TIDMGRID
RNS Number : 2019U
Gresham House Energy Storage Fund
22 November 2023
22 November 2023
GRESHAM HOUSE ENERGY STORAGE FUND PLC
("GRID", "the Fund" or the "Company")
Quarterly NAV and Factsheet publication
Gresham House Energy Storage Fund plc (LSE: GRID) (the Fund)
announces its NAV as at 30 September 2023 was GBP837.7mn and NAV
per share was 146.08p per ordinary share (30 June 2023:
146.66p).
Highlights
-- NAV at GBP837.7mn and NAV per share at 146.08p per share declined by 0.40% over the quarter
-- A 1.84p dividend in respect of the quarter ended 30 June 2023 was paid on 29 September 2023
-- NAV total return of 91.6% since IPO
-- Operational portfolio reached 640MW vs 590MW on 30 June and 550MW on 31 December 2022
-- During the quarter, the most significant changes to NAV per share included:
o +1.95p from project revaluations:
- Shilton Lane was valued on a DCF basis for the first time,
being within nine months of commissioning, at a 75bp premium to
operational discount rates
- Grendon was commissioned and was valued as a project in
commissioning at a 50bp premium to operational discount rates
o -1.84p from the payment of the Q2 dividend
o +1.36p due to higher third-party revenue forecasts, reversing
some of the reduction seen up to the first half of 2023 (-9.38p at
HY 2023), reflecting improvement in longer term revenue forecasts
for longer duration projects
o -1.24p from delays on construction projects
o +0.83p from portfolio cashflow generation
o +0.58p from projected cost savings, mostly reflecting the
reduced insurance premiums achieved
o -0.47p for fund costs including transaction fees
o -0.46p for debt costs
o -1.29p for other items including movement in fair value of
interest rate swaps
-- No changes to inflation assumptions or underlying discount
rates during the period. The weighted average discount rate (WADR)
for the portfolio in Q3 2023 was 10.9%, and was 10.6% for
operational assets
-- Operational assets valued at GBP833k/MW. Adjusting for
working capital, i.e., taking just the NPV of future cashflows, the
valuation stood at GBP736k/MW. Working capital included cash and
batteries and other equipment held for upgrades
Portfolio activity
Grendon (50MW/100MWh), our largest battery to date, was
commissioned and began commercial operations in the period. The
site has demonstrated encouraging performance, highlighting the
advantages of longer duration BESS in today's market
environment.
From a construction perspective, the three sites which were
exposed to an Independent Connections Provider (ICP) that went into
administration were quickly transferred to a new ICP several months
ago. West Didsbury has now been energised, while Penwortham and
Melksham are on track for completion at the start of 2024.
More broadly, we continue to make good progress on the remainder
of the '2023 pipeline', as announced with the Fund's Interim
Results 2023. York remains on track to be energised in November.
Elland and Bradford West are on track to follow later in H1 2024.
We look forward to providing further updates in due course.
Market outlook
In Q3 2023, Frequency Response prices generally remained low but
we have seen some short-term improvements in prices such as in July
2023 when volume requirements increased during a period of high
wind power generation. This period further demonstrated the high
levels of curtailment which ESO currently needs to implement,
cutting renewables output to increase fossil fuel thermal
generation to manage system needs - the consequence of insufficient
BESS and low utilisation of available BESS on the system.
As previously announced, steps are being taken to resolve this.
On 16 October 2023, ESO hosted an event called 'Enhancing Energy
Storage in the BM' to provide clarity on the system improvement
plans in the BM to better utilise BESS flexibility. A detailed
timeline showed the steps being taken to improve systems and the
revenue opportunity for BESS. The next key step is the launch of
the Open Balancing Platform (OBP), a new system alongside a new
dispatch algorithm (called the Bulk Dispatch Optimiser, or BDO),
which is expected to drive significant increases in the volume of
actions for BESS in the BM. ESO remain committed to their 12
December 2023 launch date. We look forward to seeing the
improvements these bring for BESS and their wider impact on higher
volatility in wholesale markets, driving greater trading
returns.
The fundamentals for BESS remain strong, with rising renewable
penetration placing increasing challenges on the system today. The
decommissioning of nuclear power, remaining coal and older
gas-fired power stations over the next few years will further drive
reliance on renewable generation, driving increased supply, and
power price volatility.
Portfolio outlook
Regardless of any improvement in revenue backdrop, the portfolio
remains well positioned to return to dividend cover (without
interest income on construction capital deployed to SPVs) in 2024
as operational, revenue-generating capacity increases as pipeline
is commissioned, as highlighted in the Manager's five-point plan in
the Company's Interim Report and Accounts 2023.
Q3 2023 Factsheet
The factsheet for the period ended 30 September 2023 is
available within the key documents section of the website at
https://greshamhouse.com/real-assets/new-energy/gresham-house-energy-storage-fund-plc/
For further information, please contact:
Gresham House New Energy
Ben Guest +44 (0) 20 3837 6270
James Bustin
Jefferies International Limited
Stuart Klein +44 (0) 20 7029 8000
Gaudi Le Roux
Harry Randall
KL Communications gh@kl-communications.com
Charles Gorman +44 (0) 20 3995 6673
Charlotte Francis
Effie Aye-Maung-Hider
JTC (UK) Limited as Company Secretary GHEnergyStorageCoSec@jtcgroup.com
Christopher Gibbons +44 (0)20 7409 0181
About the Company and the Manager:
Gresham House Energy Storage Fund plc seeks to provide investors
with an attractive and sustainable dividend over the long term by
investing in a diversified portfolio of utility-scale battery
energy storage systems (known as BESS) located in Great Britain and
internationally. In addition, the Company seeks to provide
investors with the prospect of capital growth through the
re-investment of net cash generated in excess of the target
dividend in accordance with the Company's investment policy.
The Company targets an unlevered Net Asset Value total return of
8% per annum and a levered Net Asset Value total return of 15% per
annum, in each case calculated net of the Company's costs and
expenses.
Gresham House Asset Management is the FCA authorised operating
business of Gresham House plc, a London Stock Exchange quoted
specialist alternative asset manager. Gresham House is committed to
operating responsibly and sustainably, taking the long view in
delivering sustainable investment solutions.
www.greshamhouse.com
Definition of utility-scale battery energy storage systems
(BESS)
Utility-scale battery energy storage systems (BESS) are the
enabling infrastructure that will support the continued growth of
renewable energy sources such as wind and solar, essential to the
UK's stated target to reduce carbon emissions. They store excess
energy generated by renewable energy sources and then release that
stored energy back into the grid during peak hours when there is
increased demand.
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END
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