REG - Gresham House Energy - Half-year results and capital allocation policy

Gresham House Energy Storage FundAnnouncement

24/09/2025 07:00

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RNS Number : 5219A  Gresham House Energy Storage Fund  24 September 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU 596/2014) WHICH IS PART OF UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018.

 

24 September 2025

Gresham House Energy Storage Fund plc

("GRID" or the "Company")

 

Half-year results to June 2025 and capital allocation policy

 

Gresham House Energy Storage Fund plc (LSE: GRID), the UK's largest fund
investing in utility-scale battery energy storage systems (BESS), is pleased
to announce its half year results to 30 June 2025 and updated capital
allocation policy.

 

Highlights

 

·    Underlying portfolio revenues increased 76.9% year over year to
£31.7mn (H1 2024: £17.9mn) with underlying portfolio EBITDA up 97.6% to
£20.5mn (H1 2024: £10.5mn), reflecting an improving revenue rate as well as
increased operational capacity.

·    First and only Gigawatt-scale operational portfolio in GB with
operational capacity of 1,072MW / 1,701MWh.

·    330MWh of initial augmentations completed to date, taking the
portfolio's average duration to 1.6 hours and a further 350MWh programme of
augmentations underway.

·    Transaction reflecting the portfolio's carrying value concluded
through an equity fundraising into the Glassenbury project, which is now being
augmented to a 2-hour duration with the capital raised.

·    Sharp increase in long-term contracted revenues with 939MW, or 88%,
of the operational portfolio signing long-term revenue floor contracts in
addition to the two-year revenue tolls with Octopus Energy.

·    NAV marginally declined 1.5% to 107.71p per share in the period
(December 2024: 109.35p) reflecting further reductions in third-party revenue
forecasts largely offset by (i) increased valuations for projects that have
been under construction now being valued as operational assets and (ii) cash
generation retained in the portfolio.

·    Debt drawn as of 30 June 2025 of £160.0mn (31 December 2024:
£150.0mn) and cash on hand of £48.2mn (31 December 2024: £43.7mn) in the
Company and the portfolio resulting in net debt of £111.8mn. Net debt to NAV
was therefore 18% at the period end.

·    After the period end, a crucial refinancing was completed, unlocking
capital for growth.

 

NAV attribution

 

The primary underlying driver of the NAV per share in the period from 31
December 2024 to 30 June 2025 was a further reduction in independent
third-party revenue forecasts, which was mostly offset by a combination of
positives, including increases in value from projects progressing through
construction to operational status, operational life increases on certain
assets and cash flow generation in the portfolio. A full breakdown of NAV per
share movements in the period is provided below:

·    -11.54p impact of changes to independent third-party revenue
forecasts;

·    +3.73p from extension of asset lives through lease options;

·    +1.93p from net working capital gains after debt costs;

·    +1.73p from revaluing new projects such as through the equity raise
in Glassenbury and projects moving closer to operation, thereby reducing the
discount rate premiums used;

·    +1.52p on the model roll-forward;

·    +1.30p from updates to construction timings and changes to total
build costs in the period;

·    -0.43p for the movement in market value of interest rate swaps; and

·    +0.12p from a reduction in O&M contractual costs.

 

Revenues and Industry update

 

While the mid-year 2025 NAV per share reflects a further decline in
third-party revenue forecasts, GRID's portfolio generated strong actual
revenue growth and outperformance against revenue forecasts so far in 2025.

 

The Manager is also seeing ongoing incremental evidence of progress by NESO in
terms of control room systems, and by Ofgem in terms of anticipated regulatory
changes, which are expected to drive a further recovery in revenues as
projected by third-party forecasts. The Ofgem-led regulatory rule change
(codenamed GC0166) will require BESS operators to communicate the exact amount
of electrical energy in a battery to allow the control room to confidently
reserve that energy in lieu of gas-fired generation - something that has so
far not been possible and perpetuated the prioritisation of gas for the
provision of flexibility.

 

While the above does not guarantee a reduction in skip rates, it is
encouraging to see that NESO process improvements are continuing to take
place.

 

Capital Allocation Policy

 

Background

 

To support the Board's deliberations, the Company has engaged extensively
with, and received feedback from, its shareholders.

 

The Company has focused on taking full advantage of strong BESS industry
growth as reflected in the Three-year Plan (3YP) announced at the Company's
Capital Markets Day in November 2024. During this growth phase, which is
expected to be significantly progressed by the end of 2027 and completed in
2028, the Board believes there is the potential for substantial value to be
captured by the Company.

 

Seeking to capture the potential value offered by this growth phase requires a
significant portion of the Company's anticipated free cash flow to be
reinvested into operational project augmentations and new pipeline
construction detailed in the 3YP. As such, free cash flow otherwise available
for distributions to shareholders will be directed primarily towards growth in
2025 and 2026.

 

Once the 3YP construction milestones are achieved, total installed battery MWh
capacity is expected to have doubled from 1.7GWh to 3.5GWh as a function of
new project capacity growing 65% from 1.1GW to 1.8GW. In this scenario, the
whole target portfolio's average duration would have increased from 1.6 hours
to c2.0 hours.

 

Assuming this increase in capacity has been achieved in 2027-2028, underlying
cash flow would be expected to grow markedly concurrently with the conclusion
of construction programme expenditure. Once construction spend has concluded
and the portfolio has reached 1.8GW, at the current merchant revenue level of
£75k/MW/Yr 1  (#_ftn1) on 2-hour assets, the portfolio could generate excess
cash flows of c.10p per share. For context, third-party forecasters are
anticipating 2028 merchant revenue levels for 2-hour assets of
c.£90k/MW/Yr.

 

Dividend and Buyback Policy

 

Having carefully considered the growth opportunities outlined above and the
views of our shareholders, the Board is prioritising reinvestment over
near-term cash returns to shareholders.

 

The Board notes the importance of any future dividend being fully covered. For
the next two financial years dividends are expected to be set at a very low
level in order to prioritise growth opportunities as outlined above, with any
meaningful increases likely only taking place from 2027 onwards following
completion of the augmentations and the first of the new projects.

 

More specifically, the Company expects to pay a small dividend of 0.11p/share
in November 2025, in relation to FY2024 earnings, to comply with its
Investment Trust Company regulatory obligations. Then the Company intends to
pay a single dividend of at least 0.25p/share in 2026 in relation to FY2025.

 

From 2027, dividends will be declared as interim dividends paid at half-yearly
intervals and are expected to continue to be fully covered by free cash flow.
The dividend declared after the end of the financial year may be larger than
the first half as the seasonality of the Company's business means earnings are
generally expected to be lower during summer months.

 

The Board will review this dividend policy at the end of 2026 when the
delivery of construction in the 3YP is more advanced and continue to consider
how stabilisation of the portfolio might positively impact its ability to grow
dividends.

 

In addition, the Company will retain the flexibility to repurchase shares from
excess free cash flow as long as the Company's shares trade at a material
discount to NAV per share.

 

 

Outlook

 

·    New augmentations are now underway and are expected to add 350MWh
across eight projects. Further augmentations are expected to be announced in
due course.

·    Work is ongoing to complete the financing of our pipeline projects,
ahead of starting construction by the year end, notwithstanding possible
delays caused by NESO's queue reform process.

·    Our construction and augmentation milestones will approximately
double installed battery capacity over the next two years with a corresponding
increase in cash flow as commercial operations begin.

·    Work continues with NESO and Ofgem to drive greater utilisation of
BESS and enhance the revenue opportunity for our assets. In the meantime, the
Manager also continues to work on alternate revenue strategies to drive
further earnings growth for the portfolio.

 

 

Gresham House will host a webinar for investors at 11:00am BST on 24 September
2025. To access the live webinar, please register in advance here
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fgreshamhouse.zoom.us%2Fwebinar%2Fregister%2FWN_BkR_FZX4QUuWuxndhrg7iA&data=05%7C02%7CL.Darbourne%40greshamhouse.com%7C51c56bb642f141c8d57608ddf1e7b19d%7C7a74c7b448444bcaa292c2f67edf7466%7C0%7C0%7C638932700027314928%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=OnYUyGDJXhaSFv60amaJPpgIAkUXPRurZm%2F2leHn%2FHo%3D&reserved=0)
.

 

The Company's Interim Report and Financial Statements for the period ending 30
June 2025 are available on the Company's website
at: https://greshamhouse.com/grid (https://greshamhouse.com/grid) and will
shortly be available on the FCA's National Storage Mechanism:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

 

 

John Leggate CBE, Chair of Gresham House Energy Storage Fund plc, commented:

 

"This half-year period has been a critical step in delivering against the
three-year strategic plan we set out in November 2024. GRID has now made
significant progress in strengthening its foundations to support future value
creation.

 

"The Board believes that the growth opportunities we see represent the best
future total return for investors and we are pleased to see good support for
this approach among our shareholders. The growth that GRID aims to deliver
over the next two years should significantly increase the revenue-generating
base for the Company, which will in turn drive greater long-term returns for
shareholders."

 

 

Ben Guest, Fund Manager of Gresham House Energy Storage Fund plc &
Managing Director of Gresham House Energy Transition, said:

 

"We are very pleased with the progress made so far in 2025 and delivering on
the initial steps of our Three-year Plan, with long-term floor agreements and
refinancing our debt facilities. Our progress also includes advancing our
subsequent deliverables, with our near-term focus on construction of the new
pipeline.

 

"As part of this progress we're also delighted to be the first BESS investor
to have passed the symbolic 1GW milestone for operational projects.

 

"With falling battery prices, we see significant opportunities to invest in
expanding the duration of the portfolio as well as building new projects. We
look forward to delivering on the growth plans we have set out in more detail
in the half-year report, as we embark on driving operational capacity to over
2GWh.

 

"We have seen a significant improvement in revenues year-over-year, even
though absolute levels remain challenged, as improvements in the Balancing
Mechanism have begun to take effect. We look forward to seeing further
upcoming NESO and OFGEM-led improvements driving better revenues - there is
much still to be done. Beyond this, we continue to pursue all avenues to
ensure BESS assets are fairly rewarded for the value they bring to the system
and can operate on a level playing field. In this regard, we welcome the
Government's recent investments into new BESS projects via the National Wealth
Fund; we expect this to enhance focus on the importance and need for growth of
our sector."

 

 

ENDS

 

For further information, please contact:

 

 Gresham House Energy Transition        +44 (0) 20 3837 6270

 Ben Guest

 James Bustin

 Harry Hutchinson

 Jefferies International Limited        +44 (0) 20 7029 8000

 Gaudi Le Roux

 Stuart Klein
 Harry Randall

 Peel Hunt                              +44 (0) 20 7418 8900

 Luke Simpson

 Huw Jeremy

 KL Communications                      gh@kl-communications.com (mailto:gh@kl-communications.com)

 Charles Gorman                         +44 (0) 20 3882 6644

 Charlotte Francis
 JTC (UK) Limited as Company Secretary  GHEnergyStorageCoSec@jtcgroup.com (mailto:GHEnergyStorageCoSec@jtcgroup.com)

 Christopher Gibbons                    +44 (0) 20 7409 0181

 
LEI: 213800MSJXKH25C23D82

 

About the Company and the Manager

Gresham House Energy Storage Fund plc aims to invest in a diversified
portfolio of utility-scale battery energy storage systems (known as BESS)
located in Great Britain and internationally. The Company seeks to provide
investors with the prospect of capital growth through the re-investment of net
cash generated in excess of its target dividend in accordance with the
Company's investment policy.

 

Gresham House Asset Management Ltd is the FCA authorised operating business of
Gresham House Ltd, a 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 (http://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.

 

DISCLAIMERS

This announcement has been prepared for information purposes only. This
announcement does not constitute a prospectus relating to the Company and does
not constitute, or form part of, any offer or invitation to sell or issue, or
any solicitation of any offer to subscribe for, any shares in the Company in
any jurisdiction nor shall it, or any part of it, or the fact of its
distribution, form the basis of, or be relied on in connection with or act as
any inducement to enter into, any contract therefor. The merits or suitability
of any securities must be independently determined by the recipient on the
basis of its own investigation and evaluation of the Company. Any such
determination should involve, among other things, an assessment of the legal,
tax, accounting, regulatory, financial, credit and other related aspects of
the securities.

This announcement may not be used in making any investment decision in
isolation. This announcement on its own does not contain sufficient
information to support an investment decision and investors should ensure that
they obtain all available relevant information before making any investment.
This announcement does not constitute or form part of and may not be construed
as an offer to sell, or an invitation to purchase or otherwise acquire,
investments of any description, nor as a recommendation regarding the possible
offering or the provision of investment advice by any party. No information in
this announcement should be construed as providing financial, investment or
other professional advice and each prospective investor should consult its own
legal, business, tax and other advisers in evaluating the investment
opportunity. No reliance may be placed for any purposes whatsoever on this
announcement or its completeness.

The information and opinions contained in this announcement are provided as at
the date of the announcement and are subject to change without notice and no
representation or warranty, express or implied, is or will be made in relation
to the accuracy or completeness of the information contained in this
announcement and no responsibility, obligation or liability or duty (whether
direct or indirect, in contract, tort or otherwise) is or will be accepted by
the Company, the Manager or any of their affiliates or by any of their
respective officers, employees or agents to update or revise publicly any of
the statements contained in this announcement. No reliance may be placed for
any purpose whatsoever on the information or opinions contained in this
announcement or on its completeness, accuracy or fairness. The document has
not been approved by any competent regulatory or supervisory authority.

Any investment in the Company is speculative, involves a high degree of risk,
and could result in the loss of all or substantially all of an investment in
the Company. Results can be positively or negatively affected by market
conditions beyond the control of the Company or any other person. There can be
no assurance that any targeted returns will be achieved or that the Company
will be able to implement its investment strategy or achieve its investment
objectives. There is no guarantee that any such returns can be achieved or can
be continued if achieved, nor that the Company will make any distributions
whatsoever.

The information in this announcement may include forward-looking statements,
which are based on the current expectations, intentions and projections about
future events and trends or other matters that are not historical facts and in
certain cases can be identified by the use of terms such as "may", "will",
"should", "expect", "anticipate", "project", "estimate", "intend", "continue",
"target", "believe" (or the negatives thereof) or other variations thereof or
comparable terminology. These forward-looking statements, as well as those
included in any related materials, are not guarantees of future performance
and are subject to known and unknown risks, uncertainties, assumptions about
the Company and other factors, including, among other things, the development
of its business, trends in its operating industry, and future capital
expenditures and acquisitions. In light of these risks, uncertainties and
assumptions, the events in the forward-looking statements may not occur and
actual results may differ materially from those expressed or implied by such
forward looking statements. Given these risks and uncertainties, prospective
investors are cautioned not to place undue reliance on forward-looking
statements.

Each of the Company, the Manager and their affiliates and their respective
officers, employees and agents expressly disclaim any and all liability which
may be based on this announcement and any errors or omissions from this
announcement.

No representation or warranty is given to the achievement or reasonableness of
future projections, management targets, estimates, prospects or returns, if
any. Any views contained in this announcement are based on financial,
economic, market and other conditions prevailing as at the date of this
announcement. The information contained in this announcement will not be
updated.

 

 

 1  (#_ftnref1) Representing approximate revenue levels achievable today on a
2-hour asset. Merchant revenue rates may vary significantly upwards or
downwards from the figure mentioned; the information given here does not and
should not be treated as indicating any likely level of profits for the
current financial period or any subsequent financial period or as otherwise
constituting a profit forecast

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