The renewable energy fund KGAL ESPF 5 is entering into a joint venture with IMCS, a renowned Italian renewable energy specialist, to jointly develop battery energy storage systems (BESS) in Italy. The emerging market for energy storage systems is gaining strong political support, as BESS can be used to mitigate the increasing fluctuations in electricity production from renewable energies. At the same time, this modern technology contributes to the portfolio diversification of the KGAL ESPF 5 Article 9 fund.
The plan is to develop four battery energy storage systems, with a total capacity of 1,100 megawatts (MW). The joint venture offers the opportunity to develop the
BESS projects at an early stage and sell them when they are at ready-to-build
(RTB) status. The expected return significantly exceeds the target return of KGAL
ESPF 5. Joint venture partner IMCS has many years of experience in the
development and realisation of innovative, large-scale solar projects in Italy. The
company's strategy has always focussed on being among the first to enter new
markets. KGAL has already successfully realised several PV projects with its Italian
partners for the predecessor fund KGAL ESPF 4.
Double digit return for investors
The rapidly growing Italian market for renewable energies offers opportunities for
battery storage projects like few other European markets. “With its highly qualified interdisciplinary team, IMCS is the ideal joint venture partner for developing BESS projects efficiently and promptly through to approval," says André Zücker, Co-CEO of KGAL.
With this project, the KGAL ESPF 5 fund is investing at an early stage in a key
technology for the success of the energy transition, which has an exceptionally
attractive risk/return profile. Florian Martin, Co-CEO of KGAL, adds: “This
strengthens the basis on which we can continue to offer our ESPF 5 investors a
double-digit return in the future." Institutional investors have until October 2024 to participate in the final fund closing.
"We are pleased to enter the emerging market for battery energy storage systems
in Italy with our trusted partner KGAL at a strategically favourable time. Now is the right time: Italy needs to build new energy storage systems with a capacity of at least 15 gigawatts by 2030 to meet the targets of the national energy strategy, say Raffaello Giacchetti, CEO at IMCS and leader of the Group of Developers that own IMCS.
Ambitious expansion plans and growing BESS market
Italy has a high share of renewables in the energy mix and continues to pursue
ambitious expansion plans. However, the large pipeline of renewable energy
projects, primarily in southern Italy, and the high energy demand in the north of the country, regularly lead to overloads in the transmission lines. As a result, the
expansion of flexible battery storage systems is a priority in order to reduce grid
shutdowns of PV and wind power plants, ensuring the storage of energy and
consequently contributing to the long-term stabilisation of the country's electricity
grid. KGAL ESPF 5's other Italian investments, such as its platform investment
Baltex Progetti, will also benefit from the development of the BESS offering.
The Italian BESS market currently totals 2.3 gigawatts, but consists almost
exclusively of systems for private households. Independent, larger-scale projects
are not yet in operation. The Italian government is therefore planning to support
the development of large-scale storage systems through the MACSE programme,
the framework funding which was approved by the European Union in 2023.
