The UK Infrastructure Bank has announced its first debt transaction in battery storage with a £62.5 million commitment to support the development of multiple new energy storage and grid stability facilities across the UK.
The Bank’s investment will form part of a £175m financing deal which will support Pulse Clean Energy Ltd (PCE) in its plans to invest over £1 billion in the deployment of more than 1GW of battery energy storage system (BESS) capacity across 20 sites in England, Scotland and Wales over the next three years. This includes the conversion of several existing energy generation sites to more sustainable BESS facilities, which ultimately allows more energy to be stored on the grid and released in line with consumer demand.
In addition, PCE will be constructing its first synchronous condenser project under phase three of National Grid’s Pathfinder programme, to help ensure grid stability in the UK.
Currently, the UK has close to 5GW of storage capacity with National Grid estimating that up to 29GW of storage will be needed by 2030*. With portfolio level debt in battery storage still emerging, this transaction will provide a substantial boost by increasing confidence in this market, helping to ensure rapid rollout of battery capacity to grid and supporting the UK Government’s ambition to decarbonise the nation’s electricity system by 2035.
Once complete the current portfolio pipeline will provide enough storage to save around 1.9 million tons of CO2 emissions over the lifetime of the assets – equivalent to the emissions of 28,500 homes over 15 years**. The project is expected to create approximately 200 jobs, significantly benefiting the areas where sites will be located, many of which have lower-than-average rates of employment and income.
John Flint, CEO of UK Infrastructure Bank, said:
“If we are to fully harness the power of renewables, we need to vastly increase our storage capacity – by as much as six times by 2030 alone, according to National Grid estimates. By offering flexible debt financing, we will unlock further investment and accelerate the development of the UK’s battery storage sector.
“Alongside the climate benefits, the integration of more low-carbon power technologies could save the UK energy system billions, which in turn will lead to lower energy bills for everyone.”
In March 2023, legislation that puts the Bank on a statutory footing received Royal Assent, giving the Bank the power to lend directly to local authorities across the UK. With £4bn to deploy, the Bank can provide flexible loans to support regional infrastructure at a preferential rate.
The Bank’s lending team welcomes enquiries from local authorities seeking flexible finance for qualifying projects.
