Matt Allen - Founder and CEO, Pivot Power

In the run up to Utility Week Live, we will be talking to six industry leaders driving change across energy, water and utilities. Matt Allen, founder and CEO of Pivot Power, is the second in our series of 'change makers'. He spoke to Denise Chevin about his bold ambition to revolutionise electricity storage and the uptake of EVs

How do we ramp up renewables while providing adequate storage to cope with intermittent generation?

Step forward Matt Allen, one of a new breed of energy entrepreneurs looking to shake up the sector. Allen is the founder of start-up Pivot Power and has an ambitious strategy to provide battery storage at grid scale. He has a £1.6 billion plan to build battery storage facilities, each the size of half a football pitch, on 45 sites around the country. Energy from the 50MW batteries – each of which will be large enough to power 10,000 homes – will also be used to power super-fast electric vehicle (EV) charging stations or charging hubs for electric bus depots or car fleets. With a total capacity of more than 2GW, it will be the world’s largest network of batteries, able to store roughly two-thirds the energy generated by the planned Hinkley C nuclear power plant.

The idea of launching Pivot first surfaced 18 months ago. “It came to us when we began to ask why the EV charging side of the business had not rolled out as fast as was needed. Where were people going to charge? And would it be fast or slow charging? It was clear to us there was a gap to be filled, so we approached National Grid with the concept.”

Uniquely, the storage will be built on National Grid-owned sites located close to towns and major roads and be fed directly by the high-voltage transmission network. Each site will have a 57MW grid connection.

Pivot has said that co-locating batteries and chargers in this way and connecting them to the transmission network will reduce the construction and operating costs, giving the business a competitive advantage over rivals who are installing batteries and chargers separately or connecting them to distribution networks. In particular, the batteries will allow Pivot to maximise the value of costly grid connections, which would otherwise need to be bigger.

The right-site equation

“Sites were selected where there was the capacity, where we could host a battery on National Grid land, and where these sites were close to the road network and populations. We therefore narrowed down potentially 300 sites down to 45.”

Pivot Power is taking a long-term lease with National Grid on commercial terms and is not getting any subsidy or grants. “We are a customer of National Grid. We essentially put forward connection applications to National Grid, which evaluates them and sees if it has spare capacity and at what cost – rather like it does with its other customers. Once we are connected, the tables are turned, and National Grid essentially becomes a customer of ours.”

Allen is hoping to roll out 45 battery sites by end of 2024. “By Q4, Southampton and Carlisle will be on stream; in 2020 there will be another eight, and then 10 more each year.”

Planning permission has been granted for five Pivot sites so far. The batteries are lithium ion devices, of which there are about a dozen manufacturers in the market. “We’re supplier neutral,” Allen says.

With each new facility costing around £25 million, the success of the plan will depend on getting investors on board. UK-based private equity firm Downing has provided funding “to get the business off the ground, build up a team and make the connection applications, and generally to get going. We’ve not disclosed how much investment we’ve had, but it’s in the millions.”

Pivot has just launched a funding round for Q1 and Q2 with the goal of raising £250 million for its first 10 battery network sites. Downing has invested more than £500 million in renewable energy. Allen says that Southampton will be the first site because National Grid was able to make it immediately available and it was the most straightforward to get operational.

He adds that Pivot is working closely with local councils to ensure there is support and to facilitate the planning process. Local authorities that are committed to improving the environment and where there are air quality issues have been particularly enthusiastic, he says.

“All of the different sites we own will have their unique requirements and customer base. We are working with communities to establish those ambitions. Sometimes the links within communities will be at council level, and sometimes this will be at the private level – or with local landowners, where we might be able to build a vehicle charging hub. But we do start at the council level; this is because we want to have their support.”

The chargers may be at hubs, but connections could go straight to large users, to bus depots, taxi and delivery van fleets, within a five-mile radius of the battery site.

“A number of companies are dipping a toe in the water in terms of having electric vehicle fleets; our USP is that we have the ability to scale up with those organisations. We’re looking at a distribution centre with 20 rapid chargers. As we start scaling up with the uptake of EVs, we will be able to increase the volume to those sites.”

Opportunities and risks

So will Pivot be able to raise the huge investment that will be needed to deliver this ambition, and what are the risks?

The great opportunities for battery-based storage combined with the expected growth in electric vehicles is an attractive proposition for investors. But, as Allen acknowledges, there is still Brexit to come, and snap policy changes outside the private sector’s control always make for risk.

“We have a view that storage is the greenest solution when it comes to flexibility – compared to interconnectors and gas fire plants and pumping hydro-plants.”

He talks through Pivot’s investment model and how batteries can provide a number of services and income streams. The first is in trading electricity, filling up during the cheap time and selling back when demand is highest; the second is in ancillary services, providing a balancing mechanism and frequency response to the National Grid; and the third is to act as a backstop to the capacity market.

The capacity income stream was never planned to be huge, he says, but he doesn’t foresee the market stalling permanently, referring to the judgement by the European Court of Justice in November 2018 which ruled the UK capacity market to be illegal.

He expects that Pivot will appeal to investors who take the view that the EV market will scale up and that demand for charging will rise in future. The government announced plans last year to ban petrol and diesel cars by 2040, and the past four years has seen a surge in EV registrations, up from 3,500 in 2013 to more than 195,000 by the end of January 2019.

But that isn’t to say Pivot is undertaking a risk-free venture. “There are always risks: policy and regulatory risks – those things always scare investors – Brexit, of course. But if you look at the spread of the wholesale market, it’s an enormous opportunity – particularly because you can be paid to take surplus electricity.”

He doesn’t give a figure on the payback period and says the rate of return will be different for each site. The key, he says, is to be aligned with what the investment criteria required. Interest in investing in Pivot is coming from multiple sources, he says – incumbents in the market (power companies and oil companies alike) and also from infrastructure and pension funds.

“To cement anything new there will always be challenges, but investors so far have been positive. The key is making sure we have the right investment partners on board – partners who believe in the vision.”

Other risks include the bottlenecks in the EV industry, such as the lead time from placing an order for an EV to actually having it roll off the production line and delivered to the customer.

“There are enormous opportunities for flexible storage. We are managing the controllables, which is all we can do. At Pivot Power we need a business plan that morphs to meet the needs of energy systems; the adaptability mindset is within our DNA.”

What about the emergence of competition? Allen is relaxed: “We would welcome others replicating what we’re doing. Our skill is about trading to maximise revenue – that’s more our focus.”

In terms of aggregation, he says, the company is working to develop some software in-house as well as collaborating with others. “I don’t see the point in reinventing the wheel to predict volatility."

In future he would like to get into behind-the-meter storage linked to solar on the roof, and distributed energy.

“A big part of the business is giving to the community. We’re committed to being fair and transparent on cost and to making it affordable; we’re also exploring local ownership.”

He says that more details will be revealed about the company's commitment to social value in the coming weeks. "Being sustainable and tackling climate change is not a periphery sport. We want to get people involved."

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