Gresham House Energy Storage Fund - GRID.

[EarnestHummingbird]

They must be reading this thread because they have recently started share buybacks at around 50p each and there's been some medium size director's buys as well.

Personally, I bought 2060 shares for £1000 at around 48.5p.current share price is 52, so a modest capital gain
But I'm holding to see the price recover - it seems like an over reaction for the share price to collapse so much.

[PrefInvestor]

The 3 BESS trusts (GRID, GSF and HEIT) all have revenue problems that are challenging their dividend cover. These problems have been caused in part it seems by the NG Balancing Mechanism which provides the means that the companies use to sell their output to the Grid.

GRID and HEIT have both now come out with RNSs cancelling or postponing their dividends, so not an immediately attractive prospect for income investors.

See my collection of posts on this topic on the GSF thread starting here:-

viewtopic.php?f=94&t=39897#p642336

GSF seem best placed of the three due to their international diversification which ought to help minimise the impact of the UK related Balancing Mechanism problem.

IMHO, DYOR etc

Pref

[nlewis3]

@prefinvestor it isn't just the Balancing Mechanism that is a source of revenue. Originally the main impetus for the likes of GRID was the ESO ancillary services to manage frequency which initially was extremely lucrative but ESO played a blinder sucked in loads of investment in BESS then when to auctions and price collapsed. The BM was then going to be next salvation but currently ESO systems are in evolution in 2024 to change the emphasis from gas CCGTs to be primary source for energy to widening the market such that batteries will be on an equal footing. We will have to see how that plays out. Finally BESS can compete in wholesale and spot market which they are doing but they are new to this game and probably still building up to maximum potential. On the face it things look more favourable but there is the little matter of the massive build of new BESS assets coming on line all wanting a slice of the action.
Im interested at these levels but want to see where revenue generation is headed first.

[PrefInvestor]

@prefinvestor it isn't just the Balancing Mechanism that is a source of revenue. Originally the main impetus for the likes of GRID was the ESO ancillary services to manage frequency which initially was extremely lucrative but ESO played a blinder sucked in loads of investment in BESS then when to auctions and price collapsed. The BM was then going to be next salvation but currently ESO systems are in evolution in 2024 to change the emphasis from gas CCGTs to be primary source for energy to widening the market such that batteries will be on an equal footing. We will have to see how that plays out. Finally BESS can compete in wholesale and spot market which they are doing but they are new to this game and probably still building up to maximum potential. On the face it things look more favourable but there is the little matter of the massive build of new BESS assets coming on line all wanting a slice of the action.
Im interested at these levels but want to see where revenue generation is headed first.

Well I agree that the enormous amount of new capacity / players in the BESS market must surely be a further headwind for the UK only BESS trusts. I confess I can no longer see the point of much of the massive new UK BESS capacity that is already under construction. My fear is that dividend reductions are likely to reflect the current market conditions, for the UK only players anyway. So I am in no hurry to go back into this sector ATM.

Just my personal view, could be wrong as always !.

ATB

Pref

[richfool]

Trading Update from GRID:

18 April 2024
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 (BESS), is pleased to provide shareholders with the following trading update ahead of the publication of its annual results for the year ended 31 December 2023 expected on 29 April 2024.

Highlights

· The challenging trading environment in January and February 2024 has improved with revenues since March 2024 reflecting the increased efforts by the GB Electricity System Operator (ESO) to utilise BESS.

· Full focus on deleveraging and increasing operational capacity:

o The Company's debt facility has been amended and restated, among other things, to amend the Interest Cover and Net Debt to EBITDA covenants for 2024 and 2025 to give the business additional headroom in the event that the recent low revenue environment prevails; the Company has also decided to cancel £110mn of debt commitments, reducing the total debt facility size to £225mn.

o Operational capacity increased to 740MW/864MWh as of 31 March 2024, from 690MW/788MWh as of 31 December 2023; the Manager continues to make good progress on the remainder of the construction programme which it expects to complete by the end of October 2024 increasing operational capacity to 1,072MW/1,696MWh.

· Unaudited NAV per share of 129.07p as of 31 December 2023, resulted in a 17.01p or 11.64% reduction in NAV per share since 30 September 2023, reflecting significantly more cautious revenue assumptions adopted for the next 3 years.

· As capital allocation is focused on cash preservation and debt reduction and given the challenging recent revenue environment, the Board does not currently expect to pay any dividends or carry out further share buybacks in 2024.

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

"The BESS sector, the Company and its shareholders are going through the most challenging operating environment since the Company's inception in 2018. The Board is taking a series of steps to put the business on a stable footing in a volatile market so that we can best capture what we continue to think is a significant strategic opportunity in the BESS sector.

In particular, the Board is prioritising deleveraging and cash preservation given the volatile trading environment. This has led to the difficult decision to suspend dividend payments and share buybacks for the balance of 2024 but will enable us to complete our ongoing construction programme which will drive our near-term cash flow potential and inform our future dividend policy."

Trading update

As previously announced, the GB BESS industry has been significantly impacted by a weakness in electricity markets (made more extreme by the impact the invasion of Ukraine had on gas and power markets) and the slower than expected adoption of BESS by the ESO.

In this context, January and February of 2024 were among the most challenging months to date for the GB BESS market and for the Company. Initiatives such as the Open Balancing Platform (OBP) which was launched by ESO in December 2023, the first milestone in their Balancing Programme, have not yet delivered the expected impact on the GB BESS market.

More recently, it has been encouraging to see revenues in March and April improve meaningfully. However, revenues remain well below long-term third-party forecasts. Higher revenues since March can be attributed to the increased efforts by ESO to utilise BESS while implementing upgrades in line with their Balancing Programme. In particular, we have seen the launch of 'Balancing Reserve' (allowing BESS a completely new revenue stream) and a change from a '15-minute' rule to a '30-minute' rule (allowing BESS to be dispatched by ESO for a maximum of 30 minutes instead of 15) contribute to the recent improvement.

Debt Facility - amendment and restatement agreement

In order to give the business additional headroom in the recent lower revenue environment, the Company has amended and restated its debt facility agreement. Specifically, this includes:

- consent to draw all remaining funds required (up to £65mn) to complete the current construction programme, which is forecast to take operational capacity to 1,072MW/1,696MWh in 2024.

- amended Interest Cover and Net Debt to EBITDA covenant levels for 2024 and 2025.

The Company has also decided to cancel £110mn of the undrawn debt facility taking the total size down to £225mn of which £110mn has been drawn to date. All drawn debt is fully hedged at 3.70% resulting in a blended cost of debt of 6.70%. The margin on the debt facility remains unchanged at 300bp over SONIA.

Capital Allocation

The Board's priority is to deleverage without compromising the construction programme which will significantly increase operational capacity and accordingly cash flows. These actions will provide the Company with a scalable platform and a lower debt profile which the Board believes positions the Company well for a future recovery in the BESS market.

The Fund's debt to Gross Asset Value[1] was 13% as of 31 December 2023 and is not expected to exceed 20% by the time all current construction projects have been completed. Notwithstanding this relatively low level of gearing, in the current challenging revenue environment, the Board is focused on cash preservation during 2024.

Accordingly, the Board does not expect either to pay a dividend or to carry out any further share buybacks in 2024.

https://www.investegate.co.uk/announcem ... te/8145402

As a holder of GRID nursing a big fall in its SP, I'm not impressed with the cancellation of the dividend.

[BullDog]

Trading Update from GRID:

18 April 2024
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 (BESS), is pleased to provide shareholders with the following trading update ahead of the publication of its annual results for the year ended 31 December 2023 expected on 29 April 2024.

Highlights

· The challenging trading environment in January and February 2024 has improved with revenues since March 2024 reflecting the increased efforts by the GB Electricity System Operator (ESO) to utilise BESS.

· Full focus on deleveraging and increasing operational capacity:

o The Company's debt facility has been amended and restated, among other things, to amend the Interest Cover and Net Debt to EBITDA covenants for 2024 and 2025 to give the business additional headroom in the event that the recent low revenue environment prevails; the Company has also decided to cancel £110mn of debt commitments, reducing the total debt facility size to £225mn.

o Operational capacity increased to 740MW/864MWh as of 31 March 2024, from 690MW/788MWh as of 31 December 2023; the Manager continues to make good progress on the remainder of the construction programme which it expects to complete by the end of October 2024 increasing operational capacity to 1,072MW/1,696MWh.

· Unaudited NAV per share of 129.07p as of 31 December 2023, resulted in a 17.01p or 11.64% reduction in NAV per share since 30 September 2023, reflecting significantly more cautious revenue assumptions adopted for the next 3 years.

· As capital allocation is focused on cash preservation and debt reduction and given the challenging recent revenue environment, the Board does not currently expect to pay any dividends or carry out further share buybacks in 2024.

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

"The BESS sector, the Company and its shareholders are going through the most challenging operating environment since the Company's inception in 2018. The Board is taking a series of steps to put the business on a stable footing in a volatile market so that we can best capture what we continue to think is a significant strategic opportunity in the BESS sector.

In particular, the Board is prioritising deleveraging and cash preservation given the volatile trading environment. This has led to the difficult decision to suspend dividend payments and share buybacks for the balance of 2024 but will enable us to complete our ongoing construction programme which will drive our near-term cash flow potential and inform our future dividend policy."

Trading update

As previously announced, the GB BESS industry has been significantly impacted by a weakness in electricity markets (made more extreme by the impact the invasion of Ukraine had on gas and power markets) and the slower than expected adoption of BESS by the ESO.

In this context, January and February of 2024 were among the most challenging months to date for the GB BESS market and for the Company. Initiatives such as the Open Balancing Platform (OBP) which was launched by ESO in December 2023, the first milestone in their Balancing Programme, have not yet delivered the expected impact on the GB BESS market.

More recently, it has been encouraging to see revenues in March and April improve meaningfully. However, revenues remain well below long-term third-party forecasts. Higher revenues since March can be attributed to the increased efforts by ESO to utilise BESS while implementing upgrades in line with their Balancing Programme. In particular, we have seen the launch of 'Balancing Reserve' (allowing BESS a completely new revenue stream) and a change from a '15-minute' rule to a '30-minute' rule (allowing BESS to be dispatched by ESO for a maximum of 30 minutes instead of 15) contribute to the recent improvement.

Debt Facility - amendment and restatement agreement

In order to give the business additional headroom in the recent lower revenue environment, the Company has amended and restated its debt facility agreement. Specifically, this includes:

- consent to draw all remaining funds required (up to £65mn) to complete the current construction programme, which is forecast to take operational capacity to 1,072MW/1,696MWh in 2024.

- amended Interest Cover and Net Debt to EBITDA covenant levels for 2024 and 2025.

The Company has also decided to cancel £110mn of the undrawn debt facility taking the total size down to £225mn of which £110mn has been drawn to date. All drawn debt is fully hedged at 3.70% resulting in a blended cost of debt of 6.70%. The margin on the debt facility remains unchanged at 300bp over SONIA.

Capital Allocation

The Board's priority is to deleverage without compromising the construction programme which will significantly increase operational capacity and accordingly cash flows. These actions will provide the Company with a scalable platform and a lower debt profile which the Board believes positions the Company well for a future recovery in the BESS market.

The Fund's debt to Gross Asset Value[1] was 13% as of 31 December 2023 and is not expected to exceed 20% by the time all current construction projects have been completed. Notwithstanding this relatively low level of gearing, in the current challenging revenue environment, the Board is focused on cash preservation during 2024.

Accordingly, the Board does not expect either to pay a dividend or to carry out any further share buybacks in 2024.

https://www.investegate.co.uk/announcem ... te/8145402

As a holder of GRID nursing a big fall in its SP, I'm not impressed with the cancellation of the dividend.

I think you're seeing the least worst option taken here

[UncleEbenezer]

If that NAV is even remotely realistic, it looks like deep value territory. And cancelling the dividend will cast a long shadow over income investors, meaning it's unlikely to close the gap fast.

But I'm thinking: unless the debt problem is existential, it could be a great value investment now. And with that kind of discount there's surely potential for a corporate buyout.

Where's Mr Value when you need expert comment? Or did he give up on that when he became Mr HYP/Aviva?

[BullDog]

If that NAV is even remotely realistic, it looks like deep value territory. And cancelling the dividend will cast a long shadow over income investors, meaning it's unlikely to close the gap fast.

But I'm thinking: unless the debt problem is existential, it could be a great value investment now. And with that kind of discount there's surely potential for a corporate buyout.

Where's Mr Value when you need expert comment? Or did he give up on that when he became Mr HYP/Aviva?

I agree. There's still money going into new BESS facilities. SSE just commissioned their first one recently. Given the increased costs and long waits for grid connections, I would definitely think there's likely predators. As it is I think it would be naive to think anyone considering investment in BESS isn't running a spreadsheet over the options of build new or buy existing nearly new plants.

My reading is that there's nothing wrong with GRID's BESS plants. It's fairly simply ESO is not awarding them the load that they should be. ESO is favouring gas fired power plant over BESS. For no other reason than that's what they've always done in the past. But it's been devastating to the economics of BESS facilities.

[BullDog]

If that NAV is even remotely realistic, it looks like deep value territory. And cancelling the dividend will cast a long shadow over income investors, meaning it's unlikely to close the gap fast.

But I'm thinking: unless the debt problem is existential, it could be a great value investment now. And with that kind of discount there's surely potential for a corporate buyout.

Where's Mr Value when you need expert comment? Or did he give up on that when he became Mr HYP/Aviva?

I agree. There's still money going into new BESS facilities. SSE just commissioned their first one recently. Given the increased costs and long waits for grid connections, I would definitely think there's likely predators. As it is I think it would be naive to think anyone considering investment in BESS isn't running a spreadsheet over the options of build new or buy existing nearly new plants.

My reading is that there's nothing wrong with GRID's BESS plants. It's fairly simply ESO is not awarding them the load that they should be. ESO is favouring gas fired power plant over BESS. For no other reason than that's what they've always done in the past. But it's been devastating to the economics of BESS facilities.

GRID (and HEIT) in play, it seems. Predictable -

https://citywire.com/investment-trust-i ... e/a2441002

[richfool]

Latest (improving) BESS revenue figures:
https://www.investegate.co.uk/announcem ... te/8153290

[clissold345]

Latest (improving) BESS revenue figures:
https://www.investegate.co.uk/announcem ... te/8153290

GRID don't seem to have published monthly MW/yr figures in the past. It would be good if they now publish them every month. What were they a year ago?