Scotland debt arrangement is largest project finance facility for battery storage projects to be arranged in Europe.
Zenobē, the international EV fleet and battery storage specialist, has secured a £235m long-term debt facility structured by NatWest as sole debt advisor.
The financing comes from Canadian Imperial Bank of Commerce, Rabobank, Santander UK and Siemens Financial Services through Siemens Bank and NatWest to fund Zenobē’s next two grid-scale, transmission connected battery storage assets totalling 400MW / 800MWh.
The deal is the largest project finance facility for battery storage projects to be arranged in Europe and is a further endorsement by financial institutions of their confidence in Zenobē and its battery storage assets and infrastructure business.
The debt structure also includes a £400m accordion facility that will be used to debt finance expansions at each site as well as future projects that will bring Zenobē’s total battery storage portfolio in Scotland to 1,050MW/2,100MWh by 2026.
The assets will be located at two of Zenobē’s transmission-connected sites in Scotland; Blackhillock, a 200MW/400MWh site near Inverness, which will go live in the summer of 2024 and Kilmarnock South, another 200MW/400MWh site near Glasgow, which will go live shortly thereafter.
Both sites have the ability to expand by 100MW/200MWh. It is estimated that the initial 400MW/800MWh phase across both projects will prevent 4,100,000 tonnes of CO2 from entering the atmosphere over 15 years, equivalent to removing 150,000 cars from the road for 15 years.
With the Scottish government announcing an ambition to deliver 20GW of additional low-cost renewable electricity generation capacity by 2030, including 12GW of onshore wind, Zenobē’s battery storage assets will play a crucial role in increasing the efficiency of the grid and enabling more renewable generation to be transmitted by it.
The batteries will provide a wide range of services including the balancing of supply and demand. This will ease constraints on the network by storing electricity at times of peak renewable generation and ensure network demand and consumer cost expectations are met.
The projects were awarded to Zenobē following a successful application to the UK National Grid ESO’s Stability Pathfinder process to improve the long-term stability of the electricity system. In this instance, the assets will relieve constraints on the system and provide stability services such as inertia, short circuit level and reactive power which are critical for the UK’s energy transition.
Zenobē currently has around 430MW of contracted grid-scale battery storage in the UK, around 170MW of which is operational, including Zenobē’s landmark 100MW battery storage asset at Capenhurst, Cheshire.
The financing was structured by NatWest as sole debt advisor. Pinsent Masons acted as borrower legal counsel with Gowling WLG as lender counsel. Consulting firms Baringa and Cornwall Insight acted as commercial advisors with DNV as technical advisor, Aon as insurance advisor and RSM as model auditor.
Nicholas Beatty, co-founder and director of Zenobē, said: “Securing this first of its kind financing structure is another landmark for Zenobē and our mission to accelerate the grid’s uptake of renewable energy affordably and reliably. This follows the successful arrangement of a private placement to debt finance our existing and pipeline fleet business last year. As lead advisor, NatWest has been instrumental in developing a debt facility that enables us to deliver grid-scale battery storage projects in Scotland and presents a significant growth opportunity for our business to deliver more of these projects across the UK and elsewhere.”
Joe Taylor, head of project and specialist asset finance at NatWest, said: “Structuring this new financing for Zenobē’s network infrastructure business will help further facilitate the availability of grid-scale energy storage, which is critical to support the continued transition to renewable energy generation in the UK. Zenobē’s ambitious sustainability plans reflect our own wider climate commitments, and this transaction represents an important step forward on that journey.”
