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Shell agrees China deal to bolster green power

The Times

Royal Dutch Shell has thrown its weight behind a Chinese-backed energy storage venture building what is claimed to be Europe’s largest battery in Wiltshire.

The Anglo-Dutch energy group will use a 100-megawatt battery near the village of Minety to provide back-up electricity to the National Grid when supplies of wind and solar power dip. The battery can be charged when electricity is cheap and then discharged at peak times when prices are high.

The project has been bankrolled by CNIC, the Chinese investment fund, and China Huaneng Group, a state utility company that is also constructing the battery.

The tie-up coincides with growing scrutiny of the involvement of Chinese companies in critical infrastructure projects, such as the Hinkley Point nuclear plant. The government was lambasted by Washington this month for allowing equipment made by Huawei to be used in parts of Britain’s new high-speed 5G mobile phone network.

Grant Shapps, the transport secretary, denied yesterday that the government was in talks to give China’s state railway company a role in building the HS2 high-speed railway.

The battery project is due to be completed this year and when fully charged will hold 100 megawatt-hours of electricity, or enough to power 10,000 homes for a day. Shell said that the Chinese companies would play no part in operating the plant once it was built.

Shell reported profits of $15 billion last year, primarily from producing and selling oil and gas. It has long traded electricity but is working to establish a wider power business, from generation to selling energy to households.

Two years ago Shell bought First Utility, a domestic power supplier, and it is spending up to $2 billion a year on its “new energies” division in a strategy to become greener and to reduce its reliance on fossil fuels.

Energy companies are under pressure from policymakers and shareholders to reduce the amount of carbon that they and their customers pump into the atmosphere. Last week Bernard Looney, chief executive of BP, pledged to cut its greenhouse gas emissions to net zero within 30 years. It was hailed as the most ambitious cleaner energy target laid out by an oil major, even though Mr Looney failed to specify how BP would achieve it.

Energy storage is seen as a central pillar in the drive to reduce emissions. Climate-change rules are forcing Britain and other nations to increase dramatically the proportion of energy generated from sustainable sources, such as the wind, sun and sea. However, renewables are intermittent, meaning that batteries will be required to store energy during gluts.

Sinead Lynch, chairwoman of Shell UK, said that power was the “biggest growth area out there in energy” and that the company aimed to be a “big player in it”. She said that developing such flexible power sources would be “a really important part of succeeding in integrating large volumes of renewables into the grid”. The battery deal was “an example of how our new energies strategy is evolving”, Ms Lynch said. Last year, Shell bought Limejump, a start-up that manages and aggregates electricity from small third-party power assets, including other battery storage projects. It will be responsible for managing the Wiltshire battery.

“This is us using our balance sheet to enable the investment in this project,” she said. “We provide that revenue stream and use our balance sheet to take the risk.”

The Chinese developers of the Minety project have said that more than 80 per cent of the equipment for the battery will be made in China and that China Huaneng “will take charge of its construction and operation”.

Shell said that the Chinese companies would not have day-to-day operational control over the battery, which Shell and Limejump would control remotely via an internet connection.

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