BY GAVIN LUMSDEN, Citywire Investment Trust Insider, 1 Feb 2024:
Gresham House Energy Storage Fund (GRID) has scrapped its fourth quarter dividend, blaming grid connection delays and under-utilisation of battery balancing mechanism for falling UK revenues.
In a fourth quarter update, the company also said the ‘continued excessive use’ of legacy gas-fired power stations was responsible for the fund’s lack of cash generation to cover its payout to shareholders.
With the revenue outlook for 2024 ‘challenging’, the quarterly dividend will be reset with further details announced at the annual results in April.
In response to a sharp decline in the share price, which fell 47% in January leaving the stock on a 57% discount to net asset value (NAV) and 11% yield, the company will begin share buybacks. The value of these would not initially exceed the cut in the dividend, it added.
The company said it remained on target to increase its operating capacity from 740MW to 1,072MW this year and would focus on completing the 332MW 2023 pipeline, a ‘significant’ part of which could be funded by £40m of cash on its balance sheet…
James Carthew, head of research at QuotedData, said GRID shareholders would be extremely disappointed by the dividend cut and worried by the lack of a turnaround in National Grid revenues that was expected after its software upgrade.
‘The uncertainty about when things will turn for the better is the killer. We would expect that this fund and Harmony Energy will be out of favour for some months to come. Gore Street Energy Storage seems to be in a much better position, however, as it derives much more of its revenue from other countries.’
Read more here