Gresham House Energy Storage Fund has issued its second trading update of this year reporting a drop in unaudited net asset value (NAV) per share as of the end of December 2023.
Ahead of publishing its annual results for 2023 on 29 April, the battery asset owner is expecting an unaudited NAV per share of 129.07p as of 31 December 2023, an 11.64% reduction in NAV per share since 30 September 2023.
John Leggate, Chair, Gresham House Energy Storage Fund, said: “The BESS sector, the company and its shareholders are going through the most challenging operating environment since the Company’s inception in 2018.”
The trading update reflects significantly more cautious revenue assumptions adopted for the next three years, Gresham House stated.
The company said that the challenging trading environment in January and February 2024 has improved with revenues since March 2024 reflecting the increased efforts by the GB Electricity System Operator (ESO) to use battery energy storage systems (BESS).
Operational capacity increased to 740MW/864MWh as of 31 March 2024, from 690MW/788MWh as of 31 December 2023.
The remainder of the construction programme is expected to complete by the end of October 2024 increasing operational capacity to 1072MW/1696MWh.
As capital allocation is focused on cash preservation and debt reduction and given the challenging recent revenue environment, the board does not currently expect to pay any dividends or carry out further share buybacks in 2024.
Leggate said: “The board is taking a series of steps to put the business on a stable footing in a volatile market so that we can best capture what we continue to think is a significant strategic opportunity in the BESS sector.”
“In particular, the board is prioritising deleveraging and cash preservation given the volatile trading environment.
“This has led to the difficult decision to suspend dividend payments and share buybacks for the balance of 2024 but will enable us to complete our ongoing construction programme which will drive our near-term cash flow potential and inform our future dividend policy.”