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Gresham House makes plans to invest in new battery projects as demand for storage rises

Gresham House makes plans to invest in new battery projects as demand for storage rises

Gresham House Energy Storage (GRID) is planning to make alterations to its investment policy to enable it to invest in additional energy storage systems (ESS) that are yet to be constructed. Gresham House believes the pandemic has created what they refer to as an ‘inflection point’ for the industry.

The premium rated energy infrastructure trust has released plans to increase the volume of battery assets it holds within its portfolio, but up until now has been hindered from investing in projects that are either not completed or capable of lending to businesses developing energy storage system projects.

With the pandemic accelerating the demand for battery storage, senior executives at GRID are speaking to shareholders to discuss potential changes to the investment policy to enable it to acquire energy storage projects that are ready to build and have an existing completed lease, lease option or an agreement for lease. Gresham House also wants to supply loan finance for ready to build projects, which will enable a wider number of investment options.

The trust explains that the suggested alterations will enable the business to benefit from a bigger selection of projects and contractors, and at lower costs and less pressure on overall income. The latest quarterly update for Gresham House referred to Covid-19 as having created an inflection point for the energy storage industry.

Reduced demand for power and higher renewable energy supply experienced during lockdown has triggered a challenging scenario for National Grid, in terms of balancing supply and demand. According to Ben Guest, the Managing Director of New Energy at Gresham House, the current conditions have resulted in a significant reliance on gas-powered facilities for the main source of flexible generation.

Guest explains that combining these conditions with the curtailment of renewables, the use of gas-powered generation has been a costly option for National Grid and also resulted in higher carbon emissions. Guest acknowledges that this was a necessary measure during a particularly challenging time, but reiterates the need for batteries, as this scenario will likely become more prevalent as renewable energy penetration levels continue to increase.

The imbalances between renewable energy production levels and energy storage mean that the energy storage market is significantly underpenetrated. Gresham House experienced a rise of 1.58p per share in its net asset value during the last quarter after reviewing discount rates it applied to its assets.