‘Not unreasonable’ to expect Gresham House to target larger capacities as it continues to scale

Gresham House has made a number of announcements as of late, making further acquisitions and targeting £15 million of debt financing through a private offer of secured power bonds.

Speaking to Solar Power Portal, managing director of Gresham House Asset Management, Rupert Robinson, said that the company had been talking to shareholders about introducing debt financing for a “considerable” period of time.

A number of options were explored, including an RTF (revolving trade facility), term debt and the private offer he company ended up choosing.

“The main driver was really flexibility, cost and our confidence of raising money through this mechanism that could also be financed relatively quickly and effectively should we wish to do that down the road.

“We felt that this was the best method for the company currently on offer that really met with the requirements of the fund manager,” Robinson explained.

The funding is to be used to advance loans to energy storage projects and/or to refinance existing shareholder loans as well as for a further acquisition, with Gresham House having taken a number of assets on board in the last year.

SPP spoke to Robinson just after planning regulations were relaxed to allow battery storage to bypass the Nationally Significant Infrastructure Project process in Britain. When asked if Gresham House would be looking to acquire assets above that 50MW mark if the change results in more being developed, Robinson said that it is “not unreasonable to expect us to look at larger sites in the future and capitalise on any changes that come down the pipe with respect to regulation”.

He pointed to the “scale we’re looking to get into”, stating that “tougher planning around acquiring larger sites has been prohibitive to looking at and developing those sorts of sites”.

Most recently, Gresham House acquired 41MW of storage from Arenko in a £20.1 million transaction. The company already had a pre-existing relationship with Arenko, with Robinson explaining that manager of Gresham House Energy Storage Fund, Ben Guest, had been impressed by the results achieved by Arenko, which predominantly specialises in the Balancing Mechanism.

“They’ve achieved over a period of time now some very consistent and attractive returns from their site that are consistent with the types of returns we’re looking to deliver for our shareholders in the public company,” Robinson said, adding that they therefore wanted to add that particular asset to the portfolio.

However, two sites – Thurcroft and Wickham Market – have seen slight delays due to the COVID-19 pandemic, but Robinson was quick to stress that there's been no material impact on revenues due to the pandemic.

“I think you have to remember there's quite a diversified revenue stack in the fund, from the system stability services that we provide National Grid through FFR or EFR, then there’s the trading aspect – the asset optimisation strategy – and then obviously CM revenue and triads. I think the beauty of these assets is the diversified revenue model. Some of them are merchant and not contractual so there is that higher level of risk than you would typically get in solar or wind investment,” he said, adding that as the economy reopens the company expects that demand will pick up again and power prices will “gradually recover”.

He continued on to say that the company is “excited about the future for energy storage” as it sees opportunities to scale the fund over the next 18 months.

“We see the market continuing to grow and we would expect to be a big player within that. It’s always very difficult to put numbers on it but we expect that there’ll be probably 1GW+ of operating capacity in the UK by the end of this year, probably a bit more than that, and we’d expect a 20-25% market share of that.”