Council’s ground-breaking energy storage facility is fully energised and operational
One of the most innovative green technology initiatives ever embarked on by a local council in the UK is live and operational.
A 25MW Battery Energy Storage facility near Taunton is providing essential power management assistance to the National Grid. It is the largest council-owned energy storage system in the UK and comes as a result of c.£9.8M of South Somerset District Council investment.
The principle is simple. Energy created by solar panels and wind farms is unstable and often wasted as at times they can produce more electricity than needed. This excess energy will be able to be stored in the facility that has been created in partnership with Somerset-based Opium Power and resupplied to the National Grid when there is high demand or a requirement to stabilise the system.
There is a difference in the price of the electricity when bought at low demand and when it is sold at high demand, and it is this difference which provides a return on the investment, as well as contractual payments from the National Grid for the services provided by the battery system. The returns will help protect the wide range of services our communities receive from the council, as well as create opportunities to fund community projects.
Importantly, the site will also supply essential balancing services to the National Grid to help keep the power network stable and safe.
Cllr Sarah Dyke, the council’s portfolio holder for the environment, said: “I am extraordinarily proud that we have been able to deliver such a landmark project. The final testing phases for acceptance into the UK-distributed generation energy supply system have been particularly challenging due to the Covid-19 restrictions although, of course, we recognise their necessity to ensure the safety of workers. My thanks go to all of our business partners that have found ways of working on site through robust risk assessments to complete this project. Our council has recognised that there is a climate emergency and investing in green energy sites like this really makes a powerful statement about our commitment to making a significant reduction in our carbon emissions by 2030.”
The facility will provide 25MW of instantly available electrical power on demand to the National Grid. This will be used to balance out fluctuating demands on the local Somerset power grid. Peaks and troughs in demand cause under and over supply if not correctly managed - this can result in frequency fluctuations that can damage electrical infrastructure.
The facility is also being developed to be able produce up to 30MW of power by August this year.
The Council purchased the site in 2018 and has worked with local and international suppliers to ensure it is one of the most advanced of its type. This includes our partners in this project, Opium Power working with Kiwi Power, WPD (Western Power Distribution), BYD, the National Grid and BSR Group amongst others.
The project is a key part of our Commercial Strategy which will help SSDC meet its income generation targets while also aiding development in the region in the future by removing some of the electricity supply constraints which can be a barrier to further investment.
The Council continues to work with the award-winning Kiwi Power Ltd to gain advice on the energy auction markets and to optimise the battery system’s revenues with further bids for energy contracts into the future.
Cllr John Clark, portfolio holder for economic development and commercial investment added: “I am so pleased to see this site fully operational and income generating. I am excited to be part of such a forward-thinking council. It’s a hugely ambitious project and we are pleased to note that the facility, and land, is now valued at more than the project costs expended.
“We took positive action in a difficult financial climate and, as you can see, the choices we are making are the right ones for our communities as we protect services through prudent investment alongside protecting the environment.”
South Somerset District Council is the investor in the facility, Opium Power is the project manager, BYD Europe BV is the battery supplier and BSR EPC is the project roll out and connection contractor. Western Power Distribution is the local distribution network operator.
All of our project partners are delighted at the final completion of this cutting edge operation and being an integral part of this project.
David Owen of Opium Power said: “Our partnership with South Somerset has worked extremely well, and we hope that this battery system is the first of several very exciting ventures that our joint venture company will be progressing to deliver great value and profit to South Somerset.
'The UK has already accepted that we must adapt our electricity generation system to be Carbon Zero compliant by the use of renewables, and indeed the Government has legislated for it. Grid scale battery energy storage systems are the essential required component to stabilise the unstable and unpredictable power produced by solar and wind renewable power generation.”
Questions and answers
How significant will this operation be?
This facility is extremely significant as it represents one of the larger energy storage facilities in the country. The site can produce 25MW of power helping to balance out the peaks and troughs and stabilise the frequency of the power on the National Grid making use of what might otherwise be wasted renewable green energy produced in the UK. It will also be expanded to produce a maximum of 30MW of power in August.
What will the return for the investment be?
This investment was carried out within the approved governance of our commercial strategy. The minimum return on investment after repaying the loan and interest is 7.5%. We anticipate an Internal Rate of Return of c14% on the same basis based upon current cashflow forecasts for the battery energy storage facility.
Where is it?
This site is a few miles outside Taunton and was selected as it is in a position only 75 metres from a major grid substation. It already had an approved grid connection and being so close to a connection point is highly unusual. This therefore represents a notable reduction in setup and development costs. In addition, the site came with all the necessary consents and was ready to develop immediately.
Who's involved and who will operate the site?
Opium Power Limited will operate the site utilising the services of its technology partners BSR, BYD and Kiwi Power.
Other expertise commissioned to roll out the energy storage project includes:
- National Grid
- Western Power Distribution
- BYD (Battery supplier)
- BSR EPC (experienced energy contractor)
All of these companies have a strong track record in this field and are contributing to making the project a success.
Has this been delivered on time?
The facility was built and delivered on schedule. There were some delays in making the facility live for reasons outside of our control. Legal easements for rights to run cables through third party land between Western Power Distribution and the National Grid took longer than anticipated.
This has no impact on the financial viability of the site.
Our investment return in SSDC Opium Ltd is initially in the form of loan financing secured against the assets of the business, which provides a commercial rate of return. Loan and interest repayments are scheduled to reflect the expected cash flows of the business.
In the longer term, once the loan facilities are fully repaid, the Council expects to receive its investment income through dividend distribution of profits.
As a result of the way the investment has been structured the delay in energising the site adjusts interest being paid back to SSDC by a few months but actually means SSDC will generate increased income from the investment because SSDC Opium Power Ltd will be required to pay more interest.
Is it environmentally friendly?
Absolutely, a significant proportion of electricity generated from solar and wind is wasted because during windy and sunny periods there can be a large oversupply and there is no ability to store this energy. By storing excess energy in batteries, it can be resupplied to the grid when required.
The UK has already accepted that we must adapt our electricity generation system to be Carbon Zero compliant by the use of renewables, and indeed the Government has legislated for it. Grid Scale Battery Energy Storage Systems are the essential required component to stabilise the unstable and unpredictable power produced by solar and wind renewable power generation.
Over the next two years, the remaining four coal fired UK power stations are due to close and the gap will be filled by renewables. This will put increasing pressure on the Grid and the requirement for Battery Storage to keep the Grid safe and balanced will increase dramatically.
It’s just one of the many green commitments South Somerset District Council has made after it recognised a climate emergency in 2019.
What is South Somerset District Council’s commercial strategy?
Acting more commercially has helped us ensure we can safeguard the essential services we deliver (from preventing homelessness and providing benefits to playparks and planning) as well as providing the funding that supports important community projects like the regeneration projects in Yeovil, Chard and Wincanton.
Between 2018 and 2022, the council needs to deliver savings rising to £6 million per year. This is in addition to having to cut its costs substantially since 2010.
This is largely because Government grant funding to SSDC has dropped by 70 per cent since 2010 and further reductions are likely in the future whilst demand for and costs of many services continues to rise.
The council had a number of choices. It could have made sweeping cuts, as other councils have to the detriment of communities, or outsource more of its work which would also have its drawbacks.
Instead, SSDC chose the best approach to serve its residents was find a way to make the most out of its assets and look for new opportunities which could generate income to protect the wide range of services our communities receive, as well as create opportunities to fund new projects.
It has seen the Commercial Services and Income Generation team given an ongoing annual income target of £3.35m for commercial investment income and they continue to hit those targets.
This is about making prudent and risk-assessed financial decisions which will create significant income to get the best results for South Somerset.