German renewables company Tion Renewables AG (ETR:TION) has bought a 8-MW/9.3-MWh battery energy storage system in the UK, marking its entry into the battery storage market.
The company, previously known as Pacifico Renewables Yield, acquired the project from its developer, Boom Power Ltd./Boom Developments Ltd. The battery, located in Bacup, northwestern England, is currently under construction and is expected to come online in the first half of 2023. It will be directly connected to the electricity grid. Tion expects to generate revenues from wholesale trading activities and ancillary services, such as frequency response. It noted that battery storage will not be affected by the upcoming Electricty Generator Levy in the UK.
The battery has an enterprise value of GBP 5 million (USD 6.1m/EUR 5.8m) and an expected unlevered return on equity of slightly above 8%, according to the announcement.
Tion co-chief executive Christoph Strasser said the company chose to enter the battery market with a rather small project. “The project represents an ideal opportunity to enter a new market and to grow further without raising additional capital,” Strasser added.
“Our pipeline of battery storage projects, to which Tion has priority access, adds up to +1.5 GWh and provides many opportunities to continue working together in the future,” said Boom founder and chief executive Mark Hogan.
Tion operates a portfolio of 159 MW of wind and solar farms in Europe and holds a stake in independent power producer (IPP) clearvise AG.