Building Britain’s biggest battery energy storage system with Lisa Mackay (Fidra Energy)

There's one simple rule in infrastructure. Bigger usually means cheaper and more efficient. Shipping ports know it, supermarkets know it, and now economies of scale are driving new energy storage projects too.

Over the past few years, batteries built in Britain have been relatively small, at least compared to traditional generation sources. We've seen lots of fifty to a hundred megawatt projects scattered all around the country, and they've proved a point. Distributed flexible assets can support the grid by stabilizing frequency, plug short term discrepancies between generation and demand, but the current fleet is only just getting started. And if you want a grid that can handle a midday wave of solar, hold it, and release it right when the evening peak hits, you need scale.

One big well run battery could do the job of ten small assets. And that's the bet behind Fidra Energy. Their flagship project is Thorpe Marsh in Yorkshire, built on the side of an old coal station and reborn as a one point four gigawatt two hour battery. It's split into five equally sized blocks, each able to run on its own and staff twenty four seven designed to function like a traditional power station.

And a project this big requires big lenders. Enter the UK government. The National Wealth Fund, Britain's public investor for strategic infrastructure, has taken a major stake in Fidra. That matters.

It puts much needed capital into critical projects sending out a signal to the market. Storage is not a pilot anymore. It's national infrastructure. But is this even necessary?

Small batteries move fast. They don't wait for government support or nine figure project finance. They're nimble, privately funded, and can plug into the grid in days rather than years. That flexibility matters in a system as congested as Great Britain.

Ultimately though, and regardless of whether big batteries are necessarily better than smaller systems, scale changes who participates and the speed of deployment. It attracts institutional capital that wants to write nine figure checks with predictable returns.

It creates bargaining power in the supply chain, and it moves the conversation with the system operator from, can you fit us in to how should we design this block so it solves more problems across the network.

And that's the heart of today's conversation with Lisa McKay, Fidra's chief commercial officer. We discuss our plans for big batteries now, not later. We talk about how to manage the trading arrangements of these new projects, and we explore what it actually takes to turn a former coal site into one of the most consequential batteries on the system today. So welcome back to transmission. Let's jump in.

Hello, Lisa, and welcome to Transmission.

Thank you for having me.

My pleasure. And as always, let's start off with giving our listeners some context. So what's your background and who do you work for?

So I'm Lisa. I work for Fidra Energy. I'm their chief operating officer. We are a battery developer.

I'm new to batteries. My background is all trading in gas, thermal assets. So I joined when they brought in the new electricity trading arrangements in two thousand and one. I had a shift trading job optimizing large power stations which I'll still profess is the best job I've ever had.

Okay.

But since then, I've done a variety of jobs in asset management, commercial, public affairs and now batteries.

And can you still, like members of your family, remember those original power stations you were optimizing way back when?

Oh, yeah. Definitely. Definitely. We had yeah. We would they were being built. So when I started, there was one station at Intogen and then they brought on board another one and another one and another one.

So we had all the commissioning, the getting ready and the systems were like well, obviously, compared to now, they weren't very advanced, but then they were. We were moving away from, like, DOS. So it it was a big step in the right direction.

I I hope the people listening know what DOS is.

But if not probably won't.

If not, we'll stick a link in.

They probably won't.

Okay. And Fidra is perhaps quite exceptional in GB at the moment because you are building a very large battery site. Would you like to give a bit of detail around that?

Yes. So Fidra was started or established in two thousand and twenty four, and that came about because EIG who are our shareholder had purchased West Barton B, a gas station from EDF in twenty twenty one and we then sold the operating business. So, we sold the operating assets and we kept all our development business which was all battery storage. So at that point, we established as a strategic investment for EIG, Fidra Energy. So I'd say although we are, we'd call ourselves a battery storage developer, we have big ambitions to basically build, own and operate about ten gigawatts of storage across UK and EU, but we are solely focused on large scale transmission connected storage. So that's our niche.

And what do you mean by large scale?

So I think the absolute minimum would be a hundred megawatts, two hours. But, you know, as we'll talk about our sites that we've got just now are significantly bigger than that.

Okay. And what is the first site that you're working on?

So our first major project is Thorpe Marsh.

We reached financial close just earlier this year, so that meant we now have brought in equity to support the building of Thorpe Marsh and our other projects and we've also debt financed the Thorpe Marsh project. So we've brought in four fifty million roughly of equity. Thort Marsh itself is a one point four gigawatt so it's pretty huge. We are building just over a two hour system there and it's sort of based in the middle of the country. It's actually on the well, it it's adjacent to where the old Fort Marsh coal station was.

Okay. Okay. And that that obviously for people who are sort of like their history in in power markets, obviously, it's really nice to see the sort of old coal station changing and turning into a battery powered station. So one point four gigs, two point eight gigawatt hours is the size of the site.

You should never say that we don't do our research on this podcast. I found before this episode that the Thoughtmarsh power station was opened. It was the first power station in GB to be opened by a non royal. That's just whether that's true or not, I don't know.

But I'd like It's definitely one of the early ones.

Definitely one of the early ones. Let's let's go with that. Okay. And and that is that is unique, right, at at one point four gigs because we don't have battery projects of that size in GB today. So perhaps let's actually just sort of talk about the stage. So you mentioned that the financing has been completed.

What what is the next stage that the team are working on?

So Thorpe Marsh is well under construction. So, you know, we have all our appropriate permits in place, our planning in place, we have our connection. So I I was at the site just yesterday and it's incredible like day to day you're seeing changes because actually it was it was a kind of like a horseshoe effect and what we've done is we've built up all that ground. So, now we've basically almost completely finished flattening and raising the site. So the next stage will be that H and M V, who are electrical partner, they'll come on-site and they'll begin all the cabling works and things like that. So they'll probably start in January doing all of those things. And then finally, the batteries will arrive from Sangro, who are our battery supplier, and they'll be brought to site and plugged in and commissioned.

It'll all be tested and commissioned. What is the sort of potential date for that commissioning?

When when do you think So we expect Thornton Mars to be open operational, so have reached COD by mid twenty twenty seven.

Okay. And just because of the size of it, does does it kind of does it op does it go operational in stages?

Or yeah.

So Yeah.

That's a that's a really good question because, I mean, nobody wants one point four. It's huge. So what we've done is we've split it into five chunks. So balancing mechanism units as you defer to them under the National Grids, BMUs, we've got five individual BMUs. Now each of those BMUs have their own meters, they're dispatchable entirely independently, they've got their own transformers. So in a way it's like five little stations So they'll come on staggered one after another.

So the first one will be operational in July twenty seven and then over a sort of twelve month period, we'll get all the way up to They're kind of cascade through.

Okay. And and let's just actually revisit the whole piece around why go large scale. So so what is the sort of what's the business driver for looking at much larger sites?

I I think there's like there's three things really. We believe as a team, that's our niche. So I mean, you look at the Fidra and the team that we've got, we're all from large scale generally gas backgrounds, know, we've operated, we've built and optimized large power stations and so we think that's our niche, that's what we're good at. You know, there's lots of other people doing smaller scale distributed connected, you know, we think this is what we're good at.

So, it's our skill set. The second thing is we believe that Grid needs it. In order to meet their ambitions, we think they need large scale storage and there hasn't been very much large scale built to date and we think they need that to get over that next hurdle to the targets that they want to achieve. So, believe that Grid need it to create that that clean grid, I guess.

Yeah. And then the last thing is it's cheaper to build, right? I guess that's always a surprise to people but there is efficiency. Effectively, we think there's about a third on a pound per megawatt basis, we think that's about a third cheaper than you would get for a one hundred two hour system for the size of system we are getting.

So, a CapEx per se perspective, it's cheaper, but it also brings other parties to the table.

You know, for people who are lending to us or doing route to market agreements

You know, unfortunately, it's the same amount of effort for a small battery as it is for a big battery, but, you know, you've obviously got a lot more revenue potential for a larger scale. So we think that there there is economies of scale.

And we saw this in Italy with the Maxa, the seeing very low sort of cost of batteries coming through as they were procuring around ten gigawatt hours in one round. Yes. It sort of it seems like there are some similarities in there as well. And maybe just when it then operates, do you do you see the site operating in a different way to smaller sites when it goes live or or like how how do you see the site operating?

I think that's one of the good things about it being split is that you can adopt a different trading strategy or a different route to market strategy. And you know, as a trader, I would always profess your best with a mixed hybrid approach. You know, you don't put all your eggs in one basket and if you've got smaller scale, you've got to really commit to how you're treating that unit, whereas we've got the flexibility to do different things across different units and that's what we've done. So we've we went out to the market and looked at what what sort of route to market do we want and we've contracted four of our five units and and we had to do that in reality. We had a target of fifty percent in order to get debt financed, right, because, you know, lenders want security, they want to know that you can you can pay your debt, so we we targeted fifty percent, and we achieved that by contracting four of the units.

And we did that by tooling one unit and doing three floors, and then we have one which is currently fully merchant, but we have not contracted with an optimizer for that yet.

Okay. And so for for people kind of listening to this and trying to get their heads around a little bit of these structures. So with tolls and floors, you're essentially providing some revenue. So either a lot of revenue certainty with the toll or some revenue certainty with the floor. That means for financiers, there's just much less risk in in in the project. So they're much more willing to sort of lend you the money and potentially a higher portion of the money required to actually go ahead and build this.

Yeah. That's exactly correct. I think you had Louise Dalton from CMS on the podcast actually, and she supported us through our route to market, but she does an excellent job of explaining the different route to market strategies and how complex they can be.

She does. She would love to have a mention. It should also be said that's a bumper addition for anyone who really wants to get into how tolls and floors work. But if but if that if that is something you're interested in, then please do check out that episode.

I suppose I mean, we'll come on to the route to market bit a little in a little bit more detail. I suppose the size of the site also brings through some other interesting aspects in that not just on the commercial side, but also on the operational side the day to day. Once that site is now live, like an old power station of the past that had people on-site attending to stuff. Because you're such a large size, will you have an element of a of it being a manned site?

Yeah. I mean, I think that we will be the first to do that. So we've approached that strategy just like a large scale traditional unit. So we will have a team on-site, we're interviewing now, we've advertised lots of rules, but basically we'll have a twenty fourseven site. We will be for those in the industry, we'll be the control point, we'll be the hub where you know people can pick up the phone and they get direct to to the Thorpe Marsh battery site. So that will be twenty four seven, we'll have our own maintenance teams on-site. We do have a partnership with Sangro who are a battery supplier and H and M V who are electrical supplier and they will support us through the first two years, but we will have our own on-site team, which I think will lead to better battery performance, better approach to maintenance and all those good things that you get.

Yeah. I think I agree. It's it's it's unusual Yeah. Just because lots of other sites haven't got there because they've been in the ten to a hundred megawatts.

I think Absolutely.

And it doesn't make sense for sites of that size, but for our scale

You know, you you you can't you can't leave that as a satellite station. It just it doesn't make sense.

Agreed. And I I think, hopefully, to give people some context, so today is the twenty ninth of October. The largest site in GB for a battery is Staterra's Thorough site, which is a three hundred megawatt site. So so we are looking at something which is four and a bit times larger than the current largest site right now.

I'm sure the Thorough record will be broken before we get Yes. I think by a CIP project coming through, which is five hundred megawatts. But this just to give people just a sense of the scale of this. It really is quite remarkable.

Yep. Just to focus a bit more on on Thought Marsh. So as you say, the site is an old coal fired power station.

In terms of the land that's available from a coal fired power station and the things that come with coal fired power stations, is this sort of occupying a fraction of the the coal fired power station land, or is there much more room to go into on the Thorpe Marsh site?

Well, it's not actually even on the coal station land, so that's actually alongside it. It's actually on where they would have put all the ash, so it's on what they call the ash fields right beside it. But one of the best things about the location is it's right beside the substation. So, you know, you you've got existing connection.

There's no need for National Grid to do reinforcement work or put in and and that reduces the risk for our project, you know, substantially on delivering it on time. There have been delays. We we haven't got that same risk. So, one of the best things about that location was its proximity to the to the connection where you can actually get your megawatts out onto the grid.

And the other thing is it's about the size of forty four football pitches, I think it's probably the size approximation, so it is huge. So, one of the best things about it is we have built into our strategy augmenting, which effectively means, you know, if as your battery degrades every year, you know, you see this decline in its its maximum output, maximum import and what we do is we then come in and we add more cells and we what we call augmentation and we bring it back as close as we can to its day one capacity and then it begins again. So, we've got room to do that. The other thing, we probably have room to go to four hours or even beyond that on each Okay.

If that becomes the optimal strategy, we've got the space to do that and that was that was a real plus when we looked at that site because it's it's just you're not restricted. I mean, for example, we're participating in the Ofgem long duration energy storage For our final unit, so we would move that from a two hour unit to a ten hour unit. And, obviously, we've got to see how that process goes, but as an example, we've got the space to do that.

Yeah. I think it's a it's a really, really nice story around how you can use existing infrastructure to bring forward projects on time and at low cost, You know, at times when we're looking at huge network upgrades all over the UK, these elements of where can we use some of these existing connections are the some of the clear and obvious wins. Definitely.

I I suppose there is an element of you do have to though be a very skilled player to be able to do that. So these these old coal sites are not just are not absolutely standard. Obviously, they have had a coal site on them, and so there there must have been you've had to work with some very skilled contractors, I imagine, to be able to get to a point where this site is appropriate and sensible to progress?

Yeah. I mean, that that is not my area, but, I would say that we've had a team that we've worked with before. We've built, power stations with them before. We're very lucky that we've been able to use those same relationships and then build new partnerships With people like Sangro and H and M V to to give us confidence that we can deliver it. But, yeah, there's been huge amount of work done with the the neighboring nature reserve, you know, how do we preserve that, make make sure that it's we're working well with our neighbors and the communities and, you know, we haven't had any objections through our planning process. So for us, that's good and something we want to make sure that we continue.

I feel the local neighbors would be would see the progress from a coal site to a battery site as as progress, I hope.

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Enjoy the conversation.

Okay. Let's move on to the commercials. So, yeah, as you said, you have one merchant, three floors, and one toll, in place. Is it have you looked to get those with, one single party or have you spread that out across multiple route to market providers?

I think it's probably important to see, on the first stage is that you have to make sure that you have a robust counterparty because you're using that to facilitate debt, you know, you've got to have a bankable counterparty. So, that's key, know, and you've got to have someone who's established in the market, but no, we have taken the approach that we would like a diverse set of optimizers and whether that's under a tolling arrangement where they've got complete control over what they do to your point earlier, they pay as a fixed fee and we see that battery is used to optimize how you wish to a floor, which is much more of a shared strategy of how you optimize the battery.

But even that gives us that diversity of revenue streams from fully merchant, all the risk is with us to your floor structures where you're protected from by by them guaranteeing an absolute minimum and your tools where you're basically just handing your battery over and you're capping what you can really earn from that. So we've we've contracted with Octopus Energy

StarCraft and EDF. So those are our our partners for our route to market so far, but it's worth to see we're also looking at our next project already. So we've also trying to expand our counterparties there as well.

Very good. And, course, you know, feel free to get in touch should you want to offer those offtake agreements. I suppose you'd have you now have looked at some very large agreements and you've looked across some multiple blocks of those.

It's easy sort of from outside of the industry to look at those and say, well, all floors are probably the same and all tolls are probably the same. So you just gotta line them up in an Excel sheet, pick the top one, and off you go. How much difference is there between those arrangements?

So wish that that was the case.

The the thing is every single counterparty has different commercial priorities. You know, we we've you know, you've got counter parties who are trying to balance their retail or win positions with with battery storage or you got people that are offering services. They're just trying to build their portfolio. So, again, you know, I would say that the legal chart is extensive, but it always comes down to things like force majeure events Termination events, how do you measure performance, you know, you know, is is very different. You know, each one you wish that you could just say, that's my floor, that's it, But it's it's not. It's a very complex I mean, give you to give you a feel for it, I think probably to do those four agreements from starting negotiations to executing probably took twelve months.

I was gonna that was gonna be my next question, right, which is like people think that it's sort of a standard agreement you can get. But, yeah, as you say, twelve months from start to finish. That is why we don't see so many coming through because it is much easier to get that merchant agreement, I think, from a trading background. Absolutely.

A merchant agreement, you can probably get through a risk committee in a in a week and then The other thing I should have said earlier was that it's the length of our contracts.

So we're seven to ten years.

Okay.

So if you think about that, that's seven to ten years from COD. So that's from when that battery is commercially handed over, then you've got seven to ten years. So to your point, that is a long term hedge or a long term product that they're they're selling.

And we've we've walked into acronym with COD. What what does COD stand for?

COD is commercial operations date. So that's the date when your battery has been tested, checked, verified, compliant with all the relevant codes and it's handed over to say, okay, it's ready to be operated commercially.

Are you just with your commercial background, are you gonna be I I imagine you're gonna be sort of red hot in terms of what is going on on some of these battery sites looking considering your trading background, you're gonna want to see exactly how they're traded on day one. Is that am I painting an unfair picture?

No. No.

Actually, that was a bit of a change as well because not not on the on the tooling that I you know, that's hands off, right? That's none of our business what they do because that's the deal. But on floor agreements, that was quite a change for floor providers because they were used to people saying, you know, as long as you meet certain metrics or if there's benchmarking, but we were like, no, no, no, We want to talk about it every mean, we would have probably for every day. We'd have been like, we want to be talking about what you're treating, how you're doing it, do we like it, do you so I think that and obviously, we've got to get there, but I think it will be much more of a joint approach. So, we'll have a commercial team, You know, we'll be looking at what those batteries are doing. Is there different strategies you can deploy? So we'll be challenging those optimizers all the time by what they're doing and why they're doing it.

I wanted to ask about that merchant one. So is that merchant one you're looking to optimize that in house sort of as a as as your own project or is that being done with a third party as well?

Well, I guess the first thing is it's in long the long duration energy storage process. So we won't be doing anything until we find out what happens with that. But I think, no, we will not in house that trading. We will go to an optimizer, but we won't have the same criteria. Because it's fully merchant, we'll have we can look at all optimizers. They don't need to have larger balance sheets, credit backed and we can go from a shorter tenure, you know, one, two, three years probably maximum. We won't be looking to do a seven to ten year deal in a merchant, we want to give ourselves maximum flexibility but no, we will be going out to an external.

I know from the Moto side as these big sites come on, we we get very excited when we start to sort of look and see how they're trading and see and see whether it's different. So, yeah, very excited to see that, that site starts to come online in twenty twenty seven.

Maybe just moving on to the supply chain in EPC, one point four gigs, two point eight gigawatt hours. Is that a sort of a shock to the system for how much, best can be deployed? Obviously, you said you've partnered with SunGrow. Is that something that has SunGrow creaking at the seams trying to get it done or is that very much sort of par for the course in a global sense?

In reality, it was the opposite because what we found was people wanted to get involved in big projects.

And again, I guess similar to we talked about the amount of effort involved in these deals and negotiations actually to be doing the size of the deal for Sangro, this this is a really good option, you know, and we and we had a lot of competition.

So we're really pleased that we've chosen them and, you know, we will partner with them on our West Spartan Sea project as well. And so it it is really good that we've established that framework and our team have been out to visit their factory where the batteries are manufactured. I mean, it's all really positive and no, we don't think they're creaking at the seams. We think they have more capacity to go and yeah.

It it act it actually made the opposite different. And it was the same, by the way, with lenders. Right? Lenders and route to market.

It it because it's something different, it attracts people in to that project because they knew they they're, you know, they're doing a bigger ticket size for the same amount roughly the same amount of effort.

And then just on the Sungro, we've talked about batteries.

I assume that the Sungro is also providing the inverters that go with That's right.

Yes. Okay. Just to just to clear that one up. Okay. Great. So beyond, Thought Marsh, what's next for Phidra?

So we've got West Burton sea, which is adjacent to the gas station that we used to own. It's a five hundred megawatt two hour project. It's clearly not the scale of Thortmarsh, so we're well underway. We hope to reach financial close in Q1 next year, so we're busy.

We we are taking the same model, right? So because it's very quickly afterwards. It's not that we'll always adopt that, but for Westport and Sea because it's so quick afterwards, we'll adopt the same model. We're looking to contract those units.

We're splitting them into two, so two two hundred and fifty megawatt units. Yeah.

So it's all go.

Exciting. And when might that connect?

So that is oh, you've always catch that's twenty twenty seven as well Okay. Later.

So might we just sneaking in at the end of the protect protected connections reform Yes.

So both Thort Marsh and Westburton Sea are they have protected status.

Okay. Very good. And so then going beyond those two projects, you mentioned a little bit actually earlier that you were looking at Europe as well.

So we've got Bickerfenn, which is a development project in Lincolnshire. So we've got that one, but we're also looking at acquisitions in the UK. I should have said back at the beginning when we we raised our new equity, one of the really, really good things was that we brought alongside EIG, the National Wealth Fund. So, they have a forty five percent stake and obviously, you know, for us that was hugely positive that, you know, they see battery storage and they want to invest in it. So, they've come alongside. So, I think for now, for the next twelve months, it will be a focus on UK and acquiring ready assets whether they we we could even consider operational depending on where they are, but we will look to grow our portfolio in the UK over the next twelve months And then to the EU if they can meet the level of returns that we're looking for.

Okay. Super interesting. As you grow that portfolio, I feel like there will be a natural tendency to to bond to feel like you can bring this in house and at some stage be sort of an independent optimizer or also sort of a standalone optimizer of your own units. Do you think you'll ever go that way, or do you think that you kind of you kind of see the value of those third party optimizers?

I get that question a lot as you can imagine. I shouldn't say anything terrible, but I spent lots of years having lots of traders and it's hard going. That's But I would say that there's there's definitely got to be a point at which it makes sense, but I I don't I think it would be wrong to underestimate how much cost, effort and people and systems you need to in house that.

And if you think about our current arrangements are on seven to ten years, you know, there's a complexity in in housing and also having floor agreements and

So never say never, but I think we've got quite a while to go.

And I and I think maybe I'll have to provide a bit of numbers from my side for this because I know yours will be commercial, but if you go back ten years when you thought about sort of third third party optimizers and takers, the percentage that was shared to the optimizer generally tend to be a little bit higher than it was today. And so there was kind of more incentive to try and take stuff in house. Now because we have so many optimizers, they can be really competitive processes.

And so just because that profit share that goes to the optimizer becomes much smaller, the incentive for someone to kind of bring stuff in house is less. So again, I I I sort of makes it harder for third party optimizers, but also great see that competition in the space. Definitely.

One to one to certainly watch. Okay. I'd like to move us on to our final two questions. So the first one is is there anything you'd like to plug?

Well, I guess we're building the biggest batch tree. So, like, we're really excited about that and, you know, we might as well make the most of it while we're still the biggest. The other thing is we're hiring. So we've got a lot of rules out there. So I guess I'd encourage people who are interested in being part of The Biggest Battery that, they look at our website and, you know, get their CVs into us because, it's gonna be key that we get the right people.

And it's gonna be a whole range of roles. Right? So from some commercial roles within sort of HQ, but also, as you said, that, like, roles on-site as well.

Yeah. Commercial rules, finance rules, HR rules, generally based in our Edinburgh office, which is with our head office is. And then as you see, the site based rules, which will be full time based at the Thortmarsh site and then subsequently at West Burntsey.

Okay. And on to my final question. Is there a contrarian view that you hold?

I think we should stop talking about skip rates.

Oh, no. Don't don't tell me that.

Yeah.

What what do you what do you mean by that?

So I I think that skip rates have always existed across all technologies and I think that I understand that, you know, there's been an issue with smaller scale, you know, being skipped and and I feel like National Grid or sorry, NISO, have have done a lot of efforts around the open balancing platform steps they've taken. There's a new grid code change that they're putting in more parameters. So they are trying to move their systems to keep up, but I think that it's fair to see that one thing that needs to do very, very well is keeping the lights on. And to do that really, really important job, they need to make decisions that are not always popular, and they're not always following a set criteria. I'm all for transparency, but in reality, they need to make the decisions they need to make at the time, and I think sometimes we need to trust them to do that.

Okay. Okay.

This we could we could roll this conversation off for much longer, But I think that's an excellent contrarian view because I think many many people in the battery space do have their eyes on those skip rates all of the time, and I think that's an excellent place to leave it. Lisa, thank you for coming on. You've been a fantastic guest.

Thank you very much for having me.