Gresham House Energy Storage H2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 23, 2025

Key Takeaways

  • The fund delivered a 20% year-on-year revenue increase in H2 2024 after a challenging H1, with strong momentum continuing into Q1 2025.
  • NAV per share fell by ~15% due to lower revenue forecasts and a more conservative modelling provider, but the portfolio remains conservatively geared (£110m net debt, peaking at ~£160m) and has 360 MW of its 568 MW already contracted to derisk cash flows.
  • A planned Q2 refinancing of existing facilities into long-dated, lower-spread project finance—alongside separate new-project debt—will fund ~100 MW of battery augmentations, unlock the three-year growth plan and allow reinstatement of dividends and potential buybacks.
  • The three-year plan targets increasing average duration to ≥2 hours, adding a 694 MW pipeline to reach ~1.75 GW total capacity, and growing EBITDA to £150 m by end-2027, implying a 30–50% NAV uplift over this period.
  • Industry reforms—NISOs planned control-room modernization, proposed zonal pricing and new long-duration storage contracts—should drive higher battery dispatch (current ~16% merit-dispatch rate) and underpin future revenue growth.
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Earnings Conference Call
Gresham House Energy Storage H2 2024
00:00 / 00:00

Transcript Sections

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Rupert Robinson
Managing Director at Gresham House Asset Management

Okay, we're one minute past 10:30, so let's begin this morning's webinar. Good morning, ladies and gentlemen, and welcome to the annual results presentation for the financial year ending December 31, 2024, for the Gresham House Energy Storage Fund. As always, on these occasions, I'm pleased to be joined by Ben Guest, Managing Director of the Energy Transition Business at Gresham House and also Lead Fund Manager on GRID, and also James Bustin, Assistant Fund Manager to Ben on the company. We will present, or Ben and James will present this morning for about 20 minutes, and then we'll open up to Q&A. Some people have already sent in their questions, but I would encourage others to send those in online, and we'll get through as many of them as we can in the allotted time. Before I hand over to Ben, a couple of words from me.

Rupert Robinson
Managing Director at Gresham House Asset Management

2024 was definitely a year of two halves, with the second half leading to a significant recovery in revenues and earnings after a very difficult and challenging first half to the year. That good performance has continued in the first quarter of this year. Ben will talk through the results in more detail and also share an update on the progress made on the three-year plan we shared with shareholders back in November of last year. Please send in your questions, and we will get through as many as we can after the formal part of the presentation. Ben, over to you, sir.

Ben Guest
Lead Fund Manager at GRID

Morning, everybody. Thank you, Rupert. And thank you for everyone attending this call. I'd like to start also by echoing some of Rupert's comments to thank our shareholders for their patience and support through what's been a pretty difficult time for the business, hopefully in the rearview mirror, but clearly it's been a challenging time both in terms of the initial event of very weak revenues in H1 last year and the subsequent consequences of it in terms of pulling our dividend. And hopefully we're coming out the other side of that. Launching into the detail of the presentation, starting with some highlights. Over the year, we saw, starting with the top left, our NAV per share decline by about 15%.

Ben Guest
Lead Fund Manager at GRID

That was driven largely by, in fact, over 100% of the effect was driven by a reduction in lower revenue forecasts, partly like-for-like reductions in assumptions, as well as a mixed effect in terms of changing one of our two forecast providers to a forecast provider that is more conservative than the previous one. Moving to the right, the balance sheet position at the end of the last year remained relatively lowly geared: GBP 150 million debt drawn, GBP 40 million of cash for a GBP 110 million net debt position. That, as we mentioned in the past, we expect to peak at a net debt level of approximately GBP 160 million on a like-for-like basis. In other words, assuming no refinancing and so on, we'll come on to the details.

Ben Guest
Lead Fund Manager at GRID

One of the big things we did last year to de-risk the business from a downside perspective was to contract approximately half of our revenues for a couple of years. We will give details around what we are doing on that incrementally. Within the context of that deal, 360 MW of the 568 MW have so far gone onto contract. There are, in fact, 14 underlying contracts here, so a significant percentage have gone online, and the remainder are going online very soon. In terms of operational capacity, we can continue to grow strongly. Through the end of last year, we had grown to 845 MW. We have added another 100 MW with Melksham so far this year, taking us to close to 1.5 GWh. The percentage growth figures there are relating to the blue bar further below, the 945 MW and 1,447 MWh, and growth relative to the beginning of 2024, the 69788 figures.

Ben Guest
Lead Fund Manager at GRID

Very strong growth in megawatt hours, reflecting longer duration new projects and the augmentations that we've carried out. In terms of revenues, clearly a weak and declining year-over-year first half, followed by strong growth year-over-year and relatively easy comps, if you will, in the second half, resulting in year-over-year growth of 20%, a function of recovering revenue rates and also more installed capacity, with the revenues in the fourth quarter continuing in Q1 2025. We'll give more details on that. Similarly, some growth in the EBITDA line, slightly slower growth than in the revenue line, slightly due to the operational impact due to augmentations going on. It's a slight mixed effect there, but underlying margins for the business are actually healthier than what would be suggested by the slower growth in EBITDA relative to revenues. That's what's gone before.

Ben Guest
Lead Fund Manager at GRID

Just to highlight what's happened since the year-end, there's a bit of overlap here, and also the outlook and looking forward to things like the three-year plan and refinancing. Shilton Lane and West Bradford of our existing plan will close out finally the operational status of the original pipeline, taking us to 1,072 MW and 1.7 GWh. We look forward to closing this in the next few weeks. I appreciate there's been a little additional delay there, but these projects are basically built now and waiting for various different things to conclude more from an administrative perspective, especially in the case of Shilton Lane. In terms of the management fee, this has gone, the basis for this has changed to the average of NAV plus market cap.

Ben Guest
Lead Fund Manager at GRID

That, in the context of a discount to NAV, means that I appreciate that the share price has gone up, but we remain at a significant discount to NAV, which means a significant saving on the management fee going forward until we close that discount if we can. We have been working, as we have announced before, and the capital markets day in particular, the first time we announced this, an equity investment at a single evidence NAV effectively. That continues to progress positively. This is in late stages of due diligence and documentation now. Hopefully, we are going to be positioned to announce that in more detail soon in the next few weeks. The other big event, obviously, is the refinancing of the existing facilities and securing financing for our new construction.

Ben Guest
Lead Fund Manager at GRID

We're pleased to say that overall, this is all being worked on to close out at a lower interest rate than what we're paying currently. That's due to lower spreads, not where interest rates are. It is a function of lower spreads and a longer-term facility. Effectively, this will be project finance for those of you who understand the type of financing, the mortgage-style financing, if you will, that you see in renewables-type projects and other infrastructure projects. The reason we can secure this is the ability to contract revenues over the longer term. We're effectively expanding on our experience with Octopus, with additional counterparties, and diversifying both by counterparty and by contract type. I'll come on to a bit of detail on that.

Ben Guest
Lead Fund Manager at GRID

Once we've concluded this refinancing, I'm pleased to say that we'll be able to kick off the augmentations and new projects that we've detailed in our three-year plan. There's a bit more on that in the next page. The refinancing will also allow us to reinitiate distributions to shareholders, sorry. That will take the form of dividends and potentially buybacks, depending on where the share price is. We will detail that as soon as the refinancing is completed. Just to highlight that we plan to close this out in the second quarter. We are in the second quarter now, in the next eight weeks and hopefully before the quarter end. That includes closing out our contracted revenues and closing out the debt facilities. Just a moment on the debt facilities.

Ben Guest
Lead Fund Manager at GRID

The plan is to refinance the existing operational portfolio debt, the debt that we're all familiar with that we discussed in the previous page as well, in terms of the gross net debt positions. We will slightly upsize that to fund the augmentations that we plan on doing this year. Then separate project finance facilities, which are not cross-collateralized with the existing portfolio. In other words, if a new project goes under, of course, we don't expect that, but nevertheless, for reassurance, if a new project does not work out, there's no reach across to the existing portfolio. We are looking at separate project financing facilities for each of our new five projects that we plan on building over the next couple of years. A little bit more detail on the three-year plan. First of all, looking backwards, I've covered those points. We've been working on the refinancing.

Ben Guest
Lead Fund Manager at GRID

I've covered the first point. I mean, we've been working on the refinancing since last November. We appointed our debt advisor then. A lot of the work has been done upfront in terms of preparing models, due diligence, term sheets, teasers, investment memoranda, and so on, so that we can then ask our potential lenders to effectively mark up that term sheet that I mentioned a moment ago. We're now at the later stages of that, having selected the final lenders and those providing the most attractive terms in various different ways, and look forward to closing the facilities with them over the next few weeks, as I mentioned. This process is towards the later stages now. We're going towards the documentation, final due diligence, and obviously things like credit committees on the lender's side.

Ben Guest
Lead Fund Manager at GRID

As I mentioned earlier, the contracting of underlying revenues is key to this in terms of providing a bit of detail. There are effectively two types of contract you can secure on a multi-year basis. We contracted half our portfolio for two years. We are effectively adding to that. The options available are more tolling agreements with investment-grade counterparties so that they satisfy lenders' requirements there, or floor contracts also with investment-grade counterparties. A floor contract is one where you can secure a lower level than what you might secure with a toll, but you essentially continue to capture circa 90% of the potential merchant upside. You are sort of locking in a floor but capturing the majority of the upside. This is obviously attractive to us.

Ben Guest
Lead Fund Manager at GRID

The overall level of contracted revenues is expected to be able to service the repayment of the debt on an ongoing basis, which is the nature of project finance. You are repaying rather like you would a home mortgage and servicing, of course, the interest as well. Interest and principal repayments we intend to cover with contracted cash flows. Next, we mentioned obviously that we plan on closing this out in the next few weeks and Q2, so before the end of June. What does this unlock? It unlocks the three-year plan. The three-year plan that we detailed in the capital markets day last year in November was for the augmentation of the existing portfolio. This is over and above any gigawatt hours or megawatt hours added from the new pipeline.

Ben Guest
Lead Fund Manager at GRID

Additional augmentations of the existing portfolio over and above what we did last year, taking the duration of the existing portfolio up towards three hours. We will not be doing that all at once. We will be doing a set of upgrades or augmentations this year and next year that get us to at least two hours for the portfolio. We will be revisiting augmentations in the context of the market and in terms of the product, both the product and in terms of markets and revenue environment. There are various things going on that will keep us on our toes in terms of whether we look at straightforward three-to-four-hour augmentations or we start looking at the long-duration opportunities from a contractual perspective becoming available from the government. In terms of pipeline, new projects, we are sticking with the five existing projects that we have that total 694 MW.

Ben Guest
Lead Fund Manager at GRID

There were two 50s in the original list that led to a total of 680 MW. The difference is that those 50s are now 57 MW projects. There is a slight increase there. We are building all of those out at two hours initially and have the potential to upgrade those as well. Finally, additional revenues continues to be a really exciting area. It is a low capital requirement here. It is just a matter of putting certain things in place. We look forward to providing you with more details on that as we conclude those efforts. In terms of NAV, this is information that can be readily read in the annual report and our quarterly reports by quarter going backwards. I will not spend too long on this.

Ben Guest
Lead Fund Manager at GRID

Essentially, the decline is all explained by the middle red pillar or bar, which shows our revenue forecast declining, both as a function of less so due to individual forecasters' forecasts declining and more so due to the change of one of our two forecasters during the year that led to a significant reduction in NAV. The effect of that is shown on this page, which shows the reduction from the dotted line levels at different durations. Light blue is two hours all the way down to the half-hour curve or sub-one-hour curve in the dark blue, with one and a half hours and one hour in between. The forecasts all assumed at the beginning of the year that the recovery in revenues would occur within a two-to-three-year period in 2024, that is, through to 2027, and then we'd be largely back on track.

Ben Guest
Lead Fund Manager at GRID

That really very much reflects the improvements to skip rates that are anticipated in that timeframe through the modernisation of NESO’s control room and the trading in the Balancing Mechanism. However, nevertheless, the forecasters have become more conservative, and the recovery is really expected to take place right through 2030. Hopefully, this proves to be too conservative, and in due course, we will see an improvement. In the meantime, this is the set of forecasts that we're using, and hopefully, we can outperform these. We've introduced some more information in our annual report, which is hopefully useful, which we first introduced in our interims. Essentially, it's not a set of forecasts, but it's a scenario.

Ben Guest
Lead Fund Manager at GRID

We have revised a scenario that we provided in the past at GBP 45,000 per megawatt per year of merchant revenue in our portfolio, up to GBP 75,000 to reflect the more recent trading environment. That is shown in the middle pillar on the right, showing the breakdown in terms of merchant and contracted revenues, and the contracted revenue being a combination of CM revenue and tolling revenue while we are still on the existing tolls. It is very much looking at that. This assumes the full 1,072 MW are online, and the EBITDA drops out of that as well at GBP 59 million. The previous scenario that we provided at GBP 45,000 showed circa GBP 45 million of EBITDA. Naturally, there is an improvement as a function of the higher assumption.

Ben Guest
Lead Fund Manager at GRID

In terms of the impact on valuations, and I apologize that we're using GBP 50.459, that's what we used at the time that we drafted the report. I appreciate that the share price has rallied significantly on the back of the Harmony transaction. The EV/EBITDA assumptions are nevertheless quite low, even following the rally. Naturally, as we build out the portfolio, the asset base grows, the potential for EBITDA grows, and therefore, the potential for this all else being equal for this multiple to decline is also very much there. Oops, sorry, I've gone the wrong way. Apologies. In terms of a bit of market backdrop, what we've seen, as we've seen more renewables come online, is the volatility of that supply impacting power prices, which is what we'd want and what we'd expect in terms of the need for batteries.

Ben Guest
Lead Fund Manager at GRID

Last year, one key characteristic of the market is that we saw over 1,000 negative half-hourly price points. This year, we expect another increase. Using Modo's forecasts, the assumption is that we get to over 2,000 negative half-hours or 1,000 hours of negative price points in a year, which speaks to the downside volatility in power prices caused by renewables. As we seek to decarbonize our system per the current government's ambitions, these effects will only amplify over time as we get more renewables online. One of the important topics of the last couple of years has been the skip rate. Here it is described as a dispatch rate, which is 1- the skip rate.

Ben Guest
Lead Fund Manager at GRID

You could also call it the utilization of batteries, the percentage of the time that they're used when they're in merit or pricing themselves competitively and NESO’s control room to dispatch them in the Balancing Mechanism. We have seen very low levels of dispatch, especially at the beginning of last year. We have seen that dispatch rate increase. That is the light blue line. The actual volume, the use of batteries in the Balancing Mechanism, has increased very significantly in terms of total gigawatt hours, which is a reflection of more batteries and a higher dispatch rate. Batteries are being used much more heavily in the control room, but we would point out that the in-merit dispatch rate remains at 16%, or in other words, the skip rate remains above 80%.

Ben Guest
Lead Fund Manager at GRID

There are some various ways that this can be NESO would have different views on what that skip rate is based on certain limitations that they have, some of them based on their current systems. We would expect this to come down sharply over time as we see more batteries come online and therefore batteries being more visible and the systems improvements that we expect this year coming through. I am pleased to say that they are coming through. In terms of revenue mix, trading is very much the main aspect of the business now, and that is what we have always assumed and forecast. The red segment is now 50%. Obviously, there is some trading implicit in the tolling figure, which was only online, a portion of our portfolio online for some of the year, so down at 8%, but will represent a much higher percentage through this year.

Ben Guest
Lead Fund Manager at GRID

The combination of tolling and trading absolutely dominating our revenues. The Capacity Market revenues, which are contracted, continue at a healthy level at just under 20%. We'd expect that to decline as merchant revenues recover and frequency response also to keep declining as trading becomes the main business of the portfolio. Just in terms of comparing our revenues and with the revenue mix shown in there with the peer group to the extent that it's reliable, taking each month at a time, the portfolios consistently outperformed. I think just one month where we underperformed and another where we were roughly in line. That's gratifying given that we have a slightly shorter duration portfolio, at least we did in 2024, than the average portfolio monitored by Modo. This is the chart we've shown several times.

Ben Guest
Lead Fund Manager at GRID

I think hopefully it's useful to show that fundamentally this business is really about underlying capacity growth, which is the historical growth that you can see here. As we deploy into the three-year plan, that 1,000 MW roughly figure will grow to the top right of the page to one and three quarters gigawatts or 1,750 roughly megawatts and duration increasing, and I can give that detail in a moment. The red line is the underlying revenues. Obviously, it doesn't quite track the underlying capacity, but there's a trend there. We'd expect that red line to also trend upwards from lower left to upper right. Clearly, extraordinary revenues for the smaller portfolio during 2022 and very weak revenues in 2024 distort the overall trend.

Ben Guest
Lead Fund Manager at GRID

There is an upward trajectory, we would argue, and also supported increasingly through contracted revenues, which we will provide the details of as soon as we can, in other words, as soon as we have signed these contracts and can disclose them. I am afraid they are commercially sensitive until we have. Just in a little bit more detail in terms of what we have done over the last year and a bit, the underlying capacity has grown, which is the dark blue, pretty significantly, about 30%. The growth in megawatt hours, which is the combination of the two bars, is 1.4 GWh up from just under 800 MWh, 83% growth from memory. We will continue to grow a little bit this year as we commission the final couple of projects and then grow significantly as we unlock the growth through our refinancing efforts and contracting efforts.

Ben Guest
Lead Fund Manager at GRID

Just a quick picture of the overall portfolio, operational assets on the left, pipeline at the top there, and that's not quite online, but coming online, and then apart from Wall Pole, and then the exclusive pipeline, which is what we're looking to build this year or kick off the construction of this year. An exciting outlook, I hope, combining totay megawatts of about 1.75 GW or 1,750 MW. You can see the picture there showing good diversification across the country with the red being operational. I hope that's not confusing. In terms of our scale, we continue to lead the market, the GB market. Our position is shown in dark blue for 2023, and the combined bars across the board show the picture at the end of 2024.

Ben Guest
Lead Fund Manager at GRID

You can see a few only yellow bars showing that there are several new entrants, mostly at quite small sizes, but it does mean that our market share has declined a bit to 17% at the end of the year. It is still a significant market share, and it will be interesting to see how this industry consolidates over time. Just a final summary. We have seen an improving trading environment through 2024 with Q4 being the best by far. That continued in Q1 of 2025. We gave a scenario there which shows EBITDA of GBP 59 million based on GBP 75,000 per megawatt per year on the uncontracted segment of the portfolio. That GBP 59 million of EBITDA is a combination of the whole portfolio, but assuming GBP 75,000 per megawatt on the merchant part of the portfolio, which is a doubling on 2024 levels.

Ben Guest
Lead Fund Manager at GRID

Really the focus now is and has been for some time for the team, as well as maintaining uptime and getting the existing projects online, is really to refinance our existing facilities. Just to add a point on the financing, I've only talked about the debt, but there are various forms of capital available at the portfolio level, especially for the new pipeline that unlocks the overall picture. It is not just senior debt finance. There are other sources of equity. Again, we'll provide the details of that in due course. We have an overall picture which culminates in a portfolio where we do not expect EV to GAV to rise above 30%, just as a comparable. The majority of the listed renewables funds have EV to GAV starting at 40%.

Ben Guest
Lead Fund Manager at GRID

We're still well below those levels despite having significant levels of contracted revenues on our side now going forward, therefore comparable to renewables funds. This is just to give a context in the context of the overall investment trust market, nothing more. We look forward to concluding that the equity investment at a project level to fund an augmentation in that case, which we hopefully can demonstrate at or around NAV in the very near term. As I mentioned already, revenue contracting is absolutely key to unlock the debt that unlocks the augmentations and the new pipeline. Of course, not to understate it, the ability to turn on distributions to shareholders and maintaining, but making this a total return story of income and the substantial growth we hope to show in the next few years and income growth. We look forward to delivering.

Ben Guest
Lead Fund Manager at GRID

One final point, which I am conscious is not written down in our presentation. As we unlock this capital, there are various things that we look forward to demonstrating. There is growth in, first of all, the NAV, because obviously that is a discounting of future growth. As soon as the funding is there, we are within our rights as a business to start discounting the cash flows expected from augmentations and soon enough also of the new construction. That will have a material upside impact on our NAV and also, of course, on our revenues and EBITDA, the EBITDA bridge in particular that we showed at a capital markets day. We still are targeting as our ambition in terms of hitting GBP 150 million of EBITDA on a run rate basis by the end of 2027. That remains our ambition.

Ben Guest
Lead Fund Manager at GRID

That also unlocks significant growth in free cash flow as well. With that, I'll hand back to Rupert and look forward to taking your questions and invite James to join in as well.

Rupert Robinson
Managing Director at Gresham House Asset Management

Ben, thank you very much for that comprehensive summary of the 2024 results and outlook and progress on the three-year plan as communicated to shareholders last November. We've had a number of questions in. I'll try and cluster these. They're around, obviously, the keen in Harmony read across and the valuation for GRID, the questions around capital allocation, shareholder buybacks versus dividends versus investing free cash flow for future growth, the questions around the curves NESO doing enough to help batteries? There are questions around tolling and other contractual opportunities that you've referred to, and then Q reform and zonal pricing. Quite a lot of very topical issues to get through.

Rupert Robinson
Managing Director at Gresham House Asset Management

Do you want to start, you and James, on the Harmony reader cross?

Ben Guest
Lead Fund Manager at GRID

Sure.

Rupert Robinson
Managing Director at Gresham House Asset Management

I think it is important to distinguish between the two portfolios, the characteristics, but also the work we have done and helping investors just get to a landing place there.

Ben Guest
Lead Fund Manager at GRID

Understood. Yes. Thank you, Rupert. Obviously, numbers are being offered for the overall portfolio, and there are various ways we can read across.

Ben Guest
Lead Fund Manager at GRID

One way is just to not try and adjust for the different durations in the portfolio that are often referenced and just assume that if they're receiving an offer at NAV, then assuming that their revenue forecast and they're not wildly different to ours at a two-hour level and therefore assume that the lower duration assets that we might own or do own are reasonable, then the broad assumption is that this transaction is occurring at NAV and that's obviously GBP 109 versus our current share price of about GBP 67-GBP 68, I think, today. The other reader cross is, let's assume that we do get to a two-hour duration because that is absolutely an interim step that we'll get to, value our portfolio on that basis and deduct the cost of those upgrades. Because that's so accretive today, that produces a more favorable, even more favorable reader cross.

Ben Guest
Lead Fund Manager at GRID

There are various ways of reading across in alternative ways and encourage you to read various analyst notes that get to a NAV plus kind of reader cross to the extent that that's useful. We are excited that that deal has taken place. We are glad to see that NAV does matter because all of these deals have been all this deal and there are two bidders as well, which is helpful. Reference NAV. They do not reference anything else. That is clearly positive. James, do you want to add anything on that?

James Bustin
Assistant Fund Manager at GRID

No, I think that probably covers everything. Obviously, comparing on a per megawatt basis is usually a helpful way to do comparisons for other approaches and similar results come up when you look at it on a per megawatt basis as well.

James Bustin
Assistant Fund Manager at GRID

Obviously, we're expecting to be at a 1.6-hour duration once all of this is fully built, and that's what we're valuing in the portfolio at the moment versus a two-hour duration. Actually, the difference between the portfolios is not that great once all of these assets are built. Thank you.

Ben Guest
Lead Fund Manager at GRID

Thank you, James. The initial augmentations will take us to two hours as well. It's absolutely a realistic assumption.

Rupert Robinson
Managing Director at Gresham House Asset Management

Okay. Maybe we can move on to capital allocation and the merits of share buybacks versus dividends. Now, recognizing this is obviously a board decision, recognizing that we're going through an important refinancing at this stage, but questions around the possible, probable, and timing of the reintroduction of a dividend, the merits versus the merits of share buybacks, and also how the manager's thinking about investing in for future growth.

Ben Guest
Lead Fund Manager at GRID

Thank you, Rupert. Yeah.

Ben Guest
Lead Fund Manager at GRID

It is both a qualitative and quantitative exercise. What should this business be doing with its capital over time? Clearly, dividends, this is an income sector. While we have always talked about it being an income and growth fund and company, and therefore reinvesting some capital, paying a dividend is imperative to us and I believe our investors. We basically cannot wait to be able to say something about that upon the refinancing this quarter if all goes smoothly. We look forward to sharing that detail and to provide confidence that this business is in a position to make distributions, let alone the level. In terms of the level, clearly, it is a board decision. The manager, we will advise the board on our views. There are significant, exciting, incremental investment opportunities within the portfolio.

Ben Guest
Lead Fund Manager at GRID

I do think that both strategically, we must do the augmentations because they're quick and relatively low risk and straightforward to do and yield attractive returns. Clearly, the new pipeline being funded the way we expect to fund it is also extremely accretive. One simple calculation one might carry out is to simply look at the valuation that we use in the portfolio for two-hour projects, attenuate that if you prefer to from an NAV perspective, and compare that with, and I'm going to give a ballpark figure here, which we expect to outperform GBP 500,000 per megawatt of two-hour project construction. It is a very significant uplift in or very positive NPV of those for those projects. I think there is very, very strong justification for building new capacity in a measured way.

Ben Guest
Lead Fund Manager at GRID

In terms of buybacks, that will depend on where the share price is once the capital becomes available. We find that there are different views within our investor base in terms of the value of buybacks. Personally, I'm a proponent of them. I think that especially at these sorts of levels, that they are very accretive. They increase leverage, and they do not increase our scale. Scale is important strategically in this industry. That is the qualitative point, I suppose.

Rupert Robinson
Managing Director at Gresham House Asset Management

Thank you. Ben, talking about scale, there are one or two questions here around the financing of the 694 MW project pipeline. The question is, a 25%-30% debt ratio would release approximately GBP 150 million of further debt. How do you intend to fund the remainder of the augmentations and the pipeline of new projects that you have highlighted?

Ben Guest
Lead Fund Manager at GRID

Thanks, Rupert.

Ben Guest
Lead Fund Manager at GRID

Yeah, there are various different sources of funds available to us. The majority of the funds required for the new project will come from this senior debt, which is, as I mentioned, I think earlier, project finance, which is not cross-collateralized with the existing portfolio. It does not impact, in a downside scenario, the going concern status of the existing portfolio. It is a diversified portfolio. That is what is required under investment trust listing rules. In addition to that senior debt, we have got access to, naturally, our ongoing cash flow generation to the extent that it is not paid out as a dividend or used for buybacks. We can make that work harder for us by timing the repayments or payments for equipment and milestones for construction out. That is definitely an option in today's marketplace. That is another feature of our construction and the source of funds.

Ben Guest
Lead Fund Manager at GRID

Of course, there is a source of equity that is available at a project level. Rather same but different in terms of what we are doing, the augmentation of our Glastonbury project, which is the project where we are seeking equity funds as we announced at our capital markets day. In a similar manner, we can raise funds for new projects and equity at that level. Essentially, like any project, there is an equity layer. There is primarily senior debt, but there can be other forms of debt and/or financing that also complete the picture. It is going to be very much the same for our portfolio, our new portfolio, if you like, on incremental assets. On our existing portfolio, it is very much replacing the existing debt with project finance, but with those different features. It is a longer term, lower cost, amortizing, more favorable covenants.

Ben Guest
Lead Fund Manager at GRID

We will upscale this a little bit and draw down, in due course, the necessary amounts to carry out the augmentations that we have planned for this year and next. Hopefully, that provides the detail that some people might be after.

Rupert Robinson
Managing Director at Gresham House Asset Management

That's helpful. Thank you. Thank you.

Ben Guest
Lead Fund Manager at GRID

Of course, of course.

Rupert Robinson
Managing Director at Gresham House Asset Management

Next question. Can you please discuss the impact of a likely move to zonal pricing? Ben, you might just also within that, just touch on Q reform and how it impacts the portfolio tool.

Ben Guest
Lead Fund Manager at GRID

Indeed. Those are two pretty different topics. Zonal pricing is, first of all, something that I'm, this is a personal opinion based on what we're seeing now. It's something that we do expect to come in. Zonal pricing basically turns the national electricity market to a significantly subdivided national market where there's a price for each zone.

Ben Guest
Lead Fund Manager at GRID

Sometimes it can go down to a node. You might hear the word expression nodal pricing, where a node is basically a substation, a switching point in the network. It could cover a handful of substations or it could cover just an individual one. That is the way, for example, Texas works. There are 2,000 power prices being quoted all the time in that market. The reason for doing this, and the most outspoken proponents of this that we've heard is probably Octopus Energy, is that if there is significant renewable generation in a market, in a submarket, in a zone, there is no reason for the marginal supply to be met by gas in that particular region, which means that suddenly the power price is being set not by gas at whatever price it is at based on the region that required that gas or regions that required gas.

Ben Guest
Lead Fund Manager at GRID

It can actually be set according to the marginal price of electricity set by renewables much more. Suddenly, in certain areas, the power price has the potential to really fall. In areas like Scotland, potentially in the summer, in areas like Cornwall and other parts of the country, power prices could become extremely low. In the south, like take it London area and other highly populated areas, we'd expect that gas continued to set the price. It might actually have a slightly upward effect on power prices in the short term. What that unlocks then is a marketplace that's driven by local pricing, which will then lead to investment decisions made at that local level. Therefore, the initial picture when zonal pricing comes in is the picture at that time.

Ben Guest
Lead Fund Manager at GRID

Incremental investments made on the back of what that marketplace shows will then quickly, we believe, amend that picture as more capacity comes on. If there is too much renewable capacity, more renewables will not get built there until there are lots and lots of batteries, for example. If power prices are really high down south, it is likely that more batteries get built down south as well for different reasons. More renewables will certainly get built there and so on. That is the intention. It is to mitigate the spiraling cost of network build-out. We are supportive of zonal pricing. Most generators are not because they have got legacy businesses. Being diversified across the country, any positives and negatives for our portfolio would be broadly canceled out. Time will tell.

Ben Guest
Lead Fund Manager at GRID

We do think it's the right thing for the country in terms of trying to get a downward sort of pressure on our power prices. In terms of Q reform, that's a very near term. Zonal pricing probably won't kick in until the early 2030s is our best guess. It might happen sooner, but there's so much that needs to happen ahead of that that's likely to be several years away. In the meantime, we do have this Q reform.

Ben Guest
Lead Fund Manager at GRID

Labour now in government have the ambition to achieve Clean Power 2030 or CP30, as it's abbreviated, which is to decarbonize our electricity by then through the rolling out of the technologies that are essentially available, which is essentially the solar and wind pipeline that exists and the battery pipeline, because frankly, that is the only meaningful technology, established technology that's available to provide the flexibility around that renewable build-out within this 2030 timeframe and probably in reality in any timeframe. There have been other speculative assumptions made around the potential for small modular nuclear reactors, hydrogen, liquefied air, even pump storage, and so on. We think that this actually helps build the case for batteries much more clearly.

Ben Guest
Lead Fund Manager at GRID

The support that we've seen from government for batteries is great in that context because it's NESO’s mind and the other stakeholders' minds, DESNZ and Ofgem as well, in terms of the importance of batteries in the short term. The key thing about Q reform is about reforming the queue. The pipeline had become enormous, but there are a lot of projects developed by unfunded developers in terms of their ability to build those projects in the hope that they would sell them on. That reaches the limit in terms of what the market needs. The queue had gotten much longer than the need.

Ben Guest
Lead Fund Manager at GRID

The Q reform process is all about NESO more power to move the queue around and provide an acceleration to projects that are effectively funded and ready, and push back and make much more uncertain projects that really were getting in the way. Because until now, it has been in order of grid connection award and very difficult to kick projects out of the queue. This reform process should help projects that are fundable and buildable in the near term get accelerated or just to get built in the timeframe that they were expecting. It has been an incredible process. It is still ongoing. It has just been approved by Ofgem. There is what is called an evidence window that opens and closes probably in July and August this year, during which people submit the status of their projects, on the back of which they are awarded a new grid connection offer.

Ben Guest
Lead Fund Manager at GRID

NESO will be reawarding the same or amended grid connection offers to 6,500 projects across wind, solar, and batteries, and potentially other technologies as well. It is an enormous process. It is hopefully a one-time process because it did create quite a lot of uncertainty for a while, but we think we are through that.

James Bustin
Assistant Fund Manager at GRID

Yeah. We are well placed with our portfolio in terms of the queue as well. Hopefully.

Ben Guest
Lead Fund Manager at GRID

In summary, we are in a good position with our existing projects.

James Bustin
Assistant Fund Manager at GRID

Just to add to the zonal pricing and just broaden that slightly, we are very supportive of merchant market signals. We are lacking some of that at the moment and some suggestions about subsidies and things like that can muddy the water slightly. Zonal pricing is a move which should create greater volatility on pricing, which is great for batteries.

James Bustin
Assistant Fund Manager at GRID

Generally speaking, if you have the market signal there, we should be building the right technologies for those areas. You might see longer duration in certain zones which need it. For example, north of the border, if there is a constraint for long periods, you might find four- or five-hour batteries become the use case there. You might find in other locations, one to two hours is still preferable. The market signals that you get from that should hopefully design the appropriate technologies to fit into those areas, which might support some of this LDES requirement without the need for some of the LDES conversations that are going on as well. More generally, we support kind of the merchant signals because that is what builds out the business case. That is what batteries particularly do well on, is the merchant environment.

Ben Guest
Lead Fund Manager at GRID

Just quickly for everyone's benefit, LDES is long-duration energy storage. It's a new, what's called a cap and floor scheme, a bit like a subsidy scheme with a minimum floor contract that's being introduced this year by government administered by Ofgem, where projects with minimum eight-hour durations will be provided with a contract if they're awarded one. And they're 25-year contracts. Quite interesting development in the market there.

Rupert Robinson
Managing Director at Gresham House Asset Management

Thanks, Ben. Thanks, James. Can I move on to a question here around the sort of Octopus tolling revenues and also the other sort of contractor revenues that have been referred to? One or two questions here that follow on from one another. How will the Octopus tolling revenues roll off in the next few years? Assume it's two years from the point of transfer with circa 200 MW still to move across.

Rupert Robinson
Managing Director at Gresham House Asset Management

Can you also give further information on the structure of the contracted revenues with revenue floor you are targeting? Why is this attractive to an investment-grade offtake versus a tolling agreement?

Ben Guest
Lead Fund Manager at GRID

Great. Thank you, Rupert. Quite detailed questions there. Yeah, there are 14 underlying tolling agreements. There are 14 assets that have been contracted. Absolutely, imagine sort of different assets going on to toll and then coming off their individual tolling contract. Those that started last year will conclude in 2026. Those starting this year will conclude in 2027. In some cases, in many cases, in fact, back to back that with fresh contract starts that we're securing now for the purposes of the debt that will then extend for several years beyond that.

Ben Guest
Lead Fund Manager at GRID

Other contracts will start as the new projects are built, and other contracts will start much sooner because they're not under toll. There is a combination of different contracts that we're looking to secure around the existing Octopus arrangements as it rolls on and off. In terms of floors and tolls in the context of the offtaker, the offtaker is an interest in securing tolls depending on who they are. Octopus, for example, being a utility, has an actual use case for tolling in the context of their end customer base to naturally balance this blind demand that they're trying to sort of manage. They have natural end customers that they can assess in terms of what likely demand's going to be on a half-hourly basis. They have renewable supply that the whole system has as well.

Ben Guest
Lead Fund Manager at GRID

It creates, effectively, a different layer of balancing that is required at a utility level. That is attractive to a company like Octopus for obvious reasons. They need that flexibility as they have less certain supply going forwards. That is the attractiveness there. Floors, because they are floors, are at the highest levels that you can achieve in terms of contracted revenue. Because they are at the higher levels, the financial risk to a counterparty is greater should they not get that swap effectively that they are offering ourselves wrong in terms of being the wrong side of the trade. Therefore, the ability to do a floor for very long periods, let's say up to 10 years, is quite rare.

Ben Guest
Lead Fund Manager at GRID

Floors tend to be shorter term, but very attractive, especially for those businesses that use these—sorry, tolls are attractive to counterparty, especially to those that are looking to hedge their businesses. They have got a reason for hedging already. On the floor side, I would really describe that as a counterparty, even if they are a utility. The counterparty would look at this as more like a trading service. An optimizer, any of our optimizers, the larger ones with large balance sheets can offer floors as well. They have got the balance sheet to do that. Those would be at lower levels. The risk of those floors or revenues falling below those floors is quite low, but important for us to secure the financing and attractive to the counterparty because they secure a higher revenue share. As I mentioned earlier, it is not a massive revenue share.

Ben Guest
Lead Fund Manager at GRID

It is a good, I think, win-win for the market. I think it is a very efficient structure where we continue to capture almost all of the upside and incrementally maybe 5% less of the upside than where we were before. Does that help? Hope that helps.

Rupert Robinson
Managing Director at Gresham House Asset Management

Thanks, Ben. One or two financial questions here. I will sort of try and give you these fairly rapid-fire. What do you think the steady-state EBITDA margin should be for the company?

Ben Guest
Lead Fund Manager at GRID

Very ballpark for a new two-hour project, upwards of 75%.

Rupert Robinson
Managing Director at Gresham House Asset Management

Okay. What will the leverage be post the refinancing?

Ben Guest
Lead Fund Manager at GRID

The leverage—sorry to not give a direct answer, but hopefully this will create some clarity. When you lock in the new financing, we will have peak debt on the existing facility of GBP 175 million offset by a cash position.

Ben Guest
Lead Fund Manager at GRID

Let's say we're at GBP 165 million net debt when we secure, but able to sign the debt. We will upsize that by a certain amount. We're not giving it, but it's a modest amount to fund the incremental augmentations that we're planning this year. That will immediately start to amortize. That is the existing facility that starts to amortize. We put the new projects into construction, and those will see the debt levels increase as we go into construction and start paying for those projects with that peaking as these projects go into commissioning in two years' time, circa. You have a declining position on debt on the existing portfolio and an increasing position.

Ben Guest
Lead Fund Manager at GRID

When you combine those two, basically, it would be the wrong thing to do to take this facility on the operational portfolio and the new construction assets and add them together because that peak will never be reached. They peak at different times. One peaks right at the start, and the other one peaks at the conclusion of commissioning. The impact of that is that we have a lower peak than might be suggested by the combined facilities, which I appreciate we have not given the details of anyway. It does mean that we think that we can carry out all this growth with debt peaking at less than 30% of GAV.

Rupert Robinson
Managing Director at Gresham House Asset Management

It presumably will come down a bit depending upon the equity that might go into the SPVs alongside that debt.

Rupert Robinson
Managing Director at Gresham House Asset Management

I think what you're saying is that the cap is going to be somewhere around 25%-30%.

Ben Guest
Lead Fund Manager at GRID

25-30%. Just to highlight that this is on a GAV and therefore NAV. GAV is NAV plus debt. A NAV that is increasing as a function of the future cash flows increasing as we build new capacity as well. The debt capacity of this portfolio grows as we add new installed capacity.

Rupert Robinson
Managing Director at Gresham House Asset Management

Okay. What is the CapEx for the pipeline and augmentation, approximately?

Ben Guest
Lead Fund Manager at GRID

We've given some numbers about what the increased capacity will be. If we're taking the existing portfolio to two hours plus in the next year and a bit out of the 1.5 GWh that we plan to do longer term, we've highlighted in the past a range of GBP 100,000-GBP 200,000 per megawatt hour to augment those projects.

Ben Guest
Lead Fund Manager at GRID

We would suggest people use a number towards the lower end of that range as a guess. In terms of new projects, I can't remember if I highlighted it, but I think I did, just GBP 500,000 per megawatt of total capital required, all in soup to nuts for a new two-hour project. That's development fees, all the soft costs, and of course, all the hard costs and grid costs for the new capacity and multiply that by the 694 MW. That would be a number that we'd like to come inside of when we combine those two.

Rupert Robinson
Managing Director at Gresham House Asset Management

Yeah. Okay. Thank you. What return on investment and return on equity do you believe you can achieve on new investments in the three-year plan? What are the biggest risks to achieving these?

Ben Guest
Lead Fund Manager at GRID

Thank you, Rupert.

Ben Guest
Lead Fund Manager at GRID

On a new project, if you take the revenue assumptions, I think almost anyone could build a model out of this, actually. We've got a curve. You've got an EBITDA margin assumption. You've got a sort of outline, very high-level cash flow. I've given you an outline cost, and you can assume reasonably high levels of leverage to cost, not to value, to cost. The unlevered IRRs you'll find if you run such a model would be in the teens. Leveraging those up at 6%ish obviously creates very attractive equity returns subject to those curves being correct. When you sensitize that,

Ben Guest
Lead Fund Manager at GRID

If one did not, you can still achieve attractive returns and/or downside protection if you end up seeing an outturn that is lower. That is on the new construction where the majority of the capital will be deployed. It is potentially even more attractive on augmentations, especially from one to two hours today.

Rupert Robinson
Managing Director at Gresham House Asset Management

Thank you. Ben mentioned possibly long-duration storage going forward. Is this with using existing battery technology, or is this something else on the horizon?

Rupert Robinson
Managing Director at Gresham House Asset Management

We have been quite vocal on this topic, and we wrote an open letter to government and NESO just last week because the attender is going to take place in the near future, in the third and fourth quarters, the late third quarter and fourth quarter of this year for projects to get built up to a capacity. This is what the government is targeting of 5 GW-7 GW.

Rupert Robinson
Managing Director at Gresham House Asset Management

Contemplated technology for this long duration, which is upwards of eight-hour duration, but there are some pump storage projects which go all the way up to 24 hours. The complicated technology is pump storage with some earlier stage technologies given a separate track so that they have the ability to compete in their own environment. We wrote the letter really to say, "Please create a level playing field for batteries because batteries now can be built if they have the commercial case, which the cap and floor would provide to eight hours all the way up to 15 hours-20 hours or longer." We just need the commercial incentive, which this cap and floor provides. We are confident that we can outperform at least a large part of the pump storage pipeline. Time will tell when the tenders have been completed.

Rupert Robinson
Managing Director at Gresham House Asset Management

We have just requested that when the cost-benefit analysis is carried out, the merits of battery technology and the ability to build them in a much shorter timeframe than pump storage projects, which take, from what I have read, seven years or so, is considered. That is a very significant benefit in terms of achieving clean power in 2030. Yes, it is absolutely very similar technology. The battery technology is evolving all the time, but essentially, it is very similar technology to what we are using. It would just be configured differently. We are excited at getting some of our capacity awarded a contract.

Rupert Robinson
Managing Director at Gresham House Asset Management

Thank you. There is a further question around dividends and not clear about where the priorities lie. Can these be reinstated in 2025, or is it 2026 onwards?

Rupert Robinson
Managing Director at Gresham House Asset Management

I think all I would say there is that subject to completion of the refinancing, the board, together with the manager, have been very clear that the aim is to reinstate a dividend later in 2025. There will be more on that in due course. Going on, could you speak to the potential impact from tariffs on your outlook as they currently stand?

Ben Guest
Lead Fund Manager at GRID

Yeah. At this stage, we're not seeing any negative impacts of what's going on in the U.S. with everyone else in the world, almost. There's no new tariff dynamic between the U.K. and China. What are the impacts? We've seen interest rates come down modestly year to date, which is modestly positive for our refinancing. Spreads have not been impacted negatively at this stage, and hopefully, they won't. The overall picture on the debt is marginally positive.

Ben Guest
Lead Fund Manager at GRID

Overall, I would not say necessarily in the tariff context. The dollar weakening in the near term and the fact that a lot of the battery pricing is done in dollars is likely to be a positive, as well as other components. That is a positive for a significant part of our CapEx, all to be confirmed once we actually place final orders. More detail on that will be provided as we conclude arrangements. Generally speaking, there is clear disruption taking place to the renewable sector in the U.S. through delays in investment tax credit trades and trying to renegotiate terms on offshore wind farms. There is a lot of uncertainty there that is probably resulting in additional supply of renewable equipment and batteries trying to find a home elsewhere, including Europe.

Ben Guest
Lead Fund Manager at GRID

Certainly, the battery pricing environment has improved further this year.

Rupert Robinson
Managing Director at Gresham House Asset Management

There's a question here that's probably more directed to the board, but I'll mention it. If you got an offer for the company at close to NAV, would you accept it? I'm hoping that you resist and back long-term growth in NAV. I think rather than trying to answer that question, I think the aim of this company is to grow. Ben's talked a lot about augmentations. We've talked a lot about the new projects. We've talked about refinancing. We've talked about putting in more contracted revenues to underpin that refinancing. The aim is not to stop at 1.7 GW. I'll just hand over, Ben, to you and James just to talk about the potential NAV growth in this company from the current GBP 109.

Ben Guest
Lead Fund Manager at GRID

Yeah.

Ben Guest
Lead Fund Manager at GRID

The current GBP 109 and GBP 622 million of absolute NAV in pound terms, we see a significant percentage increase coming from the existing new pipeline using the metrics I shared earlier and give a range. Anyone can do this calculation. 30%-50% growth in NAV is not unreasonable over the next few years, all else being equal. We are excited about the potential growth just from this three-year plan and potential additional growth we can unlock elsewhere. That is really from the first two prongs of the three-year plan. In other words, the augmentations and the new pipeline, additional growth is anticipated through the third prong, which is the alternative revenues, which we have given little details about because it is capital light and implementation. It just requires quite a lot of effort in terms of arranging things in a certain way to unlock that revenue.

Ben Guest
Lead Fund Manager at GRID

That would obviously create an extra leg. There is no need to discount that today unless investors would like to. That is an extra leg. We see a huge amount of value. Take out at NAV, today's NAV, I think is going to look stale quite quickly, is one way of putting it.

Rupert Robinson
Managing Director at Gresham House Asset Management

Thank you. If you can build at 500 MW why is Harmony Energy Income Trust being bought at over 800 MW?

Ben Guest
Lead Fund Manager at GRID

Because the NPVs of the projects are justified at that level for the buyer. Look, building a project is a multi-year process. You have to secure the connections. You have to know what you are doing in terms of progressing the design, both at an electrical level, civils level, protections, and just overall integration into the network.

Ben Guest
Lead Fund Manager at GRID

It requires quite a lot of skill and dedication, especially as the projects get larger, which is a necessity in this sector. You've got to really understand the battery technology. Developing a project, the cost is not the only factor that contributes to value. It's the rolling of that out, getting it through construction, getting it connected. As we've demonstrated, sadly, it takes longer than we wanted to. It's only getting harder. There's so much taking place, both at a network level, solar, wind, new connections, so many changes in legislation around the skip rate topic as a fundamental issue, the CP30 in terms of the ambitions, NESO's new powers under CP30 and the technical codes that are changing as a result of that, the modernization of the control room, mentioned zonal. There's the long-duration piece. Everything's on the move.

Ben Guest
Lead Fund Manager at GRID

There is an awful lot that we all need to understand and stay on top of to really develop a portfolio and business that works. I suspect there is a portfolio value there. It is the fact that it is operational. It is the fact that it is through the queue and is there and exists as opposed to a lot of projects that will never get built and therefore are essentially worthless if they are too long-dated in terms of connection date. Essentially, there is a confidence there that the volatility that will come from the much higher levels of renewables will create the business opportunity for batteries. Let's not forget the renewables we have observed and anyone could observe generate power at anywhere between zero and 200% of demand at any moment in time.

Ben Guest
Lead Fund Manager at GRID

That can happen increasingly at any time of day because the wind can blow at any time of day. It's not just a function of solar. Demand can really vary in that the demand profile is changing as EVs take off. The opportunity there and the fundamental need to balance the market with batteries is absolutely there. I think there's a good business here.

Rupert Robinson
Managing Director at Gresham House Asset Management

Great. Ben, just a couple more questions. I'm conscious we're eight minutes past the hour. One is on, are there still international ambitions within GRID? The last one is, are NESO doing enough to help batteries?

Ben Guest
Lead Fund Manager at GRID

International is absolutely an ambition. I appreciate that we talked to this much more concretely in the past in particular the U.S. We see certain markets, including the U.S. And the other major countries in Europe, developing positively.

Ben Guest
Lead Fund Manager at GRID

If the opportunity arises once we've bedded down the three-year plan to expand internationally, we would be very keen to revisit that very seriously. In NESO, are they doing enough? There's definitely a different sense of urgency between an organization that needs to balance the market and worry about what's available to them versus a business like ours that's absolutely dependent on being used as we should be. It's unfortunately the wrong way around. The message we'd always NESO is really appreciate the impact of their decisions and rate of progress on our business and the industry, both in terms of revenues, but also investability. Are they doing enough? The effort has really ramped up.

Ben Guest
Lead Fund Manager at GRID

There are a couple of important changes taking place this year that will result, I hope, in the open balancing platform, which is effectively the new operating platform for the control room, for that automated algorithmically driven platform as opposed to human-driven platform to be the domain for all dispatching of technologies in the BM rather than just batteries, leaving the human uncertainty or human decision-making elsewhere. That should be a very powerful shift that takes place towards the end of this year. The other one, of course, is a change which will allow the control room to actually measure and/or have a measurement of the capacity in a battery at any moment in time in terms of its state of charge, as opposed to just guessing at it and assuming 30 minutes, which is what they have to do at the moment. That limitation has been very significant.

Ben Guest
Lead Fund Manager at GRID

We saw a very positive development when we went from the 15-minute rule to the 30-minute rule and a 30-minute assumption in terms of what's stored in a battery. Moving that to what is will have another very dramatic impact. That, with a couple of other changes I will not dwell on now, I hope will have the desired impact. There really is a need for confidence for the momentum to be maintained and for this not to slip.

Rupert Robinson
Managing Director at Gresham House Asset Management

I do think they are doing everything that's necessary. James, thank you very much. I'm just going to finish with a back-of-the-envelope calculation I've done, but shoot me down if I've got these sums wrong. The three-year plan seeks to have 1.7 GW. Assuming a two-hour average battery post augmentations, read across to Harmony at 850 MW gives you a market cap of about GBP 1.4 billion.

Rupert Robinson
Managing Director at Gresham House Asset Management

Take off debt and you're still up comfortably over a billion market cap versus GBP 390 million today. Where are my numbers wrong, Ben? No, they may be wrong in terms of execution risk, but where are my numbers wrong?

Ben Guest
Lead Fund Manager at GRID

You've used Walt Pachig as we all agree with. So 1.7 GW, actually more narrow, 1.8, two hours, absolutely, 850K per megawatt. Yep, reasonable. And you can run those metrics in different ways for EBITDA and EBITDA multiples and so on as well. Yeah, that's our ambition.

Rupert Robinson
Managing Director at Gresham House Asset Management

Thank you both very much for your time today. I'd like to thank again all our shareholders for their patience of what's been an extremely difficult time. We're still hugely excited about the opportunity ahead for this company. As Ben has articulated, it's still a growth story.

Rupert Robinson
Managing Director at Gresham House Asset Management

The aim of the board and the manager is to reinstate dividends at the appropriate time later this year. We are working hard on the refinancing and the contractual elements of this portfolio to make sure that it is in a sound position to grow going forward. Thank you, everyone, for your attendance this morning. If we did not get through all the questions, I did try to cluster them. We will follow up individually and look forward to seeing everyone soon. Thank you.

Ben Guest
Lead Fund Manager at GRID

Thank you, everyone.

James Bustin
Assistant Fund Manager at GRID

Thank you.

Analysts
    • Ben Guest
      Lead Fund Manager at GRID
    • Rupert Robinson
      Managing Director at Gresham House Asset Management
    • James Bustin
      Assistant Fund Manager at GRID
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