Gresham House Energy Storage (GRID ) is hoping to tweak its investment policy to allow it to invest in energy storage systems (ESS) that are not built as it believes the Covid-19 crisis has created an ‘infection point’ for the sector.
The premium-rated energy infrastructure trust has set its sights on increasing the number of battery assets it holds in its portfolio but to date has been prevented from investing in projects that are not completed or lending to companies developing ESS projects.
With Covid-19 fuelling demand for battery storage, the manager is now asking shareholders to change the investment policy to allow it to acquire ESS projects that are ‘ready to build’ and have in place a ‘completed lease, lease option, or agreement for lease’.
The 4% dividend yielder also wants to provide loan finance for ‘ready-to-build projects’ which will provide the manager with a greater number of investment options.
‘The proposed amendments will allow the company to benefit from a greater selection of projects and contractors, lower costs, and less drag on income,’ said the £261m trust.
In a third quarter update, the manager said that Covid-19 has ‘created an inflection point for energy storage’.
‘The low demand for power and high renewables supply environment seen during lockdown created a backdrop in which it was challenging for National Grid to balance supply and demand, resulting in heavy use of gas fired generation as the main source of flexible generation,’ said Ben Guest, managing director of new energy at Gresham House.
Guest said combined with the ‘curtailment of renewables’ the use of gas-fired generation has been expensive for National Grid and created higher carbon emissions.
‘This was a necessity during a difficult time but emphasises the need for batteries as this backdrop will only become more prevalent as renewable energy penetration increases,’ he said.
The mis-match between the growth in renewable energy produced and energy storage means that the ESS market is ‘significantly under penetrated’.
The investment company saw its net asset value (NAV) rise 1.58p per share in the third quarter after undertaking a review of the discount rates used to value its assets.
Year-to-date the NAV is up 1.1% while the shares have jumped 8%, leaving them trading at a premium of nearly 16%.
It remains on track to deliver a 7p per share dividend this year after declaring a third quarter pay-out of 1.75p.
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