Gresham House Energy Storage Fund has entered a power purchase agreement (PPA) with a subsidiary of Octopus Energy for 14 of its battery projects, totalling 568MW/920 megawatt hours (MWh), in the UK.

The two-year fixed-price contracts, in place from 1 July 2024, cover approximately half of the company’s 1.07GW target portfolio.

Under the PPA, Octopus Energy will pay a fixed fee per megawatt for the use of the battery storage projects.

The fee is based on the asset’s duration in hours, excluding separate capacity market payments.

With these additional revenues, Gresham House anticipates annual contracted revenues of £43m during the tolling arrangement.

More than 50% of Gresham’s battery storage capacity will be integrated with Octopus’ Kraken technology platform, which utilises AI and machine learning to optimise charging and discharging based on renewable energy availability and grid demand.

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The contracted portion of Gresham’s portfolio has secured a higher price compared to recent market performance.

With the completion of this PPA, Gresham’s end-of-2024 portfolio is expected to be almost 50% hedged. The remaining 504MW/776MWh will continue under existing optimisation agreements.

Octopus Energy flexibility head Kieron Stopforth stated: “Every year the UK loses hundreds of gigawatt-hours of clean energy because our system isn’t flexible enough to keep it – PLUS have to pay for this senseless waste.

“Batteries unlock the clean and cheap energy system, storing green energy when it’s plentiful and providing it back to the grid when energy is expensive – and work even better with brilliant tech to manage that optimisation,

“Through this landmark deal with Gresham House Energy Storage Fund, we’re not only increasing the size of our virtual power plant to over 1.5GW – we’re also unlocking the power of flexibility, aiming to drive down grid costs.”

Gresham House Energy Storage Fund plc fund manager and Gresham House New Energy managing director Ben Guest stated: “These new contracts with Octopus Energy secure revenues which are above those currently being achieved in the national market, demonstrating the value batteries can provide in balancing supply and demand for retail and wholesale market players.”

In December 2023, Octopus Energy Generation and Nexta Capital Partners formed a joint venture to develop 1.5GW of battery storage systems in Italy, chiefly in the southern region.