Why we are excited about the tolling agreement we have signed with Drax Group PLC
The tolling agreement with Drax will support the development of our 800MWh (200MW/4hour) Coalburn battery site, situated in South Lanarkshire.
It is a welcome indication of the increasing maturity and investability of Great Britain’s (GB’s) transmission scale battery storage market. Longterm commercial arrangements of this nature offer greater certainty for investors and developers, reinforcing confidence in the sector’s trajectory.
The UK Government’s July 2024 decision to reform the electricity system while retaining a single national wholesale price has been important in giving investors and offtakers the necessary confidence that market signals will continue to support flexible, low carbon technologies. Stability and direction in electricity market design remain fundamental to unlocking the levels of private investment needed to deliver the UK’s future energy system.
“In a market that is still finding its longterm footing, long-term tolling agreements play a crucial role in giving investors the confidence to advance major storage projects. Coalburn shows what can be achieved when a strong asset is paired with a stable, longterm commercial structure.
Continued progress on market design is essential, but tolls remain a vital tool for managing risk and delivering the large scale storage capacity the system urgently needs. This is our first four hour duration battery storage project and we see a strong trend in the market towards longer duration battery storage systems.” said Semih Oztreves, Chief Commercial Officer at Zenobē’s Network Infrastructure business.
Fully realising the value of storage for the GB electricity network will require continued focus from policymakers to ensure that the capabilities and system benefits of batteries are properly recognised and rewarded. Battery storage needs to be seen as critical national infrastructure to support the realisation of the Government’s Clean Power 2030 mission – which aims to reduce consumer bills and boost energy security in the long term.
Investment across the sector will continue to be shaped by the evolving policy and regulatory landscape. Zenobē will continue to engage constructively with Government, Ofgem and the National Energy System Operator (NESO) to help shape a market framework that not only delivers greater affordability for consumers but also remains investable and ensures a more resilient electricity system.
We plan to make a final investment decision on the project (expected within six months of the date of the agreement) and look forward to working with our partners to maximise the system benefits of the Coalburn project in the months and years ahead.
