Gresham House Energy Storage Fund (GRID) CMD 2026 summary

Market and Regulatory Outlook

• Battery energy storage systems (BESS) are central to grid operations, driven by the decline of coal and nuclear, the rise of renewables, and electrification.

• Demand for electricity is projected to grow, with AI data centers queuing over 50 GW and renewables expected to double by 2030.

• Gas assets are aging and not being replaced, increasing reliance on batteries for grid flexibility.

• Regulatory changes, such as GC0166, will enable better battery utilization in the control room, supporting revenue growth.

• The market is shifting toward longer-duration storage, with government-backed contracts emerging for 8+ hour systems.

Strategic Growth Plan and Capital Allocation

• The updated plan targets £141 million EBITDA by 2029, with a 90% reduction in required equity capital compared to prior plans, leveraging senior debt and strategic partnerships to maximize ROE.

• Pipeline capacity has expanded to 1,174MW, with 75% ownership, and staged commissioning through 2030; major projects include Rayleigh (480MW), Ocker Hill (240MW), and Cockenzie (240MW).

• Augmentations to two-hour duration are nearly complete, with future focus on eight-hour systems for select projects; augmentations scaled back from 1.5GWh to 350MWh, optimizing ROIC and reducing capex by approximately £180mn.

• Funding is secured through a mix of senior debt, export credit, and a JV with Sumitomo, TPK, and Summit Transition Partners, reducing equity needs and boosting ROE.

• Alternative revenue strategies, validated by trials, are being scaled up, targeting £25 million incremental annualized earnings by 2030, and are designed to be additive and inversely correlated to existing trading revenues.

Financial Guidance and Shareholder Value

• NAV per share is projected to increase by £0.56 (about 50%) from the new pipeline alone, with further upside from alternative revenues; current NAV stands at 114p per share, with a modelled 56p increase from the 1,174MW pipeline.

• Free cash flow target remains at £0.10 per share, with dividends to resume once fully covered, likely from 2028.

• Debt levels will remain within 50% of NAV, with amortising structures and contracted revenues supporting servicing.

• The board is committed to maximizing shareholder value and will consider strategic alternatives if the share price does not re-rate as expected.

• International expansion is under consideration, leveraging the expertise and networks of new JV partners.