Gresham House Energy Storage (GRID ) has enjoyed a jump in earnings after a recovery in wholesale energy markets and better trading conditions, as a government energy action plan calls for a rapid build-out in battery capacity.

The investor in utility-scale battery energy storage systems (BESS), which slashed its portfolio valuation by more than 16% in September on more conservative revenue forecasts, delivered some positive news for investors in its latest trading update.

It flagged further improvements in operational performance, with full-year revenues now expected to be £42m and earnings in the region of £29m, versus £25.8m last year, as uncontracted revenues exceeded £60,000 per megawatt on an annualised basis in the second half of its financial year.

Earlier in the year, GRID said that earnings could reach as much as £45m based on £45,000 per megawatt in merchant revenues from its uncontracted assets once all projects come online.

But it has been overshooting that rate by about a third since September ‘underpinned by a recovery in the wholesale market backdrop’. Also helping are better dispatch rates of storage batteries in the ‘balancing mechanism’, which is the National Energy System Operator (NESO) tool to balance supply and demand of energy in Britain’s network, after issues with the system in recent years. 

If the recovery is sustained at the higher per megawatt level, the fund ‘should be well placed to meet or exceed the £45m Ebitda level’.

GRID’s shares rose 5.6% in response to 47.5p on Monday. 

John Leggate, chair of the investment company, said he was pleased by the ‘solid progress’ in the trust’s performance ‘as well as improvements in NESO’s control room, and commitment to further change, that should see BESS increasingly well utilised’.

The fund has also been making progress in improving its assets, bringing the 50MW Elland storage facility online at a two-hour duration at the beginning of November. However, the commissioning of the 100MW Melksham facility was rescheduled as the ‘planned outage was on the same day as Storm Bert landing’.

‘The site is fully ready to energise, and the team is working to shorten the commissioning phase once energisation has taken place, which is now expected later this month,’ said the trust.

A third battery storage asset, the 40MW Shilton, is fully built and in the final stage of NESO compliance, which is expected to complete in February.

In December, GRID also raised £1.1m from the sale of non-essential equipment, such as diesel engines and loadbanks, as well as one-off construction savings.

In a nod to the tough performance over recent years that has left the trust languishing on a near 60% discount, Leggate thanked investors for their patience ‘as battery storage gets back on track with the most environmentally appropriate and economically competitive energy storage technology being properly prioritised’.

Over the past year – in which the fund scrapped its dividend, blaming grid connection delays and under-utilisation of battery balancing – the NAV has shrunk 14.4% while the shares have sunk 58%. Over three years on the same total return basis, the portfolio has grown just 4.5% while the shares have plunged 61.8%.

Leggate added that NESO is now backing BESS and the government has endorsed battery storage, creating a ‘level playing field’ for an asset which is the ‘only proven, commercially viable technology that can dynamically manage renewable intermittency at national scale’.

As part of a government aim for clean power in 2030, the UK Department for Energy Security and Net Zero is prioritising technologies that are deliverable within this timeframe, and a detailed action plan published in December said 29-35 gigawatt of batteries will be required by 2030, compared to less than 5GW installed today.