TIDMGRID
RNS Number : 1978K
Gresham House Energy Storage Fund
04 May 2022
4 May 2022
Gresham House Energy Storage Fund plc
(the "GRID" or the "Fund")
Quarterly NAV and Factsheet publication
Gresham House Energy Storage Fund Plc (LSE: GRID) (the "Fund")
announces its NAV as at 31 March 2022 was GBP577m and NAV per share
rose to 131.89p per ordinary share (December 2021: 116.86p).
Financial highlights
- NAV has increased to GBP577m, or 131.89p per share, up 15.03p
per share or 12.9% in the quarter
- From the IPO in November 2018 to the end of March 2022, the
Fund has delivered a share price total return of 64.1% compared
with 22.0% for the FTSE All Share and an NAV total return of
58.8%
- The increase in NAV primarily reflects uplifts in revenue
assumptions, inflation, the revaluation of projects under
construction and recent Capacity Market ("CM") contract awards
- Dividends remain fully covered in the quarter
- The Manager expects its 30 June 2022 NAV to be at the upper
end of the 140-145p per share guidance range announced on 6 April
2022
- The portfolio's projects continue to generate revenue and
EBITDA above the Manager's budget as the electricity market remains
volatile, which creates a positive backdrop for BESS
- As at 31 March 2022, the blended WADR across the portfolio
reduced to 10.7% due to new CM contracts being included in
forecasts
- There has been no change to underlying discount rates used,
with 5.0% for CM contract revenues and 10.85% for all other
revenues(1) . A 50bp premium is applied to each of these rates for
projects while under construction
- Since Q3 2021, 250MW of the projects which are fully-funded
and owned by GRID have been revalued above cost, namely Enderby,
West Didsbury, Penwortham and now, Melksham. This leaves 165MW of
projects (Arbroath, Coupar Angus, Stairfoot and Grendon) currently
under construction to be revalued as well as the change to the 50bp
lower discount rate once operational. The Fund is also expected to
benefit from upward revaluation of the Existing Pipeline (which is
defined and laid out in the recently published Circular available
here ) which is not yet funded, in due course.
Commentary on changes to the NAV
During the quarter, the most significant changes to NAV per
share included:
-- +5.32p from recent CM contract awards that can be included this quarter
-- +4.19p due to revaluation of 100MW of projects under construction (Melksham)
-- +3.88p from higher inflation assumptions(2)
-- +1.64p from the net effect of negative roll-forward effects,
cash retained net of dividend payments, higher revenue assumptions
from the Fund's consultant (+1.82p)(2) and other effects, including
debt costs (-0.20p) and other minor modelling adjustments
Q1 2022 dividend
The Board is pleased to announce a dividend of 1.75p per
ordinary share for the period from 1 January 2022 to 31 March 2022.
For further details, please refer to dividend RNS released this
morning.
Portfolio activity & market outlook
- The first quarter has been an active one for the Manager:
o Progressing projects through construction with Enderby,
Arbroath, Coupar Angus and Stairfoot expected to commission during
Q2 and West Didsbury and Penwortham expected to commission in Q3,
as indicated at the full-year results stage
o De-risking timelines of projects for delivery in 2023 and
beyond as much as possible
o Transitioning Glassenbury and Cleator, previously contracted
in EFR until 4 January 2022, to frequency response and trading
operations, arranging upgrades of their batteries to longer
duration, and preparing the next EFR projects for the same
(Nevendon, Tynemouth and Port of Tyne)
o Publishing a Circular which proposes changes to the Investment
Policy including the gradual expansion of the geographic mandate of
the Fund
o Working on additional pipeline including the commitment to a
new 40MW project called Shilton Lane not far from Glasgow in
Scotland
o Completing a route to market tender with over ten Asset
Optimisers taking part, focusing on the ability to maximise
revenues as well as the ability to reduce costs
- The market environment has remained supportive for battery
energy storage as renewable deployment continues to accelerate.
The factsheet for the period ended 31 March 2022 is available
here .
The Manager is hosting an inaugural Capital Markets Day today at
10.00am (BST) - register here .
Join us to hear Ben Guest, Fund Manager, GRID, discuss the
Fund's journey since IPO, the competitive landscape and the revenue
model for batteries, with guest speakers:
-- Dan Monzani, Managing Director for UK and Ireland, Aurora
Energy Research
-- Quentin Scrimshire, CEO and Co-Founder, Modo Energy
Footnotes:
1. The discount rate applied to all merchant cashflows includes
short term Enhanced Frequency Response (EFR), Firm Frequency
Response (FFR) and Dynamic Containment (DC) revenues, while the
discount rate applied to contracted income is applied only to
Capacity Market contracts at this time
2. NAV impact not included in prior guidance for 31 March 2022 as announced on 6 April 2022
For further information, please contact:
Gresham House New Energy
Ben Guest +44 (0) 20 3837 6270
Jefferies International Limited
Stuart Klein
Gaudi Le Roux +44 (0) 20 7029 8000
KL Communications
Charles Gorman +44 (0) 20 3995 6673
JTC (UK) Limited as Company Secretary
Christopher Gibbons +44 (0)203 846 9774
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.
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 Storage Systems
Utility-scale battery storage systems 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 for it
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