At a time when analysts are watching with interest to see where European energy storage projects are going to find their future revenue, French utility giant EDF gave its backing to one prospective model this week.
Its acquisition of the U.K. battery storage and electric vehicle infrastructure developer Pivot Power is a nod to how it views the future composition of the revenue stack for energy storage.
With tenders for frequency response and various other grid services maxed out, utility-scale energy storage has been on something of a hiatus in Europe.
Pivot Power has 40 projects in development in the U.K. All are proposed at 49.9 megawatts (energy infrastructure over 50 megawatts gets channeled through the national rather than the local planning process). In addition to bidding for contracted revenue, such as frequency response, its batteries will also participate in the power markets.
Pivot’s differentiator is a third pillar of revenue derived from building private wire connections from the batteries to “megawatt-scale” EV charging sites.
Matthew Boulton, Pivot Power's chief commercial officer, told GTM that the contribution from EV revenue would “evolve” over time, with ancillary services and trading revenues doing the heavy lifting.
“As a rule of thumb, the battery is 90 percent of the capex and over 90 percent of the revenue in the early years," he said. "But scroll forward 10 years, and across the portfolio, we expect the EV side to be generating 30 percent of the revenues."
“By virtue of what we're offering, this is new cable we're laying, so we're only interested in megawatt-scale offtake," Boulton continued. "The typical model for a middle-of-the-pack project [is that] in 10 years we'll see 10 megawatts of daytime peak demand and 10 megawatts of overnight demand. We'll be laying cable for 25-megawatt absolute peak and expecting to contract for 10 to 12 megawatts.”
The Pivot deal brings EDF’s trading expertise to the fore, and Boulton considers the acquisition an endorsement of the contribution batteries can play in trading markets — namely, intra-day, day-ahead and the balancing mechanism.
“It became pretty apparent during the fundraise process that you do need some pretty heavy...power market understanding and fundamentals. And if anyone understands this market, it is EDF,” said Pivot Power’s CEO Matt Allen. “It is really important, having that deep understanding of these fundamentals.”
EV uptake drives progress
While the contribution from EVs might be one for the future, the project sites themselves have been chosen with that revenue in mind.
“The selection of the sites had a lot to do with where we see the acceleration of the EV piece coming in. We look for sites close to major motorway junctions; we look for high population densities, buses and distribution center offtake opportunities. This was a key factor in how we got to this portfolio of sites,” explained Allen.
Two of the firm’s storage projects, Kemsley and Cowley, will be up and running before the end of next year. Allen told GTM another nine have full planning permission lined up.
With sites ready to take advantage of the EV rollout, Pivot is now watching for EVs to reach scale.
“EV forecasts get revised on an annual basis, and they only get revised in one direction. This is going to happen faster than any of us initially thought,” said Allen. “A lot of forecasts are about the general public's EV [use]. But when you look at buses, taxis, corporate fleets — these are markets that we think will accelerate very quickly.”
With the EDF deal, Pivot is now the master of its own destiny in terms of project timing, uncoupled from a schedule of equity funding rounds. Hotspots of EV adoption will now be a major driver in terms of where and when it progresses its projects.
Neither “we nor EDF know what the timeframe for building out all 40 sites is going to be. Is it five years, or is it 10 years? In either case, it makes sense to put the sites that are going to be generating the most [EV] upside as high up the list as possible,” said Boulton, adding that a review of the sequence and timing of the build-out is underway with EDF.
The deal is part of the EDF Group’s goal of becoming an e-mobility leader in France, Belgium, Italy and the U.K. Pivot will remain focused on its domestic market, but EDF’s gaze is already stretching beyond Europe.
It has already acquired the U.S. startups Nuvve and PowerFlex, vehicle-to-grid and load control experts, respectively. In Pivot it has also acquired a way to make European batteries investable.