Wednesday, 28 April 2021

Gresham House Energy Storage - Full Yr Results

Since its launch in December 2018, Gresham House Energy Storage (GRID) has developed the largest energy storage portfolio in the country. It operates 16 utility-scale energy storage systems with a total combined capacity of 425MW.

As we transition from fossil fuel generation to renewables such as wind and solar, we will increasingly need energy storage solutions due to the intermittent nature of renewable energy - the wind doesn't always blow and there's not much solar in the Winter months. Currently we use gas fired generation to fill the gap but we have legislated for net zero carbon emissions by 2050 (78% reduction by 2035) so the ability to store excess energy from an ever increasing renewables sector will be essential. As renewable capacity expands, gas-fired power stations will be required less frequently and so they become less profitable to run. This means that renewables are forcing fossil fuels off the grid.

As recently as 2014, coal was our main source of electricity generation. It is still used in the winter months but currently accounts for just 2% of  generation and is due to be completely retired by 2024.

GRID has several streams of revenue which include the wholesale market and National Grid balancing mechanism, Firm Frequency Response based on small-scale changes to the grid's electrical frequency, fixed fees for being on call to deliver power at times of extreme need and Triad payments from National Grid when there is peak demand. 

50MW Thurcroft Facility


The company have this week released results for the full year to end December 2020 (link via Investegate). Net Assets have increased by 8.4% over the year on a total return basis to 102.9p and share price return is up 10.8% compared to FTSE All Share Index fall of -9.8%.

Over the year, the company has acquired three more storage projects with a total capacity of 141MW. This additional capacity has boosted annual revenues from £10m in 2019 to 19m. In recent months, these revenues have increased due to the introduction of National Grid's Dynamic Containment (DC) service last October. This aims to provide more resilience to the grid supply and reduce volatility to provide a better balancing mechanism. Despite only starting in October, DC has accounted for 33% of GRID's revenues for this year.

National Grid are starting to appreciate the value of battery storage to balance the national system and in January 2021 announced an increase in DC to 1.4GW by May 2021 compared to just 500MW in December 2020. Recent trials with batteries have shown that they can provide back-up in the same way as gas turbines are used to balance the system and reduce the curtailment of renewable energy. If National Grid decide to make this a permanent feature following further trials, it is likely to lead to significant revenue opportunities for GRID.

Construction is due to start soon on a further 275MW of storage capacity and looking further ahead, the manager has identified a further 527MW of additional pipeline projects.

Commenting on the results, lead investment manager Ben Guest said:

"The UK's global leadership in renewable generation and in its setting of ambitious decarbonisation targets, continues to make it one of the world's most attractive markets for deployment of utility-scale battery storage technology. We are encouraged by the system operator, National Grid, continuing to test and facilitate new ways for battery storage to contribute to system balancing.

"More renewable energy on the system will inevitably lead to more intraday power price volatility, driving the improved revenues and profit from trading which GRID is best positioned to capture. We are intent on driving shareholder value by maximising project returns through our portfolio scale as well as operational and cost leadership, while striving to reduce our cost of capital, including through a potential new debt facility."

The company has paid a total dividend of 7.0p over the past year as promised and has maintained this target for 2021. This gives an attractive yield of 6.1% to those investors looking for income.

GRID 1 Yr Share Price
(click to enlarge)

I added this trust to my green portfolio in December 2019 at the price of 105p...its currently 115p and continues to trade at a significant premium to net assets.

Obviously this is still early days for this relatively new venture. The UK only has around 1.5GW of storage but this is expected increase to 10GW over the next 4 years so there should be plenty of opportunities for GRID to expand it's business. The focus so far has been batteries but I am wondering whether they have considered other energy storage solutions such as flow batteries or green hydrogen as these also has lots of potential.

The reality is that fossil fuel generation will gradually be replaced by renewables as we move towards our net zero target by 2050. This means increasing intermittency which will require ways to store energy to bridge the gaps and provide a constant supply.

In the past few months I have been scaling back my exposure to the UK renewable infrastructure sector but will retain my holding in GRID as it does not appear to be so affected by power prices. So, one to put back in the bottom drawer pending further developments.

The shares account for 3% of my green portfolio.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Thursday, 1 April 2021

Portfolio Review - End March 2021

Well, what a dramatic year. We went into a global lockdown last March, eased up during the summer months and then we were hit by a deeper second wave during the winter months as new cases rose exponentially, hospitals were severely stretched and deaths here in the UK rose to over 125,000. Clearly we have experienced a global pandemic crisis which has a social impact not seen since the second world war. This experience will remain long in our memory banks.

Naturally there has been volatility on the markets, especially the initial shock. In March last year the FTSE saw its largest one-day fall - 10.8% - since 1987 with a similar pull-back in the US where the Dow Jones recorded its biggest one day points fall of over 3,000. Then, a week later, the FTSE records its biggest one-day points jump of 452 and the Dow Jones climbs a record 2,100 points and the biggest gain for 90 years...remarkable...the global markets don't get any more dramatic than this. However, despite the pandemic, the markets turned out to be remarkably resilient and have weathered the storm far.

Portfolio Changes

The turbulence last year provided an opportunity to pick up a few bargains and the likes of Google, Microsoft, McPhy, Ceres Power, Nibe and Tesla were added to my portfolio. Later in the year following the election of Joe Biden I added Plug Power, Enphase and SolarEdge as well as the more eco-friendly global index fund, iShares World SRI ETF.

In the past few months I have sold down my government bonds and Tesla and also reduced my renewable infrastructure sector. The proceeds have been used to top up several of my clean energy holdings including Vestas Wind, Orsted, Enphase and SolarEdge and also add the likes of the new L&G Hydrogen ETF.

Portfolio Returns

By the end of 2020, the FTSE 100 had lost 11% for the year and stood at 6,460. It has since risen to currently 6,750 or 4.5% plus dividends. Looking more widely, my iShares World SRI fund is up 5.4% over the first quarter.

Although no longer a part of my portfolio due to fossil fuel holdings, the Vanguard Lifestrategy 60 fund is a diverse mix of global equities and bonds and provides a good benchmark for a balanced global portfolio. The fund is up 0.9% over the past 3 months.

I had my best ever year in 2020 with a total return of 44% and over 50% from my green portfolio holdings so I have been expecting some correction or pull-back in the new year. The past couple of months have seen quite a bit of volatility in the technology sector and my clean energy holdings seem to have been caught up as well. As a whole my portfolio is down 7.2% over the quarter.

Green Funds

These holdings now make up around 85% of the total portfolio. They mostly had a stellar 2020 but have fallen back around 10% to 15% over the past couple of months. 

However, over the full year since last March many are showing remarkable gains - 

ITM Power share price was 110p last year and currently 470p, a gain of 325%, 

Ceres Power was 325p and now 1250p, gain 280%, 

McPhy was €4.60 and now €32.60 a gain of 590%, 

Enphase was $29.77 and now $162 gain 444% and 

Plug Power $3.30 a year back and now $35.80 gain 980%. 

Past 12m for Ceres and ITM Power
(click image to enlarge)

However over the past 3 months most of these shares are down...ITM  -9%, Ceres down 5%, McPhy down 11%, Enphase down 11% and only Plug gaining 8%.

So I am hoping this is a short-term correction and these holdings can get back on the rising escalator over the rest of this year and beyond.


It is getting on for 30 months since I started to move my portfolio towards more climate-friendly investments and it is reassuring to see they have held up reasonably well during this past year. I certainly feel much better investing in the likes of Orsted, a global leader in offshore wind, rather index funds with their fossil fuel companies and the big banks that finance their operations.

Our attention has been very much focused on Covid this past year but with a vaccine roll-out now underway I am hoping we can move on to tackle the far bigger crisis of climate change. There are encouraging signs that the global leaders are starting to sing from the same hymn sheet and work out how to cooperate to reduce emissions and meet the goals of the Paris Agreement to limit warming well below 2.0C. The transition from fossil fuels to clean energy is well underway. Huge amounts of financial support is being directed into this area as governments move to decarbonise their economies and this along with policy shifts should support the growth of those companies trying to provide some of the solutions to this climate emergency. 

Let's see how the rest of the year unfolds..."Survival as an investor over that famous long course depends from the very first on recognition that we do not know what is going to happen. We can speculate or calculate or estimate, but we can never be certain". (Peter Bernstein)

Take it easy...have a lovely Easter!

As always, if you keep track of portfolio returns, feel free to leave a comment and share with others how your investments have fared over recent months.