INTERVIEW: Highview Power raising finance for GBP 650m storage facility in Scotland

Highview Power is live on a financing round to support a 200 MW / 2.5 GWh storage facility that will be built across 30 acres of land in Hunterston, Scotland, the first project in a wider GBP 2.5bn programme to build four large-scale plants in the UK, chief executive Richard Butland told NPM in a recent interview.

Highview Power develops liquid-air energy storage facilities which store renewable energy by capturing and liquefying air. The energy is released when the air is transformed into a high-pressure gas used to drive expansion turbine generators.

Alongside storage, its technology offers a range of services including inertia, short circuit, local voltage support, and black start.

The four projects which form the developer’s second phase of its long duration energy storage (LDES) programme, include another in Scotland and two which will be located in the Humber area. One is being developed as part of a partnership with Orsted and will be co-located with offshore wind project Hornsea Four.

Butland said each of the four projects is expected to cost GBP 600m–650m. The current financing round, expected to close in Q1 2025, will raise a small portion of the total funding required for Hunterston to support the grid stability aspect of the Hunterston project, allowing construction to begin.

Butland declined to provide specific financing detail but said: “Generically, we have senior debt at the asset levels and then we’re funded with equity from the group.”

For the current financing round Highview is working with existing investors including the UK Infrastructure Bank, Centrica, Goldman Sachs, Rio Tinto, KIRKBI, Mosaic Capital, and Sumitomo.

And “once we have the cap and floor in place that will open up more infrastructure style debt investors and commercial banks,” said Butland.

The UK government plans to implement a cap-and-floor scheme meant to address a lack of revenue stream for LDES applications and provide certainty to investors. The first round of the model is expected to open to applicants in 2025.

“It will give you a certainty on return for the capital, but it will also cap the return as a quid pro quo,” explained Butland.

He added: “What infrastructure investors need is certainty. They don't need a really high return, they just need a predictable return. The UK’s CfD rounds provides support, in effect, to renewable generation, so we’re already doing that for generation [and] without the cap and floor, it will be very hard for infrastructure investors to participate.”

According to Butland, in-house analytics and modelling show that without technologies like Highview Power’s, the UK will be curtailing 10 times as much wind in 2030 as it does now.

He added that 20 large-scale Highview Power facilities (2.5 GWh each) would be needed to support the UK’s 2040 target for liquid-air energy storage.

The four projects that form the second phase of Highview Power’s LDES programme are expected by 2030, with Butland saying: “We’re fully locked in and moving into planning.”

As Highview Power moves forward with the projects in the second phase, Butland said: “We have the connections, we have the land, we’re putting in for planning permissions."

However, Hunterston already has full development rights and planning permission, with an FID targeted for early in 2025.

"For the remaining sites, and several new sites, we will move them forward at pace with government to support 2030 targets,” said Butland.

After the first four large-scale assets are online, representing 10 GWh on the system, Highview Power intends to rollout 1–2 per year through 2040 and beyond.

Highview Power’s pipeline also currently includes three international projects of a similar size, one in Ireland and two in Australia, expected to cost an additional GBP 4bn–5bn in capex.

In Australia, Highview Power already has a team operating in Brisbane and is in conversation in the Northern Territories to integrate LDES technology with solar to provide long duration energy storage.

Meanwhile, Highview Power partner Sumitomo is currently developing a plant in Hiroshima, Japan to showcase the next generation of Highview’s storage technology. The 15 MW pilot plant will be co-located with LNG and use waste cold to improve efficiency.

Commissioning of the pilot plant is expected in early 2025.

Also currently under construction is a 50 MW / 300 MWh Highview facility near Carrington in Greater Manchester. The stability part of the project is expected to be operational in 20 months, with storage commissioning set to follow six months after.

Construction of the Carrington facility is supported by GBP 300m secured from backers including the UK Infrastructure Bank, Centrica, and a syndicate of investors including Rio Tinto, Goldman Sachs, KIRKBI and Mosaic Capital.

Highview Power primarily manages financial raises in-house but was supported in the GBP 300m round by Ardea Partners (financial), Perkins Coie (legal), and White & Case (legal).

*This story was originally published exclusively for NPM Europe subscribers.

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