Gresham House Energy Sto... Share Discussion Threads

[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."

[topvest] 23/7/2023 19:58

No. The buyer is backing the existing management team.

[speedsgh] 21/7/2023 13:56

Read the rns...https://www.londonstockexchange.com/news-article/GRID/statement-regarding-investment-manager/16044264

[willywonka12] 21/7/2023 08:57

Gresham house sold will this afect Grid

[igoe104] 19/7/2023 14:21

Write up in forbes magazine.

[marktime1231] 17/7/2023 12:36

A distraction perhaps.

[cruelladeville] 17/7/2023 10:50

All cash takeover of Gresham House announced today. No impact at GRID?

[marktime1231] 04/7/2023 18:08

Not just storage which is missing. Over the last decade we have destroyed about 20% of demand over the grid, an average of 6GW, through a combination of efficiencies, households economising in response to prices, increased self supply from solar + battery systems, and ongoing decline in heavy industry.

It would be timely if someone brought forward plant which could be scheduled to draw load from the grid and make use of intermittent surplus, things like electrolysers to synthesise hydrogen from water or gasifiers to make methane from waste, zero-carbon raw material processing, systems which sequester carbon.

How about we rebuild industry in Britain, there has to be more to us than marketing and insurance, and there has to be a constructive outcome from our massive wind farm programmes. Or will there be resurgent demand for domestic consumption, huge home batteries, EVs, immersion water heating (if someone had offered me free electric last night that is what I would have switched on instead of firing up the boiler), applique heat pump / air conditioning systems and er um ... The idea that we can export it is flawed.

Meanwhile another month goes by and no news from GRID about commissioning its constipated pipeline. The multi-project deal with Statera is proving to be a dud.

[cruelladeville] 04/7/2023 15:51

Well, the extended duration of negative power prices on Sunday is a direct result of government policy encouraging renewable generation whilst ignoring the need for energy storage. Obviously, GRID is part of that solution but the energy storage industry is in it's infancy and storage duration of available facilities is way too short.Volatility of electricity prices is exactly what GRID needs to be profitable though.

[davebowler] 04/7/2023 09:01

Liberum-
Negative power prices returned on Sunday
Analyst: Joseph Pepper

Event

Last Sunday (2nd July), the GB half hourly day-ahead power price was negative for c.15 hours, one of the longest periods of negative power prices in the history of the GB electricity market. This was a result of high generation due to strong solar irradiation and wind speeds across Europe combined with low power demand that is typical of a Sunday (especially following energy-saving initiatives since the Ukraine war).



Liberum view

Short-term negative power prices are not a new phenomenon in power markets and are an increasingly common event as the renewable build-out continues but the period of time that power prices remained negative on Sunday was exceptional. The event is also unusual in a year which has had lower than anticipated volatility due to an overall reduction in electricity demand across Europe, although we do note that monthly price spreads have in general been increasing in recent years as the GB grid becomes increasingly intermittent.



Negative power price events provide lucrative trading opportunities for BESS assets (GRID, GSF, HEIT) which can be paid to charge before being paid again to discharge power once markets return to positive pricing. While clearly less positive for merchant generators we note that prices did revert to c.£70-80/MWh which is the YTD average and comfortably above pre-Covid levels. Furthermore, renewable generators with CfDs continue to be paid the CfD strike price for up to 6 consecutive hours of negative power pricing and still receive REGOs and as such can operate profitability in the short-term despite negative power prices.

Negative power price events are inefficient for National Grid ESO which has to incur balancing costs to manage excess supply and demand in the grid. Such balancing costs totalled £20m on Sunday, roughly 15x the average c.£1.3m daily cost paid between 2017-2020. Spiralling balancing costs are a focus of increased regulatory and government scrutiny.

However, negative power prices are not exclusively a GB market issue and indeed we note similar weather patterns in Europe on Sunday resulted in record-breaking negative prices reaching c.-500EUR/MWh in some European markets.

Private Equity