Gresham House Energy Sto... Share Discussion Threads

[nickrl] 05/8/2022 12:50

llef that site can deliver 20GWh GRID can barely muster 0.5GWh currently so at c 750k/MW that will need best part of 14.5B investment to match it so nearly 7 times the capital cost. Of course key advantage is it could be built out in a couple of years as long as materials for batteries are available. As Frederick says we really need to invest in Coire Glas on the same basis we just built Dinorwic 40 years ago for national strategic interest.

GRID share price going too well imv GSF/HEIT are both lagging behind by a widening margin. The main difference is they don't have so much capacity GSF or have none online yet HEIT but when the latter does this will inject more competition in the daily auctions and probably drive down the DC price. So whilst GRID are capitalising at the moment my view is this can't be taken as long term level on which to judge income to cover dividend so an increase is a way off still.

[marktime1231] 05/8/2022 12:02

And Iberdrola have recently gone live on an eight year E1.5B project to develop the 1,158MW Tamega complex in northern Portugal. It is run-of-river + pumped hydro really but they are calling it a gigabattery, based on the idea that the pumped hydro will store surplus energy from associated wind and solar farms.

[frederickbloggs] 05/8/2022 11:34

Absolutely agree with you on Coire Glas. But I reckon it won't get the investment. Lifetime of such infrastructure is a 100 years or more which makes it a bargain really. But nobody gives a monkeys about that kind of timescale. Only the Victorians made infrastructure investment like that.

[marktime1231] 05/8/2022 10:50

Well maybe they are going for another share issue soon. And why not, take advantage of the premium.

The issue of 103 million shares in May at 145p raised £150M. The smallprint at the bottom of the prospectus reminded me that the board had approval and intended to issue a total of 400 million new shares in the year ahead.

The prospectus also said they had a new strategy to acquire earlier stage shovel-ready ventures, having previously concentrated on near-live BESS, and this opened up a huge new pipeline including +4GW in the UK where they were in exclusive negotiations. This increases the lag between expense and income, but greatly enhances the NAV growth potential in years to come.

The limit on how many shares can be issued now is perhaps the ability to continue to cover the promised 7p dividend with income. Or while expanding aggressively do we not worry too much where the cash distribution comes from? The last quarterly report indicated revenue of 1.82p versus a 1.75p dividend. Since then maybe another 40MW site has gone live, but there are 103 million more shares to service.

Q2 dividend coverage and Q3 outlook will be interesting to read about then, when we get the next quarterly report, next week maybe? But even if the coverage isn't 100% I hope GRID don't hold back, raise capital and secure the opportunities available.

[marktime1231] 04/8/2022 12:19

GRID share price at 164p starting to look hot in anticipation of the imminent Q2 NAV report etc. Based on a firm declaration we can be pretty sure the dividend is being held at 7p this year so a 1.75p quartlery to look forward to, and we have already been guided to a NAV uplift to around 145p.

A 13% premium cannot be ignored, will they want to tap the market again, surely not so soon?

In which case a NAV beat and signal that it is due further strong advances in the months ahead? Or a teaser of handsome dividend progression next year?

[frederickbloggs] 02/8/2022 15:21

Flaws in the plan for hydrogen in the national gas distribution network -1 The carbon steel used in the gas terminals, high pressure gas network and the associated machines was never specified to resist hydrogen embrittlement.2 None of the gas turbines used across the transmission network can run on pure hydrogen, at the moment. Though Siemens, GE, Mitsubishi etc... are trying.3 The centrifugal compressors (turbine or motor driven) can run on hydrogen in theory but the compressor discharge pressure is proportional to the gas density. So is far, far lower compressing hydrogen than it is methane using any given machine. You need more compressor stages to achieve the required discharge pressure on hydrogen than you do with methane.So, apart from completely redesigning and rebuilding the UK's gas distribution network from start to end. Yeah, there's no problem running the system on hydrogen........

[marktime1231] 02/8/2022 13:25

Despite lots of promising ideas (potential, kinetic, thermal, chemical, electro-chemical) not convinced we know which solutions for long term storage would stand the technical and economic tests over 60+ years. Except pumped hydro. The economic case is made for Coire Glas and has been for a decade, it is just really up-front expensive and a very long term slow payback whereas SSE are now a fast buck horse-trading company. And squeezing the government to make it a sweeter venture.

I do hope that GRID expand their horizons from short duration balancing and peaker storage to longer duration. We certainly need to graduate from 0.5-1hr to 2-4hr solutions, possibly hybrid lithium + flow battery.

My guess is the UK will end up trying to split water in to hydrogen and store it like we used to accumulate natural gas reserves or stockpile coal as a Winter energy buffer. Adjust the storage, CCGT generators, pipelines and domestic systems to run on an increasing proportion of hydrogen mixed with natural gas.

[frederickbloggs] 02/8/2022 07:54

I agree. At the moment it is very hard to see a time when the UK fleet of baseload CCGT stations are decommissioned. While we have winter periods of high pressure with deeply cold temperatures and almost no wind across the entire country, then CCGT (and nuclear) are required to cover baseload. That is not going to change. Ever.What CAN be decommissioned if we invest properly in long term energy storage are the open cycle gas turbine and diesel powered peak loppers. However, the country hasn't yet scratched the surface of long term storage.SSE are struggling to make the numbers add up for Coire Glas pumped storage, the only known suitable very large new build site we have in the UK. Meantime, we desperately need Highview and Storelectric to fast track large scale storage facilities strategically across the country. I am not at all sure that the people who make energy policy decisions understand this.

[nickrl] 01/8/2022 23:10

Frederick totally agree and NG recognise that long term storage is going to be needed the closer we get to net zero but with plenty of CCGTs available currently they have a fall back to cover longer wind lulls. There main focus is managing frequency deviation when renewables are dominant generation which is GRIDs target market but Highviews time will come.

[frederickbloggs] 01/8/2022 21:35

Thanks. The dearth of suitable pumped storage sites and the sheer mind boggling capital required counts heavily against pumped storage. But yes, it's still the best large scale option we presently have. There's lots of reasons why cryogenic air storage and compressed air storage are attractive alternatives. I don't actually know GRID's attitudes towards truly large scale energy storage. But it is a very overlooked and urgently needed piece of the jigsaw if we really do triple the amount of offshore wind generation as presently planned. Without very significant investment in grid scale long term energy storage the UK has no chance of decommissioning open cycle gas turbine peak lopping generation.

[nickrl] 01/8/2022 21:00

Frederick GRID have stated they aren't interested in long run storage probably because NG haven't got a specific product for that yet they can monetise. Highview round trip efficiency is 55% pumped storage is 75% so not as competitive but in the long run storage is going to be needed for net zero unless we are going use CCGT for fast response.

[hpcg] 01/8/2022 20:29

marktime - there are other gravity technologies people are looking at. Mine shaft drop is one. Its also has a very quick frequency response. Also let's not forget that it isn't just about replacing electricity generation but gas heating and surface transport too.

[frederickbloggs] 01/8/2022 16:42

marketime1231, I am a retired Chartered Engineer who specialised in cryogenic gas plants. Trust me, it works. The Highview Power process in simply the front end of an air separation plant. There's thousands and thousands of them out there running 24x7. It truly is off the shelf standard technology. A clever reinterpretation of a very old technology.

[marktime1231] 01/8/2022 10:52

Its a bit early to call "peak renewables" and a "glut" isn't it?

The current programme is to keep adding wind and solar aggressively up to about 2050. Remember that the load factor on wind is only 40% and just 10% on solar. Even with 60GW wind and 30GW solar on the faceplate we will be struggling on calm cloudy days.

So yes at peak times we will have surplus, call it a glut if you will. As well as the ability to capture some in to 2-4hr BESS for balancing and the capacity to cover the daily peaks, where do you accumulate 5-10 days of surplus generation in to long duration storage as a buffer?

The only proven grid-scale technology right now is pumped hydro, which is slow to build and very expensive, and it helps if you have the right sort of geography. I have studied the idea of cold liquified compressed air and do not get it ... "ambient air" is a mixture of many things which all behave differently.

Giant flow batteries maybe. Liquified hydrogen maybe.

[scruff1] 01/8/2022 07:03

Maybe should have said that the Telegraph A P-E article included a section on Highview Power - which was my reason for posting

[jonwig] 31/7/2022 19:47

Fred - it might even be a case of floating off a new venture. (I'd be applying!) If GRID got involved with new technologies like these, they'd make no income and would need to carry them for a few years.

Gresham already manage the Baronsmead and Mobius VCTs, so that's a possible route.

[scruff1] 31/7/2022 19:25

Britain will soon have a glut of cheap power, and world-leading batteries to store it

Article by Ambrose Pritchard Evans - Telegraph -28/7

[frederickbloggs] 31/7/2022 19:00

Sorry, it's Highiew Power. Not Highfield Power. Apologies.

[frederickbloggs] 31/7/2022 18:59

Perhaps Gresham House are all over it, but I reckon the next really big opportunity is in true grid scale long term energy storage. There's a couple of players spring to mind. Highfield Power who are in liquid air energy storage with a few projects underway. And Storelectric who are in compressed air energy storage. Storelectric look to be struggling to get their first plant built and have been trying for many years without actual success. Yet. As far as I know, neither of those companies are on listed stock exchanges yet. The potential looks absolutely massive to me.Seems a logical extension for GRID to get into longer term grid scale energy storage at some point in the near future. With the planned huge increase in off shore wind generation this presents a massive opportunity not to be missed? Without this kind of energy storage I think we stand little chance of decommissioning gas turbine or diesel peak lopping power plants.

[scruff1] 31/7/2022 15:46

Thanks for the responses fellas. Appreciated and more than I expected. Great depth of understanding shown nickrl. Thanks for sharing.

[nickrl] 31/7/2022 14:26

Scruff this isn't an easy company to unpick at the financial level as most of the subsidiaries are SPVs whose accounts aren't consolidated at group level. Look at the operating subsidiaries and most make a loss (high depreciation and admin charges from Gresham) so don't pay a dividend but throw off loads of cash. Gresham House, on the few subsidiaries i sampled, are also collecting interest payments at 8% on the loans they have made for at least 10 years. This was worth 22.5m to GRID rest of income is derived from changes in the valuation of the subsidiaries. Dividend needed 24m last year and will be over 30m in current year and thats as long as they don't issue anymore shares. They will have the benefit of interest payments on loans made to acquire or invest in the new projects under build to fund the increased dividend cost. As long as BESS market doesn't get saturated, i believe it will over next 12-18mths, but after that the allocation round 3 offshore wind farms will be fully commissioned and thus frequency response services will need to be considerably higher than now and this should push up the MWh rates for dynamic containment etc then dividend increases are more likley.

[jonwig] 31/7/2022 12:24

If you've used the ADVFN "financials", I'd advise against it.

eps is certainly 4.57p, but income is in two parts, "Net gain on investments at fair value through profit and loss": £22.5m, and "Other income" £0.3m.
The point is that actual cash generation is hidden within the operating subsidiaries, so is included in "Net gain on investments at fair value through profit and loss".

These numbers come from the accounts to 31/12. Best always to go straight to the primary source.

[scruff1] 31/7/2022 10:12

Anyone please educate me. Why in the financials is the Turnover PS a smaller figure than the Earnings PS rather than the other way round? Surely EPS is based on the bottom line