What is Ørsted doing in energy storage?


This week, Danish utility Ørsted wrapped up the first quarter by unveiling a project called SeaH2Land, with partners including steel giant ArcelorMittal.

This involves the development of a 1GW green hydrogen production plant by 2030 to serve the Netherlands and Belgium. This would be connected to an offshore wind farm of 2GW in the North Sea, and mean the Dutch-Flemish North Sea Port could use green hydrogen for 20% of its hydrogen needs.

That was one of two big project announcements by the utility this week.

On Tuesday, Ørsted committed to build the 518MW hybrid wind and solar complex, Helena Energy Center, in southern Texas. This is the firm’s largest onshore project to date, and it grows the company’s portfolio of operational and under-construction onshore projects to 4GW. It shows the role of hybrid projects to Ørsted’s future.

Now the eagle-eyed among you will have noticed that the US project doesn’t have a storage element. Even so, the Helena Energy Center and SeaH2Land both give an interesting view about Ørsted’s plans for the storage sector.

That is what we we will discuss in this article.

We will look at Ørsted’s current storage projects, how its storage strategy is shaping up, and why this is significant to the rest of the industry. Ørsted has spent the last decade going through a major shift from oil and gas to a leader in offshore wind and other renewables. Storage is the next step.

Starting in storage

Ørsted’s green reputation has largely been built in offshore wind.

The company is set to have 9.9GW of installed offshore wind globally by the end of 2022. It has so far been building projects in Europe and Asia-Pacific, with the US coming soon. It owns projects including the largest working offshore wind farm: the 1.2GW Hornsea 1.

Ørsted has spent the last two years expanding in onshore renewables in the US too, after buying Lincoln Clean Energy. By 2022, it is aiming to have 2.5GW of onshore wind, solar and storage capacity installed in the US.

By contrast, its storage projects are a lot smaller – though it has been growing its portfolio over the last six months.

Last September, the utility had only one operational battery in its portfolio: the 20MW Carnegie Road project in the UK, which it switched on in 2018.

It has since added one more operational storage project to its portfolio – the 2MW project HIVE, which is connected to the Burbo Bank offshore wind farm in the UK – and two more construction-stage projects with storage in the US.

They are the 420MW solar and 40MW storage development Permian Energy Center in Texas; and Muscle Shoals, which consists of 686MW of solar with 40MW of storage capacity, which is due to come online by September 2021.

In addition, Ørsted has fully funded Taiwan’s first megawatt-sized energy storage pilot system at the National Changhua University of Education.

These show that storage is becoming increasingly important to the company, and it is interested in the storage properties of multiple technologies.

Ørsted said in its 2020 annual report that it sees storage as a “complement” to its renewables portfolio, and that it would “continue to pursue storage projects that allow us to optimise our generation assets”. It said that, in the longer-term, it expected that it would pair all of its new onshore renewables projects with some form of storage.

As Declan Flanagan, executive vice president and CEO of onshore at Ørsted puts it in the Helena announcement: “Having world-class capabilities in all facets of energy markets is central to our ambitious growth plans.”

Hello to hydrogen

But why does this matter to the rest of the market?

There is no shortage of utilities that are looking to add storage to their renewables portfolios. The influx of interest from utilities in storage technologies is a key reason that appetite for storage is growing fast.

Even so, Ørsted’s plans are worth watching because the utility is a good bellwether for the direction of the industry at large.

The fact that it is throwing its weight behind both batteries and hydrogen is relevant, as the technologies are at very different stages of their commercial life cycle. Batteries are more advanced, and costs are falling as they are seen as a crucial add-on to many green projects. Green hydrogen is less established.

Even so, green hydrogen could play a key role in Ørsted’s future.

First, producing hydrogen cleanly will rely on large amounts of green power, which Ørsted is able to provide through that 9.9GW offshore wind portfolio and its growing portfolio of onshore assets.

And second, green hydrogen has enjoyed significant political and business support before and during the Covid crisis, so it makes sense for Ørsted to seek to take advantage of that momentum. The company tends to be a good bellwether for energy trends. We will watch its storage plans with interest.

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