The government’s National Wealth Fund (NWF) has pledged up to £200 million to support new battery storage projects across Britain, as part of a £500 million investment package designed to strengthen the country’s clean energy infrastructure.
The deal sees the NWF co-invest with Australian pension fund Aware Super and infrastructure investor Equitix in Eelpower, a specialist battery developer. Construction of three new storage projects will begin immediately, with several more expected to receive the green light later this year.
The NWF said its decision was driven by the urgent need for more grid-scale storage to manage growing renewable output. The UK’s power system regularly pays wind farms to switch off because the network cannot handle excess supply – a practice known as curtailment – costing consumers hundreds of millions of pounds each year.
“Batteries are a priority area for the NWF,” a spokesperson said. “They provide the flexibility and security required to balance the grid as we transition to clean energy.”
The government has set a target of installing up to 27GW of battery capacity by 2030, a sixfold increase from the current 4.5GW. The investment in Eelpower is intended to deliver at least 1GW.
However, the move has raised eyebrows among some industry figures, who argue there is already strong private appetite for battery projects. One senior developer told The Times: “It is a little surprising. There is no shortage of equity and debt investors in the sector.”
Analysis by Cornwall Insight suggests as much as 61GW of battery storage is already in the pipeline, seeking grid connections by 2030 – more than double the government’s target.
The sector has nevertheless faced headwinds. Revenues have proved volatile, in part because the National Energy System Operator (Neso) has selected fewer batteries than expected to provide balancing services. Battery funds have also struggled in public markets, with listed trusts trading at steep discounts to their net asset values. Harmony Energy Income Trust agreed a takeover earlier this year, citing limited ability to raise fresh capital.
Adam Bell, director of policy at consultancy Stonehaven, said the sector was facing a “short-term crunch on access to equity” as Neso worked to resolve operational challenges.
Backed by up to £27.8 billion of government funding, the NWF has a mandate to step in where private finance is lacking and to catalyse investment in strategic sectors.
An NWF spokeswoman said: “Our view is that the debt market is in good shape in this sector, but we have seen the equity market struggling, with a number of existing investors looking to exit or de-risk their equity stakes and not enough new money coming in.
“We bring scale and presence to ensure projects can continue to develop at the pace required to meet government targets, whilst also giving confidence to the market.”
Despite criticism, the fund argues its intervention will ensure the UK’s battery roll-out keeps pace with its wider ambition to decarbonise the power system by 2030.
