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.

 

Projected IRR between 10-12% 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) 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 hydrogen 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 a number of 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.
  3. A Special Purpose Vehicle developing our hydrogen technology. This would give a share in its roll-out potential.

 

Please enquire for further details.

Cheshire Project Highlights : Storelectric Cheshire Ltd

 

Storelectric is developing several projects, the most advanced is currently in Cheshire and will consist of a 500MW and/or a 20MW CAES Plant. Options exist to co-locate a number of plants on the same site, both transmission and distribution connected. The next phase of project development will optimise the technology solution, the sizing and the co-location option. Optimisation will be based on the expected operational regime, in turn based on the available revenue streams.

 

The project is progressing, brief highlights being:

  • The SPV (special purpose vehicle) has been set up, and the key partners are in place.
  • An agreement has been signed for the land at the Cheshire site with options for both the use of existing salt caverns and solution mining new caverns. Specific locations on the site have been identified for the underground storage and above ground buildings..
  • Grid Connections for 33kV and 132kV are available within 1km; 400kV within 6km. The national gas main, with existing major connections, runs through the site.
  • The site is well positioned between demand load points and renewable generation and with the closure of almost 10GW of fossil generation within 5 years the need for large scale storage is acute.
  • The location has sufficient underground and aboveground space to scale into 100's GWh, or even TWh’s.
  • Storelectric has started discussions with Cheshire West Council who do not foresee problems during consultation nor planning approval. Storelectric has also initiated contact with the Planning Inspectorate (as part of the NSIP process).
  • Conversations with National Grid and with Scottish Power Energy Networks (SPEN, the local Distribution Network Operator [DNO]) are ongoing.
  • Investment proposals have been submitted to several interested parties and due to the sheer size of salt storage possibilities the project allows multiple plants to be built by different investment groups.

Time Line

This multi-year project has already started.

  • Process designs started;
  • Land / cavern options - initial agreement signed;
  • Liaison with National Grid and SPEN started;
  • Liaison with Cheshire West and the Planning Inspectorate started;
  • Conversations with off-takers started.

 

Depending on planning and grid connections,

  • A 20MW plant will be operational within 3 years of first money;
  • A 500MW plant will be operational within 5-6 years;
  • In some jurisdictions, these timescales may be shrinkable quite considerably.

Investment Proposition Details

Investment is sought at two levels: the parent company and project (SPV).

 

The parent company is looking to raise upwards of £0.5 million for a significant minority equity shareholding to achieve the remaining 2016 milestones, which are expected to increase significantly the value of the Company:

  • pre-planning work on the land at the Cheshire site using existing salt caverns on which Storelectric has an initial agreement;
  • development of UK storage projects focused on renewable energy integration and grid balancing / ancillary services;
  • grant funding applications for geological and commercial modelling of aquifers, disused oil and gas fields;
  • extend key partner collaborations on the financial modelling and the engineering; and
  • internationalisation of patents.

 

Revenues would derive from all future projects, with very large potential returns, though over a longer timescale than project investment. Topco investment is suitable for EIS investors, having previously received pre-qualification for SEIS.

 

Projects (initially Cheshire and Scotland) are looking for project investment. Regarding Cheshire, project investment would build a commercially viable and remunerative plant with a guaranteed 10-12% 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.

 

£125,000 has already been invested by three seed investors for 5% of Storelectric.

Storelectric won £40,000 in the Shell Springboard Competition.

 

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 >10% IRR (Internal Rate of Return on investment) with revenues from arbitrage trading alone.

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