Enel buys 25 MW UK battery project from Element Power

Enel has purchased the Tynemouth stand-alone battery energy storage system (BESS) project located in Newcastle, in UK, by acquiring 100% of the shares in Tynemouth Energy Storage Limited from the European based energy developer and operator Element Power.

The construction-ready project, which will be developed by Enel’s Global Thermal Generation division, uses a lithium-ion battery with a capacity of 25 MW (12.5 MWh) and is expected to be completed in early 2018. Enel’s overall investment in the project, including construction, is expected to total approximately €20 million (US$22 million).

Tynemouth is supported by a four-year Enhanced Frequency Response (EFR) contract with National Grid awarded to the project in last year’s EFR tender to provide grid balancing services. After four years, the project will participate to ancillary services and capacity market tenders.

Tynemouth BESS project represents for Enel an attractive investment opportunity with a fast time to market due to its short time for construction. The EFR contract secured by Element Power that supports the project was one of the best remunerated among those awarded in last year’s EFR tender, with a price of around £12/MWh. In addition, UK is one of the most advanced markets in the world for utility-scale battery storage systems and one of the first in having set a frequency regulation tender awarding only stand-alone battery storage projects. The country offers multiple revenues streams opportunities, including both fixed payments and market remuneration schemes, and features good growth potential, with analysts estimating that 700 MW of different kind of storage projects will be installed in UK by 20201.

Enrico Viale, Enel’s Head of Global Thermal Generation division, said:

“This transaction marks an important step forward in the growth of our Group in the promising and innovative sector of the stand-alone battery energy storage systems. Due to the increasing role of renewable energy sources, the growing need of grid balancing services and the fast reduction of technology costs, the BESS market is expected to grow exponentially in all geographies in the next years. For this reason, Tynemouth represents for Enel an opportunity to gain experience and strategic knowledge in building such projects, which can then be applied to other markets”. 

Mike O’Neill, CEO of Element Power commented,

“Element Power is delighted to work with Enel in delivering one of the country’s first battery storage facilities to provide ancillary value-added services to the UK’s National Grid. This project demonstrates Element Power’s capability to be one of the leading developers able to respond to the growing demand by network operators for a broad range of services. We look forward to continuing to work closely with Enel to successfully deliver a valuable 25MW EFR site for commissioning in early 2018.”

“Element Power is proud to be one of the first movers in this emerging grid and ancillary services market, the need for which has been driven by the integration of increasing amounts of affordable, clean renewable power onto legacy grid infrastructure. We are further encouraged by the cost savings such innovation brings to the general running of the grid and the positive impact this will have on industry and consumers alike.”