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The UK’s National Wealth Fund has partnered with two institutions to invest a combined £500mn in a UK-focused battery storage developer, in a move it hopes will help to crowd in more investment to the “volatile” sector.
The NWF and Aware Super, one of Australia’s largest pension funds, on Wednesday committed to invest £200mn each in battery storage developer and operator Eelpower Energy.
Global infrastructure investor Equitix, which co-ordinated the investment consortium, said it would provide the remaining £100mn.
The move aims to help ease Britain’s shortage in battery storage, which is hindering the government’s ability to integrate wind and solar power and meet its 2030 target of decarbonising the electricity system.
“There’s a pretty urgent need for storage on the grid,” said Ian Brown, NWF interim chief executive. Equity investment in the sector was “a bit scarce”, he added, as “revenue streams have been volatile and a few equity investors have got burned”.
The commitment from the Australian group comes as the UK government is trying to drive more domestic investment infrastructure among British pension schemes by creating fewer, bigger pension funds with greater buyer power and more focus on value than on fees.
Brown said the NWF had not yet had any British pension funds coming forward to invest in battery storage alongside it. “I’m rather hoping that when they see Damien [Webb] here some of them might step forward,” he added.
Eelpower has three battery plants across Scotland and England in the “ready to build” stage. Each project has an output capacity of 50 megawatts of power and storage capacity of 100 megawatt-hours, capable of collectively providing electricity for the equivalent of about 240,000 homes for two hours.
The investors are carrying out ongoing diligence on more battery storage assets with a view that the committed £500mn will be invested in the “near term”, Aware Super said.
The investors hope to ultimately develop about 1GW of battery capacity in the coming years, mostly before 2030.
Britain had about 4.5GW of battery capacity as of the end of 2024 and the government estimates it will need 23-27GW by 2030 to meet its clean power goal.
A fall in battery prices has encouraged the development of storage infrastructure but some investors have suffered lacklustre returns.
“This significant investment reflects our shared confidence in the long-term value of the sector,” said Hugh Crossley, chief executive of Equitix.
Damien Webb, deputy chief investment officer of Aware Super, which manages A$200bn ($130) and opened its first overseas office in London in November 2023, said he was “thrilled” to be partnering with the NWF and had done a lot of work on investing in battery storage and electricity in the UK.
Given the risk profile of the investment he said he was “definitely looking for a double-digit return”. The NWF, Aware Super and Equitix are all investing on the same terms.