18 October 2023

Gresham House Energy Storage Fund plc

("GRID" the "Company" or the "Fund")

Update post National Grid ESO event

National Grid ESO commit to new system launch on 12 December 2023 as well as a detailed timeline of further system improvements.

National Grid Electricity System Operator (ESO) hosted an event on 16 October called 'Enhancing Energy Storage' to provide clarity on the system improvement plans in the Balancing Mechanism (BM), to better utilise the flexibility offered by Battery Energy Storage Systems (BESS).

The key challenge experienced by GRID and the wider BESS sector to date, has been the lack of utilisation of BESS in the Balancing Mechanism, which has significantly limited revenues. ESO has communicated the following important positive steps to remove these limitations to a large degree by the end of 2023, with further improvements due in 2024:

·      Launch of the ESO's new IT system, Open Balancing Platform (OBP) with a new algorithm, the Bulk Dispatch Operator (BDO), is now set for 12 December 2023 (previously 15 December 2023).

·      The BDO will automate the aggregation of multiple BESS to enable their use in the Balancing Mechanism. Of the ESO initiatives, this is expected to have the greatest impact on the BESS utilisation.

·      Fast Dispatch will go live in Spring 2024 to allow the use of BESS for more rapid, marginal actions.

·      The 15-minute input parameter (limiting BESS actions to 15 minutes) is expected to be made flexible by the end of 2024. ESO will run trials following the launch of OBP and BDO in December 2023 to drive further usage of storage assets for reserve requirements in the near term.

·      The launch of Balancing Reserve (March 2024) and Quick Reserve (Summer 2024) services will provide further system flexibility for the ESO and offer BESS additional revenue opportunities. This incremental revenue can be combined with existing services and the BM at any one time.

Ben Guest, Fund Manager of Gresham House Energy Storage Fund plc and Managing Director of Gresham House New Energy, said:

"We are grateful to ESO for its commitments to improve utilisation of batteries and pleased to see the release of their new system brought forward. We continue to support and engage with ESO on the implementation of their workflow.

As renewable generation increases, ESO needs batteries to ensure its flexibility requirements are met, as well as to meet its publicly stated goal of being able to operate a carbon-free grid by 2025. We are encouraged that ESO's prime incentive is to make these system improvements to meet its own objectives, and not simply to accommodate BESS operators.

Separately, we are pleased to see ESO progress also being made to unlock grid connection bottlenecks. These were discussed at ESO's separate event in London covering the prioritisation and acceleration of grid connection dates for new BESS projects, following the recent Government announcement¹."

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About the Company and the Manager: 

Gresham House Energy Storage Fund plc seeks to provide investors with an attractive and sustainable dividend over the long term by investing in a diversified portfolio of utility-scale battery energy storage systems (known as BESS) located in Great Britain and in Overseas Jurisdictions. In addition, the Company seeks to provide investors with the prospect of capital growth through the re-investment of net cash generated in excess of the target dividend in accordance with the Company's investment policy.

The Company targets an unlevered Net Asset Value total return of 8% per annum and a levered Net Asset Value total return of 15% per annum, in each case calculated net of the Company's costs and expenses.

Gresham House Asset Management is the FCA authorised operating business of Gresham House plc, a London Stock Exchange quoted specialist alternative asset manager. Gresham House is committed to operating responsibly and sustainably, taking the long view in delivering sustainable investment solutions.

http://www.greshamhouse.com/

Definition of utility-scale battery energy storage systems (BESS)

Utility-scale battery energy storage systems (BESS) are the enabling infrastructure that will support the continued growth of renewable energy sources such as wind and solar, essential to the UK's stated target to reduce carbon emissions. They store excess energy generated by renewable energy sources and then release that stored energy back into the grid during peak hours when there is increased demand.

[1] https://www.gov.uk/government/speeches/pm-speech-on-net-zero-20-september-2023