Gresham House Energy Sto... Share Discussion Threads

[cc2014] 01/2/2024 08:35

I do not wish to be picky but I will.

1. Some of HEIT's income is from capacity contracts that are already in place at fixed prices. Same with GRID. The spot price is irrelevant for these. I don't know about HEIT so much but some of GRID's would have had 15 years on them when started. One would have to look up the details.

2. If you look at what HEIT are earning off their batteries it is more than the average. They are top of the list for all providers. Unsurprising as their batteries are the newest.

Having said all that Jefferies point remains value over the gearing. It's too high an not being managed.

IMHO any project in this sector that is not under construction needs to be binned now unless the owner has already won a capacity contract for it.

[spectoacc] 01/2/2024 08:18

Jeffries came in for a lot of stick but hats off to them.

[topvest] 01/2/2024 08:15

What will the NAV per share be on the year-end valuation, I wonder? Maybe not anywhere near as bad as the share price collapse! 100-120p would be my guess.

[topvest] 01/2/2024 08:13

Fortunately I only have a small position here, but Gresham House have really messed it up. It will be interesting to see how Ben Guest spins this disaster at the presentation. It looks like they have given up on the Californian project as well - this was ill conceived from day 1. I wonder whether they can sell it and how much they have invested so far? HEIT are possibly slightly better placed as they already have 2hr duration batteries, which is what GRID should have built initially. Nevertheless, the sector is on its knees and will therefore struggle to recover for a few years. Lack of dividend cover was the warning sign...don't invest in renewable energy if the dividend is not well covered.

[igoe104] 01/2/2024 08:04

Looks like somebody has leaked some information in advance of dividend cut , poor show from the management..

[1c3479z] 01/2/2024 07:32

Question is are we at the nadir of the market for Battery storage and the ESO initiatives outlined will increase the opportunities in Feb, March and over the summer?

[spectoacc] 01/2/2024 07:26

Wow, yes - exactly what I was going to copy/paste.

"...Recalibrate..", lol. Shareholders have been recalibrated..

Surely there's huge question marks around yesterday's massive fall ahead of this morning's t/s.

And where's the same thing from HEIT?


Edit - seems to be some smoke & mirrors, they're stating they'll use the missed divi money to buy back shares instead. Yet the missed divi is because the financials have turned bad, the business model is currently structurally challenged, and they have a clear need to preserve cash.

From what I can see, it's the retrenching on CapEx/intention to make some sales that enables a small buy back. Cutting the divi is a desperate measure for GRID.

Feel for those caught out by the fall yesterday, which is when this t/s should have appeared.

[nerja] 01/2/2024 07:11

Looks like another bath,

Dividend policy - Given the recent difficult revenue environment, the Board has decided not to declare a dividend for Q4 2023. In terms of the dividend for 2024, if the current revenue environment endures, it will be challenging to generate the cash required to cover the dividend this year. As such, the Board intends to recalibrate the Company's dividend target for 2024, as well as the Dividend policy on an ongoing basis to better reflect the predominantly merchant nature of the Company's revenues. A further announcement in this regard will be made as soon as possible and not later than the announcement of our Annual Results.

[nickrl] 31/1/2024 14:44

@CousinIT BESS can and do participate in a number of services generating income. All of them need the owner to pay (most of the time) to charge up for the export services of the wholesale market which is where Guest was angling at i believe. This is in their control if they have a counterparty who wants to purchase electricity. The other two income streams are t(i) Balancing mkt which as CC2014 says has been improved to drive more utilisation of BESS over CCGTs but early indications aren't that positive that incremental revenue will be increasing anywhere like Guest suggested. However, to be fair the is the first change of many which will all improve BESS participation (next upgrade is Easter 24). Then (ii) there is ancillary services which were a real money spinner 18mths ago but has been commoditised by the ESO and no BESS operator is making decent money anymore.

As many have said the build out of BESS is pretty massive currently although the income issues afflicting GRID/HEIT will be same for many other operators so we will see whether there isn't some adjustment on the pipeline.

I dont have a crystal ball but Guest has got something nearer to it and the silence from Gresham and Harmony isn't helping confidence.

[cousinit] 31/1/2024 13:58

I re-listened to the Money Makers podcast interview with Ben Guest from November and reviewed the fund reports and factsheets over the last few days.

Ben keeps alluding to other potential, contracted, income streams in those. Could that be something along the lines of large electricity users contracting batteries to discharge when they would otherwise be called on by the grid to reduce consumption? Not claiming any insight whatsoever here!

[cc2014] 31/1/2024 13:36

One of the impacts of the new bulk dispatch system (which GRID said would make them more money in their last RNS) is that the number of dispatches has doubled but the volume has increased just a bit, 8% for the first week and that's all the data I have.

So, instead of routing to a small number of batteries about 8% more volume is being routed to double or in some cases 4 times as many batteries. My guess, because I don't have any detail on the information is that under the old system the volume was routed (through a manual process) to the batteries that had been around the longest (and that was GRID as first mover.

Now, I suggest some of the volume that was being routed to GRID is now being routed elsewhere with HEIT and others with newer installations being likely beneficiaries.

So, perhaps the pot got bigger, but GRID's slice of it got smaller.

I am kind of fitting the facts here to the share price reaction as my hypothesis whilst based on some facts could do with more evidence. For sure though GRID is faring worst.

[cousinit] 31/1/2024 13:32

I guess we are more in to the realms now of what is realisable NAV vs near term earnings. Rightly or wrongly, have dipped my toe into the water here.

[igoe104] 31/1/2024 13:32

I've been intouch company, judging by the way the emailed was worded, things aren't as bad as things seem.

[nickrl] 31/1/2024 13:29

@brwo349 thats not guaranteed remember, unlike wind, these still have to buy the electricity to charge up and find a buyer at peak periods with enough of a delta between the two to cover the round trip efficiency and operating costs.

[mr george stobbart] 31/1/2024 13:23

It is managed by Gresham House a well known ponzi

They don't have offices in the uk, and their legal seat is a PO BOX in hong kong in a demolished building

[brwo349] 31/1/2024 13:22

I bought sone at 59.5p. Yes 59.5p.

This company has to be highly operationally geared so when power prices are low enough then profit disappears but then any increase in power prices goes straight to the bottom line.

[cruelladeville] 31/1/2024 13:07

I would but I think this could easily drop by half again. With a company news vacuum, there seems no support here at all.

[brwo349] 31/1/2024 12:16

No end in sight to this absolute bloodbath.

Is anyone else thinking of just buying a few for no other reason the fall has been so big and it is due some kind of a bounce back?

[dickiehh] 30/1/2024 23:19

Wow, down from 110p to 65p in a month! And no news after the 15th December where the Board say it's pleased with the new OBP and Ben Guest points to "higher revenue opportunities"So, what has changed? Surely the Board should say something?

[marktime1231] 29/1/2024 17:06

Hmmmn, no response from GRID to the perception circulating that revenue has tumbled and there is barely any net income to cover any dividend. Nothing more on delayed sites, nothing to follow the December announcement that participation in the ESO balancing of the peak demand market will substitute the income. 68p is existential, perhaps, for the managers who screwed up, tried to cover up, and didn't have a plan B until it was too late. Not even a pathetic buy from any of the board this time, so the gloom is justified. Still not tempted back here.

[llef] 29/1/2024 10:44

there is a lot of new supply coming to the market over the next couple of years

e.g.
Zenobē reaches financial close and begins construction of its Kilmarnock South battery project, a transformative 300MW/600MWh asset to reduce wasted wind energy and power Scotland’s renewable energy future.
As part of Zenobē’s £750 million commitment to doubling Scotland’s battery storage capacity in just three years, the operation is due online in late 2025, propelling the nation towards energy autonomy.

hxxps://www.zenobe.com/news-and-events/zenobe-commences-construction-of-its-kilmarnock-south-battery-project-in-drive-to-maximise-renewables-and-reduce-the-cost-of-wasted-wind/

and

SSE Renewables has taken a Final Investment Decision (FID) to proceed with the construction of one of the UK’s largest battery energy storage system (BESS) projects in Monk Fryston, Yorkshire.

The 320MW / 640MWh grid-scale battery is SSE Renewables’ third BESS development to reach this stage, following on from its 50MW Salisbury and 150MW Ferrybridge BESS projects. Construction will begin in the coming months.

hxxps://www.sserenewables.com/news-and-views/2023/11/construction-to-start-on-sse-renewables-320mw-bess-project-in-yorkshire/

[spangle93] 29/1/2024 08:57

From Citywire weekly summary



There was no reprieve for energy storage and other specialist renewable infrastructure funds. Battery funds Gore Street (GSF), Harmony Energy Income (HEIT) and Gresham House (GRID) tumbled between 5%-19%. This left the shares trailing their asset values by 37%-52% with yields of about 9%-11% suggesting the market anticipates dividend cuts from the alt-income funds this year.

Falling UK revenues left dividends of all three funds uncovered last year and with no sign of a let-up in 2024, Jefferies analyst Matthew Hose believed they would have to reassess their distribution policies.

‘We estimate calendar 2023 dividend cover to be 0.1 times for GRID, 0.5 times for GSF and 0.0 times for HEIT (ie, costs are offsetting cash income). Coupled with the funds’ capital constraints, requiring capital to fund constructions projects, this results in material risks to current dividends, particularly as the pressures on GB battery revenue are unlikely to ease until at least the fourth quarter this year,’ Hose said in a note yesterday.

[nickrl] 25/1/2024 21:41

The original investment driver was ESO ancillary services but that market has been bashed down by the ESO auction process. That of course isn't the only opportunity here fortunately as there is the BM and wholesale mkt to go after. Again in the BM mkt alot of assets are now in play and whilst the new Open Balancing Platform has certainly given BESS assets a decent cut of the action again a lot of assets are participating and if you want a piece of the action you need to price competitively hence price will get forced down like ancillary services. Wholesale is now looking the most lucrative income stream if you can nail down the settlement periods when price is low to import and hit the peak half hour when price is likely to be high. Difficult to know how well they are doing until we get some trading updates. Also I'm not convinced most scribblers even understand this sector and are driving prices down on higher for longer and discount rates.

[marktime1231] 25/1/2024 17:55

Extraordinary plunge, needs a board response but have they got anything good to say?