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Highlights
- Strong Financial Outlook: GRID expects a 116% increase in installed capacity by Q1 2025 and projects £45 million in EBITDA for 2025, with two-thirds contracted.
- Ambitious Three-Year Growth Plan: Targeting £150 million in EBITDA by 2027, driven by capacity expansion and new revenue streams.
- Refinancing & Debt Management: Focus on reducing debt through asset disposals, with a cautious approach to leverage and a blended strategy of contracted and uncontracted assets to secure stable cash flows.
Gresham House Energy Storage Fund PLC (LSE:GRID), the UK’s largest fund investing in utility-scale battery energy storage systems (BESS), has provided an update on its current trading progress and outlined its ambitious three-year growth plan at its Capital Markets Day on 27 November 2024.
Trading Progress Update
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Improved Financial Position: In 2024, GRID has focused on cash preservation, which has helped the fund navigate the recent operational challenges in the energy storage sector.
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Capacity Growth: GRID's installed capacity is expected to grow by 116% from 31 December 2023 to Q1 2025, with a 13% increase in total capital deployed.
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EBITDA Forecast: The company expects approximately £45 million in EBITDA for 2025, with two-thirds of this figure contracted, ensuring solid revenue visibility.
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Debt Management: GRID continues its focus on asset disposals to reduce debt, with net debt expected to peak at 20% of Gross Asset Value (GAV). The company is also in the process of refinancing its debt facilities to align with its new three-year strategic plan.
Three-Year Strategic Plan (2025-2027)
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EBITDA Growth Target: GRID aims to increase its EBITDA to £150 million by 2027, driven by incremental capacity expansions and new revenue sources.
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2025-2027: The company plans to augment its existing portfolio by 1.5 GWh, targeting an additional £33 million in EBITDA.
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2026-2027: A further 680 MW of capacity is targeted to generate £47 million in incremental EBITDA.
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Revenue Diversification: GRID has reached an agreement in principle for a new revenue stack, aiming for an additional £25 million in EBITDA.
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Market Assumptions: The plan does not assume any improvement in the trading backdrop, and projections are based on £45,000 per MW per year for uncontracted projects.
Refinancing Strategy and Blended Contracting Approach
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Low Leverage Strategy: GRID plans to adopt a cautious leverage approach on merchant revenues, aligning with its strategy of using long-term revenue contracts to secure stable cash flows.
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Blended Approach to Market Access: The company intends to pursue a blended approach to market access, with a combination of contracted and uncontracted assets. This allows for a more stable capital structure while still capturing upside potential from uncontracted projects.
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Project Financing Benefits: Financing projects with contracted revenues reduces the risk of revenue volatility and helps GRID optimize its capital structure, potentially unlocking growth opportunities and improving the cost of capital.
