Octopus Energy has signed a two-year, fixed-price tolling agreement with Gresham House Energy Storage Fund for 500 MW of its battery assets, bringing the utility’s virtual power plant (VPP) portfolio to more than 1.5 GW.
Fund manager Gresham House yesterday (June 5) announced the two-year fixed price contract with Octopus, which covers 568MW/920MWh of its UK battery energy storage system (BESS), half of its long-term target portfolio of 1,072MW.
Octopus Energy will use the batteries from the BESS projects at a price determined by the duration of the assets – expressed in hours – excluding Capacity market payments that the projects will receive separately.
Kieran Stopforth, head of flexibility at Octopus Energy, said: “Through this groundbreaking deal with GRID, we are not only increasing the size of our virtual power plant to over 1.5GW, but also unlocking the power of flexibility to reduce costs. for consumers across the country.”
The deal is likely to be the first such toll scheme in the UK BESS market, certainly the first of its size, with the vast majority of projects deriving most revenue from commercial opportunities such as ancillary services and energy trading through National Grid’s various available markets ESO. However, Opportunities in the latter sector have been saturated over the past twelve to eighteen months, leading to significant sales declines.
Discussing the contracts and hinting at what Octopus will use them for, Ben Guest, fund manager for GRID and MD of Gresham House New Energy, said: “They [the contracts] demonstrate the value batteries provide in balancing supply (power generation) and customer demand managed by retail and wholesale market players, in addition to balancing supply and demand at the national level.”
Adding: “End consumers are increasingly demanding electricity that is renewable, affordable and reliable. Therefore, electricity suppliers increasingly need to strike a balance between intermittent, sustainable supply and customer demand, for which batteries are well suited.”
This article first appeared in our sister publication Current±.
