Gresham House Energy Storage Fund (GRID) will not hit its £150m earnings target by the end of next year after the National Electricity System Operator (NESO) announced 2029 energisation dates for two of the five projects in its three-year recovery plan.
The connection offers of July 2029 for Lister Drive, a 57MW battery energy storage system (BESS) in Merseyside, and October 2029 for Ocker Hill, a 240MW project in the West Midlands, means their construction won’t start until the first half of 2027.
The £420m investment trust, whose shares stand on a 40% discount to net asset value, said it was pleased to have clarity over four of its five projects, which represented 594MW, or 86% of the 694MW pipeline. It expects to receive the fifth connection offer, relating to Elland 2, a 100MW project in West Yorkshire already under construction, by this November.
Chair Leggate said the company would update shareholders on the three-year plan at a capital markets day on 28 May, stating, “it is now likely that the target £150m run-rate EBITDA [underlying earnings before interest, tax, depreciation and debt amortisation] by the end of 2027 will be delayed, to reflect the new connection offer dates.”
He added: “We are emerging from a period of stasis in the BESS market with our pipeline intact, putting us in a strong position to grow the company’s installed capacity and maintain our leadership position.”
GRID shares rose 0.4% to 75.3p. They have rallied 24% in the past year but have fallen 27% over three years. That reflects the steep decline in UK revenues suffered by battery funds in the first half of 2024 which saw GRID suspend its dividend, reinstating it at a lower level last October.
Our view
Matthew Read, senior analyst at QuotedData, said: “There is a clear sense of progress from GRID. Grid connections remain the main bottleneck in expanding the UK’s capacities for battery storage and renewable generation more generally, so, securing these for Lister Drive and Ocker Hill is a meaningful step in GRID being able to deliver on its growth ambitions. That said, the push-out of connection dates for these assets into 2029 inevitably delays part of the earnings ramp, and the admission that the £150m EBITDA target will slip reflects this reality.
“This perhaps underlines a broader point for investors: while the structural case for battery storage remains compelling, execution is still heavily influenced by external factors such as grid infrastructure and regulatory processes. However, recent events in the Middle East have once again highlighted the case for greater energy security in the UK. The need to improve this is something the main political parties agree on, even if their means differ, and suggests that BESS assets and renewable assets more generally could benefit from a more favourable regulatory environment going forward.”
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