Investors - The Business Proposition
The growth of renewable generation brings a similarly-sized need for emissions-free arbitrage, balancing and ancillary services. Now Storelectric offers cost-effective technology able to do this.
In the short term (for peak demand only), the market is for up to a third of peak demand in any country. To support baseload, 3-6 times as much storage is needed. To support the transition from fossil fuels of heating, about 3-10 times as much again is required.
Storelectric’s plants earn 12-15% returns on investment in today’s market, which is forecast to improve in the coming years, as such we are offering a select group of investors the opportunity to be involved at the start of what is a new and highly lucrative asset class.
The UK market has been assessed at £15B over the next 15years and the global market close to £1T, this data is based on the current and expected renewable penetration and does not assume the increased electricity demand arising from the electrification of transport and heating. The data has been cross referenced with other sources such as the UK government TINA report and assessments made by various market stakeholders such as Bloomberg and the National Infrastructure Assessment council. These numbers represent a global market of at least 3,500 plants with significant early investor returns following a successful first plant (currently underway), increasing further during the global roll-out.
For both the sub 50MW and 500MW plants the returns have been calculated in double digits with a substantial upside on subsequent project builds, depending on location and anticipated market developments. Each plant in each market may have different costs and revenue streams and further synergies can be entertained in co locating with other installations and infrastructure. It should be noted that the use of sub 50MW and 500MW are typical sizes for ease of reference, other sizes and configurations are deliverable.
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 can secure 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 within 5 years CAES will yield double digit IRR (Internal Rate of Return on investment) with revenues from arbitrage trading alone.
Storelectric Ltd has developed its financial models and strategy working in partnership with PwC, the world’s largest professional services firm. Detailed costing and revenue analysis has been conducted covering multiple revenue streams and based on prices (where applicable) from current tendered ancillary service data from National Grid. The returns are therefore based on what is prevalent in the market today and have been projected to show even more favourable returns expected tomorrow. In other words, future market developments are expected to make more attractive what are already attractive returns today. Storelectric Ltd is happy to provide further details on request.
Storelectric is a project and technology development company.
Investment in Storelectric Ltd: there have been 2 phases of seed investment starting June 2014 and Aug 2017 and as a result the directors have demonstrated that sufficient progress has been made in establishing the technology definition and bringing it to a sufficiently mature level for project development to commence. While no substantial additional funds are required further small funds could be entertained from well-intentioned investors who wish to take this final opportunity to invest in Storelectric Ltd at the technology holding level thereby giving a share in the whole company and its IP. Storelectric Ltd will derive revenues primarily from dividends from shareholdings in SPVs, in royalties, in offering project management & consultancy services and delivery of other specialist services.
Investment in Special Purpose Project Vehicles (SPV’s): all projects will transition into a Special Purpose Vehicle / Company specifically set up to engineer, seek planning approval, build and operate the CAES plant. This would be an infrastructure investment and give a share in profits unless the opportunity has been exercised to exit at an earlier stage of development as described earlier.
The 1st project has now completed the phase 1 funding and the feasibility is close to completion. Funding for phase 2 is now committed. Phase 2 is expected to be complete in 2018 with financial close for phase 3 anticipated by Dec 2018 and full operation tentatively set for 2020.
The screening process has already identified 20 new sites and phase 1 completion for the next 2 projects is expected by the end of Q1/18 (31.03.2018). Funding is now being sought for both projects with an expected additional 2-3 projects screened in every quarter till end 2018, resulting in ~ 10 SPV’s having been set up at different stages of development by Dec 2018.
Each project will have a dedicated and tailor-made project prospectus that will describe the specifics of technology, sizing, location of site, grid and offtake connections and a detailed plan of the planning and construction timeline. As each prospectus will be highly customised and contain sensitive commercial data
All projects are expecting double digit IRR (project) with considerable up-side. Storelectric Ltd are happy to discuss project status updates and provide data for due diligence purposes.
Project Screening and Development
Storelectric’s unique identification methodology coupled with a very refined and robust screening process which utilises over 20 different screening criteria, enables optimum locations to be quickly and accurately identified and locational risk to be mitigated.
Project opportunities are regularly screened with several market leading collaborators that between them have over a hundred years of expertise in Environmental Impact Assessment and Project Planning Approval, Geotechnical and Geological Engineering, Project Development and Financing and lastly and not least Grid Connection and EPC/equipment design.
The project development process is split into several key phases
Phase 1: Screening and Feasibility (on completion the project will have been appraised as a real and investable proposition). Conducted within Storelectric ltd.
Phase 2: Front End Engineering Design (FEED) and full Planning Approval (on completion the project will be “shovel” ready with all necessary approvals secured) conducted through a dedicated SPV.
Phase 3: Construction (on completion the plant will be fully operational and starting to generate revenues) conducted through a dedicated SPV.
Phase 4: Operation (on completion the project will be generating revenues for a minimum 25year lifetime) conducted through a dedicated SPV.
Phase 4 may be conducted by other organisations than Storelectric Ltd although Storelectric Ltd will offer subcontracted services such as plant operation, maintenance and trading.
There are opportunities for investing and exiting in each of these phases. The higher returns are commensurate with understandably a more longer term commitment however Storelectric Ltd is happy to cater for different risk and reward appetites and would be more than happy to discuss further details on request.
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Partners and Collaborators
Storelectric Ltd has developed an enviable list of partners and suppliers to ensure project success and ensure delivery is not compromised at any stage of development.
Every partner business envisages working with us as we are seen as providing a unique opportunity to create a new global market, well ahead of any competition.
An initial agreement on the land option for the first project has been secured with the owner for the use of existing gas-optimised salt caverns with 4-8GWh capacity now, with a possibility to expand this in the near future to 40-60GWh. They have experience winning planning and grid permissions for comparable projects in the gas industry, on the same property in virtually identical caverns.
OEM’s for the main equipment are numerous as this equipment is considered off the shelf and only adapted to the ambient conditions of the new location. However, we see the advantages of business partnerships and as such we are in discussions with several such as Siemens, GE, Doosan, Sulzer amongst others.
The thermal storage device is an important part of the system design and as such the supply side is considered confidential.
Several EPC and General Engineering Contractors are in discussions with us to tender for the 1st project FEED work and help screen future projects.
Costain have been commissioned to finalise some pre feed work on the 1st project expected completion 1st quarter 2018.
Pricewaterhouse Coopers (PwC) have delivered support in market, trading, financial, commercial and structural matters, including financial modelling, on a partnership basis.
Dentons LLP, the world’s largest legal practice, has contracted to provide legal services for deferred payment, at risk.
Fortum have been commissioned to complete the initial dynamic simulations for our 1st plant and expect completion May 2018.
ERM Ltd is engaged on the 1st project and have already conducted extended habitat and bat transect surveys. They are also confirmed collborators for future project screenings.
Siemens have modelled the system using their existing, catalogue equipment and are particularly focused on the air subsystem: compression, expansion and generation.
KBB Deep, the Geotechnical Engineering company that engineered the caverns in Huntorf are currently conducting geotechnical studies on our 1st plant and collaborators for future project screenings.
Oswald Consultancy consulting engineers undertook early process analyses. Jim Oswald, CEO, was R&D Director of Rolls-Royce Energy before they relocated to Canada. They are expert in gas turbines , heat exchange and thermal management.
National Grid has been working with Storelectric and PwC to identify and quantify revenue streams expected from a full-sized installation. Several leading universities are supporting with their expertise, research and development.
BEIS, the British Government’s Department of Business, Energy and Industrial Strategy (formerly the Department of Energy and Climate Change (DECC)) has provided Storelectric with funding. We look forward to greater funding and work together.
Storelectric’s proposal is “eminently credible from an energy market perspective … an exciting opportunity.
This appears to compare well with existing technologies such as pumped storage and interconnections.