Gresham House Energy Sto... Share Discussion Threads

[hpcg] 04/7/2024 11:22

Congrats to those that have been buying. You know a lot more about current conditions than I do. That said my money found productive homes anyway, so in some respects a successful strategy was to go in the opposite direction to Q1 money flows.

[cc2014] 04/7/2024 10:49

Boystown - I would try here:



Start at 28 minutes in.

[value hound] 04/7/2024 08:58

Boystown - I've been asking myself the same question, but anything's possible based on sentiment.

For example, at the end of June 22, the NAV was just over 145p per share (now 130.58p), yet in September the same year, the share price just about touched 180p - and, as we know, was under 40p in April when CC2014 commented " the share price bears no resemblance to what is going on in the real world". Hear hear!

Personally, I bought as high as 81p and as low as 41p, and intend to forget about it for the foreseeable.

[cc2014] 04/7/2024 08:29

Extra 220Mwh coming on line through augmentation


Current portfolio as of today 790/1030

Target by end of year 1072/1696

[nickrl] 04/7/2024 08:13

Couple more 2hr batteries will help the revenue stream. Nott sure how many more they have to upgrade this way which avoids grid connection issues so is a very cost effective way to drive revenue.

[boystown] 04/7/2024 07:44

Still at a 45% discount; what's a reasonable longer-term target do the experts on here think?

[george stobbart] 04/7/2024 06:36

Deutsche Bank Numis initiates coverage of Battery Storage Funds with Positive Rating

London, July, 4 2024

The significant share price volatility across battery storage investment companies in 2024 (average -31% ytd) reflects the impact of lower actual and forecast GB revenues on earnings, dividends and NAVs. Ultimately, we believe battery storage has a significant role to play in the energy transition and in our view the inherent variability of the current merchant-based revenue model is masking upside potential of the listed peer group. Although we reiterate our view that the variable revenue profile is less suited to the high fixed dividend targets that underpinned initial investment pitches, we note the composition of returns is evolving with the introduction of greater contracted revenue visibility and earnings-based dividend policies. We do not rule out the possibility of further near-term share price volatility, but in our view the significant increases in operational capacity, expected over the coming months as companies execute existing build out programmes, gives rise to attractive potential earnings. This will improve cash cover for existing dividends and enable a return to distributions from funds where dividends are currently suspended. This, combined with the potential for asset sales and corporate action, will underpin a positive share price trajectory in our view.

To download the full note (41 pages) please click here: Download battery storage note

Evolution of revenues: The weakness in revenues for GB batteries over the past 12 months has been driven by falling prices for ancillary services amid increased supply, coupled with limited opportunities in wholesale markets. The picture has improved more recently, aided by the first steps of a programme to evolve the grid balancing systems, but it is expected to be some time before the impact of this is fully felt. Gore Street Energy Storage’s international exposure has partially cushioned the impact of this weakness in the GB market on overall revenues, while Gresham House Energy Storage has responded to the challenging environment with the introduction contracted revenues through a tolling arrangement. This two-year contract will reduce the volatility of earnings, but we expect some investors will question the potential returns upside that has been sacrificed.

Do discounts offer value: Wide discounts are reflective of investor scepticism towards NAVs and portfolio valuations that are based on long-term, third-party revenue forecasts in a nascent market. As a result, we focus on nearer-term cash earnings and undertake a scenario analysis which assesses the likely run-rate earnings potential of each fund by the end of 2024 and underlines potentially attractive distributable returns going forward. We believe evidence of this translating into a more sustained period of improved returns will be required for share prices to see a significant further re-rating, but we note that there is also scope for value to be unlocked through M&A and asset sales, given significant capital is seeking access to the storage thematic.

Preferred exposure: Based on our analysis we believe Gore Street Energy Storage offers investors the most compelling exposure to the BESS sector. Its significant anticipated growth in operational capacity in H2 gives rise to attractive forward-looking earnings potential, which should be relatively stable based on the portfolio’s international diversification across five uncorrelated grids. In addition, we note that shares of Harmony Energy Income also benefit from potential nearer-term catalysts, with the prospect of asset sales and other corporate action.

[cc2014] 03/7/2024 15:23

I've just checked. Still plenty of liquidity within the spread if you want to sell

[nickrl] 03/7/2024 15:03

@CDV as CC2014 has observed someone is hoovering up shares at the moment Blackrock probably building a stake rather than an outright takeover so a difficult one to call but they've certainly run up well.

[cruelladeville] 03/7/2024 13:19

With GRID over 70p and Gore Street in the middle 60's I'm thinking of selling my GRID shares and buying Gore Street. Or is that a frying pan to fire scenario? Doesn't look that way to me.

[nickrl] 03/7/2024 11:14

@george Q2 has certainly improved things after the very low rates seen in Jan/Feb but question not answered by Jefferies note is does this now make the battery ITs profitable or not? Mind you that is a difficult question to answer due to the structure of these funds with operational units held in SPVs and none consolidating their accounts. HEIT usefully give an unaudited overview which helps to translate the figures from MODO and bessanalytics into meaningful outcomes. Even then with the likes of GRID over half their assets aren't in the BM and thus their activity isn't visible to the likes of MODO so is not being accounted for. The non BM assets are probably being traded in the wholesale mkt so an improving spread there is good news and in the long run they will be subletting many of these to Octopus at a fixed rate.

The other area that's hugely beneficial to income generation is the CM contracts. However, you need to know the terms of each asset as it varys year by year. Some have current T-1s that expire end Sept 24, some have T-1s starting in Oct 24 or T-4s and it would be helpful if GRID included an overview like HEIT do.

So I'm not yet convinced the energy income stream is at a sustainable long run level to pay dividends yet but adding income stream from CM contracts certainly improves the balance. Of course by just relying upon that metric I've missed out on whether third parties will just take them out anyhow aka Blackrock or more likely Octopus.

[george stobart] 02/7/2024 23:08

Jefferies turns bullish on Battery Storage funds for the first time since 2022.

Jefferies
Equity Research
July 3, 2024

Battery Storage - Q2 State of Charge

During Q2 GB battery revenue improved for the first time since summer 2022, predominately driven by frequency response. We expect the volume required for dynamic response services to remain high in July and August, and we also see signs of the trading environment improving going into Q3. Elsewhere, we take a look at grid code change GC0166 in more detail.

Overview: Modo Energy's revenue benchmark (now including CM revenue) indicates that GB BESS revenue improved in Q2, achieving c.£10,700/MW for 1-hour batteries and c.£14,600/MW for 2-hour batteries, versus c.£8,400/MW and c.£12,200/MW in Q1, respectively, and versus c.£14,900/MW and c.£18,500/MW, respectively, in Q2 2023. The quarter-on-quarter improvement was largely driven by stronger seasonal demand in frequency response, and helped by a better trading performance. The balancing reserve, introduced in March, saw declining prices over Q2 and therefore remains a very limited part of the overall revenue stack.

Ancillary services: Higher volume required in dynamic responses has resulted in a price improvement, which in turn contributed positively to battery revenue in Q2. The dynamic containment volume required will likely remain seasonally high throughout July and August before softening in September. This should provide support to ancillary services revenue in Q3.

Trading: Day-ahead intraday spreads have increased in Q2 to a monthly average of £52/MW, from £44/MW in Q1, and £51/MW in Q2 2023. UK forward power prices have picked up over Q2 (here), which along with the heightened possibility of zero and negative wholesale prices during summer, should improve the trading environment for batteries in Q3. Elsewhere, we see some evidence of the 30-minute rule and balancing reserve helping to increase batteries' dispatched volume into the balancing mechanism since March.

Grid code change GC0166: Our recent expert call with Caroline Still from Aurora Energy Research (here) highlighted the importance of grid code change GC0166. Currently, National Grid relies on a workaround using the unit's grid connection metrics (Maximum Import Limit and Maximum Export Limit) and caps batteries' dispatches to 30 minutes. The proposed change will bring in new parameters designed for limited duration storage (including Maximum Delivery Bid, Maximum Delivery Offer, and Future State of Energy). As these parameters reflect the batteries' operational state and commitments at the selected point in time, they enhance the communication between battery operators and National Grid's control room, which in turn will enable longer dispatches into the balancing mechanism. The workgroup on GC0166 expects to finalise the solution in September, and the grid code's implementation date is provisionally set for the end of March 2025.

[cc2014] 02/7/2024 08:21

I'm sure they didn't need to RNS. We haven't seen trades to match the increase in holding but maybe they will come through delayed.

It's interesting though. If Blackrock really did buy 2.36m shares on the 28th June as suggested by the RNS's it's had absolutely no impact on what's going on with the price action. Blackrock would still seem to be buying


Edit. Ah there we go. A 1.8m trade which I assume is delayed by a couple of days.

[nickrl] 01/7/2024 17:31

@CC2014 your on the money Blackrock upto 12.49% although not sure they needed to RNS until 13%

[cc2014] 01/7/2024 11:37

I took a look Nick.

On 19/6/23 Blackrock owned 64.07m shares
On 28/6/24 Blackrock owned 68.76m shares

My gut says Blackrock are still buying or at least someone is scooping all the shares being sold. I'm being offered 70.1p to sell 100k and 70.36p for 25k. There is no way I'd be being offered that if someone wasn't trying to quietly collect shares without disturbing the price. The pattern has been going on for weeks.

[igoe104] 29/6/2024 17:44

End of an era as the final coal shipment delivered to Ratcliffe Power Station

[nickrl] 28/6/2024 17:08

@cc2014 they last RNSd a holding on 19/6/23 - is this an adjustment to take account of GRID buying back in own shares?

[cc2014] 28/6/2024 13:47

hmm. Blackrock are the big buyer and are clearly still going today.

[cruelladeville] 26/6/2024 13:00

Looks to me like 70p has arrived.

[cc2014] 25/6/2024 08:45

Your 70p by the end of the month George is now not very far away.

The share price continues to inch up just a little bit every day, with the same pattern every day. The big buyer collects stock all day and then pushes the price up in the afternoon if they don't get very many.

He isn't getting very many at all. Yesterday probably around 100k which in the scheme of what the institutions chuck around is neither here not there.


I note the MM's are still offering me 68.4p to sell 100k so the same big buyer is still there.

[nickrl] 24/6/2024 17:04

@CC2014 i reckon the 2hr batteries have withdrawn from ancillary services as they can compete in balancing reserve and are more useful to ESO for balancing tasks as well.

[cc2014] 24/6/2024 08:20

If I looks at those graphs carefully erstwhile the big difference is the income the one hour batteries are getting from response services.

One hour batteries are getting a third of their income from it, whilst two hour batteries are getting zero

[nickrl] 21/6/2024 21:59

Modoenergy said the ESO reduced its use of BESS assets in May so good to see that trend hasn't set in during June although there has been good wind generation in June which maybe helped.

[cc2014] 21/6/2024 12:16

This is fascinating.



Click on total not merchant

It shows that quietly and in the background the revenue going through the balancing mechanism is rising steadily.

(which implies ESO are actually doing something about it)