'We need to accept that some renewable generation is worth less than others', investor says

The locational value of energy needs to be better reflected in price signals otherwise inefficiencies and costs in the system will continue to increase, said James Mills, managing director of UK BESS investor Adaptogen Capital.

In a recent interview with Energy-Storage.news (subscription required), Mills discussed the firm’s UK activities via its battery energy storage system (BESS) platform Varco Energy, European expansion, BESS capex and more. 

Varco has two large-scale operational projects in the UK: the Native River and Sizing John projects, both 2.4-hour, 57MW/138MWh systems near Liverpool. It is deploying other projects with a total capital investment of £250 million (US$340 million), which includes an augmentation of Sizing John that will increase its capacity by 40-45%. 

Varco is deploying projects near demand centres on the UK grid, and Mills had interesting views on locational value of BESS in the UK. He appears to have been a proponent of locational pricing in the UK, a long discussed reform that was ultimately rejected by the government last year. He explained that eventually the system will have to reward location whether the industry likes it or not. 

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“You do need economically efficient price signals, or economic signals in the green grid of the future based on location. And we can’t get away from the fact that renewable generation in far north of Scotland, a long long away from core demand, is less valuable to the system,” he says. 

“My personal view on the policy question is, is we we have to accept that some renewable generation is worth less than others, and if we keep trying to hide that fact we will create more and more inefficiencies in the system for consumers, and I think that will undermine the the operation of the system.” 

There is value to having storage assets at both ends of constraints, he added. Some of the most notable and largest BESS projects are being built in Scotland, at the generation end of that constraint, while Varco has targeted the demand end. Though Mills concedes: “Right now, we’re not yet seeing the UK demand side locational value appearing strongly.”