Gresham House Energy Storage Fund plc (LSE: GRID) (the “Fund” or “GRID“), GB’s largest utility-scale energy storage fund, is pleased to announce its first annual results since the IPO in November 2018. This covers the period ending 31 December 2019.
Performance highlights during the period
- Net Asset Value of £205.9m, or 100.79 pence per share, up 6.48% on a total return basis
- Driven by portfolio cash generation, improved revenue forecasts and project-level value enhancements
- Total dividends for the year of 4.5p per share, as targeted, and target of 7.0p per share reaffirmed for 2020
- Strong share price total return since IPO of 11.15%
- Shares consistently traded at a premium to NAV in the period
- £207m total funds raised during the period, including £100m at IPO
- Further £31m raised in February 2020, taking cumulative funds raised to £238m
Deployment and operational highlights
- Investment portfolio grown to 174MW of operational Energy Storage Systems (ESS) projects
- Five seed assets totalling 70MW were acquired at IPO and a further four assets totalling 104MW were acquired subsequently
- In addition, GRID advanced secured loans to three project companies to secure these in the investment pipeline
- Plans to increase total capacity to c.364MW during 2020, taking market share to around 30%, via:
- Conditional Share Purchase Agreements signed on two investments totalling 100MW which are under construction
- Exclusivity agreed on a further 80MW across two projects, and a further 10MW extension
- Strong pipeline conversion and growing average acquisition value has increased project size to 30-50MW, driving portfolio growth and reducing unit costs
- Successfully upgraded existing sites to facilitate Asset Optimisation as part of the revenue mix, via new control units and larger batteries
- Prepares portfolio for greater revenue contribution from electricity trading
- Benefits from expected increases in price volatility as renewables share increase.
- Able to ensure operational integrity of projects, and ongoing operations & maintenance so far
- Trading continues as expected with remotely operated systems
- Asset Optimisation revenues driven by energy price volatility, which depends on weather and remains broadly unchanged, and unrelated to absolute energy prices or power demand
- Minor delays foreseen in commissioning of 100MW of projects currently in advanced stages of construction. Main equipment already secured with ongoing monitoring of ability of commissioning personnel to attend construction sites
- Energy Storage Systems address the peaks and troughs of generation from intermittent renewables and reduce the need for expensive carbon intensive baseload generation. As the share of renewable generation in the UK continues to expand, driven by falling installation costs and climate change obligations, so the need and business opportunity for Energy Storage Systems increases. As such, Energy storage systems are a vital tool for the further decarbonisation the UK electricity supply
- GRID’s trading revenues driven by power price volatility, and not average energy prices therefore resilient to potential long-term fall (or rise) in unit cost of energy
- Growth in renewables, demand for more frequency services from National Grid, gradual decommissioning of baseload and a favourable regulatory backdrop are key revenue drivers for Energy Storage systems in GB.
- Increasing portfolio size and market maturation expected to reduce costs
- Final Decision on Ofgem’s Targeted Charging Review is expected to reduce projects’ fixed grid-related charges in a staged manner over next 2 years
Commenting on the Fund’s results, John Leggate CBE, Chair of Gresham House Energy Storage Fund plc said:
“We have had a successful first financial year, growing from a standing start to become GB’s largest battery storage portfolio, and we thank our investors for their confidence in GRID since IPO. Our journey has just begun, and the UK still only has 1GW of storage capacity compared to a market need we expect to grow tenfold over the next four years.
“We are committed to delivering on our future plans and to remain a leader in this essential fast-growing component of the renewables infrastructure sector, delivering stable returns uncorrelated with wider financial markets.”
Ben Guest, Fund Manager of Gresham House Energy Storage Fund plc & Managing Director of Gresham House New Energy said:
“Battery storage is the only technology that can cost-effectively meet the demand from fast-growing renewables installation, to smooth the peaks and troughs from intermittent wind and solar. Over the past year, we have commissioned facilities, installed additional capacity, upgraded control systems and acquired projects to deliver a strong portfolio across the country.
“Wind and solar generation in the UK have now passed the tipping point where every additional unit of power will cause increasing oversupply at certain times while also forcing older carbon generation off the grid. This will create a deeper trough in generation supply when renewables do not generate, and an urgent need for further battery storage capacity to match the growth of renewable generation installations.”
Annual Report and Webinar
GRID will host an online webinar and Q&A session to discuss the results at 11am on Thursday 30 April 2020. Registration is available via https://greshamhouse.com/webinar-gresham-house-energy-storage-fund-plc-annual-results-and-live-update/.
Full annual report RNS text is attached – a copy of the Annual Report is also available on the Company’s website at https://greshamhouse.com/real-assets/new-energy/gresham-house-energy-storage-fund-plc/ where further information on the Company can also be found.