Gresham House's Glassenbury battery energy storage asset. Image: Gresham House
Gresham House Energy Storage Fund has seen the EBITDA generated by its portfolio soar to £22.4 million in the first half of this year, jumping from £4.5 million in H1 2020.
This was largely driven by attractive frequency response services, representing 88.5% of the total, with the remainder from the capacity market and power trading opportunities which Gresham House took advantage of as they arose.
Frequency response resulted in £22.04 million in revenue over H1, while Dynamic Containment generated £16.18 million, enhanced frequency response generated £5.25 million, the capacity market generated £1.53 million, trading £1.36 million and firm frequency response £0.62 million.
Gresham House said that the backdrop is “much improved” compared to mid 2020, with the importance of battery energy storage systems’ (BESS) role in providing flexibility has become increasingly clear.
It is following three key trends in the market, the first of these being developments in the frequency response market. This has evolved significantly, Gresham House said, with overall demand almost 1GW higher than it was this time last year as a result of the launch of Dynamic Containment. The industry also has Dynamic Modulation and Dynamic Regulation to “look forward to”, with these expected to launch in H2 2021.
The second trend is the trading backdrop, while the third is the total installed capacity of BESS systems in the UK. This has increased, although it is proving a slow process, according to the energy storage fund. Installed capacity has increased from c.1.1GW at the start of 2021 to c.1.3GW today, with this expected to increase to c.1.5GW by the end of 2021.
While Gresham acknowledged this is a significant percentage increase, it said this is from a low base and lags behind the deployment of renewables, meaning BESS installations are not keeping up with the needs of the system.
Research from Solar Media's in-house market research team last month found the pipeline of utility-scale battery storage projects has now reached over 20GW across 800 projects, with a record Q2’21 that saw the pipeline jump from almost 17GW of total capacity to over 20GW.
In terms of Gresham House’s own deployment, it highlighted its 425MW of 100% owned, operational projects as of 30 June, as well as SPAs signed for the acquisition of 100% of a further 425MW of shovel-ready capacity across seven projects during the period. Five of these (275MW) are now under construction.
An additional 515MW of BESS projects are now being targeted by Q1 2022 from the deployment of £220 million in cash raised from share issuance under the prospectus published in November 2020.
John Leggate CBE, chair of Gresham House Energy Storage Fund, said the achievements made by the company are a result of the team's "disciplined focus of delivering against our challenging targets, the huge support of our longstanding investors and a favourable market backdrop".
"However, the scale of our ambitions and the industry's growth, simply reflect the fundamental and urgent need for continued rapid deployment of large-scale battery storage systems."