Energy: Is it time to invest in energy storage?

What can you do when the wind doesn’t blow or the sun doesn’t shine? It’s the perennial issue facing renewable energy projects.

Storage is widely seen as the panacea: grid-scale battery products that can store the power as it is produced ready for release when the energy is required.

The technology has made huge leaps forward in recent years, and now Swiss sustainable investor SUSI Partners is gearing up to launch the world’s first dedicated energy storage fund to help commercialise the battery products.

“You need storage so that you can steadily consume renewable energy without fossil fuels,” SUSI co-founder and chief executive Tobias Reichmuth told PEI sister title Infrastructure Investor. “We knew we wanted to do storage and that it made a lot of sense, but the technology was too expensive when we started SUSI in 2009. There were no viable business models back then.”

The price of lithium ion batteries has fallen dramatically since then – by as much as 40-50 percent in the last three years – and Reichmuth believes the time is right to seek investors for energy storage so that manufacturers can switch from diesel generators to using batteries powered by renewable energy.

“In some places, diesel-generated power can cost as much as $0.35 per kilowatt hour, including the cost of bringing in the diesel and maintaining the generator, which always needs to be running,” says Reichmuth.

“When you look at a large-scale off-grid solution (wind or solar combined with a battery), you can come to a total electricity price of some $0.15-$0.24 per kilowatt hour.”

To help develop the battery technology for energy storage, SUSI announced in March that it is committing €50 million of its own money to develop French power firm ENGIE’s grid-scale battery products.

The investment is a “very good match for our aspiration and what ENGIE wants to do”, Asif Rafique, SUSI’s managing director for energy storage, said.

ENGIE completed its first large-scale battery project last October when it connected a 2.4MW storage facility to a solar farm in Corsica that feeds output into a power grid. It also has previous experience operating conventional pump-storage assets in the UK, Belgium and Germany.

For SUSI, adopting new technologies and business models is “consistent with the mantra of being first movers in renewable energy”, Rafique said.

SUSI concedes there are risks involved in any kind of nascent industry such as storage because the technology is so new, but it is confident there are ways to offset this risk contractually.

SUSI’s interest in entering nascent energy markets goes beyond storage. It previously launched an energy efficiency fund that closed on €250 million last summer. Through that fund, it acquired a €32.9 million energy efficient lighting portfolio from Italy’s Beghelli Group last October. It has also raised two renewable funds.

The energy storage fund is targeting a fund size of €200 million and “double-digit returns”, according to Reichmuth, and will take the sustainable investor to more than €1 billion in assets under management for its four funds.

The fund launch is expected over the coming months but the date was yet to be confirmed at the time of going to press.