Gresham House Energy Sto... Share Discussion Threads

[boystown] 19/6/2024 15:02

I have a few FEWIW - and at a decent profit now.

[cc2014] 19/6/2024 14:54

I have come to realise there are only about 5 of us in this stock

[cc2014] 19/6/2024 14:37

hmm. A 235k sell gone through at 67.5p but the MMs are still willing to take 100k off me at the same price so this buyer is in for a fair few.

[cc2014] 19/6/2024 10:02

I should think so George.

The slow burn buyer is getting no stock today

I'm being offered 67.5p to sell 100k shares which tells me everything I need to know.

[george stobart] 19/6/2024 09:07

70p by June end?

[cc2014] 17/6/2024 11:29

For those who have an interest in trade flow someone has been absorbing every sell they can get since the day after the tolling agreement was announced.

Very many of the trades which are marked as buys when they are sells with MM's offering prices very close to the offer.

On the face of it one wonders how long this can go on but the actual net sell volume going through GRID is small by comparison with the market cap or even someone looking to pick up just a couple of million of shares.

Broadly this long term buyer is very patient and being successful but the bid keeps creeping up albeit at a snails pace.

Most of the real sell trades are relatively small. With a few exceptions most of the sells are less than 10k shares. These are probably a mixture of PI's and institutions but whoever they are from it's clear there is no large institutional seller.

I suspect the large buyer is working to some formula based on a compromise of volume/price/time. They are in no hurry but if they don't get enough volume the price moves up slightly. Occasionally some larger blocks of 250k or 375k or whatever go through. The buyer seems to absorb these without thinking perhaps because what now seems like a large block at 250k isn't a large block at all if you are looking to collect even 3% of the share capital which would be 17 million shares.


My thought process is that post the tolling agreement, GRID have effectively fixed revenues on half the portfolio and this provides a price below which the share price won't drop. I guess this to be around 60p because anything below that I would expect Octopus to consider bidding for the whole of GRID. They must have run the numbers on it several times already.

GLA

[pj84] 14/6/2024 21:19

I am fully aware that spelling and intellect are not always correlated, particularly regarding some very clever dyslexic people. But I couldn't help smiling at a self professed pedant misspelling pedant.

[cruelladeville] 14/6/2024 14:34

Excuse the pendant in me. Highview are building cryogenic liquid air storage plant. Significant difference from compressed air energy storage plant. The former stores liquified air in insulated tanks to vaporise and drive a turbine. The latter uses typically salt caverns to store high pressure air to expand through a turbine. Both technologies are available and proven. In the UK there's been no compressed air energy storage facilities built yet. They do exist overseas.

[nickrl] 14/6/2024 12:07

@CC2014 agree on Highview economics but for a fossil free grid we will need dispatchable long run storage and this maybe something in the mix. Mind whatever form of storage we will need 2-3TWh to cover for a cold day in winter if a high pressure has settled over N.Sea. We can muster about 40GWh currently!!

Anyhow the weather maybe poor in June so far but giving plenty of wind so that certainly giving good wholesale arbitrage opportunities.

[llef] 14/6/2024 10:34

CC2014, as I understand it, I think Battery storage and compressed air storage are slightly different animals, aimed at different markets.

If you look at today for example, wind electricity has been turned off for large parts of the early morning hours, and the wind farms compensated for their loss of earnings. This is despite the fact that the wholesale price of electricity has been positive through the night.
When this happens, its usually because too much electricity is being produced in Scotland relative to demand there, and there is insufficient transmission capacity to take the surplus to England.
I think compressed air storage can/will be built out in large size in Scotland, so that excess overnight electricity there can be stored there, and then released to Scotland and England during the day when the demand is greater.
The compressed air facilities will be paid by the Grid to use the electricity overnight, as this will be cheaper than paying the wind turbines to turn off.

So the compressed air owners will have 2 streams of income:
a) grid payments above,
b) buying electricity cheaply overnight and releasing it at higher prices during
the day, (similar to battery arbitrage economics).

(They might also have a 3rd income stream, whereby the Grid pays them not to release the electricity straight away, but store it for a couple of days for periods when forecast renewable energy generation is low).

[cc2014] 14/6/2024 07:46

Thanks for your post llef. I took a closer look as it's always good to keep up to date with new tech.

First I did the numbers
GRID market cap £376m for which you get 1072/1696
Highview cost £70m for which you get 50/300

If I pro-rata the market cap Highview is 269/1611 on a straight cost comparison.

So, the numbers do not compare because you cannot arbitrage a 6 hour storage device in the UK. Of course it's not built for that, it's built for longer term storage.

GRID are arbitraging an average spread of around £50/Mwh daily. Sometimes it's less and they won't capture all of it but sometimes they are two cycling a day so £50 seems about right.

Even if Highview arbitrage £100 by buying at zero when the wind blows and sun shines and release it a month later for the full £100 spread it's not economic.

If you add into that according to this video their system is only 60% efficient it seems to me to be economically unviable. Others are claiming 80%+ efficiency for similar systems so I consider that a better benchmark but even so losses of 20% are significant and will rise the longer the liquid air is stored as it's refrigerated.


I think it's interesting and we should try these things as otherwise improvements are never made but I'm struggling to see any cost/benefit analysis stacking up.

I'm thinking California is the place to try this out the sun shines all day and GSF for example are building out a 4 hour battery.

[llef] 14/6/2024 06:19

On the wider subject of storage, a 50MW/300MWH (ie 6 hour duration), compressed air storage facility has been given go-ahead in Manchester.

"The investment will enable the construction of one of the world’s largest long duration energy storage (LDES) facilities in Carrington, Manchester, using Highview Power’s proprietary LAES technology. Once complete, it will have a storage capacity of 300 MWh and an output power of 50 MWs per hour for six hours. Construction will begin on the site immediately, with the facility operational in early 2026, supporting over 700 jobs in construction and the supply chain."

and

"Highview Power will now also commence planning on the next four larger scale 2.5 GWh facilities (with a total anticipated investment of £3 billion). Located at strategic sites across the UK, these will ensure a fast roll-out of the technology to align with UK LDES support mechanisms and enable the ESO’s Future Energy Scenario Plans."

hxxps://highviewpower.com/news_announcement/uk-infrastructure-bank-centrica-partners-invest-300m-in-highview-power-clean-energy-storage-programme-to-boost-uks-energy-security/

[cc2014] 13/6/2024 08:52

Agreed. It looks to me from the trades that someone is soaking up all the volume yet the amount of volume coming on the market at this price has fallen away.

If they want more volume the buyer is going to have to increase the price.


I have already let go the shares I bought at 53p due to someone mistaking GRID's ticker for National Grid. I simply had too many, didn't really want them and a 20% turn in just a few weeks could not be ignored.

I continue to hold all my others at an average of 43p. I have carefully considered where I might sell these but that's a difficult question given the vagaries of market sentiment and interest rates.

I am sure they are not worth NAV even noting the discount rate will fall helping the NAV as interest rates fall. But after that it's very difficult. UK and US Gas prices do seem to be moving upwards considerably but Lithium is going in the other direction. The ESO do seem to be slowly getting a grip on using more and more batteries to balance power.

[george stobart] 13/6/2024 07:38

Reckon this thing prints 70p by June end

[cc2014] 10/6/2024 13:51

For info.

As discussed on here first. Citywire considering whether Octopus could bid for GRID.

[cc2014] 10/6/2024 13:19

This is starting to get interesting now.

The trade pattern suggests to me someone is still looking for stock even though they got a bunch at 63.5p

65p is the recent high from the day of the announcement of the tolling agreement.

I suspect once we break through that I will be grinning.

[nickrl] 07/6/2024 21:14

MODO energy confirm income retreated back in May from April although still above Jan/Feb lows although i have noticed a tick up in early June as wind penetration has increased significantly. Merchant revenues were down but thats probably related to lower wind levels during the month which minimises spreads and thus opportunity to charge low sell high. GRID clearly thought if Octopus want to take the risk for a reasonable amount then better to do a deal and lock in some certainty than run the risk they wouldn't be able to out perform it themselves.

hxxps://modoenergy.com/research/battery-energy-storage-revenues-may-2024-balancing-mechanism-gb-benchmark

[george stobart] 07/6/2024 12:19

Looking at US listed Energy Storage stocks like Ormat (Ticker: ORA) which is Geothermal + Battery Storage operator, Tolling Agreements are not uncommon.

It is a proven model and GRID is effectively trying to replicate Ormat's success/model in the UK BESS market.

From Ormat's fillings:

We are pursuing the development of additional grid-connected BESS projects in multiple regions, with expected revenues coming from providing energy, capacity and/or ancillary services on a merchant basis, and/or through bilateral fixed contracts with load serving entities, investor owned utilities, publicly owned utilities and community choice aggregators. We aim to balance merchant risk with long term tolling agreements and we may pursue financial instruments, where appropriate, to hedge some of the merchant risk.

The revenues fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent. We recently signed a second long-term tolling agreement that will secure fixed revenues for our Pomona 2 20MW/40MWh project that follows similar contracts for the Bottleneck 80MW/320MWh project, both in California.

[cc2014] 07/6/2024 11:15

Prices were negative on Wednesday too and as we speak are barely above zero.

[llef] 07/6/2024 10:27

Assuming GRID can capitalise on this, tomorrow's electricity pricing should allow batteries to make a stonking profit.

Prices are -11 (ie negative) or lower for 3 hours from midday, and are over 80 for 3 hours in the evening.

hxxps://data.nordpoolgroup.com/auction/n2ex/prices?deliveryDate=2024-06-08&currency=GBP&aggregation=Hourly&deliveryAreas=UK

[pj84] 06/6/2024 10:50

CC2014 not sure if you have me filtered for some reason but posted the same yesterday post 895.

[cc2014] 06/6/2024 09:40

Too much to paste but some snippets:

Christopher Brown, an analyst at JP Morgan Cazenove, estimated the deal with Octopus could lift GRID’s annual revenues to about £70m and see it reinstate a covered dividend of 4.7p per share, more than expected though well below the 7.35p it originally aimed to pay last year.

‘Overall this is an interesting transaction that locks in an acceptable level of revenue at a time of uncertainty, and while the portfolio is being ramped up,’ he said.

[igoe104] 06/6/2024 06:45

I wouldn't be surprised if octopus take over GRID within the 2 years, does make sense for a business point of view..

[cc2014] 06/6/2024 06:42

Also I don't think the deal with Octopus will turn out that great for GRID, but it does open a new market and that's important.

[cc2014] 06/6/2024 06:40

There was one question in the presentation which I think worth repeating. I'm long so perhaps I'm looking for things that aren't there.

The question was broadly something along the lines of "if ORIT are contracting for half GRID's output"... "why wouldn't they seek to acquire that output themselves"

Which GRID couldn't answer of course as it was not for them to answer. But they did say Octopus needed 1500 capacity vs the 1000ish they have taken from GRID.


As a shareholder I'm left wondering why Octopus don't just offer 90p for GRID? Conjecture I know, but maybe this is a good way for Octopus to take a "look, see" first.


it will be interesting to see where the share price goes as the market settles down and has had time to digest this. I suspect a bit higher yet.


(Also I note we are back to negative pricing last night as we had some wind)