REG - Gresham House Energy - Quarterly NAV and Factsheet publication

Gresham House Energy Storage FundAnnouncement

22/11/2023 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231122:nRSV2019Ua&default-theme=true

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 £837.7mn and NAV per share was 146.08p per
ordinary share (30 June 2023: 146.66p).

Highlights

·    NAV at £837.7mn 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 £833k/MW. Adjusting for working
capital, i.e., taking just the NPV of future cashflows, the valuation stood at
£736k/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/
(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
(mailto: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
(file:///C:/Users/SKlein/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/62D08JDG/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 (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.

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  NAVEAPFFASSDFFA