We speak to Harmony Energy’s CEO Peter Kavanagh

BY RICHARD HEAP:

Ten years ago, the solar industry mainly meant rooftops.

Five years ago, a big move to utility-scale solar was ongoing.

Today, we see the results in both costs and capacity. We are seeing a similar trajectory towards larger projects in batteries too, driven by a need to cut costs. This is true for individual developers and the market as a whole.

Take Harmony Energy. This month, the UK developer is set to complete its 7.5MW Holes Bay battery plant in Dorset. It is then planning to start building its 34MW project near Brighton; and it has a ‘shovel ready’ 99MW at Creyke Beck in Hull, where it won consent for a second 49.5MW phase in November.

You can’t judge a whole market based on three projects by one developer. It’s standard for a developer to start on a smaller project before sizing up.

But in this case, Harmony’s focus on growing project sizes in the coming years gives useful insights into the direction of the market, its chief executive Peter Kavanagh says. We spoke to Kavanagh to find out more about the background of Harmony Energy, competition in the UK’s balancing market, and the need for more supportive policies.

It also won planning consent in March for a 49.5MW battery in Wiltshire.

Shifting to storage

Harmony started in 2010 to develop, own and operate wind and solar farms.

The company built a portfolio of 15 small wind projects, with backing from the Universities Superannuation Scheme and other investors. But it pulled out of wind in January by selling 12 assets totalling 3.56MW, with feed-in tariffs, to investor Blackfinch.

Developing those assets gave Harmony a good sense of where renewables fit in the UK energy mix, but it is battery storage and solar where it is looking to make a mark now. The firm got into storage four years ago and has now built up a 500MW pipeline of development-stage and in-construction assets.

All of this is in the UK at present but Kavanagh told us that the company was mulling a move into another market too.

Spanish firm Fotowatio Renewable Ventures has supported the first 300MW of that, including Holes Bay. Harmony is now looking to secure a second round of funding, for an additional 300MW.

Harmony’s main focus is on two-hour storage assets, and Holes Bay is set to trade on a merchant power price basis, mainly via the UK’s balancing market mechanism. The key reason for this is the market is less crowded for longer-duration assets.

“A lot of people are using shorter-duration batteries. I’m not saying who’s right and wrong. We’re just more focused on where we think the market will go,” he says. Kavanagh adds making money through the balancing mechanism is largely untested for batteries as National Grid doesn’t give them priority access.

“It’s a bit of a chicken and egg scenario,” he says. “National Grid wants more battery assets in the market, so they have more flexibility over who they call and more surety that the back-up’s there… We just want certainty that we’ll be used in merit order, in the interests of the consumer,” he says, highlighting the lower costs of battery power and the benefits that brings for consumers.

Kavanagh says the popularity of smaller-than-two-hour batteries is the UK frequency response market is set to become more saturated.

This means more developers will need to look at the balancing mechanism to sell their electricity: “The proof for us will be when we’ve done 6-12 months of trading to see what we can do,” he says.

And it is this competition, as well as the lack of long-term financial support for battery storage from the UK government, that is forcing developers to build bigger batteries: “That is the best way to get scale quickly, so the batteries you’ll see coming onstream this year will be large-scale,” he explains.

UK attraction

We saw further evidence this week about the attraction of the UK market.

It has been revealed this week that Elon Musk’s Tesla has applied for a licence to produce electricity in the UK. This may suggest he is looking to build large batteries for grid balancing in the same way Tesla has in Australia.

Finally, despite its background in wind and solar, Kavanagh says Harmony won’t look to retrofit storage into existing projects. He says it only makes financial sense for a handful of large wind farms. His focus is instead on pairing new-build storage with new-build solar.

That is where the technologies can work harmoniously.

Be the first to comment on "We speak to Harmony Energy’s CEO Peter Kavanagh"

Let us know what you think. Please leave a comment.