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Edison Investment Research Lim (GRID)

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Thursday 17 February, 2022

Edison Investment Research Lim

Gresham House Energy Storage Fund (GRID): Initiation - A rapidly growing fund with scope for NAV uplifts

Edison Investment Research Limited
Edison Investment Research Limited: Gresham House Energy Storage Fund (GRID): Initiation - A rapidly growing fund with scope for NAV uplifts

17-Feb-2022 / 07:00 GMT/BST


Gresham House Energy Storage Fund (GRID): Initiation - A rapidly growing fund with scope for NAV uplifts

Gresham House Energy Storage Fund (GRID) invests in a diversified portfolio of utility-scale battery energy storage systems (BESS) in the UK and Ireland. It is the largest UK listed BESS fund and the largest operator in the market, and it is growing rapidly. GRID owns 17 operational projects with capacity totalling 425MW, which have delivered a good performance since inception. It also has eight projects (comprising a further 415MW) under construction and due to begin operating in 2022, and expects total capacity to exceed 1,500MW by 2024. BESS are a key part of the UK's commitment to reach net zero carbon emissions by 2050. Demand for these units is projected to rise from 1.4GW today to an estimated 42GW by 2050, according to National Grid. We believe GRID's asset valuation policy is conservative relative to its peers, providing scope for potential NAV uplift. GRID's manager, Ben Guest, has the funding to deliver the current pipeline and in our view, it is possible that GRID may raise further funds in 2022 to drive growth in 2023 and beyond. The fund has a high dividend policy, currently paying a dividend of 7.0p per share.

GRID's share price has traded at a premium to cum-income NAV since inception, thanks to strong investor demand for exposure to this asset class, the attractive, regular dividend, healthy dividend cover and the possibility of NAV uplifts, given GRID's conservative valuation policy. However, in the absence of further share price rises, the premium may narrow as and when any such uplifts are realised. 

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