Gresham House Energy Sto... Share Discussion Threads

[adamb1978] 08/9/2023 18:56

CC2014

I take the opposite view. I think inflation will continue to come down sharply from here and be around 4% by year end. That will mean that we're probably at peak interest rates - max there would be 1 more rate rise in Sept and therefore that market expectations of peak rates at 5.7% needs to come down further. Falling rates will therefore support the price of this sort of thing, as well as small caps, commodities etc. I plan to be 100% invested before long.

Guess our different opinions is what makes a market!!!

Adam

[nickrl] 08/9/2023 17:28

Not sure how much you can take from BESS analytics website especially trading income as thats not readily declared for weeks even for BM assets but stats for last 30 days are

HEIT 4 sites 129MW/258MWh average 6.93 £/MW/hr 61 £k/MW/yr

GRID 9 sites 355MW/398MWh average 4.39 £/MW/hr 38 £k/MW/yr

shows you the extent of not have 2hr batteries.

HEIT have one site in delay due to grid connection but two more sites coming on line a little earlier all helps boost cashflow although neither are anywhere near covering divi currently.

[topvest] 08/9/2023 13:47

No problem. Yes, I would agree HEIT are a better buy at the moment. To be honest, I think both will get cheaper though and energy storage is having a big hangover from the glories of 2021 and 2022. I should have waited longer. They are both probably better placed medium-term than short-term so there is no rush.

I am still 34% cash in my portfolio and I am not buying anything now until my chart alerts get hit (i.e. 50dma>200mda) - have 178 alerts set! Its always tempting to bottom fish, but where is the bottom? I am not convinced we will hit bottom until the US cracks. I would be very surprised if the US gets through Q4 without a stock market crash. The US is still 50%+ overvalued and when this corrects we will surely feel it!

[cc2014] 08/9/2023 13:30

My apologies Topvest. I've checked the RNS and the battery life is not being extended.
I'm not sure why I thought that, I probably read it somewhere but not on GRID.

I have been dithering about buying this morning but in the end I've decided to leave it. I'm kind of with you that 120p is a not unreasonable price but it does carry some risk and isn't super cheap which is what I would prefer.

I concur that HEIT seems better or at least they seem good at the construction side of it. And so they should be as that's what Harmony (the company not the IT) do.

[topvest] 08/9/2023 13:09

Where does it mention the extended battery life please?
I still have a small holding, but I think they are probably heading back down to the IPO price or below. HEIT looks better and that's been bad as well.
For me NAV at year-end could by c10p lower on discount rate and c10p lower on revenue projections with nothing else getting commissioned until 2024. Probably looking at about 120-125p NAV. Not really a sell, but definitely not a buy. I definitely got this one wrong. At least I have made a lot out of Gresham House plc being taken over.
It could start to look better in 2024 or later this year if we get a very cold winter with supply interruptions. Whatever happens, they have blown their credibility and won't be able to raise any new cash.

[cc2014] 08/9/2023 10:40

The share price slide suggests to me the market has lost all confidence in GRID and even though it's now hit 120p this morning the trades suggest no buyers are coming in. Not even PI's who are usually there to try to flip for a few percent regardless of the risk.

Yesterday's RNS as Topvest points out is littered with inconsistencies and it's pretty clear now that the most recent fundraises were just cash grabs (as can be said of some others like the Astrato boys at ROOF)

So, we've got execution problems, we've got lack of ownership of the execution problems, we've got a worrying LTV coming down the line and we've got blaming other agencies for their woes, but probabably more worrying that than it's now a market which is becoming saturated (and can only get worse given how much is coming on line)

But they are promising us 8% unlevered after management expenses and 15% levered on the same basis. I don't think they've actually read their own RNS or perhaps they presume to think that's true or that people who read their RNS' do believe them.

The RNS overall is not well crafted. It smacks of a fund manager who knows the game is up and can't cover all the issues off any longer as the facts and lack of delivery now outweigh the promises.

I note they have extended the battery life or the life of the projects to keep the NAV up a little. One wonders if in 10 years we discover this isn't so realistic.

[topvest] 07/9/2023 19:31

From the Annual Report:
"The Manager has reviewed and reset the pipeline’s commissioning timeline more conservatively for 2023, which had a minor impact on the NAV per share as of 31
December 2022. This re-basing should result in less risk of further slippage while the Manager will work to deliver on these expectations."

Not so!

There was no trading update as such ahead of the fundraise. They must have known about these issues and there was no RNS raising the supplier failure.

End result will be that they have ZERO chance of raising more equity for quite some time.

[topvest] 07/9/2023 19:16

To be honest with you, its wholly deserved. They have been somewhat slow on revealing the bad news. Their commentary also doesn't stack-up.
They now have 250MWh for delivery in 2023 - 4 projects all of which are significantly delayed, but then say:
"At least two Independent Connection Providers (ICPs), licensed contractors who work on the connecting infrastructure between projects and networks, have gone into administration in H1 2023. This has created delays at projects exposed to these contractors and created tight conditions in this segment of the market. GRID was exposed to one of these ICPs at three projects but has moved swiftly to new contractors to minimise delays."
and refer to a maximum delay of 150MWh...but looks like 250MWh!
I am starting to conclude that nothing else will be commissioned until 2024.
They are very evasive on reporting bad news or anything negative.

Ben Guest - well comments on this BB about him are confirmed...

Ben Guest, Fund Manager of Gresham House Energy Storage Fund plc & Managing Director of Gresham House New Energy, added:

"The Energy Storage market is going through a first phase of maturity as the small frequency response[6] market becomes saturated - something we have expected for years. SURE, DON'T THINK YOU FLAGGED!

"The exciting, much larger trading[7] opportunity is ahead of us and is the reason BESS are being built at scale. LATE MOVE TO 2 HOUR DURATION. OTHERS ALREADY DOING.

"The fundamental drivers for battery storage continue to be strong, with growth in BESS capacity continuing to lag the pace of renewables growth. At 2.7GW, more UK wind and solar was added during the first quarter of 2023 than the existing size of the entire battery energy storage sector. FAIR

"Delays at NG ESO in launching the necessary tools for the Control Room is impacting revenues today. However, we are confident that NG ESO will have taken the important steps to resolve this in the coming months. FAIR

"We therefore believe the Company is set up for a powerful recovery. The combination of MW and MWh operational capacity growth, careful structuring, an expected upturn following today's cyclical downturn created by last year's market gyrations and NG ESO modernising its systems is expected to lead to strong levels of cash flow and dividend cover". WELL THAT REALLY SHOWS YOU UP. RECOVERY FROM A CYCLICAL DOWNTURN ALREADY - YOU HAD NOT PREVIOUSLY FLAGGED THE DOWNTURN UNLESS I AM MISTAKEN. ITS LIKE NOT HAVING A PROFIT WARNING AND THEN SAY THAT REVENUES WILL BOUNCE STRONGLY FROM A VERY LOW LEVEL THAT WE DIDN'T MENTION TO YOU WHEN WE DID THE FUNDRAISE.

Not amused!

[cruelladeville] 07/9/2023 18:13

Over reaction on the downside here today. The market remains very nervous about GRID.

[waterloo01] 07/9/2023 17:08

It hardly helps that UK prices are at rock bottom and a fraction of last year. (From something North of £12 to under £3 pmwh)

GSF (Gore) I think is better placed, not only due to significant diversification, decent management but also they have £100m in the bank, more than enough to fund the near term expansion, and an undrawn £50m revolving credit line. As has been pointed out, currently the divi, like here, isn't fully covered but it will be once the spend brings in the income.

[topvest] 07/9/2023 16:51

Yes, all very disappointing. I think they have over extended themselves. They can't afford to do the US project. Better if they had focused on delivering their existing projects. Of course, the bad news is only released after the fundraising which creates a bit of a bad smell. Looks like every project has slipped - that is not good enough at all and they must have known about these delays well before now. Indeed, this BB seems to be more accurate!

[riverman77] 07/9/2023 09:41

Compare with GSF which put out a good update yesterday. GSF seemed to have anticapted all this and diversified their revenues across lots of regions and different contract types. Would definitely choose GSF over this if thinking of investing in the sector.

[cc2014] 07/9/2023 09:19

hmm.

I've been kind of following GRID for a couple of years. The price has never been low enough for me to do some serious research but it's now in the area I'm kind of interested in.

I read the RNS today and I'm completely puzzled by this statement.
"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"

It doesn't sound right to me. If your unlevered return is about 10% less 2% expenses to give the 8%, then if you are borrowing at say SONIA + 3% of the rest (which comes to around 8%), then your new projects would need to have a return of something approaching 18% assuming a gross loan to value of 50%.

More reading required I think...


Otherwise I wasn't impressed. There's clearly something uncomfortable with a DCF cashflow approach to NAV which results in a 15.5pps adjustment to revenues in just a three month period.

[nickrl] 07/9/2023 08:47

NAV update today sounds like a kids litany of excuses of why they haven't done their homework and it will be alright next time. The problem here is GRID rode the wave of exuberance last year on both high pricing for power and frequency response services before ESO moved the latter to auction and drove the prices down. Then they told us arbitrage in the wholesale mkt was the way forward now, they say it hasn't been others say it is, now its upgrading existing fleet to longer duration but at what cost and when isn't clear but it is sound strategy.

Im not in here better value in HEIT currently imv which has dropped back more over the last 6M. GRID like HEIT isn't disclosing much in the way of operational performance, unlike UKW, which always makes me wary but perhaps the small mkt for BESS assets makes it more commercially sensitive currently.

[marktime1231] 09/8/2023 12:48

Not just the effects of lower prices and market saturation dragging down the outlook here, the lobby group Electricity Storage Network representing BESS operators is accusing National Grid ESO of overlooking battery storage

[marktime1231] 01/8/2023 12:41

The slump to a wide discount because GRID has not been delivering, a little surprised we are still waiting for announcements which were supposed to be imminent ... two of the five delayed Statera projects were "close to commissioning" we were told in April. The placing prospectus in May had a weaker ambition in writing, the aggregate live target reduced and "by the end of 2023". But they guided we should expect progress in the next couple of months. Nada!

Even at this new price I still don't buy it. Heroes to zeros. Guest is a bluffer.

Searchlight might be wondering what they are buying in to here.

[cruelladeville] 26/7/2023 08:52

Yes, I also hold HEIT and recently doubled my holding there at the current silly low share price.

[cruelladeville] 26/7/2023 08:50

Certainly, I'd have thought arbitrage on volatile prices would be ideal for GRID to make money. I saw wind generation swing around from supplying 45% of grid demand to

[riverman77] 25/7/2023 21:46

I understood GRID benefited more from volaitly in power prices, rather than high prices.

[nickrl] 25/7/2023 21:38

@CDV it did rather get ahead of itself last year as it got carried up by the high power prices. It was also well placed to benefit from the higher prices the ESO paid for ancillary services but since that has moved to auction basis prices have dropped back. Capacity has ramped up considerably over the last 12mths ahead of what is needed currently for ancillary services so pricing isn't going to improve there anytime soon leaving them to play the wholesale mkt to improve revenue.

Far better yield available with HEIT who have 2hr batteries which are higher earning assets per MWh.

[cruelladeville] 25/7/2023 19:34

Hmmm. Can't see any news from GRID, share price is really suffering?

[cruelladeville] 24/7/2023 18:33

Worlds largest battery storage facility announced today to be built near Manchester - "Carlton Power is currently in "advanced talks" with companies to finance, build and operate the £750m project. The UK electric generation company has secured planning permission from local authorities for the one gigawatt site and commercial operations are expected toward the end of 2025."