EDF’s Energy Storage Ambitions Come Out of Hibernation
After something of a hiatus, EDF has acquired Pivot Power — along with its 2-gigawatt storage pipeline and its unique approach to the market.
European utility giant EDF has acquired the British energy storage and EV infrastructure developer Pivot Power, following the French state-owned energy firm’s declaration last year that it would invest $10 billion in energy storage by 2035.
The deal gives EDF access to a 2-gigawatt pipeline of projects and to Pivot’s inventive route to market, in the absence of readily available contracted revenue for battery assets.
In Europe, tenders for services such as enhanced frequency response (EFR) have become saturated to a large extent, leaving storage developers to either look for new sources of contracted revenues or take a chance with some merchant risk.
This deal could allow EDF and Pivot to boost deployment against a backdrop of stagnant growth in the U.K.
“EDF has made a lot of noise with ambitions to be a leader of the global energy storage market announced last year,” said Rory McCarthy, senior storage analyst at Wood Mackenzie. “However, they haven’t [followed through on] this with anything in the U.K. market — until now.”
EDF’s last activity in the U.K. storage market was the completion of a 49-megawatt project won in the 2016 EFR tender. The Pivot Power acquisition gives it access to 40 projects, with two of them, both 50 megawatts, expected to be commissioned in 2020. Attention will now turn to the other 38.
“The level of development of these sites is unknown, but it was Pivot’s intention to develop each at 50 megawatts, with an initial portfolio target of 2 gigawatts,” said McCarthy.
The most recent update to Wood Mackenzie’s Energy Storage Outlook forecasts global 2019 storage deployment at around 4 gigawatts, with the U.K. and Germany contributing 600 megawatts of that total.
New route to market
While it waits for conditions in the large-scale storage market to improve, Pivot Power is focusing on deploying batteries within EV charging networks. The storage assets can be used for other purposes as the market evolves.
Ben Kellison, director of Wood Mackenzie’s grid edge research, described Pivot’s approach as unique.
“Most co-location schemes seek to size the battery as small as possible to serve the EV chargers in order to reduce demand charges for EV charging owners and operators. Pivot’s model flips this view on its head, oversizing batteries so they are primarily used for grid services, but can also be used to supplement EV charging, if and when needed,” Kellison said.
“This way, they can improve utilization of the interconnection and spread demand charges across a wider base of energy supplied either back to the grid or to an electric vehicle.”
Pivot’s embrace of EV charging allows it to move beyond the “crowded distribution networks and frequency market revenue space,” WoodMac’s McCarthy noted.
The challenge there is the relatively slow pace of EV uptake in the U.K. so far. “Value will only materialize when uptick commences,” McCarthy said. “This conundrum would have likely been a big challenge for raising capital for Pivot’s grand ambitions.”
Things will look different as part of EDF, however.
And the signs are pointing in the right direction for U.K. EV sales. The most recent data suggests that plug-in hybrids and electric vehicles are seeing a surge in support. More than 25,000 all-battery EVs have been sold in the U.K. so far this year, compared to 15,500 in 2018.
Tom Lusher, an analyst with the research firm Pixie Energy, said that changes to the way taxes are applied to “company car” purchases will boost sales. Taxes will fall to nothing for fleet purchases of zero-emission vehicles from April 2020 onward. “EV market share is therefore only likely to increase from here on in,” Lusher said.
Banking on merchant
With energy storage assets expected increasingly to turn to the merchant markets for at least a portion of their revenue, having a major energy trader to work with is a tangible advantage. Over the summer, EDF made yet another acquisition with its purchase of the German aggregator and flexibility provider E2M.
“As the storage proposition in the European market becomes more of a merchant play, with untested business models, the utilities are best positioned [to play the market],” McCarthy said.
“Capital on the markets will otherwise be at a high cost, hindering competitiveness. Outside of large renewables developments, little else is getting built to balance the volatility we will see around the corner, so utility activity is likely to boost the storage market.”
Source : greentechmedia
