INVESTORS

Storelectric Ltd

Project developers of grid-scale

Compressed Air Energy Storage (CAES)

The Business Proposition

A global market of at least 3,500 plants (excluding baseload, transportation and heating), significant early investor returns following a successful first plant, increasing further during the roll-out.

 

For the UK & USA markets, based on c.30x500MW units in each market (c.10% market share), a 15% equity stake and a P/E ratio of 15, the company valuation would be c.£3 billion. Extending globally with the same assumptions increases the valuation to c.£15 billion. We also expect as many sub-50MW plants to be needed as 500MW plants. Note that we use 40MW and 500MW as typical sizes for ease of reference; many other sizes and configurations are equally deliverable.

 

Projected IRR in double digits for both types of plant with substantial upside of up to a further 15%, to be confirmed during FEED phase.

 

Pipeline of projects that can be developed in other locations in the UK and internationally.

 

IP in all our energy storage technologies, patents pending in two: using a fully sustainable hydrogen based solution and a thermal energy storage (TES, licenced from TES CAES Technology Ltd) based solution; the Storelectric approach also enables combining CAES with a Combined Cycle Gas Turbine (CCGT) to substantially improve the economic viability and environmental performance of a new or retro-fitted CCGT plant.

 

All plants will be built within Special Purpose Vehicles (SPVs).

 

Each SPV will be self-financed, around two-thirds debt funded (other than the first TES and CCGT plants), use of the partners’ resources and expertise, and obtain all local permitting and connections. Each plant in each market may have different costs and revenue streams; installations in conjunction with other infrastructure will have further revenues, as described in "Integration Synergies" below.

 

Storelectric will derive revenues primarily from: dividends from shareholdings in SPVs; royalties; project management; consultancy; and delivery of specialist services.

 

Storelectric developed its financial models and strategy working in partnership with PwC, the world’s largest professional services firm. on this strategic review which will result in either a potential sale of a minority equity stake in Storelectric, joint venture partnerships and/or financing of 500MW plants that would each store at least 3GWh of electricity, which can be increased up to many days' duration.

Seeking Investment

Storelectric seeks investment at two levels:

  1. Parent company investment would give a share in the whole company and its IP.
  2. A Special Purpose Vehicle / Company to build and operate one or more CAES plants. This would be an infrastructure investment and give a share in their profits.

 

Projects (initially Cheshire and Teesside) are looking for project investment. Regarding Cheshire, project investment would build a commercially viable and remunerative plant with an expected double digit whole project IRR and considerable up-sides; directors are happy to discuss the terms of those guarantees. Investors' revenues would be a share of the plant revenues, starting 3 years from first money for a small plant and 2-4 years later for a 500MW plant. Total project cost (within the SPV) to build a plant will require phased investments against delivery of specific milestones, though with faster and more reliable revenues / cash flow that are not IP dependent. A proportion of project investment would also be suitable for EIS investors.

 

There are several exit opportunities for investors:

  • at feasibility completion;
  • at planning approval;
  • at financial close and notice to proceed on construction;
  • at first plant operation start; at second plant funding;
  • and at intermediate/later points depending on IRR requirements and risk appetite.

Please enquire for further details.

Integration Synergies with Renewables and Interconnectors

Storelectric's CAES operates as one of a large portfolio of technologies delivering balancing and ancillary services to the grid. Others include Demand Side Response, interconnectors, pumped hydroelectricity and batteries. None of these can solve the challenges on their own, but without any one of them the costs of solving the challenges become prohibitive. Storelectric's CAES offers synergies with both renewable generation and interconnecors.

 

If CAES takes the cable from a large intermittent generator, e.g. a wind or solar farm, tidal or wave power installation, then it can reduce the size of the generator's grid connection by a factor of two or three. This will be reflected in both capital and operational (grid access charging) costs. It is because peaks in generation will be absorbed by the storage (if big enough) and dispatched only when needed: the grid connection is then geared to demand, rather than to maximum generation output. Moreover the value of electricity generated is increased due to its dispatchability.

 

If CAES is at the dispatching end of an interconnector, it can smooth out the flow of energy through that interconnector. Thus, in the example of a North African sola generation exporting to Europe, the total energy carried by the interconnector can be increased up to six-fold. Correspondingly, a CAES installation at the receiving end can put that energy into the grid dispatchably.

 

Both these configurations greatly increase the value of energy generated, while reducing the capital and revenue costs of doing so.

Economics of CAES

Storelectric CAES plants do not operate on arbitrage alone, they operate on multiple revenue streams ranging from ancillary services, arbitrage, balancing services and where applicable embedded benefits. This provides mitigation against any specific revenue stream underperforming at any time.

 

As spreads between peak and off-peak prices, and price volatility, grow with the increasing share of renewables on the grid, the economics of power stations deteriorate. Meanwhile the economics of CAES continue to improve such that in 5-7 years CAES will yield double digit IRR (Internal Rate of Return on investment) with revenues from arbitrage trading alone.

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