Last month, in a number of deals, the UK government and private investors announced plans for around £2 billion worth of UK battery storage, meanwhile finance was also confirmed for UK battery storage augmentation that will see batteries become longer-duration – it’s an investment trend that is driven by debt and equity markets turning away from US markets amid regulatory uncertainty
A rapid recent influx of investment into energy storage in the UK has reinforced the country’s position as one of the world leaders in storage deployment. UK government ministers now widely acknowledge that not only will battery storage form a crucial part of the nation’s drive to integrate more renewables into its energy system, but it will also give a significant boost to the country’s economy by creating jobs and ultimately reducing energy bills. Such is the appeal of UK battery storage that in addition to the UK government being prepared to invest hundreds of millions of public money in its deployment, massive overseas pensions funds also view investment in UK utility-scale batteries as a way of maximising returns.
Two weeks ago, these dynamics were neatly encapsulated by the announcement that a consortium – consisting of the UK’s National Wealth Fund, Australian pension fund Aware Super, infrastructure investor and developer Equitix and storage constructor-owner-operator Eelpower – is to invest £500 million into a new UK battery storage platform, called Eelpower Energy. The new platform will build, own, and operate grid-scale battery storage assets and is targeting more than 1GW of new battery storage capacity for the UK.
UK ‘one of the best places in the world to invest’
In a clarion call to global energy storage investors, UK Chancellor of the Exchequer Rachel Reeves used the Eelpower deal as an opportunity to highlight the appeal of the investing in the nation’s storage industry. “This is our Plan for Change in action, delivering long term economic growth and the jobs of the future through investing alongside the private sector, like this deal with one of Australia’s largest funds, showing that the UK is one of the best places in the world to invest,” Reeves said.
The National Wealth Fund (NWF), which is the government’s principal investor and policy bank, will pump up to £200 million into the platform. Its role is that of cornerstone investor, that is using public money to leverage private capital backing for the new venture. It seems likely that more NWF money could be forthcoming for UK storage, with the fund’s interim CEO Ian Brown acknowledging that the integration of renewables into the UK energy system is a “priority area” for the NWF. Meanwhile, pension fund Aware Super is confident that UK battery storage will provide attractive returns for its 1.2 million members.
BESS to be used to create ‘net-zero economic powerhouse’
Just 24-hours after the Eelpower announcement, further evidence came that the private sector is willing to back the UK storage sector to the hilt, even without co-investment from the UK government. On this occasion NatPower announced it had secured an agreement with Sembcorp Industries for a 32-acre site in Redcar to deliver a 1GW / 8GW lithium-ion battery energy storage system (BESS). The massive $1 billion project is fully privately financed. The Redcar project is another initiative that exemplifies how energy storage can play an integral role in driving local economic growth – the BESS will be built in the Teeside Freeport, which stretches across a large expanse of the North-East region, including Teesworks, Teesport, the Port of Middlesbrough, the Port of Hartlepool, Redcar Bulk Terminal, LV Logistics, Wilton International and Teesside International Airport. It is claimed that, by building on existing manufacturing strengths, particularly in chemical and materials processing, biomanufacturing, offshore wind and renewable activity, Teesside Freeport – which is now set to include a massive BESS as a key component – will create more than 18,000 jobs and boost the local economy by billions. Freeports are tax and secure customs zones where business can be carried out inside a country’s land border, but where normal tax and customs rules don’t apply. They can offer business incentives such as no stamp duty, five years of zero business rates, and full rebates for construction and machinery investment. While located geographically within a country, freeports essentially exist outside its borders for tax purposes.
NatPower hopes that the innovative 1GW Teeside GigaPark BESS, as it’s called, will act as a showcase for similar projects around the world. Stefano D.M. Sommadossi, CEO of NatPower UK and NatPower Marine, said: “Teesside, our most advanced GigaPark, located at Wilton International, will be the blueprint for how we combine high-capacity renewable energy storage with the electrification of ports and industry. Within five years, we can transform one of the UK’s most important industrial hubs into a net-zero economic powerhouse and then replicate this model in ports across the globe.”
UK benefitting from investors wariness of US projects
In addition to investing in new BESS projects, the last month has also seen the confirmation of substantial new financing to augment existing UK utility-scale batteries. Gresham House, a major UK fund investing in storage, confirmed a £220 million debt refinancing – provided by a syndicate of five lenders – that will be used, in part, to augment 282MW of operational projects to a two-hour or longer duration, a move that add a net 350MWh to the fund’s portfolio. In addition, the capital will be used to acquire project rights for 694MW of new projects from Gresham House’s pipeline once due diligence has been completed. Meanwhile, the appeal of the UK energy storage market to global investors was further emphasised last month when it was confirmed that Goldman Sachs Alternatives had provided a £140 million debt facility for a 360MW BESS being built by Elements Green in the East Midlands.
What are the reasons behind this dramatic influx of capital into the UK storage sector? To a large extent, the US’ loss has been the UK’s gain, with global private debt and equity markets now avoiding major US projects due to tax, compliance and other barriers to inward investment created by US President Donald Trump’s One Big Beautiful Bill Act. Indeed, it has been estimated that Trump’s tariff war could cost the US economy around $31bn a month in lost foreign investment. It seems clear that the UK’s energy storage market will be one of the key beneficiaries of this trend.
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