The UK’s largest fund investing in utility-scale battery energy storage systems, Gresham House Energy Storage Fund (GRID), has announced that 14 of its projects have secured fixed price contracts with Octopus Energy.

For the term of these arrangements, Octopus will pay a fixed fee per megawatt (MW) on the projects in return for the use of each project’s batteries.

The fixed fee rate is determined by the duration of the asset – expressed in hours – and excludes capacity market payments which the projects will continue to receive separately.

GRID suggested the contract underpins its revenues and provides a “greater degree of certainty” over the company’s cash flows.

Including the company’s capacity market revenues across its full portfolio, the majority of which are for 15 years index-linked to CPI, GRID expects to have annual contracted revenues of £43m during the tolling arrangement

“Batteries play a key role in unlocking the clean and cheap energy system, storing green energy when it's plentiful and providing it to the grid when energy is expensive,” said head of flexibility at Octopus Energy, Kieron Stopforth.

“Through this landmark deal with GRID we’re not only increasing the size of our virtual power plant to over 1.5 gigawatts (GW), we’re also unlocking the power of flexibility to drive down costs for consumers across the country.”

Chair of GRID, John Leggate, added: “The board and manager firmly believe that the rebalanced mix of contractual and merchant revenues offers shareholders a superior risk adjusted target return and material risk mitigation, particularly in a revenue environment that remains uncertain in the near term, by reducing direct exposure to the electricity system operator (ESO) as the principal counterparty in Great Britain.”

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