Gresham House Energy Sto... Share Discussion Threads

[cruelladeville] 21/11/2024 12:08

Thank you for pointing that out, appreciated.

[cc2014] 21/11/2024 09:38

CdeV

I thought you might be interested in the half hourly price for spot electricity in the following link. It shows that even though there were decent renewables yesterday and the demand is moving around alot due to the cold weather the price is pretty static throughout the day so there is nothing to arbitrage for trading. All revenue on such days comes from the balancing mechanism and ends up being pretty average. (and I would assume that if your battery is not registered for the BM it's a very bad day for revenue)

[cellular3] 20/11/2024 10:03

How does Ed Silliband even show his face-one of worst Labour leaders of all time

[nickrl] 19/11/2024 21:04

@CDV this site attempts to track curtailment hxxps://wind.axle.energy/ by comparing planned generation against instructions issued by NESO to curtail. It only cover sites registered in the BM though and some of the DNOs also have to instruct off embedded generators as well. The main drive for curtailment is lack of transmission capacity from Scotland to England and this forces gas to be fired up which tends to drive up the system price so not necessarily helpful for BESS. The main reason prices get driven negative is in high summer when solar is at its maximum or when wind generation is high at night and these create best trading opportunities for BESS.

[cruelladeville] 19/11/2024 16:10

A bit more in a similar vein - "Overall, from January 2021 to April 2023, £1.5 billion has been spent to curtail more than 6.5 TWh of wind power resulting in 2.5 million tonnes of emissions. In 2022, 4% of GB wind generation was wasted due to wind congestion – 3.4TWh". Big numbers.

[cruelladeville] 19/11/2024 15:59

Regarding curtailment of UK wind generation, it seems remarkably difficult to find numbers that do not express curtailment of wind generation in anything other than money. The best I can find is "3.5 TWh of wind generation was curtailed in 2020, with curtailment declining to 2.3 TWh in 2021 due to low wind output and a bounce-back of demand after the Covid restrictions." Given I think in the last three years there's been much more wind generation capacity installed, it's a fair bet that 2023, 2024 wind generation curtailment has been far more? I recognise that present BESS facilities can't soak up all this for various reasons. But it does demonstrate the scale of the opportunity for energy storage still available to utilise.

[cruelladeville] 19/11/2024 15:49

Thanks for the comments. The thing is, everything in your reply seems to not be unique to the UK. So if other jurisdictions have lower energy costs to begin with, there's even less arbitrage opportunity there. But as far as I can find out (and it's very limited indeed) the UK looks to me like it's the only jurisdiction where BESS facilities aren't making enough money. If I'm right, it makes no sense at all that jurisdictions with lower power prices can make money while in the UK with higher prices, it's not possible to make money. I truly can't work out why.

[cc2014] 19/11/2024 15:01

I'm not sure how to even start answering your post CdeV. Mostly because I can't figure if you are just having a rant out of frustration or not.

There is not frequently an excess of wind. Yes, there are days when prices go low or negative but these are rare and even then then aren't negative all day, just usually for a few hours. And just because you can charge your battery for free doesn't mean you can release the power at a high price because there's likely to be an excess of wind during the day and night which means you can't get an amazing price for it.

Then we have the interconnectors which are squashing the arbitrage too.


How many boring days when the wind and sun are consistent are there? Most of them leaving more and more batteries trying to arbitrage not alot to start with anyway.

[cruelladeville] 19/11/2024 14:39

Stuff doesn't add up, does it? We are told that the UK has the most expensive electricity in the world. There's quite frequently an excess of wind generation. So BESS should be using free or negative cost electricity to charge their batteries. Then discharging at the highest electricity price in the world. I don't understand why in the UK, arbitrage between free input power and the world's most expensive output power can't be profitable? I have been wondering this for a while. It seems that overseas BESS is profitable with lower electricity prices. Why isn't it profitable here? I truly don't understand it.

[cruelladeville] 19/11/2024 14:31

That's the least of your worries then in that eventuality.

[nw1234] 19/11/2024 14:31

I think roll forward is the natural unwind of the discount model. With WADR at 10.8%, we would expect roughly 2.7% per quarter (the expected NAV return if there were no other changes such as price and life extensions etc). I am sure there will be a mathematical explanation of why it is less this quarter, (1.91p = c.1.8%) but I cannot think why that would be.

[marktime1231] 19/11/2024 13:51

To be sure I have no idea what the remark about three months roll forward of the valuation model meant, it is Guest-speak not intended to be comprehended at face value. My first reaction was that it was booking value gains from projects which completed in the quarter ... no?

[george stobart] 19/11/2024 11:12

Putin about to hit Britain with nuclear.

Surely GRID's assets won't survive the attacks and share price will fall further

[cellular3] 19/11/2024 10:55

Grid and gsf remind me of what Henry VIII said to his wives in uncertain times-“if you can keep your head while all about you are losing theirs” 😬

Looking a bit futile now if you have to worry about a dividend in companies that should be raking it in-what happened to net zero?

[cc2014] 19/11/2024 10:53

Jeez. You are more pessimistic than me and that's saying something.

I have a few observations.

1. The Modo index does not include CM so I'd like to be assured they are comparing apples with apples.

2. The slippage is not good and slippage due to lack of planning permission is worse

3. But the thing that's nagging at me most is the +1.91p to the NAV from the roll forward of the valuation model by three months. Let's consider that. What they are saying is that they've increased the NAV by nearly 2% by adding 3 months to the life of the batteries plus (I think) the cash generated in the last 3 months.
Now given that the roll forward of 3 months is about say 25 years away and the discount rate is 10.4% those future cashflows won't impact the model very much, which leads me to think that in order to add nearly 2% to the NAV they've changed the degradation profile of the batteries or the number of cycles they do a period.

With regard to number 3 I feel there's something going on here which is a little opaque or perhaps it's me and I just don't understand the DCF model well enough. Any thoughts?

[marktime1231] 18/11/2024 17:51

Aha!

The factsheet shows +1.29p "working capital gain", so that is a measure of cash flow then, could that be ebitda at around £7.3M? And no management fees in this quarter?

Then minus 0.58p for debt interest, but also minus 0.39p fund and transaction fees (costs of the rejected asset sale or an abbreviated management fee?) and 0.23p interest swap (?).

Which leaves just 0.09p net income from the quarter.

Eek! No wonder it wasn't mentioned in the update and doesn't show in the NAV bridge.

As you say things might prospectively be looking better. But there is absolutely no chance of a restored dividend next year. Not until a fully energised portfolio is steadily delivering a measurable net income again.

Once that reality sinks in, and it is bound to be teased out at the CM presentation, I'm afraid GRID is heading back to the 40p barely-afloat level.

[marktime1231] 18/11/2024 17:09

Well I was worried those project delays were coming, the heralded 1GW milestone slipping to Q1 2025 or later. Something which Guest was unable to reveal in the update only a week ago. A hit to NAV and short term cashflow. Dripping out the bad news does nothing for my feeling about management.

The good news? Well the share price has held up.

Can anyone tell me what was the net income per share in the quarter, the sort of number you would expect to see in the NAV bridge and which would help answer the question what sort of dividend could be covered? I can't see that number in the update.

Following the above sums, EBITDA of £7.2m - £2.1-2.3M management fees and overheads - interest on group debt of around £120M so maybe £1-1.2M per qtr = about £3.5-4M net income? Across 569 million shares. Net income per share in H1 was 1.04p according to the interim report. So Q3 could have added 0.65-0.70p, a 25% improvement on ytd. In which case why isn't it stated, why doesn't it show up in the NAV bridge?

[stemis] 18/11/2024 14:20

Market cap = £268.9m, net debt £107m
Q3 revenue = £11.7m
Q3 portfolio ebitda (so excluding holding company costs of £2.1m/qtr) = £7.2m

So valuation of ~5.7 x revenue and 18.4 x ebitda

[nickrl] 18/11/2024 14:00

Yes more delays but at least they are now close to critical mass and the revenue stream looks more promising that it did 6mths back. What id like to know is what is the threshold thats required to reinstate dividends which again aren't mentioned. Anyhow am signed up for next presentation to see if we can get answers.

[george stobbart] 18/11/2024 08:28

More project delays.

We’re being left holding the biggest bag of odorous excrement ever assembled in the history of capitalism.

[nickrl] 17/11/2024 21:50

@marktime OFGEM have been utterly catastrophic in their regulation of the leccy industry. The transmission operators first tabled Eastern Greenlinks back in 2016 back OFGEM knocked them back time and time again in favour of "connect & manage" policy for renewables. Now we, yes it us who pay this, are shelling out a fortune on constraint payments as a result. Then we have the fiasco over licensing dozens of suppliers only to see them go bust and for them to tell us they've found new suppliers to takeover and kept the lights on yet again the costs have been loaded onto everyone bills and it runs into 100's millions. Regulation and oversight is pretty disastrous across all aspects of UK society.

[marktime1231] 17/11/2024 20:40

I remain perplexed why we have prioritised the building of overseas interconnectors. In the last three years we have added capacity from France, Denmark and Norway, with another one from Germany getting underway. Meanwhile we can't take full advantage of domestic wind assets.

The UK has been talking about various links between Scotland and England for over a decade. A £1.2B western link from the Hunterston nuclear plant to Wales completed in 2019, was two years late, and has suffered four major cable outages since. The "final" need for two eastern green links was confirmed as long ago as July 2022 with a budget of £3.8B, which is a staggering sum considering the relatively short distances involved. There are now at least 5 different projects at various stages. Only last week did OFGEM give £2B "final" approval to EGL1. It will take 5 years to complete. I think National Grid has engaged the same cable company which laid the western link.

OFGEM celebrated its accelerated fast track process in its most recent announcement.

[cruelladeville] 13/11/2024 08:47

Last sentence - 100% agreed.