Earlier this year, Danish investor AIP Management acquired a 49% stake in a 2.4 GWh UK battery energy storage system (BESS) portfolio from UK-headquartered BW ESS.
The portfolio includes three projects, including the operational Bramley project and the under-construction Hams Hill and Berkswell projects, which were completed at the end of September. At that time, Solar energy portal revealed the transaction was worth more than £650 millionand was a significant development for AIP’s storage investments, marking the first investment in a UK storage project and the first investment in a standalone storage project, as opposed to projects located next to solar facilities.
“[AIP] reached out some time ago and had already made a decision, and had the strategic belief that they wanted to deploy capital in the energy storage space,” explains Erik Strømsø, CEO of BW ESS and Managing Director of BW Renewables, who spoke to Solar energy portal exclusively about the deal.
Strømsø said Solar energy portal that the deal was not simply about attracting a new investor for its growing storage portfolio, but about capitalizing on an opportunity to work with a newcomer to the market who “clearly knew what he wanted”.
“They had done one joint deal, but this was their first standalone energy storage deal, and for us it was a benefit to see them get involved in the conversation as they were lectured and informed about the space,” he said.
“[They] were clear about what they wanted and there was a good match between the boxes they wanted to tick for their investment and the profile of the portfolio we had in Britain.”
Creating a high-quality project
When asked about the deal and the project underlying the transaction, Strømsø said that “the key is to create really high-quality projects,” making future deals easier to complete and setting a precedent for quality.
“That starts with development, so our portfolio generally consists of projects that we already developed in 2017,” he explains. “We have always focused on large-scale connections and locations with room for longer projects.”
BW ESS’s portfolio currently consists of over 500 MWh of operational BESS projects, with a further 3.3 GWh under development. The company’s operational projects are based in Great Britain and focus on high-capacity projects (greater than 100 MW) and longer duration projects (projects from 2 to 5 hours), which Strømsø says are in line with the general investment trends in the warehousing space more broadly.
“That is of course the direction the market has been taking in recent years, but they have been our focus areas from day one. For that reason, many of our projects are of quite high quality,” he said. “Once you have that starting point, everything else becomes a lot easier.”
He also highlighted a number of partnership agreements signed with other companies for the company’s UK portfolio, which also keeps the project abreast of technological trends.
“We worked with Sungrow to deliver our first project – Bramley –which was delivered earlier this yearand it was the first time anyone used the Powertitan 2.0 AC integrated container solution [in the UK]that Sungrow has created,” said Strømsø.
Strømsø also said that BW ESS has signed a seven-year toll agreement with Shell for the Bramley project, a move that will help ensure the financial viability of the project in the coming years, but also minimize counterparty risk by striking a deal with a company that has invested significantly in the energy sector and has the finances to support such a long-term arrangement.
A rapidly changing storage sector
Minimizing risk and securing funding for projects is essential given the speed at which the UK energy storage sector is changing. This is evident from figures from Solar Media Market Research Cumulative UK BESS capacity exceeded 7 GWh at the end of 2024but that the pace of new capacity expansion had slowed just as the average size of projects increased, suggesting that there is still strong demand for new storage expansions in Britain, but investors are shifting their focus from supporting mere capital volumes to a more selective focus on a smaller number of high-output projects.
This combination of rapid capacity expansions, changes in interest in UK storage projects and the fact that the sector lacks the decades-long historical precedent that other energy technologies have, means that the storage sector is becoming increasingly complex as it matures.
“If you take energy storage, it is a space with a lot of contract coverage,” Strømsø explains. “There are capacity market contracts, there are toll contracts and other forms of contract coverage, which is useful, but you are not entering a space where most projects come in with 20 years of contractual cash flows, so it is necessary to have a little more knowledge in this area.”
These trends in the storage sector are often compared to parallel trends in the solar sector, given the increasing rate at which solar and storage projects are being co-located.
According to analyst Pexapark, the co-location space is growing much faster, while Europe has still invested in many more stand-alone storage projects than co-location projects – with contracts for 3GWh of co-located storage capacity by the end of 2024 versus 14.4GWh of stand-alone projects. Between 2024 and 2025, the capacity of signed co-located contracts increased by a significant 676%, surpassing the 392% growth in the standalone battery space.
When asked about the parallels between solar and storage, especially in Britain, Strømsø said that storage is not necessarily more complicated, despite the speed at which the sector is changing.
“Many of the same dynamics that create the business case for energy storage are the same dynamics that could have substantial implications for the business case for solar,” Strømsø said. Credit: BW ESS.
“Is it more complex for energy storage? I don’t think it is,” he said. “Many of the same dynamics that create the business case for energy storage are the same dynamics that can have substantial implications for the business case for solar. Many of these are the same factors that you need to be aware of and understand.”
“The difference is that energy storage is an area that investors have generally not spent as much time on over the last decade as, say, solar, because it is less of a commoditized asset class,” he explained. “We more often encounter investors who have an interest in the space but haven’t necessarily spent time on it, who still don’t fully appreciate the technology [and] the business case.”
Strømsø says this is one reason why BW ESS found the AIP deal so attractive, as the company had familiarized itself with some of the nuances of the storage sector in a way that other investors looking to enter the space have not. While he said BW ESS would always be keen to work with investors who are less familiar with storage, he admitted it can be “refreshing” to work with those who have built this level of expertise on their own initiative.
Great Britain as a trading market
When asked how changes in the storage industry had affected the UK market in particular, Strømsø described the country’s self-storage industry as “possibly the most mature market in the world”.
“If you look at the ecosystem around it: the amount of optimizers, technical advisors [and] banks that have been involved in the space and actually deployed capital; [and] investors, listed companies and other service providers: it is a very mature market,” he said.
Strømsø specified that what sets Britain apart from markets like the US and Australia is its focus on trade finance, which “has been a driving force in Britain for many years”. He explained that BW ESS has several projects under construction in other markets, with 2.6 GW of capacity under development in Italy and 2.5 GW of capacity in the Australian pipeline. However, the more lucrative nature of the UK trading environment has left the company confident it can secure returns on its investments.
AIP has similarly invested in other projects outside Britain, but has still expressed an interest in BW ESS’s work in the country. It is the first investment in a standalone storage project, having supported two solar-plus-storage projects in California. Strømsø argued that the nature of the UK market means the company could remain a market leader and continue to attract new capital in the coming years.
“The requirements for investors [and] capital providers, such as banks and insurers, are slightly higher if the market is merchant in nature because the due diligence you have to do [and] The business case you have to convince yourself of is more complex than if it is a 15 or 20 year offtake contract, which has been the driving force behind the business case in many other major markets,” says Strømsø.
“That creates an ecosystem that is better informed about BESS, as an asset class,” he continued. “The sector has generally done very well, and I think that builds confidence.”
Strømsø explained that this arrangement means Britain continues to attract both new investors and developers to its storage sector, despite having less operational capacity than other countries. Germany, for example, has almost three times as many batteries in use as Britain – 19 GWh compared to 7 GWh – according to the German Solar Industry Association.
With this in mind, some of the actions taken to secure investment and ultimately commercial activity in the Bramley project demonstrate how best to address the challenges and opportunities in the UK warehousing space. Its deployment in a mature market and the use of financial mechanisms designed to address the concerns of potential investors ensure that those involved can “take comfort” from the project, Strømsø said.
“You’ve essentially de-risked a project – brought it online, financed it, contracted it and packaged it – in a way that many infrastructure investors take comfort in,” Strømsø explains.
