The big battery play and the side effects

Pivot Power’s ambitious plan for 2GW of battery storage has had a lot of airplay for its accompanying plans to build huge electric vehicle charging arrays alongside. But electric vehicles are step two in the company’s strategy and power market revenue lines are step one. Its worth thinking about the effect of all that flexible generation in energy markets too.

The company plans to invest £1.6 billion building out that 2GW over the next five years. That makes it all eligible to bid in this year or next year’s Capacity Market auction. Now, batteries are derated in the auction depending on the period over which they can supply power – they get credit for just 18% of their rated capacity if they can supply power for only a half hour, up to 96% if they can fulfil the entire 4-hour requirement in the event of a capacity alert. If the batteries can supply for 1.5 hours they are derated to just over half their capacity. It’s not clear what the Pivot Power strategy is on this, but it seems likely they could bid 1GW in. It’s not overwhelming, but it is a significant new entrant. The T-4 auction at the end of 2017 sought around 50GW and got it at £8.40, indicating no lack of supply, and even 1GW of storage from this new entrant will be bad news for CCGT developers who want to see the price rise to underwrite new plant.

Mean while, if all that 2GW is installed the company will also be a significant player in the balancing market and in offering ancillary services as well. What will be interesting is how that changes as the company rolls out electric vehicle charge points. Car owners denied the ability to refuel are immediately resentful and extremely vocal – much more so than electricity customers, who do not see price spikes.

Pivot Power says electricity trading will underwrite its electric charger rollout. That may be so in the medium term, but in the end, car drivers may materially affect its ability to trade power.

 

 

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