of more than 30 years.
Richborough Energy Park in Kent is typical of a growing number of energy infrastructure opportunities in the UK as the country sets a course for net zero emissions.
Originally the site of a coal-fired plant, Richborough’s thermal power station was demolished in 2012 and its grid connection is now used to bring energy ashore from Thanet Wind Farm, formerly the world’s largest offshore wind project. Richborough also acts as a landing point for the 1 GW Nemo Link interconnector to Belgium, which entered commercial service in 2019.
Located optimally where energy generation comes onshore and servicing the high demand centre of London and the Southeast, the site benefits from a favourable payment regime for using the transmission network.
Indeed, we are interested in speaking to landowners elsewhere who may have suitable plots for other projects. The UK has a 10-point plan for a green industrial revolution that aims to cut the country’s net carbon emissions to zero by 2050. It is a plan that will require a lot of land.
Even though the plan prioritises protecting the natural environment, with much of the country’s low-carbon electricity generation coming from offshore wind farms and new nuclear power stations, it will be impossible to reach net zero without devoting space to energy systems.
Even a relatively small battery energy storage plant may need several acres of land. Assuming a footprint of around 80 megawatts per acre, the UK will need to find at least 156 acres of land to install the 13 GW of energy storage the electricity system needs by 2030.
That equates to around 118 football fields, and the requirement will only grow as the UK adopts more clean energy after 2030. For landowners, a big attraction is that battery plants can be built on industrial land or brownfield sites that might otherwise have little commercial value.
Renewable energy projects such as battery plants and solar farms can, subject to planning consents, be up and running within one to two years and can provide stable lease revenues for decades.
If you are a landowner, the green industrial revolution could be an opportunity to create new revenues from land that may be non-productive or undervalued. We can tell you if your land holds value in supporting the UK energy transition.
We are looking for landowners willing to enter a short exclusivity agreement so we can evaluate the suitability of sites for development. Landowners can benefit from supporting the UK’s push to energy independence and net-zero emissions while gaining valuable revenues.
One final point of interest for those interested in this growing financial opportunity: UK battery plants are not dependent on government subsidies and are expected to deliver sustainable revenues indefinitely into the future as an integral part of the UK’s low-carbon energy system.
Whether you are an investor, a landowner or a business with land assets, this is a chance you will not want to miss.
Publish date: 24 January, 2023