Gresham House Energy Storage Fund, Britain’s biggest investor in utility-sized batteries, is dropping its last quarter dividend for 2023, as it fights sluggish growth in the UK electricity storage market.
Over-reliance by the National Grid and Energy Systems Operator ESO on gas, not batteries, as a second-by-second system balancing operator underlies the battery investor’s current woes, it told investors yesterday.
Lengthy connection waits for big batteries and storage systems (BESS) drive the nation’s excessive gas dependency, the fund’s boss Ben Guest wrote, as GRD launched a buyback of its own share to safeguard working cash.
Restricting new installations to 2023’s capex budget is GRID’s short-term step to preserve fund value. With just over 1 MW scheduled for operation by September, GRID remains on track to double its installed base this year, Guest reassured shareholders.
“The rising need for BESS as renewable generation increases remains as true as ever,” Guest informed investors. “The revenue environment is expected to improve, as discussed in the Market update below, although there is some uncertainty on the timing and trajectory of such improvement.
New generators have long blamed operator inertia and planning rules for connection delays sometimes beyond ten years. In August, former NG boss Nick Winser’s report urged paying communities to accept new link-up sites as a step to speed hooking up the colossal 230 GW of link-less projects now in Britain’s pipeline. Average waits might thus be halved, to seven years, the Energy Systems Catapult boss said.
GRID said it was also talking to its debt providers to reduce borrowing costs. As of December, it had drawn down just under one-third of its £350 million facility.
Brighter operational news sees the fund’s 50MW/50MWh plant at West Didsbury, Manchester operational since December. It was followed by a 50MW/76MWh project in York energised in last month.
A total of 340MW of projects are being also upgraded, of which 305MW will have a two-hour duration, said Guest.
The investment fund’s chair John Leggate CBE endorsed Guest’s view.
“The challenging environment continues to persist for the battery storage industry in Great Britain as it transitions to a trading-focused business model, having been focused on frequency response until Q1 2023. These conditions, and their effect on revenues, are not unique to GRID”.