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Gresham House Energy Storage Fund plc Gresham House Energy Storage Fund plc

Gresham House Energy Storage Fund plc (GRID) invests in a portfolio of utility-scale operational battery energy storage systems (BESS) in Great Britain.

Key documents

Why invest?

The UK's approach to electricity generation is undergoing fundamental change, shifting from coal and gas-fired power stations towards an energy mix dominated by renewable energy.

A cost-effective solution to the intermittency of renewable energy is energy storage to address supply-demand imbalances on the national grid, in real time.

Investment approach

The fund seeks to provide shareholders with an attractive and sustainable dividend over the long term, alongside the prospect of capital growth.

The investment team has constructed a diversified portfolio of operational utility-scale BESS projects. Each one can generate multiple revenue streams to allow the fund to deliver on its return objectives.

It focuses on four sources of revenue:

Asset optimisation – the ability to maximise income from the wholesale market and the Balancing Mechanism (through which National Grid balance intra half-hourly supply and demand)

Firm Frequency Response – the provision of a dynamic (i.e. proportionate) response to small supply-demand imbalances, second by second, based on changes in the GB grid's electrical frequency
Capacity Market – a UK government mechanism whereby generators (including batteries) are paid a fixed fee for being on call to deliver power when required at times of extreme need (known as 'stress events')
Grid payments – at times of peak demand National Grid make 'Triad' payments to generators (including batteries) during the three peak half-hours when demand is highest for the year

How to invest

The fund is listed on the Specialist Fund Segment (SFS) of the London Stock Exchange and can be accessed using the ticker GRID.
Due to its SFS listing, some platforms may not list the fund or will require interested investors to self-elect as a professional investor in order to be able to invest.

Potential investors are invited to contact Anthony Crosbie Dawson for more information:

Anthony Crosbie Dawson, Director, Private Clients
+44 (0)1451 843 096

a.crosbiedawson@greshamhouse.com

Board

John Leggate

Non-Executive Chair, Gresham House Energy Storage Fund plc Board

John is a highly-experienced international executi...

John Leggate Non-Executive Chair, Gresham House Energy Storage Fund plc Board

John is a highly-experienced international executive in the energy sector and an investor and advisor in renewable energy and digital technology. In his early career, John worked in civil nuclear power generation and held a number of senior roles at BP, focusing on the North Sea and Azerbaijan. Latterly at BP, he held a range of corporate-level executive roles, including Group Chief Information Officer.

He was also responsible for group-wide physical and cyber security and led the development of corporate digital transformation investment activity. John is currently a senior advisor to global blue-chip consultants specialising in energy and digitisation, a partner with donedeal (Monaco) – a boutique financial advisory and M&A house – and is on the board of cyber security firm Global Integrity. John also serves on the Enterprise Committee of the Royal Academy of Engineering.

Cathy Pitt

Non-Executive Director, Gresham House Energy Storage Fund plc Board

Cathy is a legal adviser who has specialised in th...

Cathy Pitt Non-Executive Director, Gresham House Energy Storage Fund plc Board

Cathy is a legal adviser who has specialised in the investment company sector for over 20 years. Cathy is currently a Partner at CMS, a top global law firm. Prior to this, she worked in the asset management practice of another top global law firm for almost 20 years, 8 of which as a Partner.

Cathy's work has encompassed investment fund structuring and fundraising for domestic and international investment funds. Cathy is also a member of the Law Society Company Law Committee and sits on the Regulatory and Governance Committees of LPeC, the industry association for listed private capital funds.

David Stevenson

Non-Executive Director, Gresham House Energy Storage Fund plc Board

David is a financial journalist and commentator fo...

David Stevenson Non-Executive Director, Gresham House Energy Storage Fund plc Board

David is a financial journalist and commentator for several leading publications, including The Financial Times, Citywire and MoneyWeek. He is Executive Director of leading alternative finance news and events service altfi.com, which covers major trends in marketplace lending, crowdfunding and working capital provision for SMEs. David is the author of a number of books, including a bestseller on ETFs and their use within portfolios in Europe for the FT.

David was a Director at The Rocket Science Group and before that a Senior Producer in business and science for BBC TV. He is also a Non-Executive Director on the SQN Secured Income Investment Trust and the Aurora Investment Trust.

Duncan Neale

Non-Executive Director and Audit Committee Chairman, Gresham House Energy Storage Fund plc Board

Duncan is a Chief Financial Officer and Finance Di...

Duncan Neale Non-Executive Director and Audit Committee Chairman, Gresham House Energy Storage Fund plc Board

Duncan is a Chief Financial Officer and Finance Director with over 20 years' public and private commercial experience. He is a Fellow of the Institute of Chartered Accountants and qualified with PwC in London. Duncan was part of the senior management team that turned Corona Energy from a gas trading business into the largest independent supplier of gas to UK businesses and has also served as CFO of an M&A team bidding for thermal power stations.

Recently he spent several years as Finance Director of Belltown Power, a renewable energy site operator (hydro, solar and wind) holding a portfolio of 215 MW. He is a Trustee and Treasurer of Cambodian Children's Fund UK.

Investment team

Ben Guest

Managing Director,
New Energy

Ben has been Managing Director and Head of the Gre...

Ben Guest Managing Director,
New Energy

Ben has been Managing Director and Head of the Gresham House New Energy division since November 2017.

He is also the Fund Manager of Gresham House Energy Storage Fund plc, with assets under management (AUM) of over £500m, and was, through 2020, also Fund Manager for the British Strategic Investment Fund (BSIF) Strategy which grew AUM to £350m under his leadership. Ben started his fund management career at Lazard Asset Management in 1994 and worked there for nine years. He later founded Hazel Capital in April 2007, serving as Managing Partner and CIO and which became Gresham House New Energy on the acquisition of Hazel Capital's business activities in November 2017.

Prior to founding Hazel Capital, he was a co-founder of Cantillon Capital, where he managed a US$1bn equity hedge fund focused on global technology, media and telecom. Ben currently serves as a director of over 50, mostly project, companies. He has 27 years of investment experience and holds a BEng in Mechanical Engineering from Imperial College.

Bozkurt Aydinoglu

Investment Director, New Energy

Bozkurt joined Hazel Capital (now Gresham House Ne...

Bozkurt Aydinoglu Investment Director, New Energy

Bozkurt joined Hazel Capital (now Gresham House New Energy) in 2008 as a Partner and Portfolio Manager. He co-manages the Gresham House New Energy VCTs and sources and executes new opportunities, covering transaction negotiation, due diligence and contract negotiation. He dedicated the early part of his career to funding and advising companies in the telecommunications and technology industries, whilst in roles at Nomura, Salomon Brothers, Bowman Capital and Deloitte & Touche. In 2002 he co-founded and built New Energy Finance (NEF), which became the leading provider of data, research and analysis to investors in the global cleantech industry. NEF was acquired by Bloomberg in December 2009.

He has 25 years' principal investment, advisory and business-building experience in the clean energy, telecommunications and technology industries, and holds an MSc in Electrical Engineering from Imperial College London.

Gareth Owen

Investment Director, New Energy

Gareth has been an Investment Director at Gresham ...

Gareth Owen Investment Director, New Energy

Gareth has been an Investment Director at Gresham House since November 2017. He joined the company following the acquisition of Hazel Capital where he was a Partner. Gareth is responsible for executing investments, particularly acquisitions, disposals and limited recourse financings of pre-and-post commissioned renewables projects. Prior to joining Hazel Capital, he worked at Barclays Capital from 2001 to 2009, latterly as a Vice President for Barclays Natural Resource Investments, a c.US$1.5bn captive private equity fund investing in natural resources and renewable energy. Prior to that, he worked in the Structured Capital Markets divisions of Barclays Capital and Deutsche Bank, handling the acquisition and disposal of various asset-based companies. He started his career in infrastructure project finance at NatWest Markets, advising on and financing a number of Private Finance Initiative (PFI) / Public Private Partnership (PPP) projects. Gareth has over 20 years of experience and holds an MBA from Imperial College Business School, an MSc in Engineering Project Management and a BEng in Civil Engineering, both from the University of Manchester.

Rupert Robinson

Managing Director,
Gresham House Asset Management Limited

Rupert Robinson has been the Managing Director of ...

Rupert Robinson Managing Director,
Gresham House Asset Management Limited

Rupert Robinson has been the Managing Director of Gresham House Asset Management Ltd since September 2015. Before joining Gresham House, Rupert was CEO and CIO of Schroders (UK) Private Bank for 11 years and prior to that spent 17 years at Rothschild where he was latterly Head of Private Clients at Rothschild Asset Management. Rupert has a proven track record of delivering significant value to shareholders. He has over 31 years of experience in asset management, private banking and wealth management, focusing on product innovation, investment management, business development, banking and wealth structuring. He is a member of the Group Management and Investment Committees.

Charlie von Schmieder

Investment Director, New Energy

Charlie is an Investment Director in the Gresham H...

Charlie von Schmieder Investment Director, New Energy

Charlie is an Investment Director in the Gresham House New Energy team. His current role began in February 2021, following a year in the team as a contractor. He is responsible for executing investments in infrastructure projects such as energy storage systems, whether acquired before construction or when already operational.

Charlie has extensive experience in the development, funding and asset management of distributed energy infrastructure projects assisting both investment managers and project developers at every stage of bringing their projects to fruition. He has worked on projects in a wide range of technologies including solar PV, hydroelectric power, anaerobic digestion, combined heat and power, thermal heat networks, gas peaking and grid-scale battery storage.

He started his career over 20 years ago as a commercial solicitor before transitioning to renewable energy, working with investment management firms for the last nine years.

Charlie studied science of materials at Trinity College Dublin and has an MBA from INSEAD, France.

Annual General Meeting (AGM)

Held on: 12:00pm on Monday, 21 June 2021

The Notice of AGM can be accessed here.
To view the new Articles of Association please click here.

Please click here to watch the replay of the AGM.

Webinar: The evolving dynamics of the broader battery storage market

Held on Monday 21 June at 12:30pm (BST)

John Leggate, GRID's Chair, and Fund Manager, Ben Guest discussed the evolving dynamics of the broader battery storage market, hosted by Non-Executive Director, David Stevenson and followed by an interactive Q&A session.

Please click here to watch the replay.

Shareholder information

View or subscribe to the key shareholder information for this company.

Introduction

The Fund (or the Company), invests in a diversified portfolio of utility-scale battery energy storage systems (''BESS Projects''), which utilise batteries and may also utilise generators. The BESS Projects comprising the Portfolio are located in diverse locations across Great Britain.

Individual projects are held within special purpose vehicles into which the Company invests through equity and/or debt instruments. It is intended that each BESS Project Company holds one project but an BESS Project Company may own more than one project. The Company will typically seek legal and operational control through direct or indirect stakes of up to 100%. The BESS Projects may participate in joint ventures or co-investments, including, without limitation with other investors or entities managed, operated or advised by the Gresham House Group. This approach enables the Company to gain exposure to assets within the Company's investment policy, the like of which the Company would not otherwise be able to acquire on a wholly-owned basis. In such circumstances the Company will seek to secure its shareholder rights through protective provisions in shareholders' agreements, co-investment agreements and other transactional documents.

Asset type and diversification

The Fund (or the Company), currently intends to invest primarily in BESS Projects using lithium-ion battery technology as such technology is considered by the Company to offer the best risk/return profile. However, the Company is adaptable as to which energy storage technology is used by the projects in which it invests and will monitor projects and may invest in projects with alternative battery technologies such as sodium and zinc derived technologies, or other forms of energy storage technology (such as flow batteries/machines and compressed air technologies), and will consider such investments (including combinations thereof), where they meet the Company's investment objective and policy.

The Company also intends to invest in BESS Projects which use gas generators or diesel or dual-fuel diesel-and-gas reciprocating generators on projects which have a ''net export'' connection. These are likely to be generators in the range of 0.5 to 10MW per engine.

The Company invests with a view to holding assets until the end of their useful life. BESS Projects may also be disposed of, or otherwise realised, where the Manager determines in its discretion that such realisation is in the interests of the Company. Such circumstances may include disposals for the purposes of realising or preserving value, or of realising cash resources for reinvestment or otherwise.

The Company intends that the BESS Projects in which it invests primarily generate revenue from in front of meter services, but may also provide behind-the-meter services.

BESS Projects are selected with a view to achieving appropriate diversification in respect of the Portfolio.

First, diversification will be sought by geographical location of the BESS Projects in which the Company invests across Great Britain.

Second, it is the Company's intention that from the end of the Initial Investment Period, when any new investment is made, no single project (or interest in any project) will have an acquisition price (or, if an additional interest in an existing investment is being acquired, the combined value of the Company's existing investment and the additional interest acquired shall not be) greater than 20% of Gross Asset Value (calculated at the time of investment). However, in order to retain flexibility, the Company will be permitted to invest in a single project (or interest in a project) that has an acquisition price of up to a maximum of 30% of Gross Asset Value (calculated at the time of acquisition). The Company will also, from the end of the Initial Investment Period, target a diversified exposure with the aim of holding interests in not less than five separate projects at any one time.

Third, the Company intends to achieve diversification by securing multiple and varied revenue sources throughout the Portfolio by investing in BESS Projects which benefit from a number of different income streams with different contract lengths and return profiles through individual BESS Projects, as well as by enabling the BESS Projects in which the Company invests to take advantage of a number of different revenue sources. Initially, it is intended that the main revenue sources will be:

Firm Frequency Response ("FFR") – the Company intends to invest in BESS Projects that generate FFR revenues from FFR contracts through which the Company and/or its subsidiaries will provide, on a firm basis, dynamic or non-dynamic response services to changes in frequency, to help balance the grid and avoid power outages to, initially, be entered into by Noriker with the National Grid and its subsidiaries.
Asset optimisation – the Company intends to invest in BESS Projects that generate revenues from importing and exporting, or generating and exporting in the case of an BESS Projects including generators, power in the wholesale market and the National Grid-administered Balancing Mechanism (''BM'').
Triads and other National Grid-related income – the Company intends to invest in BESS Projects that generate revenues from the three half-hour periods of highest system demand on the Great Britain electricity transmission system between November and February each year, separated by at least ten clear days (''Triads'') and other National Grid-related income including Generator Distribution Use of System (''GDUoS''), through which benefits are paid by DNOs to suppliers, which are passed through to electricity generators in their power purchase agreements and the National Grid's Balancing Use of System (''BSUoS''), which recovers costs through charges levied on electricity generators and suppliers. In addition, the balancing system produces small half-hourly residual cashflows that are generally negative (a disbenefit to distributed generators) but can be positive (a benefit) and are allocated to suppliers in the same way as BSUoS charges.
Capacity market – the Company intends to invest in BESS Projects that generate revenues by access to the benefit of contracts, or through entering into new contracts, to provide back-up capacity power to the Electricity Market Reform delivery body via 1 year and 15 year capacity market contracts.

BESS Projects in which the Company invests may diversify their revenue sources further by collaborating with renewable generators or large users of power in close proximity to an BESS Project, or providing availability based services to restore electric power stations or part of electric grids to operation. In such circumstances, the proportion of revenues coming from electricity sales may materially increase from that indicated above. From 2019, BESS Projects in which the Company may invest may also be able to enter into FFR contracts with Distribution System Operators (''DSO'') and provide reactive power services to the National Grid the timing of which is according to the current emerging DSO model.

Fourth, the Company aims to achieve diversification within the Portfolio through the use of a range of third party providers, insofar as appropriate, in respect of each energy storage project such as developers, EPC contractors, battery manufacturers and landlords. Finally, each BESS Project internally mitigates operational risk because each BESS Project will contain a battery system with a number of battery modules in each stack, each of which is independent and can be replaced separately, thereby reducing the impact on the project as a whole of the failure of one or more battery modules.

Asset sourcing

The Fund (or the Company), acquired the Seed Portfolio immediately after Admission and has identified the Exclusivity Portfolio in which the Company may invest, subject to completion of adequate due diligence and contract. Further information on this is provided in Part 9 (Seed Portfolio and Exclusivity Portfolio) of the Prospectus.

Other investment restrictions

The Fund (or the Company), will generally invest in BESS Projects where construction is substantially completed and at such a point that the BESS Project is capable of commercial operations. As a minimum, all BESS Projects will need to have in place a completed lease on satisfactory terms in relation to the land where that BESS Project is situated and an executed grid connection agreement and a certificate confirming completion of commissioning tests (''G59 Certificate'').

The Company may also provide loan finance to BESS Projects prior to acquisition so that the BESS Projects can acquire equipment prior to construction, provided that no more than 15% of Gross Asset Value (calculated at the time that finance is provided based on the latest available valuations) may be exposed in aggregate to any such investments. The Company does not intend to invest in listed closed-ended investment funds or in any other investment fund (other than, potentially, in money market funds as cash equivalents) and in any event shall not invest any more than 15 per cent. of its total assets in listed closed-ended investment funds or in any other investment fund.

Cash management

Uninvested cash or surplus capital may be invested on a temporary basis in:

cash or cash equivalents, money market instruments, money market funds, bonds, commercial paper or other debt obligations with banks or other counterparties having a ''single A'' or higher credit rating as determined by any internationally recognised rating agency selected by the Board which, may or may not be registered in the EU; and
any UK ''government and public securities'' as defined for the purposes of the FCA Rules.

Derivatives

Derivatives may be used for currency, interest rate and power price hedging purposes for efficient portfolio management. However, the Directors do not anticipate that extensive use of derivatives will be necessary. At the date of the Prospectus, the Fund (or the Company) has not incurred any borrowings or indebtedness or other leverage and has not granted any mortgages, charges or security interests over or in relation to any of its assets.

Efficient portfolio management

Efficient portfolio management techniques may be employed by the Fund (or the Company), and this may include (as relevant) currency hedging, interest rate hedging and power price hedging.

Leverage

The Fund (or the Company) does intend to assess its ability to raise debt and is expected to introduce leverage (at the Company level and/or the BESS Project Company level) once sufficient assets have been acquired and to the extent funding is available on acceptable terms. In addition, it may from time to time use borrowing for short-term liquidity purposes which could be achieved through a loan facility or other types of collateralised borrowing instruments. The Company is permitted to provide security to lenders in order to borrow money, which may be by way of mortgages, charges or other security interests or by way of outright transfer of title to the Company's assets. The Directors will restrict borrowing to an amount not exceeding 50% of the Company's Net Asset Value at the time of drawdown. There will be no cross collateralisation between the Projects.

Investment in developers

The Fund (or the Company) may invest in one or more Developers of BESS Projects through equity issued by the relevant Developer, provided that investment in Developers (calculated at the time of investment) shall be capped at £1 million in aggregate.

Environmental and social characteristics

The environmental and social characteristics of Gresham House Energy Storage Fund PLC (the "Company") are described under the heading "Sustainability Report" in the Company's latest annual report, which is available on www.greshamhouse.com/gresham-house-energy-storage-fund-plc (the "Annual Report").

The manner in which sustainability risks are integrated into the investment decisions of Gresham House Asset Management Limited (the "Manager") in relation to the Company

The manner in which sustainability risks are integrated into the investment decisions of the Manager in relation to the Company are described under the heading "Sustainability Report" in the Annual Report. The Manager almost entirely uses internally generated data to assess, measure and monitor the environmental and social characteristics of the Company's portfolio of assets. The only exceptions are the use of data published by the Department for Business, Energy and Industrial Strategy relating to the emissions from gas-fired power plants that energy storage systems (ESS) are expected to displace, and electricity consumption figures for residences. Please refer to the table at the bottom of page 22 of the Annual Report.

The Manager does not use any external sustainability indicators. As energy storage system ("ESS") projects make a direct contribution to the attainment of the zero carbon goal, through allowing increasing amounts of intermittent renewable power generation to come on to the grid, the Manager does not have to use these external indicators. Instead the Manager calculates, based on its own methodology, the carbon emissions avoided.

The Company is a specialist fund focusing on ESS projects only. Thus the Manager does not use screening criteria to differentiate and select different types of assets according to their sustainability profile.

However, the Manager does favour projects with larger size (more resource efficient), lower cost (usually due to less material used eg the copper in the cable required for the grid connection).

The Manager also applies sustainability criteria through its Supply Chain Policy that requires suppliers to comply on an ongoing basis with ESG-related standards such as Anti-Slavery, Anti-Bribery and meeting environmental requirements. The Manager also requires them to report breaches.

The likely impacts of sustainability risks on the returns of the Company

The Manager is required, under Article 8 of EU Regulation on Sustainability-related Disclosures in the Financial Services Sector (2019/2088) to describe how the environmental and/or social characteristics of investments are met. The Manager has set out in the Annual Report the environmental and social characteristics that it promotes in its management of the Company, which include operating the Company's portfolio of assets with a view to:

reducing carbon emissions and pollution;
managing resource management and supply chain sustainability in designing and operating ESS and performing engineering procurement and construction contracts;
promoting waste management;
ensuring the employment, health, safety and well-being of employees; and
ensuring good governance and ethical practices.

The Annual Report also describes the Manager's governance practices with regard to embedding ESG considerations into its investment process through its Sustainable Investment Framework and its ESG Decision Tool.

The Company provides ESG reporting to the Company's shareholders through the "Sustainability Report" that forms part of the Annual Report, which demonstrates the Manager's effective management of ESG matters and attendance to material ESG performance and risk across the Company's portfolio of assets. The Manager works with the Company's suppliers and stakeholders to monitor governance risks.

The Manager confirms that no index has been designated as a reference benchmark for the environmental and social characteristics of investments.

The Manager has determined that the sustainability risk (being the risk that the value of the Company could be materially negatively impacted by an environmental, social or governance event or condition) faced by the Company is low to medium. The core activity of the Company is the ownership and operation of grid-connected energy storage plants which make a large contribution to sustainability goals by allowing increasing amounts of intermittent renewable energy generation to come online. The Manager has put in place comprehensive processes and checks in place to minimise ESG-related risks associated with the manufacturing and sourcing of the components used in energy storage plants, as well as the construction and operation of these plants.


Manager and AIFM: Gresham House Asset Management Limited	Corporate Broker and Financial Adviser: Jefferies International Limited
5 New Street Square London EC4A 3TW	100 Bishopsgate London EC2N 4JL

Administrator and Company Secretary: JTC (UK) Limited	Auditor: BDO LLP
18th Floor The Scalpel, 52 Lime Street London EC3M 7AF	55 Baker Street London W1U 7EU

Depositary: INDOS Financial Limited	Registrars and Receiving Agent: Computershare Investor Services Plc
54 Fenchurch Street London EC3M 3JY	The Pavilions Bridgwater Road Bristol

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