Surging demand: A data centre manager is seen walking in a server room in Sweden. The country, one of the regions in Europe most at risk of winter power shortages, is in a rush to expand its power capacity. — AFP
STOCKHOLM: A former Gunvor Group trader is rushing to expand battery capacity in southern Sweden, one of the regions in Europe most at risk of winter power shortages.
The uptake is increasing rapidly because batteries can store electricity when wind and solar generation is high and supply it to the grid when production is low.
Scandinavian Capacity Reserve (SCR), a startup founded two years ago by Fredrik Bodecker, is targeting the development of 100 megawatts before 2025.
“The market for batteries is very interesting,” said chief executive officer (CEO) Bodecker, who previously traded electricity for Gunvor, RWE AG as well as his own energy hedge fund.
“Even the taxi drivers are asking about investing in batteries.”
While Sweden was Europe’s biggest net power exporter last year, the south of the country was pinpointed by grid group Entso-E as one of the regions most in danger of outages in the past winter after reactor closures slashed available generation.
Prime Minister Ulf Kristersson said in December it was the area with the biggest gap between supply and demand.
The battery market is still at a very early stage, but Bodecker expects it to grow rapidly in the next couple of years. There was about 70 megawatts of battery capacity online in Sweden by the end of last year, according to Ingrid Capacity AB, another developer.
Earlier this year, SCR sold its first lithium-ion 20-megawatt project – developed together with Renewable Energy Systems Ltd – to Swiss utility Axpo Holding AG.
While the batteries are much smaller than regular power plants, they require just 3,000 sq m and can be housed in about six standard shipping containers.
The total time to develop, sell and construct a project takes between one and two years, with much of that time spent on the delivery of the actual equipment, Bodecker said.
Speed is of the essence to get the best returns, according to the CEO. The European energy storage market is so far mainly driven by residential batteries, but growth in Europe, the Middle East and Africa is expected to rise tenfold by the end of the decade, BloombergNEF said in a March report.
“These early projects have a return on investment of about 3.5 years,” said Bodecker, whose partner at SCR, Carl Hagert, held senior roles at firms from Danske Commodities A/S to Koch and and Norway’s Hafslund. The CEO declined to disclose the cost of the projects.
The vast majority of income from the installations will come from so-called ancillary services that help keep the grids stable at all times, Bodecker said.
These niche markets will become even more important as intermittent renewable energy flood the grid on sunny and windy days only to evaporate when it is cloudy and still.
Southern Sweden suffers from a power shortage after four reactors were decommissioned since the middle of last decade without any large-scale replacements. The government said the nation needs all new capacity it can get, including batteries, especially as electrification will double demand in the coming decades. — Bloomberg
