Gresham House Energy Storage Fund

Improving prospects suggest discount is overdone

4 December 2024

At the recent capital markets day, Gresham House Energy Storage Fund (GRID) detailed positive developments in H224, including growing capacity and rising revenues. It also revealed a three-year plan to achieve further growth and triple earnings, from an estimated £45–55m in 2025, to £150m in 2027. Funding is expected to come from a new project finance style arrangement based on contracted revenues. Subject to the successful conclusion of related refinancing, expected in Q125, the company plans to reinstate fully covered dividend payments from Q325. GRID is also negotiating an equity investment in one of its sites. This deal would potentially serve to confirm GRID’s valuation methodology, giving investors confidence that the current NAV is a realistic estimate of its true worth. GRID’s share price is currently at a significant, historically wide discount to NAV, but this deal, combined with other positive recent developments and GRID’s plans for further improvements in capacity and revenues, suggests the discount is excessive and likely to narrow significantly as the company’s plans are rolled out (see chart below). MORE »

Capacity augmentations the priority for 2025

23 October 2024

Gresham House Energy Storage Fund (GRID) invests in utility-scale battery energy storage systems (BESS) in Great Britain. The company recently hosted a site visit for analysts and investors to its 50MW capacity Enderby plant in Leicestershire, which included updates from GRID’s Manager Ben Guest, Deputy Manager James Bustin and Chairman John Leggate. This note outlines the day’s key takeaways, and subsequent news that gives the company more scope to pay dividends from distributable reserves if required. MORE »

Rising revenues and big plans for the future

2 October 2024

Gresham House Energy Storage Fund (GRID) invests in utility-scale battery energy storage systems (BESS) in Great Britain. The sector had a tough start to the year, due to a deterioration in revenue conditions, but GRID’s efforts to stabilise revenues and increase capacity are paying off. The manager, Ben Guest, is looking forward to a significant improvement in revenue in 2025, underpinned by a large, contracted earnings base, and plans for new pipeline projects, further augmentations to GRID’s existing projects and associated revenue increases over 2025–27 will be revealed in November 2024. In a recent analyst call to discuss the release of GRID’s H124 results, the manager confirmed that he is also eyeing opportunities in foreign markets. Some investors may see value in GRID’s shares, which are trading at what is arguably an excessively wide discount to NAV. MORE »

Revenue recovery to provide base for growth

9 September 2024

Gresham House Energy Storage Fund (GRID) is the largest UK fund investing in utility-scale battery energy storage systems (BESS). The BESS sector has faced challenges over the past year due to unexpected revenue declines and the slower-than-expected utilisation of BESS by the UK’s Electricity System Operator (see our February note). This has adversely impacted GRID’s NAV and share price, which is currently trading at a 50% discount to its latest published NAV. However, a H124 trading update released today foresees a ‘strong earnings recovery in 2025’ due to rising contractual revenues and the completion of GRID’s 2024 construction pipeline. GRID will announce a three-year plan in November aimed at further increasing revenues and reducing earnings volatility. This plan will focus on further augmentations to the capacity of GRID’s existing projects, new pipeline opportunities, efficient capital management and alternative revenue sources. These expansion plans, combined with improved revenue prospects, give GRID’s manager, Ben Guest renewed and growing confidence over the medium-term prospects for the business and its ability to deliver value for shareholders. MORE »

Focused on revenues and project completions

20 May 2024

Gresham House Energy Storage Fund (GRID) invests in utility-scale battery energy storage systems (BESS) in Great Britain. GRID and its peers saw sharp share price falls in H223 and early 2024, due mostly to an unexpected decline in revenues and the slower-than-expected utilisation of BESS by the UK’s Electricity System Operator (see our last note). In response to these events, GRID’s manager, Ben Guest, and its board have refocused the company’s use of capital and are now concentrating on maximising cash generation, completing GRID’s near-term project pipeline and reducing debt. GRID’s revenues have already begun to rise and are expected to improve further as new and extended projects come on line and structural changes within the sector play out. Investors may need to be patient while these measures, and improvements to the National Grid’s energy trading platform, take full effect, but the fundamentals of the BESS market are strong, suggesting GRID’s longer-term prospects remain positive. MORE »

Responding to challenging times

5 February 2024

Gresham House Energy Storage Fund (GRID) is the largest UK fund investing in utility-scale battery energy storage systems (BESS). A recent sharp decline in gas prices, a ‘disappointing’ start to the Energy System Operator’s (ESO’s) new energy trading platform and systemic delays connecting completed projects to the national grid have raised concerns about the revenue generating capacity of the BESS sector. This has placed significant downward pressure on the share prices of GRID and others in the sector. GRID’s share price has declined by more than 50% over the past month and is trading at a 67% discount to its last published NAV. A recent trading update by GRID’s manager, Ben Guest, provided details of the company’s response to these challenging market conditions, while also reiterating confidence in GRID’s positive long-term prospects. MORE »