UK storage fund GRID expects 2024 revenue growth as market improves

Gresham House Energy Storage Fund plc (LSE:GRID), a UK fund investing in utility-scale battery energy storage systems (BESS), expects an increase in 2024 operational portfolio revenues compared with 2023, driven by capacity growth and improving market fundamentals, following a low point in the first quarter of the year.

After experiencing a 12.8% year-over-year fall in the first quarter of 2024, portfolio revenues reached GBP 33.8 million (USD 43.8m/EUR 40.6m) in the first 10 months of the year and the company expects them to exceed the full-year 2023 level of GBP 38.7 million in the whole of 2024.

Revenues are boosted by the fund’s growing capacity, which recently reached 845 MW/1,207 MWh. The market is also improving due to the rising volatile renewable generation, modest growth in power demand driven by electric vehicle adoption and stabilising electricity prices, and reduced excess supply as coal plants have been phased out.

In addition, the fund welcomed the positive regulatory steps the government is taking as part of its focus on decarbonising the electricity system by 2030. These include the National Energy System Operator's (NESO) commitment to accelerate the improvement in dispatch rates in the Balancing Mechanism. The Balancing Programme will also soon launch the Quick Reserve service, offering an additional revenue opportunity to BESS, and implement technology to help BESS to be more visible to the control room. Furthermore, the government has confirmed that lithium-ion batteries will be eligible to compete in the planned Cap and Floor mechanism for long-duration energy storage, which could see projects of eight hours duration or more become commercially attractive in due course, the company said.

"Lithium-ion is now the most competitive technology, in terms of cost and round-trip efficiency, at any duration up to at least 10 hours and will become increasingly competitive at longer durations as battery prices fall further," said Ben Guest, fund manager of Gresham House Energy Storage Fund plc and managing director of Gresham House New Energy.

(GBP 1 = USD 1.295/EUR 1.202)

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