Commercial Li-ion energy storage lands in UK

By IM Staff
Published: Thursday, 15 December 2016

Tesla’s Powerpack’s, which Camborne Capital Energy is bringing to the UK, could offer a solution to the problem of storing energy from renewable sources, but costs still need to come down.

By Rose Pengelly

Modular lithium-ion (Li-ion) energy storage systems could soon offer a way to efficiently manage power generated from renewable sources for the UK grid, according to one specialist investment company backing the technology, although the concept still presents barriers for large investors.

Dan Taylor, managing director of Camborne Capital Energy, a privately-owned UK investment business with a focus on clean energy, told attendees at a seminar in London in November that the power storage sector is witnessing "a shift from innovation to commercial business as usual".

Camborne recently began purchasing and installing energy storage batteries from US-based electric vehicle (EV) manufacturer, Tesla Motors Inc. and in September it installed the first grid scale Tesla batteries, or "Powerpacks" in Europe at an undisclosed solar farm site in Somerset, southwest UK.

According to Camborne and Tesla, the combined solar and battery installation has the capacity to provide power for over 500 homes.

The modular design of the Powerpacks, which resemble large free-standing fridge-freezers, means that the batteries can be installed in relatively unobtrusive clusters to achieve the desired capacity for any given site.

Ben Hill, vice president for Europe, the Middle East and North Africa at Tesla Energy Products, said that in addition to its main automotive business, Tesla is now looking to supply power storage products for both domestic and commercial energy users.

Tesla’s website, which allows you to "build" your own battery order according to your energy requirements, estimates the cost of installing a 1MW Powerpack and necessary supporting hardware in the UK is around £1.48m ($1.84m*). A 14 kWh Powerwall, Tesla’s domestic "home" energy storage battery, costs around £6,400 in total to install.

Hill said that Tesla has made significant advances in its battery technology in the last year, but admitted that costs still need to come down – a feat the company hopes to achieve with its new Gigafactory in Reno, Nevada.

"The new Li-ion cells from the Gigafactory in Reno are double the density and therefore double the capacity of the cells we were producing just six months ago," Hill said. "That’s pretty cool technology."

Tesla’s Powerpack’s could offer a solution to the problem of storing energy
from renewable sources, but costs still need to come down. 

Barriers to investment

Li-ion-based energy storage systems are beginning to gain acceptance in the UK, with the help of backing from specialist investors, although the business case for clean energy solutions has yet to win over the wider investment community.

Juergen Heeg, vice president for power at US-based private equity investor Denham Capital, said that private equity investors "wouldn’t get out of bed" for projects that are not worth sums in the "hundreds of millions of dollars" range.

Tesla’s biggest Powerpack contract to date is with US energy supplier, Southern California Edison (SCE). In September, Tesla announced it would supply 20 megawatts (80 megawatt-hours) of Li-ion based energy storage to SCE to help prevent blackouts for energy users in southern California. Tesla said that the Powerpacks are enough to power about 2,500 homes for a full day.

Part of the problem from the UK perspective is the small-scale nature of renewable and energy storage projects, owing to the country’s size and population density which limit space for large installations.

Camborne’s Taylor admitted that banks and private equity funds "probably aren’t at the point of throwing cash into energy storage yet", but predicted that there would soon be an acceleration in funding. He said that the large opportunities private equity investors were looking for were necessarily grid-scale projects, such as the Southern California Edison contract.

But renewable energy generation is growing in the UK and experts generally agree that finding a way to store electricity from wind turbines and solar panels is vital to the future of a low carbon energy mix. According to the UK’s Department of Energy and Climate Change, renewables accounted for 83.3 terrawatt hours (TWh – one terawatt hour is equal to the sustained power of approximately 114 megawatts for a period of one year), or 24.7% of the total 337.7 TWh generated from all the country’s electricity sources collectively in 2015 – a figure that has the potential grow significantly with the addition of mass storage.

Opportunities for raw materials

The proliferation of energy storage technology could provide a sizeable new market for suppliers of battery raw materials, including the lithium, graphite and cobalt needed to produce Li-ion batteries.

Much of the attention on Li-ion technology to date has been on EVs, but energy storage batteries are potentially a much larger volume market, since storage cells tend to be bigger and heavier than car batteries.

Junior mining companies have been queuing up to offer their services to Tesla, with eyes on the ultimate prize of a contract to supply the Reno Gigafactory.

However some exploration companies claim to have clashed with Tesla over its alleged approach to engaging suppliers. More than one junior mining company told IM that Tesla had asked it to "build a prototype" energy module using material made from their own mineral sources as their own expense – a request which they said they flatly refused.

When IM put these claims to Tesla, the company asked for further details on the assertions but said that it had no comment to make on its sourcing policy at this time.  

*Conversion made November 2016