Macquarie Pulls Back on Funding for Amazon Solar Project in U.K.

(Bloomberg) -- Plans to develop solar farms backed up by batteries for Amazon.com Inc.’s distribution centers in the U.K. are being knocked back because the cost of connecting them to the local grid is too high, according to Macquarie Group Ltd., the bank funding the project.

Only two Amazon sites got approval for grid connections because installing technologies across all facilities would require significant network reinforcement, and that’s deemed too expensive for the local grid operator, said Ulrika Wising, head of solar and battery storage at Macquarie. The bank was willing to fund the technology at all of Amazon’s sites.

“It’s a frustration we see in the industry,” Wising said at a conference in London on Tuesday. “We are ready with money, ready to invest but can’t.”

Solar combined with a battery is the holy grail of energy supply, giving the ability to store excess power for use when it’s needed. Amazon announced last month it will install solar panels on the roof of 10 of its distribution centers within 18 months. It’s seeking to have solar at all 50 of its sites worldwide by 2020.

The local grids, know as distributed grid operators, aren’t reacting fast enough to the emergence of storage and the value it can provide, Wising said.

“The result is we’re pulling back,” she said.

Britain has 7 gigawatts of energy storage projects waiting to be developed, lobby group RenewableUK said earlier this month.

Wising said she had doubts that many of these projects will end up being developed as they are unlikely to get funding.

National Grid Plc, a power transmission company, is pressing storage operators to learn how to make money based on market power prices instead of relying on income from providing balancing services to the network.

“The value isn’t recognized yet in the U.K. for what batteries can do,” Wising said. “Investors need to get more comfortable with revenue streams.”

©2018 Bloomberg L.P.