A 45% rise in monthly trading revenues has raised hopes of a recovery in the three energy storage funds after their devastating first quarter sell-off.

Shares in Gresham House Energy Storage (GRID ), which had plunged to a discount of over 70% after cutting its dividend, yesterday jumped nearly 7% and Harmony Energy Income (HEIT ) and Gore Street Energy Storage (GSF ) rose over over 2% after data from Modo Energy showed revenues from battery energy storage systems (Bess) in England, Scotland and Wales leaped from £23,000 per megawatt per year in February to £32,000 per MW per year in March.

This is back to the level of last December before their New Year slump but around half of the revenues achieved last summer (see chart below).

Modo said the improvement was driven by a 170% increase in frequency response revenues to £8,000 per megawatt per year, as prices rose across National Grid’s balancing system, and wholesale spreads climbed 25% as volatility in prices heightened.

While still early in the month, Modo Energy’s GB Bess index points to sustained momentum in estimated revenues for one- and two-hour batteries in April.

This is welcome news for the Gresham House and Harmony funds, whose shares have tumbled to 45% and 60% below net asset value, as both generate all their operational revenues in Great Britain, and also Gore Street, which despite having a more international portfolio, earns most of its revenues from GB and pays an uncovered dividend.

GB revenues slumped in the last quarter of 2023 because of the saturated ancillary services market and the grid’s lack of use of them in its balancing mechanism, all three companies said at the time.

Over the weekend, Gresham House fund manager Ben Guest told the Financial Times that the underutilisation of batteries by the National Grid’s electricity system operator risked reducing investment, adding that this was ‘throttling the development of battery solutions in the UK … not to mention slowing the UK’s legal commitment to meet net zero by 2025.’

Peel Hunt’s Markuz Jaffe pointed to Bessanalytics’ estimated revenue data showing average revenues for balancing mechanism-registered GB assets owned by Gore Street, Gresham House and Harmony Energy of £54,000, £44,000 and £65,000 per MW per year respectively over the 30 days to 7 April, corroborating Modo Energy’s data.

‘Even if only a short period of time, we see this as an important development for a sector where the listed vehicles have been severely impacted by negative news flow and investor sentiment around concerns of depressed revenue levels and subsequent risks to business models,’ he said.

However, he reiterated that the very recent estimated revenue run rate is likely to remain far below the revenues curves last used by the funds to value their GB assets, and so Peel Hunt continues to see potential for valuation cuts if revenues do not recover further in the coming months.