The collocated battery storage market is currently nascent, said Francisco del Rio de Pablo of NTR. Speaking on a panel at Solar Media’s Renewable Energy Revenues Summit 2024, he said he foresees that the market is “going to grow very quickly and massively all across Europe.” At the moment, he added, the UK is the most advanced market.
In Europe, there is a growing demand for energy storage, but regulatory barriers and incentives are needed to overcome them. Long-term investment cases and revenue certainty are crucial.
For Rosalind Smith-Maxwell, director of Quinbrook Infrastructure Partners, nascent is an interesting term.
“In 2010, renewables was a single-digit percentage of power in the UK, and now we’re at about 50%. The penetration of renewables creates volatility, which creates the opportunity for batteries.”
So far, she added, regulation has just about been keeping up with market developments.
“We are trying to push regulators to make changes that allow more opportunities, and I think it’s because we are running a very fast pace. The power mix is changing without much certainty as to what it is changing to.”
Indeed, return on investment (ROI) is maximised by calculating expected revenues, and revenue forecasting is essential for making investment decisions. According to Chema Zabala, directing manager of Alantra Energy Transition, we need to consider different generation mix approaches.
Smith-Maxwell said: “A key part of how we’re trying to retain value and maximise the value of the asset is when to use it because when you buy a battery, you get maybe 10,000 cycles, and really it’s up to you to when you use those 10,000 cycles.”
Ultimately, the key is to look beyond the project’s value and the immediate payments to ask when the most valuable cycle will be for this asset. You need to look at the forecast analytics and forecast volatility and consider when you should start deploying new battery cycles to maximise ROI.