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Gresham House Energy Storage Fund plenty of opportunity for yield compression (Interview)

Gresham House Energy Storage Fund (LON:GRID) Managing Director Rupert Robinson joins DirectorsTalk to provide some insights into the fund. Rupert explains what the fund is, why they are looking to raise new funds, what the monies will be used for, the timetable involved, how to measure performance, past performance, what the fund provides that others may not and plan to have the dividend fully cash covered in 2021.

The UK’s approach to electricity generation is undergoing fundamental change, shifting from coal and gas-fired power stations towards an energy mix dominated by renewable energy.

A cost-effective solution to the intermittency of renewable energy is energy storage to address supply-demand imbalances on the national grid, in real time.

Gresham House Energy Storage Fund seeks to provide shareholders with an attractive and sustainable dividend over the long term, alongside the prospect of capital growth.

The investment team has constructed a diversified portfolio of operational utility-scale ESS projects. Each one can generate multiple revenue streams to allow the fund to deliver on its return objectives.

It focuses on four sources of revenue:

  • Asset optimisation – the ability to maximise income from the wholesale market and the Balancing Mechanism (through which National Grid balance intra half-hourly supply and demand)
  • Firm Frequency Response – the provision of a dynamic (i.e. proportionate) response to small supply-demand imbalances, second by second, based on changes in the GB grid’s electrical frequency
  • Capacity Market – a UK government mechanism whereby generators (including batteries) are paid a fixed fee for being on call to deliver power when required at times of extreme need (known as ‘stress events’)
  • Grid payments – at times of peak demand National Grid make ‘Triad’ payments to generators (including batteries) during the three peak half-hours when demand is highest for the year