Vitol in Joint Venture to Build Battery Storage Systems in U.K.

  • Partners to spend $311 million on energy storage pipeline
  • Two projects for enhanced frequency response to balance grid

Units of the commodities trader Vitol Group and the renewables investment fund Low Carbon Ltd. said they’d invest 250 million pounds ($311 million) to develop energy storage and distributed power-generation projects in the U.K.

Their first endeavor conducted by a venture between them called VLC Energy will be two lithium-ion battery plants in the U.K., according to a statement. The facilities will have a combined capacity of 50 megawatts and require a “multi million-pound” investment, according to an e-mailed statement. 

The projects will be in Cumbria and Kent, in England. Low Carbon previously won contracts in National Grid Plc’s enhanced frequency response, also known as EFR, tender in August and also qualified for the capacity market auction with delivery for 2020.

“Renewable energy is playing an increasingly important role in the U.K.’s energy mix, and as this role expands, the development of energy storage plants will be central to the future success of the U.K.’s energy network,” Roy Bedlow, chief executive officer at London-based Low Carbon, said in the statement.

Storage is often seen at the missing link to a fully-clean energy system, since wind and solar energy are intermittent and fossil fuels such as natural gas are still needed to fill the gaps when it’s not windy or sunny. Pumped hydro makes up nearly all existing electricity storage installations, but can only be deployed near a water source.

Batteries are getting better and cheaper, with costs declining 40 percent since 2014. Banks have recently begun to lend to battery projects, signaling that the technology is maturing. Utility-scale battery systems have been installed in the U.S. and Europe.

The U.K. will be using VLC Energy’s storage plants to keep the grid steady, which will let the nation install more renewables. The batteries can supply electricity at one second’s notice.

BNEF battery price survey indicates that lithium-ion batteries were priced at an average $273/kilowatt-hour in 2016.

The Cumbria and Kent projects have reached financial close and are now beginning construction. Low Carbon and VPI Immingham are targeting commissioning by autumn 2017. The total pipeline is expected to be deployed over three to five years.

EDF Energy Renewables Ltd., Vattenfall AB, EON SE, Element Power Ltd., RES and Belectric Solar Ltd. also won contracts to build power storage projects in the U.K.’s EFR tender.

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