Dealwatch: Funds’ UK solar-storage push

• A number of UK solar-storage financings were completed recently
  
• Fund managers say co-located solar-storage offers significant value
  
• Gresham House, Infracapital and Magnora among those making investments

Solar projects combined with storage have proved to be particularly attractive to investors in recent months, with the closing of financing deals focussed on the UK market being a notable trend.

Fund managers are confident that solar-storage projects provide considerable value for investors and are backing such schemes to make a significant contribution to the energy transition.

And it’s a trend that is set to continue with a number of investors earmarking future solar-storage investments in the UK. A key driver behind the hunt for such investments is a strong belief that co-locating solar and storage makes considerable sense from an economic perspective.

Infracapital and Magnora make UK investments

Recent deals included Infracapital’s £200 million investment in UK-based solar and energy storage company Gridserve Sustainable Energy last month. Gridserve has developed what it describes as a ‘Sun-to-Wheel ecosystem’ that includes hybrid solar and battery farms and electric vehicle charging infrastructure. Upon the announcement of the Infracapital deal, Andy Matthews, (pictured, bottom left), head of greenfield at Infracapital, said the investment was part of the asset manager’s drive to “make a meaningful contribution to the energy transition while delivering value to our investors”.

Some investors who were previously hesitant about entering the UK solar-storage market now feel sufficiently assured about its prospects to go ahead and take the plunge.

In another financing deal announced last month, Norwegian renewable energy investor Magnora entered the UK solar and battery storage services market by investing in the development of an unnamed 60MW solar PV project and 40 MWh battery energy storage project. It’s expected that Magnora will follow up this initial foray into the UK solar-storage market with further investments. Commenting on its push into the UK, Erik Sneve (pictured, right), CEO of Magnora, said: “We will continue to monitor further opportunities, and subject to a successful development in this first step, we will consider further investments in the UK solar PV and BESS market.” 

Gresham House snaps up Canadian Solar assets

Meanwhile, the potential for collocated solar-storage projects to drive significant returns on investment - particularly in the UK - has not been lost on fund managers.

Back in July, Canadian Solar completed the sale of two fully-permitted UK solar and battery energy storage projects to specialist alternative asset manager Gresham House, a vastly experienced renewables investor. One of the projects was a collocated solar and battery energy storage project in Durham, with 50 MWp solar capacity and 38 MW / 76 MWh of battery energy storage – the other scheme was a standalone 28MWp solar project in Warwickshire.

The project in Durham was Canadian Solar's first collocated solar PV and battery energy storage project in the UK and it represents the second collocated solar and battery energy storage project acquired by Gresham House. Canadian Solar is particularly active in the UK renewables market with a 1.8 GWp PV solar and 4.3 GWh battery energy storage pipeline under development. Upon completion of the deal, Peter Bolton (pictured, top left), investment director, renewable energy at Gresham House, said the asset manager was keen to expand its portfolio of subsidy-free renewables and “secure further collocated solar and battery energy storage assets”. He continued: “Gresham House is a long-established investor in both renewables and battery energy storage, and we believe in the strong economic case for collocating the technologies on the same site. This reflects a UK-wide requirement for more renewables capacity and for battery energy storage to support the grid system as further intermittent renewable generation is added.”

We should expect announcements about more investment by funds in the UK solar-storage market in the near future. Fund managers are convinced of the value of collocating solar with energy storage and believe the UK market is one that currently offers substantial value for investors.