Gresham House Energy Sto... Share Discussion Threads

[speedsgh] 18/5/2023 15:12

GRID tests fragile market with £80m fund raise for US expansion -

... Analysts mostly welcomed the fund raise, saying Iliad offered good diversification and was in line with a broadening of the remit last year.

However, there is a risk of ‘cash drag’ should GRID decide not to proceed with the project after doing due diligence and have nowhere to invest the money.

Winterflood’s Emma Bird said: ‘We believe the fund’s diversification into the US is a positive development and enhances the fund’s appeal.’

Numis analysts Gavin Trodd and Colette Ord said: ‘Management had flagged its intention to invest overseas and given GRID’s already notable market share of the UK battery market we can understand the logic. It will be interesting to see if investors are happy to support the new assets with additional equity.’

Stifel’s Sachin Saggar was concerned at the timing of the fund raise as wholesale revenues in the UK were falling. He suggested GRID should pause all developments in UK until rates of return improved. ‘Until there is better visibility on how GB assets achieve a sustainable revenue stream, we think requesting additional capital is fraught with risk,’ he said. ‘In our view, there is a better way.’

Christopher Brown of JPMorgan Cazenove said the issue was effectively capped at £84m by the trust’s annual 10% limit for new share capital. He said the £80m target left a £55m funding gap that could be filled by the project taking on debt, which given the long-term contracted cash flows might be easier to do than in the UK...

[topvest] 18/5/2023 14:33

Good posts. I have just taken a small position in GRID now that this inevitable placing has been announced. I have held Gresham House plc from the original conversion from a property company. They have experienced some delays here of late, but they have made good progress overall. As for having SPVs that is quite usual - all such assets are held in SPVs across the industry. TRIG and others do exactly the same.

[speedsgh] 18/5/2023 11:45

FY22 results released on 6/4/23:
"Operational capacity is expected to reach 1GW in 2023 and c.1.5GW in 2024"

In today's placing announcement:
"GRID currently owns 590MW of operational projects and had EBITDA of GBP48.8m in 2022. In addition, GRID has 437MW of fully funded projects under construction in Great Britain targeting commissioning by the end of 2023, which will take operational capacity to over 1GW (1027MW; up c.80% year-on-year... GRID has identified a further 390MW of pipeline expected to commission in 2024 which it is now seeking to prioritise."

590+437+390=1417GW

So expected operational capacity in 2024 has reduced from c.1.5GW to c.1.4GW?

[marktime1231] 18/5/2023 10:53

£80M for future development at 155p, including a first venture in California. And how much to cover extra costs associated with delivery problems? More investment in early stage developments, not going back to safe but expensive acquisition of operational connected assets, so further exposure to execution risk. Hang on though, can we hear something reassuring about progress with commissioning of fully-funded but delayed 2022 and 2023 projects first, please and thank you. Are you going to hit 1.027GW in 2023 (revised down from 1.337GW at last fund raising) noting the operational portfolio is still stuck at 590MW?

Previous issues have been snapped up, it will be interesting to observe the institutional appetite and any retail demand.

[nickrl] 13/5/2023 11:38

Battery market is saturated in the short term despite commissioning delays and will only get worse over next 18mths but then there will be next wave of wind generation on the system so ESO will need more frequency response so pricing may come back. Also looking at bessanalytics website its the 2hr duration batteries that are consistently in the top 10 for revenue and GRID don't have any of those yet. Delays are a function of the dash for batteries worldwide and the DNO's are swamped with connections needed at 11kv and above running well above normal trends.

Ultimately i don't like GRID as teh truth is hidden in dozens of SPV's who publish results at least a year out of date and majority of them are below threshold for proper accounts so you can see very little of the truth. This is atypical financial engineering which may suit some but not me.

[mammyoko] 12/5/2023 07:31

Any reason for this to trade on a premium now they have admitted

The market backdrop for energy storage in GB has reached a watershed moment. As long-expected, frequency response services have now commoditised, and prices have reached low levels.

Now they say they are going to focus on trading - hence much more volatility in earnings

GRID will focus more meaningfully on trading as well as earning a lower proportion of revenues from Frequency Response and continuing to earn contracted Capacity Market revenues.

Plus, they continue to miss promised targets for commissioning

High energy prices have pushed down demand. GRID are assuming that demand will rebound now that energy prices have dropped. But has some demand been permanently taken out?

High gas prices in 2022 have led to much higher electricity prices for consumers driving electricity demand down and it is this, in our view, that has driven lower volatility in electricity prices in recent months.

I did hold and sold out this morning. I still think that GRID will do well over the medium term but I see it trading below NAV in the short term until it is clear whether they can make up for lower revenue from frequency response by increasing revenue from trading and whether volatility returns. I would also like to see some improvement to delays in commissioning.

[speedsgh] 05/5/2023 10:04

Dividend Declaration -

Gresham House Energy Storage Fund PLC (LSE: GRID) is pleased to announce a dividend of 1.8375p per Ordinary Share for the period from 1 January 2023 to 31 March 2023. The dividend will be paid on 8 June 2023 to Shareholders on the register as at the close of business on 19 May 2023. The ex-dividend date is 18 May 2023.

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 1.8375 pence per Ordinary Share, 0.3375 pence is declared as dividend income with 1.5 pence treated as qualifying interest income.

[willywonka12] 03/5/2023 09:49

Always delay in news

[cruelladeville] 02/5/2023 15:24

Dividend declaration day tomorrow and ex dividend on 11th May. Looking forward to more news from GRID.

[cruelladeville] 11/4/2023 18:19

Nice share price appreciation here today. Can't see any news from GRID?

[cruelladeville] 07/4/2023 06:58

Positive commentary from Tempus in The Times today. Continuing intention of long term hold of GRID here.

[nickrl] 06/4/2023 22:15

Its odd that HEIT are retreating whilst GRID are advancing

[jonwig] 06/4/2023 16:13

marktime - thank you or your detailed response.

For myself, I had little time to go beyond the headlines, and was perfectly satisfied with what I read. I was expecting mentions of delays (the word occurs 26 times) and wasn't fazed.

As far as grid connection goes, delays are well-known, and maybe there's consolation that other countries experience same and more. (China!)

There will be some analysis before long (Edison, I think, and some others - not, I admit, independent.

[marktime1231] 06/4/2023 12:07

Redefining "excellent"?

More like terrible. Still only 590MW in operation, versus the 1197MW planned according to the report last year. Less than half a job. Rapidly drawing down debt eg at £50-60M per quarter, available funds must be getting low. More debt or dilution anyone? (Compare this to UKW for example, acquiring new assets from surplus cash flow while indexing the dividend with inflation). How can you / they be "pleased"? The named two projects, already miles late, are suffering further commissioning delays, something they couldn't see or didn't want to report in an update just four weeks ago. What does "close" mean, last time they said "imminent" it was several months not weeks away. So how can you believe anything they say about future expectations? Surely a significant chance GRID won't deliver the revised plan of 1GW operational by year end.

GRID has missed out on the bubble in energy prices, a massive opportunity squandered. And now prices are subsiding. Being intensively focused on developing early stage projects to drive up NAV has backfired versus paying the price to acquire operational capacity and maximise the income opportunity. GRID are not being frank, they are not delivering. The first dividend increase for three years, and even that is -5% on inflation! I suspect there is not much net NAV improvement to look forward to either, less than the premium in the share price anyway.

As I have said before it doesn't matter why projects are late, nor who is to blame, the damage to income has been done and is being done. The share price does not reflect the execution risk, the premium is unfounded.

[nickrl] 06/4/2023 09:14

According to www.bessanalytics.com/ GRID operated sites have been falling down the list for some weeks now and its long duration assets that are making the running. My take on this is that GRID are banking on volatility to drive trading opportunities but the ESOs mandate is to avoid that and market dynamics look far more stable in 2023. So i reckon we will see setbacks during the year and with no big wind farms due online till 2024/25 now it might be a waiting game.

[cruelladeville] 06/4/2023 08:17

Very encouraging. One to tuck away for the long term.

[jonwig] 06/4/2023 06:26

Excellent results, I think. Maybe the main point:

· Performance mostly driven by revaluation of new projects and increases in third-party revenue forecasts.

NAV 155.51 at 31/12, expected to increase by 5.5p in Q1.
2023 dividend expected to be 7.35p (5% increase).

[jonwig] 18/3/2023 17:44

Edison brief flash note:

[jonwig] 15/3/2023 06:42

Thanks, interesting article. But is the discrepancy wholly due to geography? And if so, why so stark?

[willywonka12] 14/3/2023 22:26

hxxps://www.energy-storage.news/gore-street-and-gresham-house-funds-grow-nav-per-share-in-2022-by-contrasting-rates/

[nickrl] 13/3/2023 14:29

@marktime they say nothing that BESS revenues collapsing in Q1 and with more units entering the market its getting saturated. Also quite frankly as rates were very high during 2022 it compensated for lack of commissioned sites.

[marktime1231] 13/3/2023 13:41

Well that trading update, a month later than last year, confirms my worst fears. GRID no longer a runaway success story. Compare it with the trading update and outlook from Feb 2022 ...



For example Coupar Angus 40MW which they announce has only just gone live was due 22Q1. A whole year late. If you look at the pipelines then and now, starting with 425MW at the beginning of 2022 we should have had 890MW live by end 2022 and 1,127MW through 23Q1. Instead they are reporting 550MW at end 2022, 590MW now and projecting 1GW by year end. Except there must be doubt about the ongoing ability to deliver. No matter what is to blame, the plans were and are not reliable.

How this has affected revenues and ebitda, should/could have been versus actuals, is harder to say and they don't. A +20% improvement in net revenues should have been +100% or more? Financial performance to some extent saved by the bubble in energy prices to make up for terrible operational performance. For sure a huge opportunity has been missed.

A 5% dividend increase is too little too late, it reveals the weakness in financial performance. And I suspect after a terrific surge last year there is relatively modest NAV progress to look forward to from here. No longer a premium buy. Saying there is jam over the horizon. Not much to be pleased about as investors.

Out, and staying out.

[speedsgh] 13/3/2023 08:43

Trading Update -

~ Over 20% like-for-like growth in underlying portfolio EBITDA in 2022

~ Significant increase in expected operating capacity to 1GW in 2023 to drive growth in NAV and EBITDA

----------------------

2022 highlights

§ Full year EBITDA of the underlying portfolio exceeded £48mn, a like-for-like increase of over 20%.

§ 7p dividend to be paid in respect of 2022, covered 1.3x.

§ 155.5p per share unaudited NAV as of 31 December 2022 (31 December 2021: 116.86p).

§ Unaudited NAV total return of 39.1% in 2022 and 93.2% since IPO, representing an annualised return of 17.2%.

[continues]


----------------------

2023 outlook

§ Q1 NAV per share to benefit from incremental project revaluations of +3.3p.

§ Operational capacity is expected to reach 1GW in 2023 and around 1.5GW in 2024, representing growth of 80% and 170% respectively compared to capacity as of 31 December 2022. This is expected to drive NAV and EBITDA growth.

§ In light of the growth in EBITDA from increased operational capacity in 2022 and expected in 2023, the Board intends to pay a dividend of 7.35p per share for 2023, a 5% increase over 2022. The Board will periodically review the dividend policy to maintain a competitive dividend yield while also ensuring that dividend cover remains strong.

[marktime1231] 28/2/2023 15:48

The stagnant dividend and the doubts I expressed about execution and management have been gnawing at me, the premium no longer looks justified. I decided to crystalise gains this afternoon. GRID could excel again so good luck to those of you with the nerve to hold on.

[davebowler] 28/2/2023 10:29

htTPs://www.edisongroup.com/research/powering-on/31990/