Valeria Martinez, Investment Week, 2 August 2024:
Shareholders of London’s battery energy storage trusts have had to stomach severe volatility since the last quarter of 2023, but early signs of recovery are starting to provide grounds for longer-term optimism.
The sell-off across the three London-listed energy storage trusts so far this year has reflected the impact of lower actual and forecast revenues on earnings, adding to the pressure their share prices were already under from a sharp rise in interest rates.
There are various drivers behind the weak revenue environment, including saturation in ancillary service markets due to the rapid build-out of Great Britain battery energy storage systems (BESS) and a reduction in wholesale power price volatility and spreads.
The under-utilisation of BESS in the Balancing Mechanism, combined with implementation issues with the National Grid ESO Open Balancing platform, have also contributed to the sector’s revenue woes..
Despite the sector’s challenging position, some experts have argued there are reasons to be optimistic, a sentiment that mirrors a moderate re-rating of the three trusts in recent months..
QuotedData analyst Matthew Read also noted that as more renewables come online, the spread between low and high intraday prices is widening, which is in turn increasing battery profitability and leading to lower battery costs.
In addition, wholesale electricity prices have staged a recovery over recent months, which has led to improved trading for the battery storage companies, added James Smith, fund manager of the Premier Miton Global Renewables trust (PMGR).
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