3 March 2025

Gresham House Energy Storage Fund plc

("GRID" or the "Company")

Unaudited NAV as of 31 December 2024 and Trading Update

Gresham House Energy Storage Fund plc (LSE:GRID), the UK's largest listed fund investing in utility-scale battery energy storage systems (BESS), is pleased to provide shareholders with the following trading update ahead of the publication of its annual results for the year ended 31 December 2024, expected in April 2025. All figures presented are unaudited.

Highlights

-     Unaudited NAV of 109.35p as of 31 December 2024, compared with 109.09p as of 30 September 2024, up 0.2% (31 December 2023: 129.07p)

-     Unaudited operational portfolio revenues in 2024 increased 20.1% to £46.5mn, (31 December 2023: £38.7mn), with substantial revenue improvement in H2 (up 59.3% to £28.6mn vs £17.9mn in H1 2024)  

-     Unaudited operational portfolio EBITDA increased 12.4% to £29.1mn, (31 December 2023: £25.8mn) resulting in an EBITDA margin of 62.5% in 2024 (FY2023: 66.7%)

-     York (50MW/75MWh), Penwortham (50MW/50MWh), and Elland (50MW/100MWh) were energised and a further 193MWh of capacity was added to operational projects through augmentations in 2024. Melksham (100MW/100MWh) was energised in January 2025

-     79% of the Pipeline was energised as of 31 December 2024 with 845MW operational at year end (31 December 2023: 690MW)

-     568MW framework tolling agreement signed with Octopus Energy with 310MW under contract as of 31 December 2024

Unaudited NAV per share

The Company's unaudited NAV per share for 31 December 2024 is 109.35p. This is broadly unchanged versus the prior quarter (109.09p) and 19.72p or 15.3% lower than 31 December 2023.

The primary driver of the year-on-year reduction comes from lower long-term revenue forecasts from independent third-party consultants. Gresham House Asset Management Limited (the "Manager") cautiously expects that, should trading conditions improve, an uptick in revenue forecasts may also materialise. Indeed, in December 2024 the portfolio achieved an average annualised revenue rate of £91,000 per MW per year with a portfolio average duration of 1.4 hours, which was well above the third-party forecast revenue curves for 2025. Performance in January and February has continued at a similar level to Q4 2024. The valuation discount rates remain unchanged from prior year except for the addition of tolling revenues at a discount rate of 8.5% as explained in the 2024 interim report.

Portfolio performance

Despite the difficult start to 2024 the portfolio saw substantial improvements in both revenue and EBITDA generation compared with 2023. Revenue was up 20.1% from £38.7mn in 2023 to £46.5mn in 2024. EBITDA also increased, rising 12.4%, from £25.8mn in 2023 to £29.1mn in 2024.

The revenue environment in 2024 evolved during the year. 2024 started with BESS assets being severely under-utilised (being skipped up to 95% of the time in January 2024 according to Modo Energy[1]) in the Balancing Mechanism resulting in unexpectedly low revenues in Q1 2024, whereas revenues had been expected to increase following the launch of the new Open Balancing Platform by The National Energy System Operator (NESO). From Q2, utilisation in the Balancing Mechanism started to improve, ending the year on a high, and in Q4 2024, the revenue performance of the portfolio had recovered to an annualised revenue rate of £75,000 per MW per year. Nonetheless there is still a lot of room for improvement as NESO is still skipping batteries over 80% of the time according to data published by Modo Energy¹. Even NESO has now admitted that skip rates in the first seven months of 2024 were around 83%[2].

In June the Company signed a landmark tolling arrangement with a subsidiary of Octopus Energy. Contracted revenues have been elusive for BESS since the sector's inception. The availability of tolls and other forms of contracted revenues is now a core focus for the Company to de-risk downside revenue scenarios.

While revenues and EBITDA grew, margins contracted versus the prior year for two reasons. Firstly, revenue growth was driven primarily by increased operational capacity which comes with incremental costs. Secondly, several projects experienced scheduled downtime during their augmentation. If revenue per MW for the full year improves in 2025, as expected, EBITDA margin is anticipated to increase.

Debt refinancing and three-year plan

At the Company's Capital Markets Day on 27 November 2024, the Manager presented the Company's plans for the three years from 2025 to 2027. The plan has three key elements and associated targets:

(i)         Augmentation of more operational projects adding EBITDA of £33mn

(ii)        Build out of new pipeline of 680MW adding further EBITDA of £47mn

(iii)       Add alternative revenues to the existing revenue stack adding EBITDA of £25mn

The aim of the above is to take annualised operational EBITDA to £150mn by the end of 2027[3].

In this context, the Company is progressing with a debt process to refinance its current debt facilities and to secure the project financing required to build out its new pipeline. The process, which is progressing as expected began in November 2024 and is expected to complete in the second quarter of 2025.

Any debt secured will remain within the Company's current gearing limit of 50% of NAV at the time of drawdown, and net debt to GAV is expected to be in a range of 25-30%. The Company expects to meet future debt servicing obligations primarily from contracted cashflows.  

John Leggate CBE, Chair of Gresham House Energy Storage Fund plc, commented:

"2024 proved to be an immensely challenging year for the GB BESS sector including for GRID. After a very difficult start to the year, it is encouraging that portfolio revenues in Q3 and Q4 improved substantially and that EBITDA for 2024 outperformed 2023. However, we continue to push for NESO and its regulator Ofgem to make further progress in reducing the skip rate for BESS during 2025.

We are encouraged by the UK Government's commitment to its Clean Power 2030 plan. While we are monitoring closely the ongoing Connections Reform, at this stage, we do not expect this to impact our near-term growth ambitions.   

The Company is focusing on delivery of its three-year plan which aims to lift revenues and EBITDA, and with a much higher proportion of contracted revenues. Returning to delivery of sustainable dividends remains a priority for the Board which should be unlocked by the refinancing of the Company's debt facilities."

Ben Guest, Fund Manager of Gresham House Energy Storage Fund plc & Managing Director of Gresham House New Energy, added:

"We are pleased to have started the new year strongly in terms of operational capacity, with Melksham's energisation taking operational capacity to 945MW/1,307MWh. We are confident that remaining augmentations and project energisations already under way will follow in the very near term.

We are making progress on our three-year plan, with refinancing currently progressing as expected. A successful refinancing is expected to reduce the Company's cost of debt and secure capital to grow the portfolio through the augmentation of existing projects and the construction of new pipeline without overstretching the Company's combined balance sheet.

The three-year plan unlocks strong capacity growth and cash flow, of which more will be contracted, creating a more traditional infrastructure-like business with improved revenue visibility."

For further information, please contact:

Gresham House New Energy

Ben Guest                                                                   +44 (0) 20 3837 6270
James Bustin

Harry Hutchinson

Jefferies International Limited

Stuart Klein                                                                  +44 (0) 20 7029 8000
Gaudi Le Roux
Harry Randall 

Peel Hunt                                                                  

Huw Jeremy                                                               +44 (0) 20 7418 8900

Luke Simpson                                    

KL Communications                                                            [email protected]
Charles Gorman                                                         +44 (0) 20 3882 6644
Charlotte Francis
Effie Aye-Maung-Hider

JTC (UK) Limited as Company Secretary                         [email protected]
Christopher Gibbons                                                   +44 (0) 20 7409 0181

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 internationally. 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 Ltd is the FCA authorised operating business of Gresham House Ltd, a specialist alternative asset manager. Gresham House is committed to operating responsibly and sustainably, taking the long view in delivering sustainable investment solutions.

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.

DISCLAIMERS

This announcement has been prepared for information purposes only. This announcement does not constitute a prospectus relating to the Company and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer  to subscribe for, any shares in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor. The merits or suitability of any securities must be independently determined by the recipient on the basis of its own investigation and evaluation of the Company. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the securities.

This announcement may not be used in making any investment decision in isolation. This announcement on its own does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment. This announcement does not constitute or form part of and may not be construed as an offer to sell, or an invitation to purchase or otherwise acquire, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this announcement or its completeness.

The information and opinions contained in this announcement are provided as at the date of the announcement and are subject to change without notice and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein and no responsibility, obligation or liability or duty (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, the Manager, Jefferies, Peel Hunt or any of their affiliates or by any of their respective officers, employees or agents to update or revise publicly any of the statements contained herein. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this announcement or on its completeness, accuracy or fairness. The document has not been approved by any competent regulatory or supervisory authority.

Any investment in Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment. Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. Any data on past performance contained herein is no indication as to future performance and there can be no assurance that any targeted or projected returns will be achieved or that the Company will be able to implement its investment strategy or achieve its investment objectives. Any target returns published by the Company are targets only. There is no guarantee that any such returns can be achieved or can be continued if achieved, nor that the Company will make any distributions whatsoever. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to be materially lower than the target returns of the Company.

The information in this announcement may include forward-looking statements, which are based on the current expectations, intentions and projections about future events and trends or other matters that are not historical facts and in certain cases can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "believe" (or the negatives thereof) or other variations thereof or comparable terminology. These forward-looking statements, as well as those included in any related materials, are not guarantees of future performance and are subject to known and unknown risks, uncertainties, assumptions about the Company and other factors, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur and actual results may differ materially from those expressed or implied by such forward looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements.

Jefferies International Limited and Peel Hunt LLP, which are authorised and regulated by the Financial Conduct Authority in the United Kingdom, are acting only for the Company in connection with the matters described in this announcement and are not acting for or advising any other person, or treating any other person as their client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Jefferies or Peel Hunt (as applicable), or advice to any other person in relation to the matters contained herein. Neither Jefferies, Peel Hunt, nor any of their directors, officers, employees, advisers or agents accept any responsibility or liability whatsoever for this announcement, its contents or otherwise in connection with it or any other information relating to the Company, whether written, oral or in a visual or electronic format. Each of the Company, the Manager, Jefferies, Peel Hunt and their affiliates and their respective officers, employees and agents expressly disclaim any and all liability which may be based on this announcement and any errors therein or omissions therefrom.

No representation or warranty is given to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views contained herein are based on financial, economic, market and other conditions prevailing as at the date of this announcement. The information contained in this announcement will not be updated.