Power flexibility ‘in the money’ but recession drags on transition: investment fund

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Investments in power system flexibility, stretching from industrial demand response to battery storage systems, were “massively in the money” due to current wholesale prices, Pieter-Jan Mermans of Junction Growth Investors told S&P Global Commodity Insights Oct. 5.

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Avoiding peak price periods has become a hot topic in Europe after EU energy ministers Sept. 30 agreed a mandatory 5% cut in power demand during peak periods this winter.

“Aggregators working on industrial flexibility and battery storage are having a good time, all these investments are massively in the money,” Mermans said.

In late August, evening peak block 5 power prices in the UK exceeded GBP660/MWh ($753/MWh) and have averaged GBP351.43/MWh since end-June, up 80% year on year, according to assessments by Platts, part of S&P Global Commodity Insights.

In France, the situation was much more extreme due to poor nuclear availability, with December peak power settling at Eur2,384.76/MWh on Oct. 4 on the EEX exchange.

Mermans, a founder of Belgium’s REstore demand response company bought by Centrica in 2017, helped launch a variety of demand side management products at the company before moving on to set up private equity fund Junction Growth Investors, focused on European scaleups in the energy transition sector.

The fund has raised Eur75 million to date and aims for Eur100 million, with further closings by end of this year and by July 2023.

While bullish on flexibility investments, Mermans said he had changed his opinion on the macro impacts of the current energy crisis on the transition.

“My initial position in Q2 2022 was this was going to accelerate the energy transition. My current thoughts are that it is probably going…

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