Gresham House Energy Sto... Share Discussion Threads

[hiddendepths] 24/3/2022 23:36

I am aware of that jonwig. I have holdings in several of these companies and know the argument. But the projects don't need to die. They can be refreshed with replacement batteries for a start. In any event, as the technology continues to improve, the replacements will be cheaper and more efficient so hopefully the margins will actually rise. I think that first mover advantage and the 35% market share will be highly advantageous in the massive growth that's inevitable in the next decade and beyond. That growth does make this sector stand out.

My biggest concern fwiw is the relatively modest costs of entry to the business. A couple of major energy companies, especially with significant new technology, muscling in to try to clean up the huge profits I expect would be unwelcome. The consolation is that such competition would probably sweep up GRID for what to them would be small change - not that shareholders here would think of it as such!

[jonwig] 24/3/2022 12:03

But each project has a finite life and the nav will therefore begin to decline (DCF calculation), whilst maintenance costs increase. Therefore the portfolio needs refreshing with new projects financed with equity raises.

It's the same with all these asset-backed companies: infrastructure, renewables, etc.

[hiddendepths] 24/3/2022 11:54

The energy environment has become incredibly supportive of GRID's business model going forward for years to come. There's going to be a dash for massively more wind generation, with all its inherent volatility. I thought this was a fantastic long term investment already but it's looking increasingly knock-out! I suppose to a large extent it's a self-limiting asset and income play, the problem being that a big expansion will inevitably be funded primarily by equity issues, limiting NAV growth.

Even so, I think it's quite surprising that the share has completely ignored the positive drivers which are falling into place. At present I'm riding the wave of oil and, especially, gas companies but when that starts to run out of steam (to mix metaphors) I fully intend to at least double up the already significant holding in my SIPP.

[marktime1231] 28/2/2022 13:11

Well done speedy I was just about to paste those key passages and you beat me to it.

NAV +5p to be recognised this quarter, and NAV +10p more to come over the next two years as projects-in-progress are commissioned.

So the share price response today a little muted, the embedded NAV prospect c. 130p means we are looking at a narrow premium not a 13% one as the screens show.

The really good news will be when the board agree that this deserves a healthy increment to the dividend Q1. 1.8p or 1.85p?

[speedsgh] 28/2/2022 12:16

Absolutely, hiddendepths.

Capacity Market (CM) Auction 2022 and NAV uplift -

... GRID's project valuation models assume no CM [Capacity Market] revenues until contracts are in place. These contract awards will directly contribute to the Company's NAV and are expected to add approximately 15 pence per Ordinary Share to NAV over time. The impact on the Q1 22 NAV is expected to be a positive uplift of approximately 5 pence per Ordinary Share. The remaining NAV uplift of approximately 10 pence per Ordinary Share is expected to come in subsequent quarters from assets which are under construction as they are revalued based on future cashflows, in line with the Company's valuation policy, and include the benefit of these CM contracts.

The Company expects to publish its Q4 2021 NAV alongside its Annual Results in April 2022. The uplift from these recently awarded CM contracts will not be included in Q4 2021 figures. The Q1 2022 NAV is expected to be published in early May 2022 and is expected to include around 5 pence of the approximately 15 pence overall NAV uplift announced today...

[hiddendepths] 28/2/2022 07:37

Great RNS this morning!

[marktime1231] 21/2/2022 13:12

It's a funny old world.

The Uniper gas power plant at Isle of Grain, which is I think a base load generator c. 1.4GW, is closed because Eunice damaged one of its three chimney's on Friday.

Not that we need all our base gas generation at the moment, because the wind is blowing strongly enough to knock chimneys over. Besides Uniper are still operating the Notts coal power station up to 2GW baseload. Taking the pressure off gas demand, as will the Grain outtage which lies adjacent to one of the UKs three operational LNG import terminals. Enough wind to briefly be a net power exporter to the continent over the weekend.

However, I wonder if that sudden offline caused another special pricing event for GRID providing emergency capacity and balancing services. Bad news for Uniper has to be good news for someone else.

[pob69] 17/2/2022 09:19

Live now...

[spangle93] 17/2/2022 09:01

I think it's Edison's site, rather than the research note itself. Can't open any research report issued previously by them

[jonwig] 17/2/2022 08:02

Edison research note:



except that I'm getting "Problem loading page" at the moment.

These research notes are pretty comprehensive with lots of industry-wide information. They are, of course, sponsored by the company.

[speedsgh] 14/2/2022 08:49

Dividend Declaration -

Gresham House Energy Storage Fund PLC (LSE: GRID) is pleased to announce a dividend of 1.75p per Ordinary Share for the period from 1 October 2021 to 31 December 2021. The dividend will be paid on 25 March 2022 to Shareholders on the register as at the close of business on 4 March 2022. The ex-dividend date is 3 March 2022.

Any such dividend payment to Shareholders may take the form of either dividend income or "qualifying interest income" which may be designated as an interest distribution for UK tax purposes and therefore subject to the interest streaming regime applicable to investment trusts. Of this dividend declared of 1.75 pence per Ordinary Share, 1.65 pence is declared as dividend income with 0.1 pence treated as qualifying interest income.

[hpcg] 13/2/2022 10:56

footprint is pretty meaningless for batteries as the rent or land value is very small relative to the hardware put on top of it. TCO of the cumulative charge / discharge cycles is much more important than the name plate of the technology.

[jonwig] 13/2/2022 09:25

Irene - a timely article in yesterday's FT points out:

"Solid state technology is the next frontier in battery technology but, as Smith says, it has been coming “next year” for the past five years."

[irenekent] 13/2/2022 08:39

We need solid state batteries which will hold much higher charges for longer and have a much smaller footprint relative to present batteries.

[marktime1231] 07/2/2022 13:44

Tit for tat going on between GRID and GSF via rns.

Last week GRID said it has extended its deal with Arenko to use their system for optimising revenues across much of the GRID portfolio, something which came about from the acquisition of Bloxwich. The idea of getting the best return from assets obviously a good one, and no shame that GRID is employing an expert third party to do so. Is there? No concerns why it felt the need to announce this in public?

A response from GSF this morning to say that, thanks to someone called Modo Energy it can claim that "three of the Company's sites were ranked as one of the highest revenue generating assets per MWh". Unfortunate use of impenetrable language yet again, what do they mean exactly? And we cannot see Modo's report to judge for ourselves. But great that they felt the need to say something.

Getting to the truth will probably have to wait for hard financials or a truly independent commentary, but this is healthy competition from the look of it. Asset managers used to focus on the size of their assets and therefore the management fees they are earning, they are now squabbling about who is squeezing the best returns and competing to be the top income generator.

Good for investors, the leading managers striving to deliver the best income rather than waving the size of their asset growth at each other. We are income investors, how well income covers the dividend is what we are here for.

Not that we had much to worry about, revenues have been super for all sorts of market reasons, both companies trading in a purple patch and share prices at an extreme premium to NAV. Presumably because the (reporting of) NAV growth needs to catch up, and hopefully because revenues are continuing to exceed the base plan.

Still waiting to hear GRIDs strategy for long duration storage. Something about the next level and brand new markets would be good too, the prize as always is the USA where individual energy storage projects are bigger than the whole of GRIDs pipeline.

[frederickbloggs] 19/1/2022 14:59

Indeed, though I am hoping for a swift execution of new build by Harmony with their Tesla partnership. I bought at IPO and will hold. The other trusts in the sector look too expensive to buy more. I also hold GRID.

[petersw1] 18/1/2022 16:12

I'm watching HEIT, to see if it falls like GSF did. I'll be looking out for that sweet spot after the initial excitement has died away but before the targeted 8% yield is already being paid.
Unlike GRID it seems they didn't and still don't have any operational assets. Even GSF had a small amount operational in their seed portfolio.

[igoe104] 18/1/2022 12:16

UKW and Trig (wind turbines farms) both pay quarterly dividends and overall dividends of 5%. I hold both of them as well as Grid.

[frederickbloggs] 18/1/2022 11:07

You might wish to take a look at the very new Harmony Energy Income Trust. It has the same business model as GRID but is still trading around 100p launch price. I hope for good things once it gets its projects completed and in operation. Worth a look because I think the existing ITs in this sector are too expensive to buy now.

[davidbennett] 15/1/2022 10:17

Just discovered this and Gore Street - both seem like a great combination of decent income and solid longer term capital growth. A bit like house prices but much more liquid and reliable.

I've got to create an income as well as having an asset which provides capital growth and both these stocks tick all the boxes - so what's the catch?

I particularly like Gresham House as fund managers - does anyone know if there are any other renewable funds coming to the market with a decent yield?

Thanks in advance to anyone who will give me some of their time to help me with this

Cheers
DB

[marktime1231] 14/1/2022 11:48

You are right jonwig to be wary of project execution risks including input costs, we should not assume it will all be plain sailing and we should not ... perhaps as GRID are doing ... be celebrating our good cost control before the jobs are done. Persistent gleeful optimism is not a good idea. But they are now getting pretty experienced at this, and I am hoping that some of the inflation pressures are negated by having already done deals for the near pipeline. Rises in material costs are potentially offset by the overall decline in battery manufacturing costs in recent years, that is how Tesla see it anyway.

On balance I would give GRID the benefit of the doubt that the cost improvements, and so the NAV gains, they are looking at over the net couple of years are achievable. But they still need to be achieved.

[pavey ark] 14/1/2022 09:14

jonwig, are you suggesting that there will be a doubling of battery costs ?

Prudent viewing of prospects is to be welcomed but I think you are erring well beyond that.

[jonwig] 14/1/2022 08:24

Pavey - I hope you're right about cost control. But if one factor is 25% of whole, then doubles, it becomes 40% of the new whole.

(I am, of course, a holder herebut I'm always on the lookout for what can go adrift.)

[pavey ark] 14/1/2022 07:50

The battery costs are only c.25% of total installation costs.
The company have always said that they buy the best from reputable international companies and these come with guarantees.

Given their scale and experience I would imagine that efficiencies in procurement and construction offset (exceed ?)any of the above increases.