Gresham House eyes 182 MW storage portfolio in the UK

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Asset management fund Gresham House Energy Storage Fund PLC has announced an intent to acquire a 182 MW energy storage portfolio.

The news accompanied the release of Gresham’s net asset value (NAV) update. The asset manager boasts a NAV of £99.95 million ($130 million) spread between investments worth £60.89 million in storage projects plus cash and net current assets worth £39.06 million.

The company said the portfolio of five operational storage facilities it acquired for around £57 million after completing a £100 million IPO in November has a cumulative capacity of some 70 MW. The fund manager has its eyes on a pipeline of five additional projects with a total capacity of 182 MW, it added. Pending issuance of a provisional acceptance certificate, the fund’s next acquisition will be a 50 MW facility in Wolverhampton, in the English West Midlands, for which the company has exclusive purchasing rights.

Now, the asset management company is looking to deploy further capital for capacity extensions at one site and battery upgrades at others. In its statement, the asset manager said “it is expected that the initial gross proceeds [of the IPO] will be fully deployed by the end of the year”. Moreover, a borrowing facility will be put in place for future acquisitions.

A bright outlook for U.K. storage

Keeping energy storage among its assets appears a lucrative option for the fund. The storage systems generate revenue for Gresham House by participating primarily in the firm frequency response contract markets with British utility National Grid. The entire portfolio participated in half-hour winter peaks – known as triads – which generate particularly high returns. This year, Gresham House said, it will target asset optimization through new energy trading strategies that promise higher returns.

And the fund manager is not deterred by uncertainty clouding the future operation of the capacity market – the mechanism for ensuring sufficient power generation capacity is always available. Gresham House said it is confident the capacity market will be reinstated but if it is not, intraday energy prices will become more volatile, thereby increasing the value of services offered by energy storage to the grid. “This may offset any loss of income associated from the withdrawal of the capacity market mechanism,” the company wrote.

Despite the removal of subsidies for wind and solar in the U.K., Gresham House also believes new capacity will be added, thus progressively increasing the need for storage systems to provide grid resilience. Citing research undertaken by Finnish engineering consultancy Pöyry and Imperial College London in May 2017, Gresham House said the “total U.K. storage capacity is rising from approximately 2.9 GW in 2020 to 20.3 GW in 2030, in the central case, with a high case seeing as much as 35 GW of storage capacity by 2030”.