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Shell In Chinese Tie-Up To Run Europe’s Biggest Battery

by Paul

Royal Dutch Shell has announced that it has entered an agreement with China Huaneng Group to run what is believed to be Europe’s biggest energy storage facility. The giant battery, which is being funded by Chinese investment fund CNIC and China Huaneng Group, a state utility company that is also constructing the battery.

Shell, through Limejump, the electricity management and aggregation start-up it acquired last year, will be responsible for managing the battery, which is located near the Wiltshire village of Minety.

The 100-megawatt battery will hold enough energy to power 10,000 homes for a day and provide back-up electricity to the National Grid when wind and solar generation dips. The battery’s business model is to charge when electricity is cheap and then discharge at peak times when prices are high.

80% of the components used in the battery’s construction will be sourced from China. While the battery’s construction will be managed and carried out by China Huaneng, Shell has said that the Chinese companies backing the project will play no part in operating the battery plant once it is up and running. Chinese involvement in critical UK infrastructure projects such as using Huawei technology in building the 5G telecoms network and the Hinkley Point nuclear plant has come under increased scrutiny.

Energy companies are under pressure from both policymakers and investors to step up the transition towards renewable energy sources accounting for a much larger part of their overall mix. BP’s new chief executive Bernard Looney last week pledged to drive the company towards carbon neutrality by 2050.

Energy storage is seen as a key in the push to reduce emissions. Climate-change policy means Britain and other nations are committed to a dramatic increase in the proportion of energy generated from sustainable sources, such as the wind, sun and sea. However, the weakness of power generation bases on renewables is that they are inherently intermittent. That means next generation battery technology is required to store energy during gluts that can then bridge fallow periods.

A China Huaneng spokesperson commented:

“In recent years, with the rapid development of wind power in UK, the intermittence and fluctuation of wind power output is making the imbalance of time for supply and demand more and more obvious. After the project’s operation, it will become the largest battery energy storage project in Europe, providing power source emergency support when the main grid has an accident, and elevating effectively the safe operation level of the grid.”

Shell is currently investing around $2 billion a year in its ‘new energies’ unit, which is focused on renewables and reducing the company’s reliance on fossil fuels. The company is also ramping up its power business by investing in generation and seeks to extend into households and business supply. The acquisition of domestic electricity supplier First Utility two years ago announced the new direction.

Sinead Lynch, chairwoman of Shell UK believes that power is currently the biggest growth area in the energy market and that the company intends to be a ‘big player’ in it. On the Minety battery project, she commented:

“This is us using our balance sheet to enable the investment in this project. We provide that revenue stream and use our balance sheet to take the risk.”

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