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2 July 2020

Developers plan battery storage with the UK’s solar revival

By Andries Wantenaar

The UK is looking at a major revival of its solar industry thanks to a change in government policy – but this time solar-plus-storage is the norm, as reflected in two announcements this week. Macquarie’s Green Investment Group and Enso Energy have formed a Joint Venture to develop a solar-battery pipeline aiming at an initial 1 GW portfolio, while EDF and Octo Energy will develop 200 MW of solar-plus-storage across England and Wales.

Enso Energy is a British company which has so far developed 1,500 MW of distributed generation in the country. This 1 GW plan is a big step up from 2018 and 2019, when it had 100 MW and 300 MW consented respectively – including gas peaker projects. Besides solar, Enso has a hand in gas peakers and pure energy storage projects – including a 50 MW battery set up in Bedford last year with Arlington Energy.

The specific projects proposed by Enso, so far, are less than 100 MW each in size, and they all have a battery energy storage component – very much something we have seen in the USA, where multiple developers have reported that nearly all of their planned solar portfolios have co-located battery installations. Germany and the UK are together set to make Europe one of the big four global markets for battery projects – along with China, the USA, and Asia Pacific.

EDF Group, originally a French utility, has an aim of 50 GW renewable energy and 10 GW battery by 2035; its UK division EDF Energy will be working with local Welsh partner Octo energy to find dual-use sites, such as on existing farmland.

Another developer taking part in the UK revival is SolarCentury – an originally British company which branched out overseas when government policy turned against solar and onshore wind in 2016-2017. The company has a 62 MW plant under planning in Wales.

The UK’s Solar Trade Association recently called for 40 GW of solar to be targeted by the government for 2030 – currently the UK has 13.4 GW installed. While 40 GW is unlikely to become the target, the surge in investor interest right now means that the pace of installations will definitely increase. In the stagnant two years prior to recent policy changes, just 500 MW was installed: but during the peak year of 2015, almost 4 GW was installed. A resurgence to 1.5 GW per year for the next decade would see solar capacity double to 30 GW. In our solar forecast we have plumped even higher at 35 GW by 2030.

The proximate cause for the UK upswing is the addition of onshore wind and solar to the Contracts for Difference (CfD) auctions, but the wider picture includes photovoltaic cost declines and the new phenomenon of cost-effective lithium-ion battery storage. SolarCentury’s 62 MW plant was actually announced in February, a couple weeks before the CfD policy changed.

SolarCentury has noted some criticisms of the CfD, even now. Observing that the CfD has been better suited to wind than solar in the past, the program needs to have a solar-plus-storage category. Mass solar development without energy storage would be liable to deliver too much of its power at the wrong times, with a resulting impact on profits and investment. A 2-year timetable would also be largely irrelevant to solar, whose development times are far faster than wind – beyond boosting investor confidence.

While the Solar Trade Association celebrated the new policy, it has also noted that issues remain – congested networks, dense planning processes and a lack of routes to market for exported generation. There is also some regulatory uncertainty from the Conservative government, whose green attitude is ambiguous at times.