Santander invests £28.5m in UK battery storage firm
Banking firm Santander has become one of the first senior debt lenders to provide financial support to the energy storage sector, after backing an independent UK battery developer with a £28.5m funding investment.
Santander will invest £28.5m into UK-based Battery Energy Storage Solutions (BESS) to assist with the construction and operation of a grid-scale energy storage portfolio that is expected to reach a 100MW capacity by the end of 2018.
“We are delighted to have closed this landmark transaction with a new client in a new niche market segment: project finance for battery storage,” Santander’s head of infrastructure and renewable energy Howard Whitehead said.
“We believe we are one of the first senior debt lenders to close a project finance transaction in this space, a fact which underscores Santander’s desire to be a leader in this fast-developing sector.”
London-based BESS was formed in March 2017, but already owns and operates 14MW of grid-scale battery storage projects. A further 49MW of grid-connected batteries are set to come online at the end of this month, bring BESS’s total portfolio capacity to 63MW across eight sites.
Ripe for funding
UK law firm TLT advised Santander that the energy storage market is “ripe for debt funding”, and Santander cited the 13 renewable energy records broken in 2017 as a key reason to focus funds in this area.
Battery storage is viewed as a vital component to help balance the intermittency of renewables, which can only maximise performance in favourable weather conditions. Research notes that a smarter, more flexible power system that incorporates battery storage could create savings for the UK to the tune of £8bn by 2030. A separate report from regulators Ofgem notes higher savings, ranging from £17bn to £40bn by 2050.
BESS’s co-founder Nicholas Beatty added: “The UK’s power system is now the fourth cleanest in Europe. However, the pace of transition to a low carbon power system brings with it challenges for the National Grid in balancing the network and ensuring supply and demand is matched on a second by second basis.
“Such balancing of supply and demand only being possible by the introduction of new technologies like battery storage. We believe our company is uniquely placed to capture that market demand. We value the guidance and support provided by the Santander deal team in this complex transaction.”
Earlier this month, the UK's biggest portfolio of utility-scale enhanced frequency response battery storage sites was completed. The 50MW portfolio spans two sites including a 40MW battery park in Glassenbury, Kent and a 10MW battery park in Cleator, Cumbria.
As part of an edie webinar series, energy managers from top companies such as British retailer M&S and property developer Landsec revealed they are exploring the potential of battery storage technologies on their estates to boost energy resilience. Despite the interest, business uptake of storage projects is still in its infancy.