In a presentation last week (May 28), managers of the Gresham House Energy Storage Fund (GRID) provided further details on a recently announced investment deal.
The long-term strategy presented in a presentation at the capital markets day was fully covered Energy storage.news Premium.
ROSTER announced funding for a 397 MW portfolio of 2-hour battery energy storage systems (BESS) just shy of two weeks ago. It was then revealed that Summit Transition Partners (STP), controlled by Japanese conglomerate and trading house Sumitomo Corporation with participation from TPK Holding, would act as investment partner.
GRID is listed on the London Stock Exchange and is managed by asset manager Gresham House. The fund’s management explained the new investment partnership with the Sumitomo Corporation-controlled entity; it will cover most of the equity investment required for five projects totaling 697 MW, starting with three projects totaling 397 MW, while debt will cover the remainder.
This means a new approach for the company. Funds like GRID helped boost the UK market for network-scale energy storage by raising capital through a stock exchange listing and putting that money into BESS projects, in addition to financing debt projects. However, since the decline in share prices, it has become much more difficult to raise that capital.
Ben Guest, manager of the fund which has more than 1 GW online in the UK, explains: “Bringing in external capital significantly reduces our equity capital requirement. It reduces our EBITDA, but means much less capital is required, reducing risk to our business.”
“It crystallizes some of the value we have created with our projects, reduces GRID’s day one capital needs and increases our equity returns,” said James Bustin, assistant fund manager for GRID.
“It is a financing structure for the first three projects that also creates a framework for the future pipeline.”
Could GRID follow Harmony Energy’s trajectory?
In the Q&A portion of the presentation, an audience member asked a direct question about the future of the fund: How long will the managers wait before admitting they are not delivering value and pursuing alternative paths?
Although I didn’t mention it, this clearly referred to one option selling the fund to private investors, as Harmony Energy did with the Harmony Energy Income Trust (HEIT) fund. The questioner asked what they would do if a large industrial company made a bid for GRID.
John Leggate, chairman of the GRID board, responded: “We have a runway for these plans to come to fruition. If we don’t get results over the course of the next year, we have a duty to consider alternatives. Right now we are focusing on these plans, but at some point we will certainly review their progress.”
“You never know with these things and I’d rather not speculate on what could happen, we’ll keep our heads down. These events are to bring information to the market. If anyone is interested, just look at our records. If anyone comes up with something interesting, the board will take it seriously.”
Further coverage of the presentation, which delves deeper into GRID’s revenue development and asset expansion, is available with a Premium subscription on Energy storage.news.
