By LUKE ATKINS
- UK-based Anesco has opened subsidiaries in the Netherlands and Germany
- But storage industry faces supply chain challenges and rising lithium prices
- Company now exploring potential of sodium-ion batteries
Reading-based Anesco, the solar and storage developer that claims to have been responsible for connecting the UK’s first utility-scale battery storage unit, is now turning its attention to expansion in Europe.
Earlier this year, the company announced the opening of its first two subsidiaries outside the UK – in the Netherlands and Germany.
Anesco, which was founded in 2010, now boasts just under 200 employees and a pipeline of around 1.5 GW of solar and 1.5 GW of battery storage, but the drive into European markets appears to be a bold move given the supply chain issues affecting the storage industry.
Energy Storage Report spoke to Sarah Webb, Anesco’s director of development & technical, to find out what the biggest opportunities are for the company, the impact of the supply chain-related woes, as well as hear her views on the evolution of the energy storage industry.
Webb, who earlier this year was named one of Energy Storage Report’s ‘Top 40 Women Leaders in Energy Storage’, also highlighted what she sees as the emerging trends in storage in the coming year.
What sets Anesco apart from other solar/storage developers?
Sarah Webb: There are two main things. We have more experience than most in the market, having installed our first utility scale battery in 2014. We were the first to do that in the UK, and have built up a wealth of knowledge and experience in understanding solar and storage technologies, how they perform, and how to look after the assets.
There is also our full-service offering. We can help with initial inspections all the way through the route to market, so we understand the key factors within the service chain. Everything from initial inception – the empty field – to generating revenues and optimising assets. There is a close link between our operations & maintenance (O&M) division and the route to market team, which work closely to understand the best times to do maintenance work without disrupting revenues, for example.
How has the energy storage market changed since Anesco installed its first utility scale battery in 2014?
SW: Back then it was a very new technology and nobody was familiar with it. Getting funding and trying to prove the business case was challenging, and nobody really understood the future of where the revenue streams where going. There were other barriers, such as the National Grid being quite manual in their control room and going through a digitalisation process.
All the early markets have disappeared or become saturated. We looked at energy trading and went through a cycle of understanding what that meant for revenue streams, and have built up a comprehensive revenue model to understand what we can do with our assets and to help investors understand how they can lock in long term revenues. The two main markets now are frequency response – where grid operators pay energy storage operators to help them balance the grid – and trading.
The risks were higher, but so were the rewards. Now the market has stabilised and there is more investment in energy storage.
What are the biggest challenges facing Anesco and the wider energy storage sector?
SW: Definitely the supply chain. Everyone is feeling the same in the market at the moment. There is huge volatility in the supply chain, and there are impacts from macroeconomic effects such as Russia’s war in Ukraine, Brexit and Covid. Lithium prices increased significantly from autumn last year – they have now stabilised slightly, but that increased the price of battery storage significantly.
It isn’t just the batteries. It is the wider supply chain, and with prices rising everywhere, validity periods to hold quotes are very short at the moment. As a contractor, we can’t offer the same binding prices for as long, so there’s a change in the market to shift to a fairer allocation of risk between contractor and clients.
In the UK, there are issues with grid connections. There is a lot of congestion on our grid network. A lot of small-scale assets are connecting to the grid at distribution level. For larger batteries, however, there is a significant grid congestion coming through on the transmission level, leading to more curtailment.
That requires more reinforcement for the assets, leading to higher costs. There are glimmers of hope with grid reforms, such as access reforms, which we hope will make a difference.
What do you see as the biggest commercial opportunities for Anesco?
SW: We are seeing a huge boom in the market despite the challenges. There is significant demand for, and interest in, battery storage, so that means more opportunities for engineering procurement and construction (EPC) contract work, for O&M, and for other services. The market is getting more familiar with the technology and the revenue streams, making it easier to get finance for projects.
The other opportunity, relating to our recent expansion, is the European market. Battery storage hasn’t really taken off in Europe as much as it could, but we expect it to grow fast over the next few years depending on how EU policies progress.
What will be the key emerging trends in energy storage in the next year?
SW: There has been a shift from one-hour storage to two-hour storage. Two-hour storage is very standard now, and that will be the way forward for the next few years. In terms of technology, we are still focused on lithium phosphate for the majority of utility-scale batteries, but there are some interesting prospects coming through and the likes of sodium-ion will shape things going forward and create potential for longer duration storage as well. A number of our suppliers are looking to offer sodium-ion batteries and we are really interested in exploring that.
I don’t see any let up in demand. There will be continued demand for these assets for the foreseeable future because we desperately need them to enable the deployment of renewables. It’s really important to build out storage faster to meet UK carbon targets and reduce reliance on Russian gas. Battery storage is an enabling technology – we are an enabler for renewables and grid flexibility.