Batteries on the boil as fund attracts investors

10 November 2018 – Patrick Hosking at The Times

Patrick writes:

Investors have sunk £100 million into a new listed company that aims to use shipping containers packed with lithium-ion batteries to buy, store and sell electricity.

Gresham House Energy Storage Fund claims that it will make a return of 15 per cent a year by providing electricity when surges in demand coincide with periods when the wind is not blowing or the sun is not shining.

Its capital-raising round scraped home after it extended the timetable, reduced the minimum amount it sought to raise and persuaded the sellers of battery assets it is buying to accept shares instead of cash. It had hoped to raise £200 million.

The company is the second listed electricity storage fund in London. In May, Gore Street Energy Storage Fund floated after raising £31 million, short of its £100 million target. Today its shares trade at 99¼p, slightly down on the 100p issue price.

GHESF, which will be listed in the specialist fund category on the London Stock Exchange main market, was conceived by Gresham House, the specialist asset management group. It will take an initial 1 per cent of net assets, or £980,000 a year, to manage the fund.

A typical 50-megawatt energy-storage site of the kind the company intends to acquire hosts 19 containers, each housing thousands of lithium-ion cells. A fully charged container has the energy to boil about 32,000 kettles. National Grid and electricity wholesalers want access to batteries because of the intermittent nature of renewable energy.

The company is chaired by John Leggate, a former BP executive, who has invested £5,000. The new investors were institutions and wealthy individuals. Dealings in the shares begin on Tuesday.

Sceptics argue that while the targeted return and 7p-a-year dividend are attractive, there are risks that the batteries may not last as long as the 15 or 20 years expected.

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