Gresham House Energy Sto... Share Discussion Threads

[marktime1231] 01/11/2024 16:45

News on progress delivering the additional 670MWh by year end? You would think assets of that scale entering service would be material and worthy of an rns. Instead some bluff about authorising capital reserves for distribution even though there is nothing in the kitty to distribute.

The importance to income of being live going in to the busy season is acute. I suspect the recent demand-supply squeeze when wind dropped was solved in part by being able to call on battery storage.

At this late stage and given no news it is fair to assume some of the revised schedule is slipping further. My guess is this will be quietly implied as a possibility, and at the same Guest will present another impressively ambitious 3 year plan, at the CMD on 27 Nov.

[marktime1231] 30/10/2024 12:32

The doldrums putting stress on the UK energy system again today as wind has dropped below 2GW. Prices will spike at lunch and this evening. Gas close to maxxing out, and some Nuclear still offline. What will save the day this time. Batteries if there is a bit of sunshine to top them up, interconnectors where links to France and Norway have been restored, half-term and pricing measures suppressing demand ... I wonder how sales of torches, batteries and candles are doing, it feels like we haven't been at such risk since the 1970's.

[cc2014] 24/10/2024 11:37

"When they first energised the 1st Hour at Enderby, it was already all laid out for 2nd Hour. So it was just a case of putting the batteries in the right place and connecting them up."

Yes you would think so, but that's not what happened, because some batteries had to be moved around due to using CATL batteries for the augmentation rather than the existing supplier

[pj84] 23/10/2024 21:26

I haven't looked into the details of the capital reduction but in general even if a company has cash to pay a dividend, it can't do so, if it doesn't have distributable reserves or enough distributable reserves. It sounds like the capital reduction has in effect tidied up the balance sheet so that it will now have more distributable reserves should it choose to pay dividends in the future.

To me it looks like a lot of bad news is already priced in with a discount to NAV of around 50% and the share price has more or less stabilised over the past 9 months and any resumption of the dividend and/or sale of assets close to or above NAV may result in an increase the share price. Further falls in interest rates will also lead to the discount rates being used to calculate NAV to fall which on it's own would increase the NAV of the assets.

[jimjamthe2nd] 23/10/2024 19:00

I don't really understand the whole 'Reduction of Capital' RNS but they do talk of 'a significant pool of reserves' which could be used '
to provide flexibility for any other general corporate purposes' No amount if mentioned, but could this provide Cash for more Augmentations?

GRID said that the ‘purpose of the Reduction of Capital is to provide the Company with a significant pool of reserves which can be used in the future, if required, to fund dividend distributions, returns of capital or to provide flexibility for any other general corporate purposes, in accordance with applicable law.’

It's got to of made it quite a bit cheaper that they had designed it to be 2 hours.

'The augmentation of the Enderby (50MW) and West Didsbury (50MW) sites has involved upgrading each from 1-hour to 2-hour duration, adding 100MWh of additional operational capacity. Both sites had been designed for these upgrades from inception.'

When they first energised the 1st Hour at Enderby, it was already all laid out for 2nd Hour. So it was just a case of putting the batteries in the right place and connecting them up.

[cc2014] 23/10/2024 12:58

Thank you for this PJ84. I've just taken a read and I'm lost for words.

So, they've got no cash as the RCF is maxed out but the plan is to one way or another add more batteries in 2025. One of the ways to build more batteries is to sell batteries (why bother). The next way to build new batteries can only be to continue to not pay the dividend. I note the phrase "resumption of the dividend is a key priority". I would have to check but has that changed from "dividends will resume in 2025". Another way to build new batteries is from "higher revenues" from e.g. tolling agreements. Jeez.

I'll move on. I'm struggling here with the focus of the fund manager.

Oh and btw the reason Enderby was cheap to augment is not because they had some spare batteries lying around they hadn't connected but because the invertors were previously one to one with the batteries but are now one to two as the new CATL batteries have been added to the existing invertors

Or perhaps there really were spare batteries not connected.... which would be astonishing in itself.

[pj84] 23/10/2024 12:30

Gresham House Energy Storage Fund — Capacity augmentations the priority for 2025



Although the note focuses on the better returns from augmenting existing battery storage at existing sites rather than at new sites, the note also discusses the fact that CRID recognises that restoring the dividend in 2025 is also a priority for shareholders.

[cc2014] 22/10/2024 09:07

Jeez. The share price is weak. Rising gilt yields and falling price of oil.

One might have though some perceived good news from GSF and HEIT might have helped but GRID is going in the opposite direction.

Am I going to get another opportunity to buy this in the low 40's? Surely not. And if it does get there what I going to have to sell to buy it and also should I wait for it to retest the low which was around 36p IIRC.


Decisions, decisions. If only I had a crystal ball.

[craigso] 21/10/2024 12:12

CC2014, the 42/60 simply comes from having read somewhere - maybe on one of these BESS IT threads so it could be far from reliable - that a 1-hour battery can only actually be drawn down at full capacity for 42 minutes. (as part of an argument as to why 2-hour batteries are far more valuable assets and why NESO has been reluctant to call on batteries when more capacity is needed quickly)


The 3% number surprises me as well, but certainly lines up much better with GSF selling 100MW of capacity for 4 hours.

[cc2014] 21/10/2024 09:37

Craig. I'm not sure where you get your 42/60 from but this is how it works.

The battery provider declares an amount which is slightly less than the 100MW to CAISO, which is what they can actually provide. This number is based on a real life test of the actual battery.


With regard to what this number actually is I recently went on the GRID open day and asked this question. I was told they run the batteries down to only 3% charge. I was quite shocked at this as it's doesn't fit with everything I had previously understood so I challenged them as to whether this was really 3% or whether there was another charge available which was never used which was on top of the declared battery size. The conversation then floundered and I couldn't get an answer that satisfied me but either way it seems the full capacity of the battery is largely available.

[craigso] 19/10/2024 17:36

Since you can't drain a battery down to zero, GSF can't really be selling a full 100MW for 4 hours.

IIRC you can only operate a 1-hour battery at full capacity for 42 minutes. Not sure if that 42/60 ratio would be the one that applies to longer duration batteries.

[marktime1231] 18/10/2024 10:03

Interesting read across from GSFs monetising of imminent Big Rock BESS in California. "fully stackable resource adequacy" is equivalent to the UK's Capacity Market. You commit your battery to be available to the system operator, while still trading supply.

So how do you turn a 2-hour BESS in to a 4-hour one? By halving the capacity and selling it in two consecutive chunks. In a region where the capacity market (resource adequacy) rules requires 4-hour duration that is one way to deliver long duration storage. Implications?

[nickrl] 15/10/2024 17:56

@marktime settlement periods 32-34 cleared at over 660/MWh so plenty of opportunity for BESS to make a few quid if they were charged up when prices were low 24hrs earlier and held back.

[marktime1231] 15/10/2024 11:36

Not sure what is causing interconnector problems. We are supposed to be able to import up to 4GW from France over different links but only 1GW has been available since September. The 1.4GW link from Norway failed last week (the day that NESO announced UK energy supply was secure!!) and is offline. Missing 4.4GW.

Both Sizewell B reactors are offline for refuelling, other reactors around the country are on reduced load due to faults. So Nuclear is 2GW down. My guess is some gas power stations are also offline for maintenance, we are well short of the theoretical capacity. The last 2GW of coal power was shut last month.

The warning issued yesterday by NESO said we would struggle to meet 39GW evening peak demand because of these problems, because wind plunged below 3GW. The warning was cancelled but how we got by is not clear, we didn't have an official Demand Flexibility event. Throwing every plant available at it, cutting back export to Ireland, and price incentives flattening the curve.

Despite all of which prices spiked briefly to £300/MWh. If GRID and other battery storage operators saved the day and made good money we will hear about it. Until supply problems are resolved this will probably recur.

This simple combination of events shows how vulnerable the UK is. Probably unfortunate coincidences rather than bad actors, just imagine though if someone was actively trying to disrupt. In theory we should be able to raise around 49GW but yesterday we struggled with 39GW. On a cold evening in Winter we would have been in a real mess.

Fortunately the wind is blowing strongly again.

[kernelthread] 15/10/2024 08:55

>>So we will still have a huge fleet of Nat Gas power plants ready to cover all our >>winter needs for an extended period of zero wind/Zero solar power.

>>Having that fleet in reserve obv costs quite a bit of cash.. but that issue is not >>discussed in polite company. :-)

Just like everyone who isn't a rabid greenie has been saying all along.

[llef] 15/10/2024 08:49

I read an interview with CEO of NESO (in teh Guardian I think).
In it he said that Labour's "net zero EV generation" ambition by 2030 was being replaced by a "clean zero EV generation" by 2030.

Clean zero was defined (by him) as 95% generated from fossil-free sources over the course of a year.
So we will still have a huge fleet of Nat Gas power plants ready to cover all our winter needs for an extended period of zero wind/Zero solar power.

Having that fleet in reserve obv costs quite a bit of cash.. but that issue is not discussed in polite company. :-)

[llef] 15/10/2024 08:43

@nickrl, thanks for the info re the french i/c and the nuke being off line, (do you know why the i/c is off-line and how long its likely to be?)

In some ways that's reassuring that we "only" had an alert despite those issues, in another, it does show that as our dependence on i/c increases, so does our vulnerability to them being available at the times when we really need them.

[waterloo01] 14/10/2024 16:14

Short term negative pricing is a real bonus for batteries, esp when followed by demand. They get paid to charge the batteries

[marktime1231] 14/10/2024 15:45

It illustrates the case for long term storage, never mind the interconnectors. Yesterday the UK generated over 18GW from wind at peak, AND switched off 3GW we couldn't use or export. Prices were driven down to zero. Now wind has dropped to negligible and we are struggling to meet demand this evening, prices soaring, costing a fortune to import.

How can anyone in government, Ofgem, NESO, the energy industry be feeling happy or secure?

[llef] 14/10/2024 11:57

Quite a bit of stress on the grid this evening:
Energy price peaks at £200 per Mwh between 6-7pm, and was under 80 for most of the very early morning.
Its rather early in the autumn/winter to see such prices.
I'd imagine no batteries are being skipped/ignored tonight!

[marktime1231] 09/10/2024 12:51

As if to demonstrate the foolishness of considering subsea links to be secure and reliable, a very recent story of unexpected faults on the links to Norway and Ireland causing a near-crisis



Batteries saving the day is the headline, I wonder if that represents a windfall for the likes of GRID or is it the fast-response service already paid for.

[marktime1231] 09/10/2024 12:37

If subsea interconnectors are such a good idea how come it has taken us so long to link our wind generation areas in Scotland with demand areas south of the border. The proposals now grinding forward seem slow and jolly expensive. Whereas overseas links seem to get done swiftly as if there is a strong self-supporting business case.

There is a far-fetched scheme to connect the UK to solar and wind assets in Morocco. Over two thousand miles! Without linking to Spain, Portugal or France along the way. So what is so special about the UK situation? We are not a large energy consumer. The biggest power user in the UK is our own network eg transmission losses over the grid which are something like 10% of the total.

Go figure.

The notion that these links are two-way and an economic opportunity for the UK is fanciful, we seem to import energy when the price is high, demand for export only when the price turns negative. Apart from Ireland which perhaps has built data centres faster than its domestic energy programme can supply.

[cc2014] 09/10/2024 08:56

It raises an interesting observation though.

If you string an interconnector to the next time zone or so and that time zone strings one to their next time zone and so on until you have one that goes completely around the world, you can squash the peaks and troughs significantly, which will make the returns on batteries even lower.