Varco Energy has successfully secured £58 million in debt financing facilities from NatWest, a strategic move aimed at bolstering its pipeline of Battery Energy Storage Systems (BESS). The financing package, facilitated in consultation with Carlingford, a division of GFI Securities, will play a pivotal role in advancing Varco Energy's Native River and Sizing John BESS projects, both of which are projected to become operational in the final quarter of 2024.
NatWest, after conducting a thorough assessment of Varco's funding requirements and anticipated revenue streams, has committed to being the exclusive lender, offering a £50 million capital expenditure (capex) facility, along with an £8 million value-added tax (VAT) facility. Additionally, an interest rate hedging facility has been extended to support Varco Energy's endeavors.
Varco Energy's portfolio comprises two BESS assets in the United Kingdom. The Native River project, located south of Liverpool, boasts a capacity of 57MW and 138MWh, with a direct connection to the transmission network. Similarly, the Sizing John BESS initiative, situated south of St. Helens, also possesses a 57MW capacity and 138MWh of energy storage, connected to the transmission network.
Notably, these assets are strategically positioned within a congested segment of the UK's high voltage grid. They are well-equipped to provide localized balancing and stability services to the National Grid system operator. Additionally, they offer the capability to shift loads effectively, facilitating a higher penetration of renewable energy generation within the broader UK grid.
James Mills, Director at Varco Energy, emphasized the significance of flexible and specialized capital in driving the decarbonization of the economy and fostering a sustainable future. He commended NatWest's financing package, which enables the realization of utility-scale battery-based energy storage systems.
Jacob Lloyd, Head of Specialist Asset Finance at NatWest, expressed the bank's delight in supporting Varco Energy's BESS projects, which will contribute an additional 114MW of energy to advance the UK's transition toward renewable energy sources. He noted that as the UK continues its journey toward a net-zero energy system, the BESS market plays a vital role in stabilizing the grid. NatWest's commitment to the sector aligns with its broader pledge to provide £100 billion in climate and sustainable funding by 2025.
