Gresham House Energy Storage Fund sees NAV per share fall due to COVID

Gresham House Energy Storage Fund (GRID) has seen its Net Asset Value (NAV) per share fall 2.6p as a result of COVID-19 over the first half of 2020.

According to the company’s half-year results, released today (1 September), its NAV was £230 million, or 98.16p per share. This is flat of a total return basis, and its share price return sits at 4% for the period and 15.6% since its inception. Its weighted average discount rate also remained largely unchanged at 11.1%.

GRID has paid or declared total dividends of 3.5p for January to June, which is an increase of 2.5p from the same period in 2019. It expects dividends to be fully cash covered in 2021.

The company stated that the impact of COVID-19 remained low, and despite some slowdown in connections for a couple of projects it remains optimistic.

John Leggate CBE, chair of GRID said it was helping to meet the UK’s “challenge to rapidly expand storage capacity” over the coming years.

“Our first wave of operational projects is now delivering revenues and system flexibility, and we remain on track to double our capacity by the end of 2020.

“The COVID-19 pandemic highlighted significant operational strain on the electricity network and ultimate potential expense to consumers if battery storage is not rolled out at an accelerating pace.”

The pandemic led to an impact on the commissioning dates for GRID’s Wickham Market – a 50MW storage system acquired in April – and Thurcroft – a 50MW storage system acquired in March – projects, due to a slowdown in connections by Distribution Network Operators (DNOs).

Despite the slowdown however, the company is still targeting 350MW of operational capacity by the end of the year. It has currently grown to 215MW, helped by the acquisition of the Bloxwich battery from Arenko in July.

Since 31 December 2019, GRID’s portfolio has grown by 24% from 174MW, and will be further bolstered when Thurcroft and Wickham Market become operational. In the company’s full-year results for 2019, released in April, it announced it’s ambition to grow its portfolio dramatically over the course of 2020.

Ben Guest, fund manager of Gresham House Energy Storage Fund plc and managing director of Gresham House New Energy said: “Crucially, portfolio capacity availability recovered sharply to 97% following successful site upgrades at the end of 2019 which facilitate transition to full asset optimisation.”

During the first half of 2020, the company raised £31 million, bringing its total funds raised to date to £238 million. This should grow further with the first Series of the GRID Power Bond set to get underway.

COVID-19 has highlighted the opportunity for batteries to provide grid balancing services according to GRID, which pointed to the £718 million system balancing costs announced by National Grid between March and July due to high renewable generation and low demand during lockdown. With renewables producing 47% of generation in Q1 of 2020, and continuing strong through Q2, GRID is confident that c.10GW of energy storage will be needed by 2025.

“Looking to the future, we’re pleased that National Grid is increasing its demand for services from batteries, demonstrating their competitiveness and environmental credentials,” continued Guest. “The launch of Dynamic Containment and the trial of batteries in Balancing Mechanism Reserve are particularly exciting developments and we look forward to participating in the provision of these services.”