Ampeak Energy Limited (LON:AMP) Chief Operating Operator David Taaffe caught up with DirectorsTalk to discuss the significance of the AW1 project, its role in the company’s broader strategy, and what lies ahead for Ampeak Energy’s growing UK energy storage portfolio.
Q1: First off David, congratulations on achieving financial close for AW1. Could you just explain for us what AW1 is, how it fits into Ampeak Energy’s broader strategy at Uskmouth, and why it’s a landmark project for both the company and the UK energy storage market?
A1: AW1 is a utility-scale battery energy storage project at 120MW or 240MWh capacity so the scale and revenue stream it provides for the business make it a landmark project for us. AW1 is the first battery storage project to be financed, built, owned and operated by Ampeak, and it’s a flagship project for our Uskmouth Sustainable Energy Park.
We have raised £67 million to build this project whilst retaining over 75% ownership. This demonstrates that we’re delivering on our strategy to become a major IPP in the battery sector. AW1 unlocks the rest of our portfolio, it’s a key project for us. We can now move rapidly to build a 3.5GWh storage portfolio between our sites at Uskmouth and in Scotland in Mey. We have already announced we’ve got planning support for a further 2.5GWh of this capacity at these sites.
Uskmouth is a key site for the UK storage market because it has existing infrastructure and enables us to rapidly build this site for the UK energy storage market.
Q2: Now that financial close has been secured, what are the key steps to bring AW1 into operation, and what does the construction timeline look like leading up to first operations in 2027?
A2: The construction timeline, in very brief, involves the following steps:
The civil works are going to be finished this year. We had early engagement with local civil contractors, and we’ve ordered all the long lead items. That work is well underway and expected to be finished in 2025.
The electrical installation works can then start and finish in the first half of next year in preparation for batteries and the main grid transformer, which will be delivered in Q3 next year.
We then move to Q4 2026. We will be commissioning the system, with full commercial operations expected in Q1 2027.
So, we are extremely confident that this programme will be on schedule owing to the experience, the proven track record of our project partners, and also the experienced delivery team here at Ampeak.
Q3: With AW1 now fully consolidated and Ampeak, as you say, retaining a 75% stake, can you walk us through what this means for the company’s near-term finances?
A3: This project is transformative for the group’s finances and cash flows. It has forecast annual revenues of £13 million per annum and an annual EBITDA of £9 million per annum and really that’s just the tip of the iceberg.
The AW1 project is being designed and constructed so its capacity can be doubled very quickly for further enhanced revenues. The two projects that have just passed their planning hurdles are now both ‘ready to build’ status are now preparing for financial close, and AW1 was a catalyst for those projects. They have a combined storage capacity ten times that of the AW1 project. So, we are forecasting potential annual revenues of around £100 million per annum when all these projects are operational.
In summary, the outlook for both the near and long-term finances is absolutely fantastic.
Q4: We know how critical grid-scale battery storage is for balancing intermittent generation. How strong is the UK demand for projects like AW1 and how does this project position Ampeak Energy to scale its storage platform across Uskmouth and Mey?
A4: Putting it simply, we just cannot achieve the UK 2030 net zero targets without an enormous increase in battery storage capacity. There is no other technology that can match the supply of intermittent generation with demand as efficiently or cost-effectively as battery storage can. There are no better locations that can deliver it at this scale and pace than we can here at Uskmouth.
Battery storage is well regarded as one of the fastest growing technologies in the energy sector. The current capacity in the UK is around five gigawatts, and the overall requirement by the end of the decade under the government’s CP2030 plan is about twenty gigawatts. That enables the securing of renewable energy supply and grid reliability with intermittent generation.
This is not going to be achieved by building small projects, we need very large projects that can be rapidly delivered and that’s why projects like AW1 and AW2 are in critical demand.
Q5: With AW2 having recently received planning permission, how does this next project build on the progress of AW1, and what can investors expect in terms of future news flow and milestones?
A5: To give an overview of our AW2 project, it has a 1.25GWh capacity, that’s five times bigger than AW1. It should be noted that Ampeak owns the land at the site, which provides additional sources of revenue for the group.
Now, that it has planning permission, over the next 12 months we will be working on the more detailed design phase of the project, and we’ll also be locking down the revenue streams such as capacity market and optimisation agreements. A combination of these contractual arrangements and a fully procured project allows us to finance the project.
We expect AW2 to reach financial close and start construction in 2027.
