Gresham House Energy Storage (LON:GRID) outlined a revised growth plan at a capital markets presentation, with management emphasizing expanded battery storage capacity, new project-level financing arrangements and a strategy to diversify revenues beyond existing battery trading activities.
Chairman John Leggate said battery energy storage systems, or BESS, had moved from a “marginal activity” at the time of the company’s 2018 IPO to a central part of the U.K. power system. He pointed to rising renewable generation, the decline of coal and aging gas-fired capacity, and growing electricity demand from electric vehicles, heat pumps, data centers and artificial intelligence as structural drivers for storage.
Portfolio and Growth Targets
Fund manager Ben Guest said GRID has grown from 70 megawatts at IPO to 1,072 megawatts today, giving it about a 15% share of the Great Britain battery storage market. The portfolio includes 30 projects, currently located in England and Scotland.
Management said the company expects its portfolio duration to reach just under two hours by the end of 2025 as a result of augmentation work. GRID has augmented nine projects to date, adding nearly half a gigawatt hour of incremental storage capacity, and expects to complete additional augmentation work during the year.
The company’s updated growth plan targets adjusted EBITDA of £141 million. Guest said the target reflects a slightly improved revenue backdrop for the existing portfolio, £7 million from augmentations, £55 million from new pipeline projects and £25 million from an “alternative revenues” strategy. The prior three-year plan had targeted £150 million of EBITDA, but Guest said the new plan requires “a massively lower” equity contribution from GRID.
Management also presented an illustrative central case in which the build-out of the new pipeline could add £0.56 per share to net asset value. Guest said that figure excludes any contribution from alternative revenues.
Pipeline Expanded, Funding Structure Detailed
James Bustin, part of the fund management team, said GRID has added 480 megawatts to its pipeline through the Rayleigh project, taking its new pipeline to about 1.2 gigawatts. Combined with the existing portfolio, management said this would bring the company to about 2.2 gigawatts and 4.4 gigawatt hours.
Of the new pipeline, 397 megawatts are fully funded and already under construction, with connections expected through 2027 and early 2028. The remaining 777 megawatts are targeted by the end of 2030, with management indicating a 2029 expectation subject to final confirmation for some projects through the U.K. grid connection reform process.
Bustin also described a new funding template that includes senior debt, export credit-backed financing and project-level equity from Summit Transition Partners, a joint venture between Sumitomo Corporation and TPK Holdings. The JV is taking a 25% stake in individual projects, with GRID retaining 75% ownership.
- Senior debt has been raised for Cockenzie, Monet’s Garden and Elland 2, totaling £141 million.
- The senior debt can cover up to 70% of project costs and is amortized over more than 15 years.
- An export credit arrangement for Monet’s Garden and Cockenzie defers 50% of BESS equipment payments over 10 years.
- Bustin said the export credit pricing was based on 160 basis points over SONIA, while the senior debt margin was 250 basis points over SONIA.
Management said the structure involves no cross-collateralization between individual project vehicles and is intended to be repeatable for future pipeline assets.
Alternative Revenues and Long-Duration Storage
Guest said GRID is beginning to scale an alternative revenue strategy following trials. He described it as an additional revenue stream layered onto the existing battery portfolio, involving longer-term commitments to sell power and using batteries to manage imbalances. Guest said the company is targeting £5 to £10 per megawatt per hour from this activity, while noting that a trial achieved £23 per megawatt per hour after fees.
Management also said the company is reassessing future augmentation beyond two hours. Guest said falling battery costs and technical developments could make eight-hour-plus systems more attractive than moving from two to four hours. Ocker Hill and Rayleigh were cited as projects that could potentially be built to eight-hour duration, subject to future investment decisions and possible participation in the U.K.’s Long Duration Energy Storage cap-and-floor scheme.
Market Outlook and Shareholder Returns
Guest said U.K. electricity demand is expected to rise after years of decline, while renewable generation is set to increase significantly under clean power targets. He also highlighted aging gas capacity and system changes at the National Energy System Operator, including the expected implementation of GC0166, which would allow the control room to see more information on battery state of charge.
During the Q&A, Leggate said moving from the Specialist Fund Segment is not currently a top priority, though the board remains open to ideas. Asked about dividends, he said the board would only pay dividends when they are covered. Management reiterated a target of £0.10 per share of free cash flow over time, with increases expected to come from augmentations, alternative revenues and the new pipeline.
Leggate said the board’s focus is on executing the plan and delivering shareholder value through NAV growth and free cash flow, while acknowledging that if returns do not materialize, the board would have an obligation to consider alternatives.
About Gresham House Energy Storage (LON:GRID)
Gresham House Energy Storage Fund plc (GRID or the Fund) seeks to capitalise on the growing intraday supply and demand imbalances caused by Great Britain’s ever increasing reliance on renewable energy. The Fund aims to provide investors with an attractive and sustainable dividend by investing in a portfolio of utility-scale Battery Energy Storage Systems (BESS) located in Great Britain, which primarily use batteries to import and export power, accessing multiple revenue sources available in the power market.
Gresham House Asset Management Limited (GHAM), is the investment Manager for Gresham House Energy Storage Fund plc.
