Britain’s biggest investment fund for grid-scale batteries charged ahead in 2021, posting record figures today. Overseas markets beckon, its chairman signalled this morning.
Gresham House Energy Storage Fund (GRID)’s results for calendar 2021 saw revenues from its working 425MW of amp accommodation and coulomb crèches more than double to £51.4 million, with earnings before interest and tax rising to £42.5 million. Both achievements are ‘significantly ahead of budget’, the company said.
Gresham House claims a market-leading 30% share of UK utility-sized battery assets. Pictured above, chairman John Leggate CBE’s fund first floated in November 2018. Since then it claims to have produced share price returns for investors of 14.2%.
Eight projects totalling 415MW were under construction as 2022 dawned, with a further 717MW primed and shovel-ready.
Net Asset Value across the portfolio rose 42.6% last year to £511.7mn. Battery degradation was described as “modest” in 2021, with the portfolio’s State of Health (SOH) rated at 97.5%. The fund wants to push that higher, to capitalise on growing opportunities to trade capacity, and hedge against ‘commoditising’ flex response (FR).
Gross new equity raised during 2021 was £100 million, down on 2020’s £151.2 million. But GRID held £122 million in cash as year end, backed by £180 million from its bankers.
Last April saw the fund pay £15.6 million to snap up 30MW at Wester Dechmont near Edinburgh, its first foray north of the Border.
Chair John Leggate CBE commented: “Our third full calendar year since IPO has seen GRID delivering key milestones and gain significant momentum, with robust and rising dividend cover backed by strong increases in profitability and net asset value.”
Expansion options
Leggate signalled increasing interest in expansion into new markets “with comparable market dynamics ( to Britain’s) in the United States, Canada, the European Union, and Australia”.
While the UK currently represents only about 1% of global electricity consumption, the US and European Union markets are among the world’s largest, each being at least ten times the size of the UK’s electricity market, the chairman pointed out.
The company’s investment managers are closely examining the impact of Russia’s invasion of Ukraine, Leggate added.
“For the moment, the indications are pointing towards a much faster rollout of renewable energy globally with an associated increasing demand for energy storage projects,” the chair advised.
Ben Guest, manager of Gresham House Energy Storage Fund and MD of its New Energy entity, said eight projects under construction plus more being designed ”will deploy all existing equity funds as well as the existing debt facility, improving the company’s structure while increasing portfolio cashflow significantly”.
“Our focus for 2022 remains on deployment and pipeline execution”, said Guest.
Underlying revenues over the year split out at 82.2% from Frequency Response (FR) contracts, 11.5% from trading, 5.8% from Capacity Market contracts and 0.5% in TRIAD income.
During 2021’s fourth quarter, the portfolio’s daily operations became more trading-focused as Frequency Response services started to commoditise, “as we have expected for some time”, Guest added. Greater value was to be secured by investing in batteries of two-hour duration and longer.
By lunchtime, GRID’s shares had charged 5.7% ahead to 148p, powering close to a year’s high. Full financial reports for 2021 via the company’s website.
