Pivot makes huge play for 2GW battery storage and mass EV charging network

May 22, 2018

Start-up seeks £1.6bn to spend on massive batteries and EV charging infrastructure.

Pivot Power has unveiled highly ambitious plans to build 2GWs of battery storage connected directly to the transmission network.

The start-up aims to use dozens of 49.9MW batteries to balance the grid and simultaneously charge entire car parks of electric vehicles within minutes.

The company has backing for the initial phase of its plan from Downing LLP. The investment firm plans to bring in both institutional and retail investors to fund a programme that could top £1.6bn, subject to sufficient backing and planning consents. The company thinks EV owners will also crowdfund the buildout.

Think big

Pivot Power aims to commission the first 10 grid scale batteries within 18 months, the first a £25m project on the south coast.

Mikey Clark: Investors comfortable with storage.

Chief technology officer Mikey Clark told The Energyst the firm is currently working through permissions for the rest, a potential portfolio of 45 sites. But, while connecting to the transmission system is “more arduous” than distribution, Clark is quietly confident Pivot can deliver.

While other developers have been “nervous” about connecting to the extra high voltage network, Clark said doing so gives the firm “access to a much bigger connection”.

It also cuts out distribution charges, which means cheaper power – both for EV charging and potentially, to sell to large industrial users, according to Clark.

“Access to transmission electricity gives us options that haven’t been used before,” he said. “So we can unload electricity to energy intensive users at a very competitive price.”

Investors ‘comfortable’

Plans for 50MW batteries are not unheard of, and some developers believe they will build 300MWs of storage by 2020.

But delivering two gigawatts of battery storage would represent step change.

Given lack of long-term revenue predictability, how confident is Pivot Power that investors will back such ambition?

Matt Allen: Compelling investment that also solves EV constraints

“We will engage with institutional and strategic investors over the next few months,” said CEO Matt Allen. “But in terms of the value stack [grid balancing, arbitrage, EV charging, plus potentially retail] it will be a very compelling investment.”

Clark added that investors have had “a lot of time to get under the skin” of storage economics. Financiers “are far more mature than they were a year ago, when they were looking [predominantly] at firm frequency response price [visibility] over two years,” he said. “They are past that and are comfortable with it.”

“We will have access to much higher volumes of connections going directly into the transmission system – and access directly into the Balancing Mechanism and all the trading benefits that come with that,” added Clark.

“We expect quite a lot [of revenue] to come from trading, but certainly where available we will look for frequency and ancillary services revenues. So it is a case of picking and choosing, but we anticipate arbitrage – intraday, day ahead or within the Balancing Mechanism – to be a large part of the stack.”

Clark said the size of the batteries and connecting direct to the transmission network also brings mandatory frequency response contracts into play as well as constraint management for the system operator.

Then there is the EV aspect.

EVs and retail?

Pivot’s plan is to locate batteries strategically around the UK road network and use them to feed rapid charging stations capable of charging 100 EVs simultaneously (100 x 150kW rapid chargers, equating to 15MW of dedicated EV charging per site).

The company says that capacity could also be used to cater for electric bus depots or transport fleets.

Meanwhile, its planning activity also includes lease agreements and options for land rights, which could create opportunities to build retail parks around its infrastructure, and associated revenues.

“Access to flexible and abundant power and being able to get that power to locations where we see large demand for electrification of transport … starts to become a very compelling piece to the value stack,” said Allen.

Accelerating EV uptake?

But EV volumes are not there yet. Six months ago there were around 120,000 plug in cars in the UK. That figure is expected to rise to 200,000 by the end of 2018. Pivot Power plans to commission 10 large-scale batteries by the end of 2019, “with the EV piece there or just after that”, according to Clark.

While Clark said achieving a substantial EV revenue stream is a “medium-term” proposition, Allen suggested there is an element of chicken and egg: range anxiety and distribution network constraints may be holding back EV uptake. He thinks the infrastructure has to come first.

“The reality is there is a constraint, so we are focused on addressing the power problem,” he said. “Being transmission connected and having the power at volume allows us to address that bottleneck.”

National Grid appears to agree, with its project director for EVs, Graeme Cooper, adding a quote to Pivot’s press launch materials.

“We expect the use of electric vehicles to grow rapidly. This innovative solution will help accelerate adoption by providing a network of rapid charging stations across the country enabling cars to charge quickly, efficiently and as cost-effectively as possible,” stated Cooper.

“It will also give the system operator more choice and flexibility for managing the demands in the day to day running of the network, and also help mass EV charging”.

EV owners as investors?

While Downing aims to bring other large investors into play, the firm also believes small individual investors – and in particular EV owners – will help fund Pivot’s grand plan.

Julia Groves: storage ‘the next big opportunity’

Julia Groves is a partner and head of crowd funding at Downing. She said the firm has invested £500m into renewables to date and believes “this is the next big opportunity”.

She admitted two gigawatts “is huge”, but thinks taking a site-by-site approach, at around £25m a pop for each 49.9MW battery, makes it manageable.

Groves also believes EV drivers will have appetite to fund the charging infrastructure.

Downing has been active in crowdfunding for around two and a half years, raising £58m to date, with renewables “by far the most popular” funding category, according to Groves.

Downing will set the minimum investment low, potentially as little as £100, she added, and it may be that ISAs can be used to invest in the Pivot projects.

“We have to wait until all the planning is though [to provide details of investments and anticipated returns], because it has to be simple and robust,” said Groves. “We do need institutional partners. But we believe it is entirely appropriate that this opportunity is opened up to the general public.”

Pivot CEO Matt Allen said the firm is “optimistic and curious” to understand retail investor appetite. He suggested giving “those joining the EV revolution the ability to also own the critical charging infrastructure is emotionally a very compelling proposition”.

Walking the walk

Now the start-up has broken cover, can it realistically hope to deliver hundreds of megawatts of storage, from scratch, within 18 months? There is a precedent of sorts in South Australia. But that was Tesla, with a mature supply chain, and with Elon Musk’s word, and company cash, at stake.

CTO Mikey Clark is sanguine.

“There are always obstacles that may cause some friction in getting all the way to ten [commissioned batteries] in 18 months – planning, supply, equipment etc. But we have a strong planning approach in place, are a long way down supply chain talks and the vendors are bullish,” he said.

“Hopefully we will do all of those ten and more.”

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