The company has signed with the Interland Group a strategic partnership agreement for the initiation, construction and holding of electricity storage projects in the UK on a significant scale.
The partnership enters into a first deal for the Cellarhead project, one of the largest electricity storage projects in the world, with a capacity of about 700 megawatts per hour, which is expected to connect to the electricity grid in the second quarter of 2024.
The construction cost of the project is about 214 million pounds, and it is expected to yield annual revenues of about 42 million pounds and annual EBITDA of about 35.5 million pounds.
In line with its strategic plan, Nofar Energy continues to expand its global operations, entering the renewable energy market in the UK. The company reports that it has signed an agreement with the Interland Group, for the establishment of a joint dedicated platform that will engage in the initiation, development, construction, financing, management and holding of electricity storage projects in the UK. Nofar will hold 75% of the joint corporation, and Interland will hold the remaining 25%.
In addition, this morning the company reports on the first deal of the new partnership, which is entering into the Cellarhead project – the largest battery storage project in the UK and one of the largest in the world. This is a project with a connection point to the electricity grid with an estimated power of 300-349 megawatts and a storage capacity of about 700 megawatts per hour. The total projected construction costs of the project are expected to stand at about £ 214 million, and it is expected to yield annual revenues of around £ 42 million and annual EBITDA of around £ 35.5 million. The company is expected to begin construction of the project in the first half of 2022, and connect it to the electricity grid during the second quarter of 2024. Concurrent with the construction of the project, the partnership promotes development and entry into a number of additional UK storage projects at significant suppliers.
This is another significant leap forward in the activity of Nofar Energy in the field of electricity storage. The company established and connected to the electricity grid the first storage facility in Israel at Kibbutz Nir Yitzhak, signed a number of strategic procurement agreements with leading battery manufacturers, including agreements of 300 megawatts per hour with Tesla, connected the electricity grid to Tesla’s first storage facility at Kibbutz Shoval Storage facilities in its partnerships all over the country. In addition, last week it was announced that the company has signed an agreement for the initiation, construction and maintenance of a storage project with a capacity of about 400 megawatts per hour, the largest of its kind in Israel, with Mivna Real Estate.
Nadav Tene, CEO of Nofar Energy Nofar Energy continues to expand its global operations in the field of electricity storage, characterized by significant growth and high returns, and requires knowledge and capabilities in the fields of engineering, operations, financing and trade in electricity. The new partnership with Interland , While leveraging its entrepreneurial capabilities, a supportive organizational infrastructure that includes a global engineering and operational system as well as activities in the field of electricity storage in Israel.
We chose to set up a joint venture with Interland, having been convinced beyond a shadow of a doubt that its rich experience in initiating and setting up projects in the UK alongside its power storage capabilities will lead to significant growth and rapid and successful implementation of hundreds of megawatts at high yields. “I congratulate our partners at Interland on the new partnership and the new project, thank the wonderful staff of Nofar Energy for the professional and dedicated work on the deal over the past few months and wish us all great success in the new activity.”
Oleg Voroveitchik, Senior Director, Interland ‘Interland continues to grow and diversify into new strategic investment channels. Storing electricity in batteries will make it possible to stabilize the built-in volatility in renewable energy sources and drive the transition to renewable energies. We have identified the field of battery storage as a strategic growth target that has the potential to flood significant value to our group and partners in the long-term energy nofar.
We are excited to partner with Nufar Energy. Our first investment in Cellarhead is the largest storage project in the UK and one of the largest in the world. The proven experience of both parties in the field of initiation, execution, construction and operation and the combined set of skills will enable the partnership to become a major player in the field of storage in the UK and gain a significant market share in the coming years. “I would like to congratulate the teams at Interland and Nufar Energy on their hard work in recent months and wish the two teams success in the new year.”
The UK renewable energy market
The UK renewable energy market is growing steadily, with the aim of reducing the use of fossil fuels including coal and natural gas. UK government policy has clear targets for reducing emissions – including Net Zero emissions by 2050, reducing pollutant emissions by 68% by 2030, 78% by 2035 and 80% by 2050 (relative to 1990), by increasing capacity Installed of the renewable energies and increasing the production of electricity from renewable energies.
Renewable energy use is characterized by volatility in the power supply, resulting from changes and volatility in weather conditions. For example, solar systems generate electricity only during the day, when there is sun. In addition, cloudiness during the day causes a temporary decrease in system output. Also the suppliers of electricity generation farms using wind depends, among other things, on the strength of the wind at any given moment. Depending on changes in wind energy during the day, it causes fluctuations in electricity supplies – this is in contrast to systems for generating electricity from non-renewable energies that are characterized by stability and the ability to plan ahead. Accordingly, the growing scope of renewable energy use requires the use of complementary systems – Flexible Generation facilities – that will provide security of power supply alongside grid stabilization capabilities.
One of the flexible energy supply facilities is a battery storage project. Projects of this type allow backup for power supply during hours when renewable energy systems do not operate (or operate partially), thus ensuring a stable supply of electricity according to market requirements, and allow stabilization of power supply, at times when there is a temporary decrease in power supply. Which causes a decrease in the output of solar systems, a temporary decrease in the wind that causes a temporary decrease in the output of wind farms, disruptions in conventional electricity production, etc.). .
Battery projects are an enabler for renewable projects, hence their importance. Moreover, according to the National Grid, battery projects are a necessary factor in replacing fossil fuels with renewable energies. The UK battery market amounts to about GW 1.75 of battery facilities, and according to the National Grid, it is expected to grow to about GW 7-15 in 2030 and about GW 20-40 in 2050.
Revenue Battery projects in the UK include several types of revenue, as follows: (1) Sale and purchase of electricity in Wholesale Markets – Day Ahead and Intraday markets, in which electricity is purchased and sold, with battery projects aimed at purchasing electricity at low prices and selling it at higher prices while utilizing Price differences, as much as possible; (2) revenue from a balancing mechanism, in which the system manager balances the supply and demand at the time before the time window for electricity consumption; (3) Ancillary Services, in which the battery projects provide system services to the electricity grid, including frequency stabilization, assistance with default or pre-default events, and more; (4) Capacity Payments; And (5) network payments / receipts.
It should also be noted that the management of the purchase and sale of electricity in the battery projects is carried out through Root to Market Providers (RTM) who are market participants who have knowledge, experience and software dedicated to effective management of systems, with emphasis on optimizing the purchase and sale of electricity. The electricity. The arrangement with the RTM may include a price floor for revenue from the battery projects, in accordance with the commercial terms to be agreed with the RTM.
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