REG - Gresham House Energy - Long-term floor agreements on 789MW of projects

Gresham House Energy Storage FundAnnouncement

Today 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250703:nRSC5181Pa&default-theme=true

RNS Number : 5181P  Gresham House Energy Storage Fund  03 July 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.

 

 

3 July 2025

Gresham House Energy Storage Fund plc

("GRID" or the "Company")

 

Long-term floor agreements on 789MW of projects

 

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 that it has signed long-term floor-pricing agreements ("Floor
Agreements") with two counterparties. The first of these is with Statkraft
Markets GmbH ("Statkraft"), part of Statkraft Group, the renewable energy
business; the second is with Markel Bermuda Limited ("Markel"), whose ultimate
owner is Markel Group Inc., a listed US insurance group, in an agreement
originated and managed by Markel's affiliate Nephila ("Nephila"). Both Floor
Agreements have counterparties whose corporate groups have investment-grade
status.

 

These Floor Agreements, which supplement GRID's existing two-year tolling
agreements with Octopus Energy over 568MW of capacity ("Tolling
Agreements") 1 , will significantly increase GRID's long-term contracted
revenues over the next ten years.

 

Once all the Floor Agreements are in force and the Tolling Agreements have
expired, 789MW (74%) of GRID's 1072MW 2  portfolio will secure minimum annual
contracted revenues of £35mn, while still providing exposure to the upside
merchant trading opportunity above the contracted floors. The portfolio's
Capacity Market contracted revenues are not included in the figure above and
are expected to represent an additional c.£11mn of contracted revenues in
2026.

 

GRID anticipates signing additional contracts on operational projects with a
further investment-grade counterparty ahead of concluding the refinancing of
its operational portfolio, as well as contracting a significant portion of the
pipeline detailed in the Company's Three-year Plan.

 

Strategic rationale

 

This is a key milestone for GRID. These Floor Agreements significantly improve
the Company's risk-adjusted return characteristics by protecting against low
merchant revenue conditions below agreed floor levels, while maintaining
exposure to upside merchant revenues that are expected to out-turn above those
floor levels. They are key to unlocking advantageous terms for GRID's
previously announced new debt facility, which is due to refinance existing
debt facilities shortly, with the aim that future debt servicing (interest and
principal repayments) will be fully covered from cashflow derived from
contracted revenues.

 

Gresham House Asset Management Limited (the "Manager") estimates that c.50% 3 
of the 1072MW portfolio's total revenues will be contracted once the Tolling
Agreements roll off and all Floor Agreements are in force, including the
agreement with a further counterparty mentioned above.

 

The refinancing unlocked by these Floor Agreements is key to progressing our
growth agenda via operational project augmentations. The refinancing of the
current debt will also enable the board to announce a revised dividend policy.
The Floor Agreements also support new pipeline construction (the latter also
being dependent on closing of SPV-level project financing). These are detailed
in the Company's Three-year Plan, which is targeting £150mn in aggregate
annual EBITDA once concluded.

 

In summary, 115MW of assets are expected to be subject to Floor Agreements in
2025, to deliver an incremental c.£2.9mn of contracted revenue in addition to
the 568MW of assets on Tolling Agreements. In 2026, a further 231MW of assets
are expected to benefit from Floor Agreements and generate c.£10.5mn of
contracted revenue. These figures exclude Capacity Market revenues as
mentioned above.

 

Floor Agreement details

 

The Nephila Agreements

 

The agreements with Markel, originated by Nephila, are on 377MW of operational
capacity and are structured as an International Swaps and Derivatives
Association (ISDA) agreement. The agreements will come into force upon the
completion of GRID's refinancing, at which time a premium will be paid to
guarantee a floor of £52,000 per MW per annum for over seven years, subject
to the performance of the assets. Three agreements, two in respect of Melksham
(100MW) and one in respect of Elland (50MW), will come into effect once the
premium has been paid; a fourth, with York (50MW) once this project has been
augmented; and another three, Shilton Lane (40MW) and two for West Bradford
(87MW), are aligned to the expiry of their current counterparty agreements.
Finally, an agreement with Thurcroft (50MW) is aligned to the expiry of its
current counterparty agreement and following augmentation to a greater than
2-hour duration.

 

The Statkraft Agreements

 

Statkraft and certain SPVs of GRID have entered into agreements for a
portfolio of 412MW of existing BESS assets.  The agreements will commence
between 2025 and 2027, following an augmentation programme for some of the
assets, to at least a 2-hour duration.  Statkraft will underwrite a minimum
income of approximately £135mn through September 2035.

 

In more detail, two agreements, for Nevendon (15MW) and Cleator (10MW), start
immediately. Agreements for Arbroath (35MW), Bloxwich (41MW), Byers Brae
(30MW), Coupar Angus (40MW), Grendon (50MW), Red Scar (49MW), Roundponds
(20MW), Rufford (7MW), Stairfoot (40MW), Tynemouth (25MW) and Wickham (50MW)
will have floors come into force either from the end of their current
counterparty agreement and/or from the completion of an augmentation.

 

 

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

 

"The Floor Agreements announced today with Statkraft, Europe's largest
renewable generator, and with Markel, a leading specialty insurer
respectively, represent delivery against key milestones of our Three-year
Plan.

 

"Being able to demonstrate to lenders that GRID has de-risked revenue streams
is key to unlocking more favourable and longer-term financing terms with less
onerous covenants. Along with a third agreement, which we expect to conclude
soon with a separate counterparty, this revenue floor model will deliver
contracted minimum revenues on the majority of our assets, meeting our needs
to cover debt servicing obligations whilst retaining opportunities to access
upside revenues.

 

"Now secured, these future revenues underpin the refinancing we will undertake
in the coming weeks and unlock the Company's Three-year Plan as set out at the
Capital Markets Day in November 2024, as well as providing the Board with the
opportunity to refresh our Dividend Policy.

 

"These actions collectively are designed to deliver tangible long-term value
to our shareholders."

 

 

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

 

"Since announcing our tolling agreement with Octopus Energy in 2024, we have
been working hard to maximise merchant revenues on the uncontracted portion of
the portfolio while also looking to limit the impact of downside revenue
scenarios across the portfolio over the longer term.

 

"The floors announced today achieve the latter and are the culmination of
months of work.  I would like to thank my team and our advisors for their
hard work on this and on other preparatory work being undertaken to allow the
Three-year Plan to unfold as smoothly as possible once the refinancing is
completed.

 

"These Floor Agreements fundamentally reposition GRID as a business with
significant minimum contracted revenue while retaining merchant upside
exposure, which we believe significantly improves our risk profile.

 

"Floor agreements are relatively new to the BESS industry but are common
contractual arrangements in the world of renewable energy infrastructure, to
support project financing of assets.  Had attractive floors today been
available sooner, we would have financed GRID in line with the renewables
infrastructure sector sooner.

 

"We can now proceed to finalise our refinancing on improved terms, and unlock
the capital required for augmentations and much of the equity capital required
for our pipeline, taking us a key step further along on the journey of
executing on GRID's growth plan.

 

"As well as aiming for significantly higher EBITDA, the Three-year Plan will
naturally also drive GRID's NAV significantly once the funds are in place and
construction is under way on new projects and augmentations.

 

"We look forward to announcing further milestones, starting with a further
floor agreement and our refinancing."

 

 

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

 Stuart Klein

 Gaudi Le Roux
 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 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 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 Company is speculative, involves a high degree of risk, and
could result in the loss of all or substantially all of their investment.
Results can be positively or negatively affected by market conditions beyond
the control of the Company or any other person. Any data on past performance
contained in this announcement is no indication as to future performance and
there can be no assurance that any targeted or projected earnings or returns
will be achieved or that the Company will be able to implement its investment
strategy, including, without limitation, the refinancing, or achieve its
investment objectives. Any target earnings or returns published by the Company
are targets only. 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. There may be other additional risks, uncertainties
and factors that could cause the earnings or returns generated by the Company
to be materially lower than the target earnings or returns of the Company.

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 therein or omissions
therefrom.

No representation or warranty is given to the achievement or reasonableness of
future projections, management targets, estimates, prospects, earnings 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.

 

 

 

 1  As announced in July 2024, the Tolling Agreements are two-year agreements
over 14 projects with 568MW of capacity and start dates in 2025 and 2026.

 2  Including Shilton Lane and West Bradford, which are expected to be
energised shortly.

 3  This figure assumes total revenues of £100,000 per MW per year (which is
above current levels but at a level reflected in longer term forecasts).

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  AGRMZGGNFZNGKZZ