Investor appetite continues to grow for battery storage

By Mark Futyan, CEO Anesco

Back in May, I was delighted to take part in an Inspiratia hosted expert panel discussion, exploring the ‘coming of age’ of energy storage in the UK. Building on those conversations, the panel regrouped this week, looking in more detail at the ongoing challenges and opportunities faced by the sector.

I was struck by how much had changed in just a matter of months. We touched on issues spanning revenue optimisation, financing and investor confidence. I summarise the key takeaways below.

 Investor confidence is growing

The general consensus among the panel was that the market is strengthening. Falling costs, combined with new revenue streams and higher clearing prices in National Grid auctions, have all improved investment returns and, as a result, investor confidence is on the rise.

We have also seen a positive trend for new investor groups keen to enter the market – notably financial traders who see assets as a key asset with which they can hedge portfolio risks, and international investors. Energy storage is becoming an increasingly mainstream asset class.

However, a key challenge for new entrants to the market is the difficulty in de-risking revenue streams. So called ‘price floors’ in revenue optimisation contracts are insufficient to cover downside risk, and capacity market contracts are no longer material. As a result, battery storage remains a high risk / high return investment better suited to equity investment rather than project finance.

The scene is set for rapid growth

The conditions are right for accelerated investment. The market is liquid, with many new and large projects coming to market, alongside strong investor interest. All of this points to the likelihood of significant growth in the coming years.

For Anesco, battery storage is a technology we have long believed in. We installed the UK’s first grid-scale battery back in 2014 and developed a sixth of the country’s capacity to date. For new investors interested in the storage market, the end-to-end service we offer – from design and development to construction and market optimisation – simplifies an otherwise highly complex market, expanding the market beyond its specialist core.

I look forward to seeing how these green shoots develop and strengthen in the coming months and years.

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