TIDMGRID
RNS Number : 8427X
Gresham House Energy Storage Fund
10 January 2022
10 January 2022
GRESHAM HOUSE ENERGY STORAGE FUND PLC
("GRID" or the "Company")
Trading Update
Gresham House Energy Storage Fund PLC (LSE: GRID), the UK's
largest fund investing in utility-scale battery energy storage
systems, is pleased to provide shareholders with an update on
trading for the full year to 31 December 2021 ahead of the
publication of its audited annual results in April 2022.
2021 has been another transformational year for the Company. Key
highlights include:
- Full year revenues of the asset portfolio comfortably ahead of
modelled levels and EBITDA of the asset portfolio expected to be in
excess of GBP40m, more than doubling FY2020 EBITDA (GBP15.6m [1]
);
- Full dividend cover [2] for FY 2021 dividend target of 7.0 pence per share;
- 415MW of battery energy storage systems ("BESS") under
construction as at Q4 2021 (Q32021: 175MW);
- 280MW added to the exclusive pipeline during Q4 2021 for
connection in 2023 and 2024, increasing the target portfolio, once
operational, to over 1.5GW;
- Further growth in the Company's capital base in 2021 with
GBP100m raised in equity funds and GBP180m of debt secured at an
interest rate of SONIA + 300bp before hedging costs.
Looking ahead to 2022, as projects progressively commission
through the year, GRID anticipates achieving the following
ambitions:
- Full dividend cover for FY 2022 target of 7.0 pence per share,
with cover continuing to improve progressively as new projects
commission during the year;
- Net Asset Value ("NAV") growth towards the upper end of the
target range of 8% to 15% ([3]) ;
- Continuing to be the leading owner of operational BESS in the
UK and Ireland with a market share of c.25% to 30%.
These targets are underpinned by the deployment of existing cash
and, incrementally, drawing of low cost debt into pipeline projects
with Internal Rates of Return (IRRs) which are significantly above
the Company's weighted average discount rate.
John Leggate CBE, Chair of Gresham House Energy Storage Fund PLC
commented:
"The outlook remains very exciting for energy storage sector
investments, particularly due to the recent Contract for Difference
(CfD) auction launch announcement for renewable generation
projects. The UK government's Department for Energy and Industrial
Strategy (BEIS) expects this will result in a further 12GW in
contracts, primarily for offshore wind, far in excess of the 5.5GW
achieved in the 2019 round. This substantial growth in renewables
will lead to increased generation intermittency and therefore drive
the need for significant additional energy storage capacity. GRID
remains committed to taking the lead in providing this storage
capability in the UK and Ireland."
Ben Guest Lead Fund Manager and Managing Director of Gresham
House New Energy, added:
"We continue to work towards the commissioning of our extensive
pipeline, as well as continuing to grow it. We are excited about
the impact that achieving these milestones will have on the
prospects for earnings growth and NAV progression in 2022."
Operational update
GRID has the potential to build the majority of its pipeline
projects to at least 2-hour durations and has built several
projects to 1.5 hours to date. The Manager expects that at least
two projects, for delivery later in 2022 and 2023, will be built to
2 hour durations as the trading opportunity for 2-hour duration
sites becomes at least as profitable as for shorter duration sites.
This opportunity is becoming more compelling as the frequency
response market (which only requires sub-1 hour projects) is now
becoming saturated, as widely anticipated.
GRID continues to expect to acquire its upcoming pipeline at the
lowest levels achieved to date. All-in costs are expected to be, on
average, under GBP450k per MW for 1 hour projects and under GBP625k
per MW for 2-hour projects.
The Manager has experienced some Covid-related supply chain
challenges relating to the construction of its current pipeline.
While this has no significant effect on the Company's budgets, some
project timelines have been affected with target commissioning
dates pushed back by up to a quarter, as indicated in the table
below.
Target portfolio:
Project Location MW Operational Target Commissioning
status date
Current operational portfolio UK 425 Operational Fully commissioned
----------------- ------ ------------------- ---------------------
Enderby Leicester 50 In construction Q1 2022
----------------- ------ ------------------- ---------------------
Coupar Angus Co. Perth 40 In construction Q1 2022
----------------- ------ ------------------- ---------------------
Arbroath Co. Angus 35 In construction Q1 2022
----------------- ------ ------------------- ---------------------
Stairfoot South Yorkshire 40 In construction Q1 2022
----------------- ------ ------------------- ---------------------
West Didsbury Manchester 50 In construction Q2 2022**
----------------- ------ ------------------- ---------------------
Melksham East & West Swindon 100 In construction Q3 2022**
----------------- ------ ------------------- ---------------------
Penwortham Preston 50 In construction H2 2022
----------------- ------ ------------------- ---------------------
Grendon Northampton 100 In construction*** H2 2022
----------------- ------ ------------------- ---------------------
Project York (previously York, N. 50 H2 2022
project Y) Yorks.
----------------- ------ ------------------- ---------------------
Project Elland (previously West Yorkshire 150 Q1 2023**
project E2)
----------------- ------ ------------------- ---------------------
Project Bradford West West Yorkshire 87 Q1 2023**
(previously project B)
----------------- ------ ------------------- ---------------------
Monet's Garden North Yorkshire 50 Q2 2023**
----------------- ------ ------------------- ---------------------
Lister Drive Merseyside 50 Q2 2023**
----------------- ------ ------------------- ---------------------
Project Bradford West West Yorkshire 100 2023
2*
----------------- ------ ------------------- ---------------------
Project Monvalet* Rep. of Ireland 180 2024
----------------- ------ ------------------- ---------------------
Total (including operational
projects) 1,557
------ ------------------- ---------------------
*New pipeline projects
**Target Commissioning date pushed back by up to a quarter
*** Only 50MW under construction at this time
Note: all figures contained in this announcement are
unaudited.
For further information, please contact:
Gresham House New Energy
Ben Guest +44 (0) 20 3837 6270
Jefferies International Limited
Stuart Klein +44 (0) 20 7029 8000
Gaudi Le Roux +44 (0) 20 7029 8000
Neil Winward +44 (0) 20 7029 8000
KL Communications gh@kl-communications.com
Charles Gorman +44 (0) 20 3995 6673
Will Sanderson
Millie Steyn
JTC (UK) Limited as Company GHEnergyStorageCoSec@jtcgroup.com
Secretary +44 207 409 0181
Christopher Gibbons
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,
Northern Ireland and the Republic of Ireland. 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, calculated net of the Company's costs and expenses.
Once certain further asset management activities are completed and
leverage is introduced to the Portfolio, the Company targets a
levered Net Asset Value total return of 15% per annum, 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
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.
[1] GBP15.8m was reported in the Annual Report 2020 issued in
April 2021. This was calculated pre-audit of the asset portfolio
and the final EBITDA number post-audit was GBP15.6m. This will form
the comparator in the Annual Report 2021 when issued.
[2] Dividend cover is calculated in accordance with the
Alternative Performance Measures table in the 30 June 2021 Interim
Report: this is based on underlying EBITDA from the asset portfolio
and deducts ongoing costs in the Company
[3] Growth in NAV is driven by the realisation of additional
value when pipeline projects are valued as construction projects
initially and then as operational projects. It does not assume any
reduction in the current weighted average cost of capital.
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