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Battery storage owner revenues fall by 30%, blames poor pick-up from system operator

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Battery owner Gresham House Energy Storage Fund saw revenues fall by a third in the first half of 2023, as “long-expected saturation of ancillary services has not been replaced by the anticipated level of trading revenues”. The Fund said the most significant factor in the fall was low utilisation of batteries by National Grid ESO (NGESO) in the Balancing Mechanism (BM), which it said was affecting the entire GB battery industry.
It said NGESO system issues were expected to be addressed in the relatively near term. Changes include a new trading platform which NGESO has committed to launch on 15 December and changes to make batteries contractable in advance, to address NGESO control room’s concerns that uncontracted batteries may not be available when needed.
The Fund also attributed the revenue fall to low power price volatility, with lower demand caused by higher energy bills and increased supply from rising renewable energy generation. It said, “Volatility is cyclical and is expected to normalise”.
Revenue fell by 31.9% to £20.5 million and EBITDA was £13.8 million, down from £22.7 million in 2022.
The fund now operates 640MW at 22 battery projects. A further 387MW at six sites has been built and connection works, delayed by ongoing industry grid connection challenges, are expected to be completed this year and into H1 2024.
Ben Guest, Fund Manager of Gresham House Energy Storage Fund plc and Managing Director of Gresham House New Energy, said: ” The past five years since GRID’s IPO have seen some of the most extraordinary market conditions condensed into a short timeframe. While some of those periods have been very positive for GRID, the current weaker trading environment has been challenging and lower revenue forecasts in 2023 also arise from industry issues outside our immediate control.
“We have carefully re-examined our strategy to maximise returns in light of the tougher market environment which includes a focus on extending MWh duration rather than creating new MW capacity. These project extensions do not require new grid connections and provide a quicker route to revenues.”