Shell Signs 330MWh Battery Storage Offtake Deal with BW ESS and Penso Power

In a landmark move, energy titan Shell has inked a seven-year agreement to trade power from the Bramley project, a 330MWh battery energy storage system (BESS) under development by BW ESS and Penso Power in Hampshire. Once operational, this project will become the UK's longest-duration BESS.

This fixed-price tolling agreement guarantees revenue for the Bramley BESS, situated 12 miles south of Reading, by connecting it to the Scottish & Southern Energy Network's distribution grid by the end of the year.

Today's announcement highlights the deal as the first long-term tolling agreement for a single BESS asset in Great Britain. It provides revenue certainty for BW ESS and Penso Power while allowing Shell to trade Bramley BESS in ancillary services and wholesale markets.

Tolling agreements are gaining traction in the burgeoning energy storage sector. These contracts involve the 'offtake' or 'route-to-market' provider securing a fixed payment for complete trading control of the battery. This mitigates risk for developers and owners while offering energy trading experts the opportunity to maximise returns through optimised asset trading.

"We are thrilled to partner with the highly experienced energy trading team at Shell on this project," said Erik Strømsø, CEO of BW ESS. "Bramley showcases our commitment to advancing energy storage solutions that set the bar for the wider market - while pioneering new models for project financing and operation.

"This tolling agreement, which has been some time in the making, demonstrates the attractiveness of longer-duration, higher-performance battery systems. It not only secures long-term revenues for Bramley but also helps enable the market's shift away from short-term frequency response towards load shifting."

BW ESS, a subsidiary of the BW Group, has more than 500MWh of energy storage projects under construction across the UK, Italy, Sweden, and Australia. In October 2021, it announced a joint venture with Penso Power to fund the development of Penso's UK project pipeline, which exceeds 3GWh in total capacity.

The Bramley BESS deal is an extension of an ongoing relationship, building on the multi-year offtake agreement between Shell and Penso Power for the 100MW Minety battery storage project in Wiltshire, established in 2020.

Shell's energy management software platform, Limejump, controls and optimises the system, which can power up to 10,000 homes for a day before needing to be recharged. Shell manages the power trading from the two 50MW batteries developed by Penso Power, with funding from China Huaneng Group and CNIC Corporation.

"We are pleased to continue our relationship with Shell with another innovative contract structure to de-risk revenues and support project funding," said Richard Thwaites, CEO at Penso Power.

"The floor contract we agreed with Shell on our Minety battery storage project back in 2020 became a template for the industry, and this tolling agreement for Bramley breaks new ground. It represents a coming of age for the battery energy storage sector."

The announcement comes barely a week after Shell announced quarterly adjusted earnings of £4.9bn, bringing the oil and gas giant's profits to £10.9bn in the first half of the year.

"The Bramley battery system is one of the most sophisticated longer-duration assets under construction in the UK and will provide us with unmatched capabilities for portfolio optimisation," said Rupen Tanna, head of power and systematic trading at Shell Energy Europe. "Tolls have been a feature of conventional energy trading for many years. By extending the business model to battery storage, Shell has the trading experience to add significant value while supporting the UK's ongoing energy transition. The experience gained through these early tolling contracts will be invaluable to the wider market."