The location value of energy must be better reflected in price signals, otherwise inefficiencies and costs in the system will continue to rise, says James Mills, managing director of British BESS investor Adaptogen Capital.
In a recent one interview with Energy storage.news (subscription required), Mills discussed the company’s UK operations through its battery energy storage system (BESS) platform Varco Energy, European expansion, BESS capex and more.
Varco has two large-scale operational projects in Great Britain: the Native river and Sizing John projects, both 2.4 hours per day, 57 MW/138 MWh systems near Liverpool. It is deploying other projects with a total capital investment of £250 million (US$340 million), including a expansion of Sizing John that will increase capacity by 40-45%.
Varco implements projects near demand centers on the UK electricity grid, and Mills had interesting views on the location value of BESS in the UK. He appears to have been in favor of location pricing in Britain. a long-discussed reform that was ultimately rejected by the government last year. He explained that the system will ultimately have to reward location, whether the industry likes it or not.
“You need economically efficient price signals, or economic signals in the green grid of the future based on location. And we cannot escape the fact that renewable generation in the far north of Scotland, far away from core demand, is less valuable to the system,” he says.
“My personal view on the policy question is: should we accept that one renewable generation is less valuable than another, and if we continue to hide that fact we will create more and more inefficiencies in the system for consumers, and I think that will undermine the functioning of the system.”
There is value in having storage resources on both sides of the restrictions, he added. Some of the most notable and largest BESS projects are being built in Scotland, at the end of that constraint, while Varco has focused on the demand side. Although Mills admits: “At the moment we are not seeing the location value on the UK demand side emerge strongly.”
