Gresham House Energy Sto... Share Discussion Threads

[marktime1231] 21/6/2023 11:53

Oh dear, it seems diversifying to invest in US projects such as Iliad in California does not solve GRID's problems. This report observes mounting supply chain and connection problems over there, the issues which are blamed for the long delays in delivering its UK portfolio.

[cruelladeville] 16/6/2023 07:25

Absolutely. At that scale you need to build a few more Dinorwic style pumped storage plants. We haven't got the geology/geography though. And nobody wants to spend that much money. Not on nuclear plants either. All along with this net zero stuff, all well and good building more and more wind and solar generation. Lack of true grid scale storage is something nobody seems to want to hear about. Even now.This morning we have just 870mw of wind generation in total on the grid. There's still 380mw coal generation on the grid this morning. Let's call it progress.

[nickrl] 15/6/2023 23:24

2nd time this week coal been called on the system at short notice. Partly down to a nuke dropping off and partly down to CCGTs on summer maintenance. Thing is one unit of coal at drax can do 660MWh thats a lot of battery power which just can't be replicated currently.

[cruelladeville] 15/6/2023 21:33

As a matter of interest, I just checked and preselected have about 480mw of coal fired generation on the grid. Almost no solar ( of course ) and 1700mw of wind generation. Coal fired generation. In summer.

[cruelladeville] 15/6/2023 20:25

Indeed you're right. The older coal fired units were commissioned in 1974. So they're just coming up to 50 years old. What a way to run a supposed 1st world economy. For completeness, the newer units at Drax were brought on line in 1986.And regarding HEIT, yes I absolutely agree. They could scoop the big money with their 2 hour duration facilities that will still be running when GRID is exhausted. Mind you, by then we'll highly likely have widespread loss of power regionally anyway. We might need battery storage and diesel generation just to bring other generation back on line.

[nickrl] 15/6/2023 17:24

@CdV Drax is the youngest of the coalies and didn't run last winter but now West Burton is being demolished DNEZ are in blind panic mode. Blackouts wont go down well in an election year not that any other party has a sensible plan that will keep the lights on under worst case scenarios something the CEGB successfully did outside of the 87 hurricane. My take is HEIT could yet become the star here with its 2hr duration batteries to exploit the arbitrage and be of use in the balancing mechanism. The long run issue here is they don't go mad on over-cycling them to make money now but degrade them quicker.

[cruelladeville] 15/6/2023 14:53

I think GRID should have a good winter. Government is reportedly talking to Drax about preparing their coal fired units for operation in the coming winter. Yet Drax is already decommissioning them. You couldn't make it up. The country is dependent on 60 year old coal fired dinosaur power plant to keep the lights on next winter. It's looking like winter 23/24 we will be heavily reliant on the interconnectors to Europe. Good luck with that when we have a high pressure weather system, no wind generation, little solar generation, minus 10 degrees ambient in Jan/Feb. Power price arbitrage opportunities will be extremely lucrative. I expect.

[marktime1231] 15/6/2023 11:41

I would not take any comfort from GSFs report, they have been undershooting there for years, same issues of slow progress and struggling to cover the dividend despite recent price spikes, their share price has sunk below IPO price. Talk without the walk.

Having maximum capacity available going in to last winter, as per the plan, to take advantage of the extreme pricing was a one-time opportunity. Getting in position to take advantage of future opportunities, albeit milder ones, is still a possibility. There is still a business case for more battery storage, especially longer duration and coupled with solar, eg where there are already grid connections.

Unfortuntely while GRID chase new developments and the funds needed to expand, and continue to suffer pipeline delays, the negative jaws between income and dividend are going to get wider. I would not be surprised if this retreats all the way back to 130p and I'm not sure if I would be a buyer even then.

And no I am not just doing GRID down or making excuses to sell, I was until recently a huge fan and had faith in the exciting prospects ahead. We have been let down, I am disappointed and angry.

[nickrl] 15/6/2023 08:13

@waterloo GORE are much more diversified around the globe so won't feel the effect of the saturation now appearing in UK mkt. Batteries are here to stay but with material price increases driving up construction costs as well as delays to commissioning the mkt may come better into balance during next year as the next wave of windfarms come online.

[igoe104] 15/6/2023 08:02

I'm afraid we are a environment where investors are looking for any excuse to sell.

[waterloo01] 15/6/2023 07:47

Good results from Gore St this AM. NAV up, revenue up and divi up.

No mention of capacity price issues.

[nickrl] 14/6/2023 21:30

@marktime those conditions will drive demand for more ancillary services from ESO as less synchronous generation on the system the more batteries need to be called on the system to manage frequency swing. That said the fundamental issue now is the ESO is being swamped with bids for ancillary services so GRID adding another 200MW is going to create a race to the bottom on auction pricing. There is still big daily swings on half hour pricing though for them to boost income through trading but without PPAs they have to trade in the balancing market and every other battery wants a slice.

Reality was that last years power spike was an aberration albeit the long run price will now be higher but then so is the cost of building these. share price got ahead of itself last year so pushing back to having enough margin for lower run power prices.

[marktime1231] 14/6/2023 16:31

A month ago we were promised commissioning of 4 projects, mostly being built by Statera, delivering 200 MW into the live portfolio within "a couple of months". No news. It is the erosion of management cred and the continuing failure to execute the plan, original or revised, which has predictably driven GRID to a discount. As you say market prices are slumping, network demand keeps setting new record lows, we are tapping in to surplus hydro from Norway and surplus nuclear from France.

Not sure where this will end, but right now we don't need to hear about expansion strategy or reward schemes it all rests on generating income.

[waterloo01] 14/6/2023 16:06

nope. i see they have some negative pricing in some Nordic countries esp.

[cc2014] 14/6/2023 14:02

The market is not liking the combination of falling power prices and increasing cost of debt.

[marktime1231] 25/5/2023 21:24

Well it is hardly a vote of confidence to be so far short of target, and is way below the funds required for the proposed projects. Or have they trimmed the pipeline. Oh dear.

Maybe a pause while delayed income catches up would have been a better strategy after all. Still no news on commissioning progress.

Hard not to conclude this is a terrific venture going wrong.

[speedsgh] 25/5/2023 18:17

£50m raised against a target of £80m. Not too shabby in the context of the current awful fundraising environment.

Result of Issue and Total Voting Rights -

GRID surprises analysts with £50m raise to fund US expansion -

[marktime1231] 19/5/2023 12:24

That was a really good summary of broker perspective. Some on the sell side saying this will be an attractive diversification and lowers the risk of long term income. Combining solar with longer duration battery storage an obviously good strategy. Others sharing my disappointment asking where the rest of the money will come from to implement the shrinking and delayed portfolio pipeline. You have to agree with the conclusion that expenditure has run too far ahead of income, mostly because of the extra time it is taking new projects to complete. Should fund raising and portfolio expansion pause to allow income to come through?

Yes if you are income investor, let projects catch up to put some shine back on the yield.

No if you are a portfolio manager getting paid according to AUM and doing deals.

What if you are a NAV growth trader or share price speculator, where do you think things will turn in the short term? What would the effect be of having to borrow to fill the funding gap, not just on income but on perceived value? If and when delayed projects go live will NAV momentum be restored?

Well unusually it is a week-long placing so you would think that for the time being the share price will be held at the offer price of 155.5p. But no, there are open market buyers at 156-156.5p. Go figure! Maybe there is more appetite for GRID than I expected, with punters expecting the share price to return to a premium shortly.

[cruelladeville] 19/5/2023 10:50

Offer to shareholders via Rex at 155.5p doesn't look much of a bargain does it?

[speedsgh] 18/5/2023 16:12

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 15:33

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 12:45

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 11:53

£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 12:38

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 08:31

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.