Eneco has agreed to buy half of a German energy storage project whose caverns are still being emptied of salt. It will also be the project's only customer for its first phase. That makes Eneco both the investor taking development risk and the buyer underwriting the revenue. Very few storage deals of this type exist to compare it with.
Key takeaways
- Eneco announced on 22 January 2024 a provisional agreement to acquire a 50 percent stake in Corre Energy's Ahaus compressed air energy storage (CAES) project in North Rhine-Westphalia, Germany; the deal value was not disclosed.
- Phase one of the Ahaus CAES project will use two of the site's four salt caverns to provide 220 MW of compression capacity and 320 MW of generation capacity.
- Eneco will also secure the entire storage capacity of phase one of the Ahaus project under a long-term offtake agreement, making it both co-owner and sole offtaker.
- The Ahaus project already holds permits to construct its caverns, which Leap describes as significantly de-risking development, and the first cavern is due to be handed over to Corre Energy in early 2027.
- Eneco and Corre Energy had previously signed a 15-year offtake agreement for Corre's ZW1 storage project in the Netherlands, announced in December 2022.
What is compressed air energy storage, and why does Ahaus need caverns?
Compressed air energy storage uses electricity, usually when it is cheap or plentiful, to pump air into a sealed underground space at high pressure. When power is needed, the air is released through a turbine to generate electricity. The underground space is the battery.
Salt caverns are the natural home for this. They are large, airtight hollows created by dissolving salt deposits with water and pumping out the brine. At Ahaus, the chemical company Solvay is still extracting salt from the caverns. Construction of all four caverns is well underway, but the first will not be handed to Corre Energy until early 2027. Siemens Energy is expected to supply the equipment.
This is why the permits matter so much. Securing consent to build underground storage is one of the slowest and most uncertain parts of developing a CAES project. Ahaus already has it, and the caverns are already taking shape through Solvay's salt extraction. That is the basis for Leap's assessment that the existing permits significantly de-risk development.
Why is the compression capacity smaller than the generation capacity?
Because the two sides of a CAES plant do different jobs and need not be the same size. Phase one can absorb power at 220 MW when compressing air and deliver power at 320 MW when generating.
That asymmetry means the plant charges more slowly than it discharges. Generation capacity is about 1.45 times compression capacity. For a utility, the valuable moments are the evening peak or a windless spell, when stored energy can be released at a higher rate than it was taken in. A plant built this way is sized for the moments when power is scarce, not for the moments when it is cheap.
It also means the 320 MW headline overstates what Ahaus can take off the grid. Comparisons with lithium-ion batteries, which usually charge and discharge at similar power, need to account for that.
Why is Eneco both owner and offtaker?
Because it removes the biggest revenue question from a first-of-a-kind project. Eneco will co-develop, co-finance and co-operate Ahaus through LichtBlick, its German subsidiary, alongside Corre Energy Germany GmbH. It will also take the entire storage capacity of phase one under a long-term offtake agreement.
An offtake agreement for storage is a contract in which a buyer pays for the right to use the storage capacity, rather than buying power from a generator. For a new technology with no merchant track record in Germany, a creditworthy offtaker is what turns a project from a concept into something lenders will finance.
For Eneco, owning half the asset aligns its interests on both sides. If the project performs, it benefits as an owner. If storage becomes more valuable, it already holds the capacity. The relationship is not new. Eneco signed a 15-year offtake agreement with Corre for the ZW1 project in the Netherlands in December 2022. Ahaus, close to the Dutch border and southeast of Enschede, extends that partnership across it. The site is also close to Germany's planned hydrogen backbone grid, the H2-Startnetz, which links it to future hydrogen infrastructure.
Enerdatics records six M&A deals in mechanical energy storage worldwide since the start of 2022, and only two are acquisitions of compressed air projects. Corre Energy is a party to both. In July 2023 it bought a 280 MW CAES project in Texas from Contour Energy. Ahaus is the second and the only one in Europe. Neither discloses a value. The four deals that do carry a price are company investments rather than project sales: Goldman Sachs' $250 million and CPP Investments' $25 million in Hydrostor, a $50 million round for thermal storage company Antora Energy, and Filatex's $11.32 million in flywheel company Energiestro.
What does the deal signal for long-duration storage in Germany?
It signals that long-duration storage still trades on partnerships rather than prices. With no priced CAES project in Leap, there is no market benchmark for Ahaus, and neither party has offered one. A strategic buyer that also contracts the capacity has less need to publish what it paid.
It also signals that geology and permits are the scarce inputs. Lithium-ion projects in Germany are sized very differently. Deals such as Kyon Energy's battery portfolio sale to Obton show how much power ratings can diverge from stored energy. Long-duration assets that rely on underground space, such as Statkraft's Red John pumped hydro scheme in Scotland, take years to permit and cannot be replicated on any site.
The deal was provisional when announced and was expected to complete in the first half of 2024. The longer timeline is the build. Until the first cavern is handed over in 2027, the value of Ahaus rests on its permits, its partner and a contract with its own co-owner.
Frequently asked questions
What did Eneco agree to buy from Corre Energy? Eneco agreed to acquire a 50 percent stake in Corre Energy's Ahaus compressed air energy storage project in Germany. The deal value was not disclosed.
How big is the Ahaus compressed air storage project? Phase one uses two of four salt caverns to provide 220 MW of compression capacity and 320 MW of generation capacity.
Who will buy the storage capacity from Ahaus? Eneco will secure the entire storage capacity of phase one under a long-term offtake agreement, alongside its role as a 50 percent owner.
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