The government’s National Wealth Fund (NWF) has pledged more than £200 million to support the UK’s new battery storage project, part of a £500 million investment package designed to strengthen the country’s clean energy infrastructure.
The deal brings NWF to co-investment with Australian pension fund Aware Super and infrastructure investor Equitix Eelpower, a professional battery developer Eelpower. Construction of three new storage projects will begin immediately, with a green light expected later this year.
NWF said its decision was driven by the urgent need to conduct more grid-scale storage to manage growing reproduction. The UK’s electricity system regularly pays for wind farms because the network cannot handle too much supply (a practice called restriction) that costs consumers hundreds of millions of pounds a year.
“Batteries are a priority area for the NWF,” a spokesperson said. “As we transition to clean energy, they provide the flexibility and security needed to balance the grid.”
The government has set a goal to bring battery capacity up to 27GW by 2030, a six-fold increase from the current 4.5GW. Eelpower’s investment is designed to provide at least 1GW.
However, the move has attracted the attention of some industry figures who believe there is already a lot of private demand for battery projects. “It’s a little surprising. There’s no shortage of fair and debt investors in the industry,” a senior developer told the Times.
Cornwall Insight’s analysis shows that up to 61GW of battery storage is already in the pipeline, seeking grid connection by 2030, more than twice the government’s goal.
However, the industry faces headwinds. Revenue has proven to be volatile, partly because the National Energy Systems Operator (NESO) has selected fewer batteries than expected to provide. Battery funds are also struggling in the public market, listing trust transactions at discounts on their net asset value. The Harmony Energy Income Trust agreed to the acquisition earlier this year, citing limited ability to raise new capital.
Adam Bell, policy director at consulting firm Stonehaven, said the industry is facing a “short-term tightening of gaining equity” as NESO works to address operational challenges.
Supported by government funds of up to £27.8 billion, the NWF has the task of intervening in places lacking private finance and catalyzing investment in strategic sectors.
A NWF spokeswoman said: “We believe the debt market is in good shape in this area, but we have seen stock market struggles, with many existing investors looking to exit or get out of risk hazards, and their equity capital does not have enough new capital.
“We bring scale and presence to ensure projects continue to grow at the rate needed to achieve government goals, while also having confidence in the market.”
Despite criticism, the fund believes its intervention will ensure that the UK’s battery launch is keeping its ambition to decarbonize by 2030.
