Gresham House to significantly grow its BESS pipeline thanks to £380m NatWest funding

Gresham House Energy Storage Fund plc (GRID) is to significantly grow its pipeline having secured a £380 million funding package from NatWest.

The funding includes plans for seven newly announced utility-scale operational battery energy storage system (BESS) projects, which are expected to be completed in 2022.

NatWest’s funding package will run over a five year period, and is made up of a £150 million capex term loan, a £30 million working capital facility and £200 million uncommitted accordion. GRID will use part of these funds to repay a maturing bond.

 “Introducing a modest amount of cost-effective leverage to the portfolio has been an ambition since IPO and we’re delighted with the successful completion of this transaction, the terms achieved and the quality of the institutions that have taken part,” Ben Guest, GRID fund manager and head of the Gresham House New Energy division said.

“We recently set out ambitious plans to significantly increase the size of our portfolio over the next two years, given the UK's need to increase battery storage capacity tenfold by the middle of this decade. This facility will provide us with the financial headroom to achieve our growth plans.”

GRID, which was launched in 2018, is one of two publicly listed BESS focused funds in the UK, with the other being Gore Street Energy Storage Fund. Within GRID's H1 2021 financial results, it stated that it had 425MW of 100% owned, operational projects as of 30 June.

During H1, it signed sales and purchase agreements for the acquisition of 100% of a further 425MW of shovel-ready capacity across seven projects during the period.

GRID saw its EBITDA soar to £22.4 million in the first half of 2021, jumping from £4.5 million in H1 2020. This was largely driven by frequency response services – accounting for 88.5% of its revenue – and highlights the opportunity for BESS projects in the UK market currently.

“As the proportion of energy that comes from renewable sources grows, so does the importance of storage,” said Jacob Lloyd, energy director, Specialist Asset Finance at NatWest.

“This makes the work that GRID and the team at Gresham House do central to the net zero transition, and NatWest are delighted to have supported them in this. Sustainability is at the heart of NatWest’s purpose, and we’re committed to providing the bespoke funding and support required to help UK businesses go greener.”

Jefferies and Latham & Watkins acted as advisory support and legal councel for the funding package, and additional funding was provided by Santander, Lloyds Bank and Commonwealth Bank of Australia.