Read the original article here.
As Scotland and the UK look to source ever-greater amounts of energy from renewables like solar and wind, equal efforts must be made across the country’s grid infrastructure to ensure that energy can be moved to where it’s needed most – or, increasingly, stored for later if it can’t.
It’s a challenge well understood by Amp Energy. Founded as a solar developer in Toronto, Canada, in 2009, the company developed and built over 2.5 gigawatts (GW) of wind, solar and battery storage assets across the UK, US, Japan, India and Australia.
In late 2020 the company secured $374 million in investment from the Carlyle Group, both to help increase its asset base and support the growth of its proprietary grid-edge technology business, Amp X.
Most recently it has set its sights on two pioneering energy storage projects in Scotland’s central belt.
As co-founder and chief investment officer Paul Ezekiel explained, these form part of a wider shift amongst the company’s portfolio as it looks to make the most of the assets themselves, and the challenges posed by the energy transition.
“The strategy is no longer just standalone generation,” Mr Ezekiel said. “Just from a risk perspective, it actually makes more sense to put physical edge battery storage on site, so we’re hybridising everything we’re doing around the world,” alongside some markets where it also has a “standalone storage strategy.”
That strategy will see the company build the two largest battery storage facilities in Europe at strategically located sites in Hunterston on the Ayrshire coast, and Kincardine, north of Grangemouth on the river Forth.
Dubbed the “Scottish Green Battery Complex”, these will consist of two 400-MW battery facilities, each providing 800 megawatt-hours (MWhr) of storage capacity.
The projects will provide reliable grid stability services and power management across the central belt and are of particular importance in their proximity to load centres like Glasgow and Edinburgh and local transmission infrastructure to move power into the wider grid network.
Due to be operational in April 2024, Amp says the facilities will enable up to 1,750 GWhr per year of additional renewable energy to be generated in Scotland and transported to other regions of the UK – the equivalent of approximately 500 MW of new offshore wind deployments.
This will help future-proof electricity infrastructure “at a fraction of the cost of expensive transmission upgrades,” the company says.
It will also serve as the first UK deployment for the company’s AI-backed Amp X platform, which will be used to optimise dispatch of power from the batteries to the main electricity grid, as well as providing additional services like frequency and demand response.
“Coming from a trading background we have a particular set of expertise. Battery storage is way more complex than a standalone generation asset, given the complexity around dispatch,” he continued.
“That places us well in terms of our experience…there’s a lot more value in the flexibility of a battery.”
Strategic importance
Mr Ezekiel said Scotland is an attractive market for Amp largely because it presents similar challenges to those seen in other areas of operation.
“What’s interesting about Scotland is that it looks a lot like one of the other markets we operate in, South Australia, where most of the load much of the time is met by renewable energy.”
As more intermittent clean capacity is added to the grid, exporting this electricity to southern demand centres is becoming more challenging – particularly as up to 25GW of new capacity is now inbound as a result of the ScotWind leasing round.
It’s another reason why the location of the Battery Complex assets – including behind a “very constrained” interconnector, B6 – will add to their strategic value. (The 20-acre site at Hunterston is also close to the new Western Link HVDC interconnector).
“As you continue to race to net zero, you cannot operate a system with increasing variable renewable energy and less thermal, without the addition of very large-scale storage… If you’ve got a problem at 10GW now, a further 25GW is a much bigger issue – so again it just speaks to the value of these assets specifically where they are,” he said.
Ultimately, Amp has plans to set up a 2GW-plus business in the UK, and has recently acquired a third storage asset at another location.
Crucially though, Mr Ezekiel said it’s important to view the facilities – and Amp X’s capabilities – as an integrated proposition. “It’s not a set of assets, it’s a business,” he said, pointing to the additional value of storage in providing grid balancing and stability services across the network.
Explaining the company’s revenue structure, he added: “We are going to probably explore some sort of structured hedge. It may not be something that’s typically used in the market, but we are going to procure some type of structure to provide some sort of revenue certainty – and that’s not just for equity investors but also for lenders.”
To do so, he says the company will “probably have to engage with a [third-party] optimiser” though noted this is a service that Amp X already provides in other markets.
Despite fears over rising battery supply chain costs, he is also confident that the company’s huge scale of orders – and some prudent conservatism in its project assessments – mean there is unlikely to be any major disruption.
“We are in the middle of procuring about 1600 MWh for the first two assets, and about half of that again for the third – it’s probably just about one of the largest orders going on anywhere right now,” he estimated. In addition to another 1000MWh bound for Australian projects, it suggests a healthy pipeline of capacity.
Green hydrogen
Yet the scale of the energy transition means other forms of energy storage are also gaining ground. Alongside batteries, Amp is increasingly looking to green hydrogen for future growth.
“We’ve got four sites in active development and two other new sites we’re about to add to the portfolio, but that is a huge area of growth and the generation implications to the platform are profound,” he explained.
“The technology to produce hydrogen has been around forever. I think what’s changed is the price point to deliver it.”
He pointed to Amp’s Australian business, which has “arguably the most advanced hydrogen asset”, and where initial plans covered a portfolio of around 4GW of solar, wind and large-scale storage. Including green hydrogen production into the mix pushes that generation “probably up to 10-12GW capacity.”
“So as we position the business to do that, we obviously have access to very large pipelines of assets to meet that sort of energy objective,” he continued.
Rocketing demand for the commodity is also leading to unexpected export interest.
“We were looking at developing green hydrogen out of Australia, primarily, exporting to markets like Japan and Korea – that was the original thesis,” he said, based on a 1GW electrolyser exporting via a commodity like green ammonia or methanol, in the absence of any available hydrogen-only carriers.
“But we then started seeing demand in Southeast Asia and then, last but not least, we started seeing demand for Australian green hydrogen from Europe.”
While the sheer distance at first suggested this would make little sense, Mr Ezekiel said the cost of shipping is in fact “somewhat trivial”. At the same time, the huge demand for green hydrogen for decarbonisation – even prior to the invasion of Ukraine and the move away from Russian energy supplies – suggests it well may be a viable proposition.
Nevertheless, the company is also working on new hydrogen assets within Europe too – and quickly – though he declined to provide any specific details due to commercial reasons. “They’re happening on a very accelerated basis and we see them sort of logically fitting into the rest of the portfolio that we’re developing.”
Alongside a raft of hybridised solar, wind and energy storage facilities in Spain and Australia, and a pipeline of work in Italy, Poland and Germany, Amp will soon preside over an enviable global footprint in an essential area of energy transition.
“And if you liked that thesis pre-Ukraine, it’s obviously even more persuasive now – so we’re doubling down and increasing our focus in Europe, it’s a priority for us.”
