By Mark Futyan, Anesco CEO
2020 will go down in history as the year that coronavirus impacted upon all our lives. Here at Anesco – as in companies of all shapes and sizes across the world – we have needed to quickly adapt to new ways of working and I’m proud of the whole team for all their efforts in ensuring it remains ‘business as usual’.
But for Anesco, this year is significant in many other ways too.
In November, the company will celebrate its tenth anniversary and a decade spent supporting clients to realise the full commercial and environmental potential of renewable energy. This has seen us leading the way in areas such as utility-scale solar PV and battery storage, regularly being first to market with new innovations and developing commercial models that support the adoption of renewables.
Now, as we approach this milestone, we do so with a renewed focus and clear vision for business growth – one that will play to our core strengths, while supporting the UK to achieve its net zero ambitions.
Since being founded, Anesco has been developing, constructing and operating solar PV and energy storage assets, alongside our energy efficiency operations. To date, we have developed 750MW of such assets across 115 projects – including installing the UK’s first utility-scale battery storage unit back in 2014 and developing the country’s first subsidy-free solar farm, Clayhill.
A vast majority of these projects have been sold to investors, with Anesco providing ongoing operation. In recent years, we have also invested directly, becoming an asset owner, in order to help open up the market for subsidy-free solar and storage.
Now these markets are mature, we are looking to sell the assets we hold – as was always our long-term intention – and this will be an important step in the growth of the business. It will allow us to focus fully on Anesco’s core offering: providing full lifecycle engineering services to solar and energy storage markets.
It will enable us to raise new funds to help bring new projects into being and to grow our operations and maintenance, asset optimisation and ECO divisions. Overall, creating a truly integrated proposition for renewable energy investors.
At Anesco, our true strength has always been in providing specialist services to enable low carbon investments. We develop, construct, operate, maintain and optimise the value of solar PV and storage assets. By focusing on these core areas, we will retain our place at the forefront of energy market leadership, while continuing to drive the green agenda and the UK’s transition to net zero.
By Mark Futyan, CEO Anesco
I was delighted to take part in an expert panel discussion recently, exploring the ‘coming of age’ of energy storage in the UK and in particular, what the key challenges and opportunities are and how the market is expected to evolve moving forward.
As a company that has been at the forefront of this sector since day one – installing the UK’s first utility scale battery storage unit back in 2014 and developing one fifth of the UK’s total storage capacity – this is naturally a topic we are very passionate about. Especially in relation to revenue stacking and optimising asset performance for our customers.
There is no doubt the last year has been a challenging one for the sector, but I believe we are starting to see some green shoots in spite of the COVID-19 pandemic.
Here is an overview of the key discussion points and takeaways from the conference. To find out more or to discuss any of the issues raised here, please feel free to get in touch.
UK battery storage landscape
Energy storage is recognised globally as a key technology required to support the transition to a low carbon energy system, maintaining grid stability as intermittent renewables become widespread.
In Europe, the UK remains the dominant market for battery storage with 900MW now in operation. Although there has been a fall in new build volumes, investment continues, particularly by sector specific funds such as Gresham House and Gore Street Capital.
According to Inspiratia, there is a strong development pipeline for future market growth, with nearly 4GW projects having been granted planning permission in the UK alone.
Although the sector has suffered some adverse regulatory changes in the past few years, more recently, there have been more positive shifts, including:
- The reinstatement of the Capacity Market (CM) with 4.7GW battery projects successfully prequalifying for the T-4 auction, the majority targeting 15-year contracts
- Plans to reinstate solar PV and onshore wind back into the Contracts for Difference (CfD) scheme, accelerating the energy transition and supporting the need for flexibility, and
- Changes to National Grid’s Balancing Mechanism (BM) enabling smaller battery assets to access for the first time
Achieving optimal value in the market
The energy storage value stack is uniquely complex with a whole host of different revenue streams available spanning capacity, wholesale, balancing services and frequency regulation. Then there is state of charge management and cell degradation to consider on top. The market complexity, combined with growing capacity in the market, has opened up the need for asset optimisation services.
This unique challenge has been tackled by a range of market participants, including trading houses, aggregators and specialist firms. More recently, Anesco announced its intention to develop an offering in the market, supported by our long running experience in optimising nearly 100MW of flexible capacity in the UK. Watch this space for further updates!
Investor confidence and merchant risk
In the early days of battery storage, revenues could be underpinned by long term Enhanced Frequency Response (EFR) and Capacity Market contracts. The market for flexibility has since evolved and investments in batteries are now predominantly exposed to merchant markets. As a result, we are seeing a re-alignment in who is investing in new capacity, away from fixed income funds and utilities, towards sector focused investors. It is important that investors have a deep understanding of the market and are able to manage the merchant risks involved.
Increasingly, diversification across different revenue streams can help with risk management. The emergence of comprehensive battery optimisation services can help spread short term market risk across wholesale, balancing and frequency regulation.
The benefits of co-location
In today’s market, the main benefit of co-locating storage with renewables is to reduce combined construction costs. In the long term, we might start to see a market signal to use excess wind or solar generation for charging, with discharge from the battery at peak times, such as in the evening. However, today, that is rarely the optimal way to utilise the assets, so revenue synergies are limited.
Anesco was proud to unveil the UK’s first subsidy-free solar farm, Clayhill, back in 2017 – a site which combines 10MW solar PV with 6MW battery storage. In the last three years, we have benefited from construction and operational insights that will help shape the market going forward.
A further challenge highlighted by the panel was that renewables and storage are different asset classes. Renewables are typically subsidised with de-risked revenue streams and even new subsidy free solar projects are exposed to deeper wholesale markets, as opposed to shallower flex markets. While there are some investors active in both asset classes, the combination is a relatively unique proposition.
6 key predictions for the future of the storage industry
- There will be a realignment in the market, with different types of investors coming forward.
- Supply chain efficiencies will increase, reducing overall build costs.
- With the reduction in embedded benefits, we will see an increase in larger scale projects, close to the 50MW planning threshold.
- COVID19 is not expected to have a lasting impact on the market. Wholesale prices are depressed by low demand, but the need for flexibility is just as high.
- Competition will increase as more capacity comes to market, putting downward pressure on frequency regulation prices.
- Market optimisation services will become more important as investment shifts away from utilities and the array of revenue streams expands.
After a challenging period for storage developers and investors, the future once again looks bright with some exciting developments in the market and a strong forward pipeline. Energy storage remains an essential part of the energy mix, complementing renewables, as we transition towards net zero.
The ‘Energy Storage Virtual Conference’ was hosted by Inspiratia on 5 May 2020. Discussions are planned to continue at a face-to-face event being held in September. For more information, visit www.inspiratia.com.
Anesco Head Office
As the situation surrounding COVID-19 continues to develop, at Anesco we are doing everything we can to ensure that we keep our people safe, while continuing to deliver a high-quality service for our customers.
These are extraordinary times and the coronavirus outbreak is having an increasingly significant impact on our day-to-day lives. Despite these challenges, at Anesco we remain fully open for business.
Following the latest advice from the Government, we have made some key changes to the way we work. Including:
- Remote working – We have provided our office-based team members with the equipment, systems and support they need to be able to work remotely. Our field force operatives and construction teams who already work remotely, will continue to do so.
- Communications – Our telephone lines and emails will operate as usual. We are also able to offer meetings via video conferencing, in the place of face-to-face meetings.
- Support – We continue to liaise closely with all our customers and suppliers and to support our team members in any way we can, to ensure they are aware of the latest guidance and updates from the government.
In the face of the current difficulties we remain a strong and resilient company, with robust contingency plans and procedures ready to implement, should the time come.
We will continue to monitor the situation closely and to take any steps necessary, while ensuring the renewable energy this country needs keeps flowing.
If you have any questions or concerns, please do not hesitate to get in touch with a member of the team and we’d be happy to help you.
Anesco responds to the Targeted Charging Review (TCR)
Ofgem has released its long-awaited Targeted Charging Review (TCR), which outlines some key changes to electricity network charges.
One of the biggest changes is that residual charges will be delivered via a banded fixed charge framework, as opposed to the current system which sees end users charged depending on how much power they take from the grid.
In addition, amends to embedded benefits will remove the ability for suppliers to reduce their liability for balancing services charges by contracting with small distributed generators. An exemption from paying balancing services charges for small distribution generators is also to be the subject of a second Balancing Services Charges Taskforce.
Commenting on the news, Steve Shine, Anesco executive chairman, said: “We feel that the blanket residual demand charges while delivering lower costs to consumers in the short term, could increase the cost to the consumer in the long run. In our view, Ofgem is taking a risk by imposing such a reform. It could have serious implications for the UK’s ability to reach its carbon reduction targets, as it has the potential to deter investment.
“This is a clear example of why we need joined up policy and thinking if we’re to achieve net-zero. In seeking to find an outcome which is ‘fair’ Ofgem has inadvertently removed a key incentive for consumers to install renewable energy sources. This is not a problem if Ofgem, BEIS and the treasury introduce new incentives for consumers to install renewables – but that must be done swiftly.
“For utility scale assets there is little change but again uncertainty remains, as we await the outcome of the Balancing Services Charges Taskforce.
“Businesses such as ours will need to stay agile and to consider how we design our assets, to provide an investment case. This will be vital if the UK is to meet its carbon reduction targets. As will ensuring that policies are clear and all political and regulatory bodies are committed to pursuing a common aim.
“We will continue to petition BEIS, National Grid, Ofgem and the treasury to provide certainty rather than subsidy, as that is how we will create a sustainable market for renewable and flexible technologies in the UK.”
Established in Reading in 2010, Anesco is the UK market leader for energy storage. The company has developed more than 100 solar farms to date, while its renewables operation and maintenance arm has nearly 1GW of renewable energy under management.
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Solar farms have long been a target for criminals, due to the value of their component parts and the remote locations they typically occupy.
For both new sites and existing solar farms, the issue of security is a key consideration. Whether it’s reducing the risk of theft, trespass or damage, site security should form a vital part of any operations and maintenance contract.
New solar developments
The number of solar farms being built in the UK has soared in the past 10 years, a trend that has been driven by several factors; the global shift towards green energy; the falling cost of the technology; and Feed in Tariff (FiTs) subsidies, which were introduced by the government to encourage its take up.
While FiTs payments may now have come to an end, new developments continue to come online and the UK’s large-scale ground-mount solar pipeline for 2019 was reported to consist of almost 200 projects with a combined capacity of 3.3GW.
As the number of solar farms continues to increase, so too does the threat of theft and other criminal activity. Solar panels, inverters and copper cables all remain popular targets, not to mention vehicles and construction site equipment being used during a solar farm’s construction.
Reducing the risk of crime
For investors, ensuring the maximum return on investment is achieved from any renewable development remains a top priority. That means taking every step necessary to maintain performance and optimise the yield of the solar installation.
Having a comprehensive operations and maintenance contract in place that is delivered by an experienced team and thinking about site security, is therefore crucial. This not only reduces the risk of loss or damage to assets, but helps to avoid any potential drop in performance that such incidents may result in.
It may also influence insurance premiums, with insurers increasingly specifying the scope of security measures that must be in place.
Top 5 solar farm security measures
While no security system is impenetrable, the aim of onsite security measures should be to reduce the potential risk and stop a would-be criminal in their tracks.
Such measures need to be fit for purpose, fully tested and regularly reviewed. Like an insurance policy, you hope you will never need them, but if you do, then they need to be in full working order and doing their job well.
Here is a run through of some of the most popular security measures being used by UK solar farms today:
Perimeter fencing makes accessing and exiting a site far more difficult. This reduces the risk of trespassing and having criminals drive on site to move out equipment. Requirements in relation to landscape management plans will influence the type of fencing that can be used.
The presence of professional security guards on site at a solar farm can act as a strong deterrent and is particularly effective during the construction phase. A full time security detail, working alongside the developer to manage secure access points and guarding the site out of hours, can help to ensure that entry to the site is strictly controlled.
Intruder alarms and perimeter beams can be positioned to detect the presence of people and vehicles on site, while working in such a way so as to allow wildlife such as rabbits and birds to access the site without setting off the alarm.
Monitored infrared CCTV systems are one of the most popular security technologies around. For any solar farm, the positioning of the cameras is key. They need to be placed in such a way that means they cannot easily be tampered with and any blind spots need to be considered.
Mobile patrols and alarm response
Mobile patrols work by having a security officer make an agreed number of visits to the site, at random times throughout the night. This can be a strong deterrent, while limiting the time criminals have available to cause damage or steal assets.
Solar farm operations and maintenance
At Anesco, we have been designing, building and maintaining solar farms for almost a decade. Our comprehensive operations and maintenance (O&M) service provides complete peace of mind that the greatest benefit is being achieved for our customers, from their renewables investments. For more information, please call us on 0845 894 44 44.
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