Various media outlets have reported that the Thurcroft battery storage project, which is the largest of its kind in the UK to date, was acquired by Gresham House Energy Storage Fund in early November and is now active in various electricity markets. Listed on the London Stock Exchange, Gresham House is the UK’s largest infrastructure fund that specializes in utility-scale battery storage.
The Thurcoft project is located in the county of South Yorkshire and has a capacity of 50MW (75MWh). It was previously developed and owned by Gresham DevCo and Noriker Power. The former is a subsidiary of Gresham House, while a 5% stake of the latter was also acquired by Gresham House in 2019. The acquisition of the Thurcroft project was completed at the start of this November.
The value of the deal totals £32.5 million (US$42.32 million), though there is also an additional payment of £0.75 million related to deferred contingent consideration. The Thurcroft project is 11th in the series of utility-scale battery storage projects operated by Gresham House. The energy storage portfolio of the infrastructure fund now has a total capacity of 265MW.
Gresham House is also in the process of acquiring another 50MW battery storage project near Wickham Market in the county of Suffolk. The deal is expected to be completed soon. John Leggate CBE, chairman of Gresham House, stated that the Thurcroft site is currently the largest in the fund’s battery storage portfolio, and its activation is an exciting event. Leggate pointed out that people in the UK have been paying attention on power fluctuations in the National Grid during the COVID-19 lockdown. Moreover, wind and solar installations continue to grow in number across the country. Therefore, the focus is now on the rising demand for large-scale energy storage systems that can offer instant and flexible support to the grid system when needed.
Before the Thurcroft deal, the fund’s largest battery storage project was located in the Red Scar Business Park (Lancashire). With a capacity of 49MW, the Red Scar project was acquired by Gresham House this January for £32.8 million.
Presently, the Thurcroft project is used by Flexitricity to provide flexibility and demand response. Flexitricity is a firm that operates in the reserve electricity market. It stated that this battery array, which is already starting to turn a profit, will be supporting the National Grid Electricity System Operator (ESO) in balancing the grid as more wind and solar installations are interconnected.
The contract between Flexitricity and Gresham House also entails the former taking over the management and optimization of the battery array at Thurcroft. Andy Lowe, director of Flexitricity, said that his firm will also collaborate with Gresham House in other projects in the future.
The Thurcroft project has been incorporated into ESO’s Balancing Mechanism (BM) and is producing revenue along with many other energy storage systems in the country. To balance the grid in real-time, Flexitricity has a control room that remotely monitors and manages energy storage batteries 24/7. The batteries’ charge and discharge profiles are continuously adjusted depending on the demand situation.
Additionally, the Thurcroft project has been participating in the wholesale energy market and tenders for frequency response and ancillary services. According to Flexitricity, the project has already been given lucrative daily contracts in the Dynamic Containment market. Dynamic Containment, together with Dynamic Moderation and Dynamic Regulation, constitute ESO’s new market regime for allocating opportunities related to frequency regulation. These market segments are grabbing a lot of attention lately as they will eventually replace Firm Frequency Response.
Lowe emphasized that flexibility is critical in the de-carbonization of the domestic grid system, so deploying storage batteries is the best approach for raising flexibility. Lowe also noted that investors have a very optimistic outlook on the energy storage market, and the activation of many large-scale energy storage projects this year is a positive development. The rapid response provided by storage batteries is something that ESO needs to maintain grid stability.
Flexitricity further stated that it is “off to a great start” with the Thurcroft project. The firm reports that it has been successful in maximizing revenues from the batteries under its management in various types of markets. For instance, the firm obtained high prices in the first-ever round of tenders for Dynamic Containment.
Recently, the government of the UK has implemented regulatory changes that are going to reshape the development of utility-scale energy storage projects in the country. The National Grid already has incorporated more than 1GW of energy storage systems. Moreover, some rules and restrictions for setting up battery arrays that are 50MW or larger have been loosened recently.
Ben Guest, managing director of Gresham House, indicated that the UK will have to build up at least 10GW of energy storage capacity in the next several years in order to have a smooth transition to full adoption of renewable energies in the utility sector. Guest also mentioned that Gresham House is aiming to own more than 350MW of operational assets by the end of this year.
Looking ahead, Gresham House will continue to make tangible contribution to the UK’s net zero target by 2050 and deliver strong returns to its investors at the same time.
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