BY BEN COOK:
UK energy storage is hotting up.
Private fund manager SUSI Partners this week entered the market.
And while institutional investors’ involvement in storage is currently limited, it is only a matter of time before more add storage assets to their portfolios.
Swiss-headquartered SUSI Partners – which manages €1.5bn in investor commitments across six institutional funds – announced at the start of this week that it had acquired three front-of-the-meter battery storage assets in the UK with a cumulative capacity of 40MW from Eelpower.
And SUSI won’t be stopping there. Richard Braakenburg (pictured), its managing director investments, is eyeing further deals: “The UK is a fast-growing energy storage market – we’re looking at other sites and we are keen to invest more,” he says.
Not only did SUSI Partners acquire the three aforementioned assets from Eelpower, but it has also entered into a partnership with the battery storage operator with a view to developing more storage assets.
One project is already in the works.
As part of the partnership with Eelpower, SUSI Partners has also acquired a 50MW project in Scotland from Gigabox Developments, with construction scheduled to begin in the first quarter of this year.
SUSI Partners says the partnership agreement also has “substantial potential for additional projects in the near future”.
And why has the investor linked up with Eelpower?
Braakenburg, who joined SUSI Partners last year from battery storage and electric vehicle charging network Pivot Power (where he was CFO) has a long-standing relationship with Eelpower and has been particularly impressed with the skills they have shown when it comes to monetising battery storage assets.
“I’ve known the [Eelpower] team for a number of years – they were one of the first to move into energy storage,” he adds.
Storage track record
Though this is SUSI Partners’ first foray into the UK energy storage market, the fund manager has a history of investment in the sector: “We have a track record of exploring new areas in energy transition,” Braakenburg says. “We raised the first dedicated energy storage fund a few years ago.”
Indeed, SUSI Partners’ energy storage fund has made investments in a number of countries including the US and Australia, as well as Canada.
In April 2019, the company acquired a 50% stake of a portfolio of behind-the-meter battery storage systems from Macquarie’s Green Investment Group. The projects are located in the western Los Angeles Basin in California, and have a total capacity of 63MW/340MWh.
Also in 2019, SUSI Partners announced it was investing up to A$50m in a project in Western Australia – delivered by Starling Energy Group under the Plico Energy brand – that combines residential rooftop solar PV and battery storage systems.
This raises the question of why the fund has switched attention to the UK. It’s a market with the sound fundamentals that SUSI wants, says Braakenburg.
“The core tenets are a sizeable chunk of intermittent generation, a market not fully interconnected with other markets, a deep and liquid energy market and a stable, and well-understood regulatory regime,” he explains. “The UK is also at the forefront in Europe in the development of a lively offtake market and we expect to see more [energy storage] assets built out.”
Will institutional investors pile in?
Braakenburg acknowledges that, to date, institutional investors have been hesitant when considering storage assets: “The number of institutional funds participating is limited,” he says, adding that this is partly due to a “lack of familiarity with storage asset monetization”.
But he expects this situation to change. Braakenburg predicts that energy storage will increasingly be integrated with other renewables and added to institutional investors’ portfolios.
So, other than the UK, which other markets offer the best opportunities?
Braakenburg has Spain, Portugal and Italy in his sights: “We have an OECD mandate and there are a few markets in Europe – for example, the Iberian Peninsula and Italy – where we expect energy storage to become attractive.”
In the longer term, the company could also look to assets in continental Europe. But, for the time being, look out for more moves in the UK market as energy storage becomes increasingly alluring to investors looking to broaden their renewables portfolios.