Battery storage fund Gresham House Energy Storage Fund (LON:GRID) said the closure of the UK’s last coal-fired power plant delivered a boost to its revenues in October.
The firm, which is growing its portfolio of utility-scale operational battery energy storage systems (BESS), said it was “starting to see a return of scarcity pricing” in the electricity market after Ratcliffe-on-Soar, the UK’s last remaining coal-fired power station shut down.
The UK became the first G7 nation to completely phase out coal power at the end of September, bringing to an end a 142-year era of burning the fossil fuel for electricity generation.
Gresham House said it expected UK electricity prices to remain “volatile” while NESO, the UK’s newly privatised electricity grid operator, undertakes “improvements” in the balancing mechanism which fine tunes the supply of energy to the grid depending on demand and production.
Higher electricity prices is good news for Gresham which said the volatility was “encouraging”.
The firm said its underlying portfolio generated revenues of £11.7m in the third quarter.
It added that the money it makes from electricity storage continues to outperform the Modo BESS index, achieving on average 26% higher revenue figures across the quarter.
In a business update, the investor group said: “October revenues improved on the back of increased tightness (reduced excess supply) on the system.
“With the last coal fired generation finally decommissioned earlier this year, which had created significant excess supply over the previous winter suppressing revenues further, we are now starting to see a return of scarcity pricing on days of low renewable generation.
“This was highlighted by the first Capacity Market notice to be released in almost two years on 14 October 2024. As with previous notices, this was later cancelled once additional more expensive generation was brought online but did lead to significantly higher peak electricity prices.
“Merchant revenues are likely to remain volatile while NESO undertakes improvements in the Balancing Mechanism, and it is encouraging to see volatility of supply begin to translate to volatility in system prices and hence improved trading spreads.”
Ben Guest,Gresham House Energy Storage fund manager and managing director of Gresham House New Energy, said the company has doubled its capacity in the year, due a new 50MW project near Leeds and to augmentations of battery storage projects at Penwortham and Nevendon.
He said: “It is pleasing to see that while revenues in GB are improving across the market, we are maintaining our outperformance versus the competition whilst delivering a more diversified GB revenue profile.
“This underlying revenue performance, combined with the increased operational capacity under management, means that the company remains on track to outperform 2023 revenues this year.
We are also set to have energised ten new projects and augmentations and to have nearly doubled the operational capacity of the portfolio through 2024, taking operational capacity to 1,387MWh by the year end.
“This will increase further to 1,701MWh shortly after the year end with the conclusion of our current in construction pipeline. The increased operational capacity moving into 2025 gives us a much stronger footing for earnings generation to support our objectives.”
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