Powering
the renewable
energy transition
Gresham House Energy Storage Fund plc (GRID)
Annual Report and Financial Statements for the year ended
31 December 2022
Contents
Highlights 4
Chair’s Statement 6
Investment Manager’s Report 10
Portfolio 13
Sustainability Report 24
Task Force on Climate-related Financial
Disclosures (TCFD) 30
Strategic Report 38
Principal Risks and Uncertainties 44
Stakeholder Engagement and Statement under
Section 172 48
Board of Directors 50
Investment Team 52
Directors Report 56
Directors Remuneration Report 61
Corporate Governance Report 65
Audit Committee Report 70
Remuneration Committee Report 74
Nomination Committee Report 76
Management Engagement Committee Report 78
Independent Auditor’s Report to the
Members of Gresham House Energy Storage Fund plc 80
Statement of Comprehensive Income 86
Statement of Financial Position 87
Statement of Changes in Equity 88
Statement of Cash Flows 89
Notes to the Financial Statements 90
Alternative Performance Measures 114
Company Information 117
Glossary 118
Appendix 1 - Sustainable Finance Disclosures Regulation
2
Gresham House Energy Storage Fund plc (GRID)
Real time energy storage
to address supply-demand
imbalances to enable
renewable energy.
Gresham House Energy Storage Fund plc (GRID,
the Fund or Company) invests in a portfolio
of utility-scale operational Battery Energy
Storage Systems (BESS) in Great Britain
and beyond.
Gresham House Energy Storage Fund plc (GRID) 3
Highlights
155.51p
+33.07%
£150.0mn
+50.00%
£217.1mn
+170.00%
£48.8mn
+14.82%
7.0p
+39.1%
+96.4%
550
MW
+29.41%
NAV per share
(as at 31 December 2022)
Total gross equity funds raised
(as at 31 December 2022)
³½v®â½À³ïÈv®È³Èv¨
comprehensive income
(as at 31 December 2022)
EBITDA of underlying
investment portfolio
1
(as at 31 December 2022)
Dividend per Ordinary Share
(as at 31 December 2022)
NAV per Ordinary Share Total Return
(as at 31 December 2022)
Ordinary Share Price Total
Return since IPO
(as at 31 December 2022)
Operational portfolio reached
(as at 31 December 2022)
Dec 21
Dec 21
Dec 21
Dec 21
Dec 21
Dec 21
Dec 21
Dec 21
Dec 22
Dec 22
Dec 22
Dec 22
Dec 22
Dec 22
Dec 22
Dec 22
155.51p
£150.0mn
£217.1mn
£48.8mn
7.0p
+39.1%
+96.4%
550MW
116.86p
£100.0mn
£80.4mn
£42.5mn
7.0p
+20.3%
+51.5%
425MW
1. Alternative Performance Measures, including Operational
Û®³ÛÀƜvÀï®v®v¨Ë¨vȳ®page 114
Gresham House Energy Storage Fund plc (GRID)4
Performance highlights
Net Asset Value (NAV) as of 31 December 2022 rose to
£841.7mn or 155.51 pence per share (HY 2022: 144.11
pence/FY 2021 116.86 pence).
Operational Dividend Cover
2
of 1.28x was achieved in
2
022. The dividend for the year of 7.0 pence per share
was equivalent to a 4.3% dividend yield based on th
e
c
losing share price of 161.50 pence on 31 December 2022.
In light of the growth in EBITDA from increase
d
o
perational capacity in 2022 and expected in 2023
,
t
he Board intends to pay a dividend of 7.35 pence pe
r
s
hare for 2023, a 5% increase over 2022. The Board
will periodically review the dividend policy to mainta
in
a c
ompetitive dividend yield while also ensuring that
Operational Dividend CoverƂ remains strong
.
£
150mn equity was raised in May 2022 at a share price of
145 pence per shar
e.
In a
ddition, a £155mn incremental debt facility wa
s
c
losed by Gresham House Energy Storage Holdings pl
c
(
MidCo), a wholly owned subsidiary of Gresham Hous
e
E
nergy Storage Fund plc in November 2022, taking th
e
t
otal debt available to £335mn. As of 31 December 2022,
£60mn had been drawn.
Operational highlights
The underlying investment portfolio generated
r
evenues
3
of £62.7mn (December 2021: £51.4mn) and
E
BITDA of £48.8mn (December 2021: £42.5mn).
Operational Capacity of the portfolio has now reached
550MW as of 31 December 2022 with Arbroath (35MW),
Stairfoot (40MW) and Enderby (50MW) completed in
the period. The total increased to 590MW in Q1 2023
with the commissioning of Coupar Angus (40MW)
in February 2023.
While the portfolio has experienced anticipated delays
on its construction throughout 2022, the Manager is
working to improve lead times on in-construction assets
and increasing the construction capabilities of th
e
t
eam to ensure smoother programme execution an
d
g
rid connections processes. The Company anticipate
s
operational MWs to reach 1027MW by the end of 2023.
2. Alternative Performance Measures, including Operational Dividend
³ÛÀƜvÀï®v®v¨Ë¨vȳ®page 114
3. Financial performance of the underlying investment portfolio
contributes to the valuation of investments through growth in working
capital balances. Earnings greater than forecasted in prior valuations
will increase valuations and hence NAV
5Gresham House Energy Storage Fund plc (GRID)
Summary
2022 was another important and successful year for the
Fund. We are delighted to have shown strong growth in
earnings, in operational capacity and in our NAV per share
and share price, while maintaining a fully covered dividend.
This progress is despite the challenging macroeconomic
backdrop in 2022. The greatest headwinds were
experienced in relation to construction activities within the
®ÛÃȮȽ³Àȳ¨³Ɯýïv¨¨â®ÈÀó¨vâÃvËÃ
by longer lead times and issues relating to connecting
projects to the grid, as well as some supply chain cost
increases linked to, for example, the weakening of sterling
versus the US dollar. These issues have affected the entire
Battery Energy Storage System (BESS) sector. Conversely,
and more positively, delays in the growth of the Great
ÀÈv®®ÀâÃȳÀvðÈvÛÛ®ÈáÃÈ®OO
portfolio a boost in terms of performance in 2022, as a
result of undersupply of BESS capacity in key services. By
the end of 2022, we had grown our operating capacity to
550MW and it is expected to reach 1GW during 2023.
Rising interest rates have prompted us to increase the
discount rate we apply to contracted income by 50bps,
while merchant discount rates remain unchanged as we
recognise our growing track record and demonstration
of the revenue case. The challenges and delays faced in
³®ÃÈÀËȳ®vÛ®ÀðÈ®v®®ÀvóŮű½Ã®
the discount rate used for projects under construction.
Our weighted average discount rate has risen to
10.9% (2021: 10.8%). We believe that our position on
discount rates and approach to valuation is both robust
and appropriate.
Despite the delays in construction experienced by the
portfolio, and the higher interest rate environment, the
³vÀv®È9v®vÀÀv®³®ï®È®³ËÀv¨Èâȳ
meet the Company’s returns targets, made up of income
generated by the existing portfolio and capital growth from
the integration of well-priced project acquisitions.
Performance update
The Company’s NAV increased to £841.7mn and 155.51 pence
per share as of 31 December 2022, up 64% from £511.7mn
and 116.86 pence per share as of 31 December 2021. NAV
per share performance in 2022 was driven by project
revaluations, new Capacity Market contracts, stronger
revenue forecasts and healthy cash generation over and
above our dividend payment requirements. Further details
can be found in the Investment Manager’s report.
The underlying investments owned by the Company
generated a record level of EBITDA at £48.8mn
4
, up 15%
year over year and up 22% on a fully comparable basis (this
excludes locked box accrued in 2020 but accounted for in
2021 on project acquisitions completed in 2021).
Portfolio, transactions, and pipeline
The Fund saw three new projects commissioned during
2022: Arbroath, Enderby and Stairfoot. These contributed
to an increase in operational capacity to 550MW as of 31
December 2022 from 425MW at the end of 2021. During Q1
2023, operational capacity increased to 590MW through the
completion of Coupar Angus.
Űƛ¨ÈÀ®vÈÛIÀ³Àv®9vÃËÀÃvÀï®v®
calculated on page 114
We are delighted to have shown strong
growth in earnings, in operational
capacity and in our NAV per share and
share price, while maintaining a
well covered dividend.
“
Chair’s Statement
On behalf of the Board, I am pleased to present the Annual Report and Accounts of Gresham
House Energy Storage Fund plc (“GRID”, the “Fund” or the “Company”) for the year ending 31
December 2022.
6 Gresham House Energy Storage Fund plc (GRID)
The target portfolio has grown to 2GW, due to a further
0.4GW in project pipeline, as discussed in the Investment
Manager’s report. Of the new total, 477MW is due to
commission during 2023 and a further c.500MW in 2024.
S9v®vÀvÃv¨Ã³¨ÈƜ³ÀÈïÀÃÈÈƜÈÃ
efforts to secure a large, long-term pipeline to build the
portfolio in the second half of this decade. While not
Èv¨®Ã½ï½À³¦ÈÃƜÈ9v®vÀvÃܨ¨vÛv®
pipeline opportunities in place in Great Britain and Ireland
and is working on similar opportunities in the US, European
Economic Area and Australia. The pipeline potential derived
from these agreements is expected to exceed 5GW. This
Ãv¨ÀðÈÃÈÃç³È¨³v¨vÀÃÃv¨vÀ§È
created by intermittent renewable electricity generation.
Construction activities
Throughout 2022, we continued to see supply chain
disruptions caused by COVID-related lockdowns in China.
China has rapidly opened up since December 2022 and this
has already started to ameliorate disruptions. However, we
continue to see a general tightening of supply chains. This
is caused in part by the huge demand created by the global
³³®À®Üv¨ÃƜ³³ÃÈâÈVOƷ*®ðvȳ®LËȳ®
Act” and the anticipated EU “Green Deal Industrial Plan”, both
of which are designed to provide tax breaks for renewables
and energy storage projects.
The result, unsurprisingly, is longer lead times and higher
equipment prices. The drive for more renewable energy,
however, brings with it an increasing requirement for
installed BESS globally, presenting opportunities for the
Company and its investments in the UK and internationally.
*®vȳ®ƜLËÃÃvƺîÛvó®³V§Àv®Ɯv®Èýï
targeted destruction of its grid infrastructure, is also
lengthening lead times for high voltage equipment as
manufacturers support repair and reinforcement efforts.
In parallel, the growing number of renewables and BESS
projects seeking access to grid capacity has challenged the
Distribution Network Operators and National Grid.
These challenges are industry wide, however GRID is
well positioned thanks to its scale in terms of portfolio
ÃçƜ½ËÀvî½³ÜÀv®È®ÛÃÈ®ÈÃvȳ
the Manager’s project delivery team with expertise
over all areas from project development, procurement,
construction and operations to address these issues.
Positive developments include a material reduction in
shipping rates while underlying commodity costs such
as copper and steel were lower in 2022 than in 2021. Even
lithium carbonate prices have recently fallen, and lead times
³ÀvÈÈÀâ½ËÀvÃóÀ%L*vÛîïv®È¨â½À³Ûƛ
We are excited to see continued technical innovation which
ýÀ³Û®Èí®âƜ®Àâ®ÃÈâv®Ë®È³®v¨Èâ
of grid-scale batteries.
Gresham House Energy Storage Fund plc (GRID) 7
Financial StatementsAdditional Information Annual Report
Dividends
The Fund paid a 1.75 pence per share dividend for each
quarter in 2022, a total of 7 pence per share for the full year
(2021: 7 pence).
However, the Board is aware that the accretion in NAV per
share from IPO to date and the resulting increase in share
price has brought the Fund’s dividend yield to levels of less
than 4.5% based on the share price at the end of 2022. In
light of the growth in EBITDA of the underlying portfolio
6
in
2022 and the increasing operational capacity expected in
2023, the Board intends to pay a dividend of 7.35p per share
for 2023, representing a 5% increase over 2022. The Board
will continue to periodically review the dividend policy to
maintain a competitive dividend yield while also ensuring
continued strong dividend cover. The Board believes that
the Fund’s investment opportunities merit retaining some
income as well as recycling some capital into accelerating
the growth of the portfolio. The Board wishes to strike a
balance between growing the Company and maintaining
its market sector leadership, alongside increasing the
Company’s dividend.
Ųƛ¨ÈÀ®vÈÛIÀ³Àv®9vÃËÀÃvÀï®v®
calculated on page 114
Capital structure
S$Ë®vÃvÈÈÀvÈvîïv®Èv³Ë®È³vȳ®v¨
v½Èv¨®ŮŬŮŮƜïÀÃȮȳÀ³v®³ÛÀÃËÃÀ
£150mn equity raise at a price of 145p per share in May and
then in the form of an incremental debt facility of £155mn
entered into by MidCo in November 2022 as an extension to
the existing £180mn facility
5
. As of 31 December £60mn of
this facility had been drawn.
Investment policy
As reported in the Company’s interim results, the
$Ë®vÃá½v®ÈóÀç³®ÃÈÀ³ËvÃvÀ³¨À
resolution, which was overwhelmingly approved to change
the Investment Policy to allow a 30% exposure, as a
percentage of Gross Asset Value (GAV), to invest in Overseas
2ËÀÃȳ®ÃƜÜvÀï®vÃÈV®ÈOÈvÈÃƜ
Canada, the European Economic Area (EEA) and Australia.
The purpose of this change is to permit the Fund to pursue
opportunities in growing markets, following a similar trend
®%ÀvÈÀÈv®ƜvÃÈ®ÀvèÈÀïvȳ®³®Àâ
consumption and decarbonisation of electricity generation
through the growth in renewable generation capacity has
driven the need for energy storage capacity.
5. £155mn Accordion Debt Facility RNS: https://otp.tools.investis.com/
clients/uk/gresham_house_energy_storage_fund_plc2/rns/regulatory-
story.aspx?cid=2430&newsid=1641471
Gresham House Energy Storage Fund plc (GRID)8
Annual Report Financial Statements Additional Information
Sustainability
The Company’s approach to sustainability is inherent
in its business: by operating and increasing BESS
capacity, the Company is supporting the decarbonisation
of energy to help address climate change. Previously,
we have described our sustainability performance by
reporting against internal objectives set in the Manager’s
Sustainable Investment Framework. This was because
reporting standards had not kept pace with our, and
our investors’, wish to see progress from a sustainable
investment perspective.
The Board recognises that laws and reporting standards
vÀ½À³Û®ÜÈÀvÈïvȳ®³È®ÛÀ³®®ÈÈ
in the UK and the establishment of reporting standards
such as the EU Sustainable Finance Disclosure Regulation
(SFDR) and Taskforce for Climate-related Financial
Disclosures (TCFD). Although neither of these standards
are compulsory for the Company at this time, we have
adopted these new standards to demonstrate its
commitment to understanding and addressing climate-
related risks and to aid consistency and comparability
for stakeholders.
The Company’s sustainability work comprises much more
than can be reported in these two external formats.
In our monitoring and reporting, we continue to focus on
key indicators of the Company’s contribution to mitigating
climate change: Operational BESS capacity in MW and
MWh; greenhouse gas emissions; and carbon emissions
avoided. This is discussed further in our Sustainability
Report on page 24.
Outlook
Following GRID’s strong trajectory in 2022, the Company
has set its ambitions higher going into 2023. EBITDA of the
underlying investment portfolio is expected to increase in
2023 as more projects are commissioned and operational
capacity increases. This should also lead to growth in NAV
per share and in the Fund’s potential to pay dividends.
At the time of writing, the markets were still digesting
ÈvÀ§Èè³vȳ®®Èï®v®v¨®ËÃÈÀâv®
implications of Central Banks actions. The Manager
continues to monitor GRID’s banking exposure and will act
to minimise risks on a pro-active basis.
The Manager continues to focus on performance of the
ðÈÀ³³®Û®È³®v¨ÈÀÃÃËvÃ˽Èv®
accessing fully optimised EBITDA delivery. The metrics
displayed in the Investment Manager’s report demonstrate
the Manager’s strong operational oversight of the
portfolio, while its continued investment in technology-
led asset management systems will allow the team to
scale the operational portfolio without a proportionate
increase in staff.
The Manager has reviewed and reset the pipeline’s
commissioning timeline more conservatively for 2023,
which had a minor impact on the NAV per share as of 31
December 2022. This re-basing should result in less risk of
further slippage while the Manager will work to deliver on
these expectations.
As set out in the Company’s Initial Public Offering
prospectus, a Continuation vote will be proposed at the
upcoming AGM. Further information will be made available
in the Notice of Meeting.
We expect to see the income generating capacity of
the underlying investment portfolio grow as the Fund’s
operational MW capacity almost triples through 2025,
and as MWh capacity grows even faster as we increase
the average duration of our portfolio (new projects are
increasingly built out to 2-hour duration). Beyond this, it
is clear to the Board and the Manager that we are still only
in the foothills of the opportunities in the energy storage
vÀ®v®%ÀvÈÀÈv®v®¨³v¨¨âv®Ã®ïv®ÈÀ³ÜÈ
beyond 2025 is expected to drive ongoing shareholder
returns for many years.
John Leggate CBE, FREng
Chair
Date: 5 April 2023
Gresham House Energy Storage Fund plc (GRID) 9
Financial StatementsAdditional Information Annual Report
Portfolio and pipeline overview
The Company increased its operational portfolio further
in 2022 with the addition of Stairfoot (40MW) and the
commissioning of Arbroath (35MW) and Enderby (50MW),
taking the total operational portfolio to 20 projects and
550MW (2021: 17 projects and 425MW). In addition to this,
the Company has also added Coupar Angus (40MW) after
the year end, taking total operational capacity to 590MW
as of the date of the approval of the accounts.
We are pleased to inform investors that the Company’s
portfolio and exclusive pipeline currently stands at a
total of 2.0GW, having increased by 410MW since 31
December 2021 with the addition of Shilton Lane (40MW),
Rothienorman (50MW), Walpole (100MW), Project SK
(100MW) and Monvalet 2 (120 MW). The pipeline table can be
seen on the next page.
In May 2022, the Company raised £150mn in equity to fund
new projects moving into construction. The placing was
îïv®È¨â³ÛÀÃËÃÀËÈȳ½v®âáÀÃ
capital discipline by not accepting more funds than
required at that time. In addition to this, the Company,
through its wholly owned subsidiary Gresham House
Energy Storage Holdings (MidCo), has increased its
overall borrowing capacity with a £155mn incremental
debt facility, secured in November 2022, taking overall
debt available to £335mn. The available debt alongside
the equity raised in the year is being deployed into the
existing pipeline.
Delays in both equipment availability and connection dates
have caused a number of delays to project commissioning,
meaning certain projects which were originally planned
for 2022 are now expected to be commissioned in 2023.
Despite these challenges, by the end of 2023, the Company
expects to have 1027MW of operational capacity, an 87%
increase in operational capacity from 31 December 2022.
The key challenges faced by the Manager and other BESS
operators in the market in commissioning new projects
remains similar to what we highlighted in the Interim 2022
Report. The high demand for renewable and BESS projects
is tightening supply chains, which, along with more general
®ðvȳ®vÀâ½ÀÃÃËÀÃv®Üv§ÃÈÀ¨®Ɯó®ÈÀËÈ®
to higher costs and delays. However, the greatest impact
on commissioning dates through 2022 has come from
À³®®È³®½À³ÃÃÃƝ®ÃËí®È½À󮮨v®
other resources at Distribution Network Operators (DNOs),
National Grid and Independent Connection Providers (ICPs)
is resulting in delays to project programmes.
To address the challenges, the Manager has been growing
its project delivery team to ensure deep involvement in
the grid connection process and to pre-empt potential
issues which could cause delays. Having in-house asset
management and Operation and Maintenance (O&M) teams
enables directing additional resource to help unlock
commissioning challenges.
Investment Manager’s Report
Gresham House Asset Management Limited (GHAM) is wholly owned by Gresham House plc
(GH), an AIM-quoted specialist alternative asset manager with a market capitalisation of
£289mn as at 31 December 2022. Gresham House provides funds, direct investments and
tailored investment solutions, including co-investment, across a range of highly differentiated
alternative strategies. GHAM’s expertise includes strategic public equity, private equity,
forestry, housing, new energy and infrastructure.
10 Gresham House Energy Storage Fund plc (GRID)
Map
ref.
Existing
assets
Location
Capacity
(MW)
Battery
size
(MWh)
Site type*
Operational status
31 December 2022
1 Staunch Staffordshire 20 3
Battery and generators,
0.5MW import
Operational
2 Rufford Nottinghamshire 7 10
Battery and generators,
symmetrical
Operational
3 4³§¨vç Bristol 15 22 Battery, symmetrical Operational
4 Littlebrook Kent 8 6 Battery, symmetrical Operational
5 Roundponds Wiltshire 20 26
Battery and generators,
16MW import
Operational
6 Wolves West Midlands 5 8 Battery, symmetrical Operational
7 Glassenbury* Kent 40 28 Battery, symmetrical Operational
8 Cleator* Cumbria 10 7 Battery, symmetrical Operational
9 Red Scar Lancashire 49 74 Battery, symmetrical Operational
10 Bloxwich West Midlands 41 47 Battery, symmetrical Operational
11 Thurcroft South Yorkshire 50 75 Battery, symmetrical Operational
12 Wickham Suffolk 50 74 Battery, 40MW import Operational
13 Tynemouth* Tyne and Wear 25 17 Battery, symmetrical Operational
14
Glassenbury
Extension
Kent 10 10 Battery, symmetrical Operational
15 Nevendon* Basildon 10 7 Battery, symmetrical Operational
16 Port of Tyne* Tyne and Wear 35 28 Battery, symmetrical Operational
17 Byers Brae West Lothian 30 31 Battery, symmetrical Operational
18 Arbroath Scotland 35 35 Battery, symmetrical Operational Q4 2022
19 Enderby Leicester 50 50 Battery, symmetrical Operational Q4 2022
20 Stairfoot North Yorkshire 40 40 Battery, symmetrical Operational Q4 2022
Total operational 550 598
ƦËÀÀ®ÈÃç½À³Àȳv®â½³È®Èv¨ËÀvȳ®áȮó®Ã
Table 1 - Company portfolio
Gresham House Energy Storage Fund plc (GRID) 11
Annual ReportFinancial StatementsAdditional Information
Map
ref.
Existing assets Location
Capacity
(MW)
Battery
size
(MWh)
Site type*
Operational status
31 December 2022
21 Coupar Angus** Scotland 40 40 Battery, symmetrical Operational Q1 2023
22 West Didsbury Manchester 50 50 Battery, symmetrical Target COD: Q2 2023
23 Melksham Wiltshire 100 100 Battery, symmetrical Target COD: Q3 2023
24 Penwortham Preston 50 50 Battery, symmetrical Target COD: Q2 2023
25 Grendon*** Northampton 100 200 Battery, symmetrical Target COD: Q3 2023
26 York York 50 75 Battery, symmetrical Target COD: Q2 2023
27 Bradford West West Yorkshire 87 174 Battery, symmetrical Target COD: Q4 2023
28 Elland 1 West Yorkshire 50 100 Battery, symmetrical Target COD: Q4 2023
29 Shilton Lane Scotland 40 40 Battery, symmetrical Target COD: H1 2024
30 Rothienorman Aberdeenshire 50 50 Battery, symmetrical Target COD: H2 2024
31 Walpole Cambridgeshire 100 200 Battery, symmetrical Target COD: 2026
Total portfolio owned by the Company 1,267 1,677
Map
ref.
Pipeline projects Location
Capacity
(MW)
Battery
size
(MWh)
Commissioning/
Completion status
Operational status
31 December 2022
32 Elland 2 West Yorkshire 100 200 Battery, symmetrical Target COD: Q2 2024
33 Monet's Garden North Yorkshire 50 50 Battery, symmetrical Target COD: H2 2024
34 Lister Drive Merseyside 50 50 Battery, symmetrical Target COD: H1 2024
35 Bradford West 2 West Yorkshire 100 200 Battery, symmetrical Target COD: H1 2025
36 Monvalet Rep. of Ireland 180 180 Battery, symmetrical Target COD: H2 2024
37 Monvalet 2 Rep. of Ireland 120 120 Battery, symmetrical Target COD: 2025
38 Project SK Yorkshire 100 100 Battery, symmetrical Target COD: 2024
Total pipeline not owned by the Company 700 900
Total portfolio and pipeline 1,967 2,577
**Acquired subject to satisfaction of conditions.
ƦƦƦS³Ãó®®vÈÀðÈÃÈűŬ9`%À®³®ŭIÀ³¦ÈƜÜÈvËÀÈÀűŬ9`§®³Ü®vÃ%À®³®Ův®È½vÈȳ®³®ÃÈÀËȳ®®
due course. Grendon 2 has been delayed versus original expectations for various reasons and is not being prioritised by the Manager until it is fully
ready to build.
Table 2 - Pipeline summary
Table 1 - Company portfolio (continued)
Gresham House Energy Storage Fund plc (GRID)12
Annual Report Financial Statements Additional Information
Portfolio
Key
Acquired Pipeline
Operational
Pipeline
1
2
3
4
5
6
8
18
21
17
36
13
16
20
9
24
26
22
35
34
27
33
28
11
25
19
10
23
12
15
7
14
29
30
31
37
32
38
13Gresham House Energy Storage Fund plc (GRID)
Fund and portfolio performance
The Fund continues to perform well, with the underlying
investment portfolio yielding its highest revenues to date
at £143k per MW, up 13% on 2021. This has driven the
investment portfolio to generate EBITDA of £48.8mn for
the year, resulting in Operational Dividend Cover of 1.28x
7
of the 7.0 pence dividend paid (2021: 1.32 pence and 7.0
pence dividend).
`vÀ½¨vÃȳ³®ïÀÈvÈÈljŭűŬ®¿ËÈâÀvÃ
in May 2022 has now been fully deployed and as of the
year-end we had begun drawing down on our available debt
facilities to fund the remainder of the pipeline. £60mn
has been drawn down as of the year end, with a further
ljűŬ®³¨¨³Ü®®ÈïÀÃÈ¿ËvÀÈÀ³ŮŬŮůƛS³½v®â
through its wholly owned subsidiary, Gresham House
Energy Storage Holdings, has a combined debt facility
of £335mn. This will allow the Company to drive equity
returns in the future.
The Company’s share price has continued to outperform
equity markets with a Share Price Total Return for the year
to 31 December 2022 of 29.6%. This was underpinned by
NAV Total Return of 39.1%, compared with 0.3% for the
FTSE All Share Index. This was supported by historic and
anticipated NAV growth as pipeline sites are acquired
and commissioned.
With the appreciation of NAV, AIFM fees continue to fall
as a percentage of NAV due to the tiered fee structure
(fees on incremental amounts are lower above certain
thresholds), helping to keep costs down. Annualised
ongoing charges in the period were 1.18% based on the
weighted average NAV for the year to 31 December 2022
(FY 2021: 1.23%, FY 2020: 1.26%). Based on publicly
available information, we believe these are amongst the
lowest compared to other listed funds in the sector.
ųƛ¨ÈÀ®vÈÛIÀ³Àv®9vÃËÀÃvÀï®v®
calculated on page 114
Portfolio performance
As noted above, the Company’s underlying investment
portfolio generated EBITDA of £48.8mn, an increase
of 15% from £42.5mn in 2021. This growth in earnings
was largely driven by exceptional revenues in Dynamic
Containment (DC) in the summer, with a small increase
due to new projects commissioning in Q4 2022 and
contributing towards the portfolio’s earnings.
Revenue from underlying assets for the year was
£62.7mn (£63.3mn including Liquidated Damages on late
commissioning projects), up 21.9% on 2021 (£51.4mn).
Revenues peaked at a high level in June on the back of
increased demand for frequency response services from
the Electricity System Operator (ESO), primarily DC, whilst
operational capacity in the market lagged expectations
due to industry-wide commissioning delays. This led to
peak prices during July of £105/MWh in DC, although this
was short lived with the market eventually becoming
saturated from Q3 2022 as expected - see the market
update section for further details.
148
206
196
Operational
Portfolio by
duration (MW)
<1 hour c1 hour c1.5 hour 2 hours +
148
1036
246
537
Portfolio by
duration (MW)
<1 hour c1 hour c1.5 hour 2 hours +
550
527
890
Portfolio by
Development
Status (MW)
Operational In Construction Pipeline
DR, 1.1%
DM, 0.4%
Frequency
Response,
82.0%
FFR,
27.5%
DC,
48.4%
Gresham House Energy Storage Fund plc (GRID)14
Annual Report Financial Statements Additional Information
With frequency response services remaining
undersupplied for the majority of the year through
to September 2022, it is unsurprising that frequency
response services overall made up the bulk of revenues
at 82.0%. Out of these services, DC was the largest single
revenue stream with 48.4% of revenues while Dynamic
Moderation (DM) and Dynamic Regulation (DR), which
are much smaller capacity services, represented just
1.5% of revenues.
All Enhanced Frequency Response (EFR) contracts
®®ŮŬŮŮƜÜÈI³ÀȳS⮮ȨvÃÈȳï®Ã
in the service in July 2022. In total, 4.6% of revenues for
the year came from EFR. Each of the former EFR sites
is now fully tested for all services and have also been
trading in the year.
Firm Frequency Response (FFR), being the monthly
frequency service, remained a large part of the revenue
base at 27.5% despite a declining number of MWs being
procured. This, at times, presented good opportunities,
particularly as the DC market became saturated towards
the end of 2022.
Whilst trading represented a lower overall percentage of
the underlying investment portfolio’s revenues at 10.6%,
versus 11.5% in 2021, this does not tell the whole story. We
saw trading opportunities throughout the year however,
the exceptionally high frequency response markets during
ÈýÀ®v®ÃËÀ½À³Ûȳ³À½À³ïÈv¨
pricing opportunities and the focus of the portfolio was on
capturing those prices.
During H2 however, allocation towards trading revenues
increased as the frequency response markets became
saturated, with trading in December making up 27.5%
of revenues. The focus is now very much on the
trading opportunity.
Capacity Market (CM) revenues increased from October
2022 as the portfolio started earning on the record high
1-year contracts awarded in February 2022. Subsequent
pipeline will earn revenue from their CM contracts once
they are operational and so further growth in CM is
anticipated over the coming months. In total, CM revenues
made up 7.4% of revenues over 2022 and reached 15.7% of
revenues in December 2022.
As recently announced in the trading update on 13 March
2023, the Company’s underlying portfolio assets were
awarded additional CM contracts (T-1 and T-4) in the latest
auctions in February 2023, with the 15-year T-4 auction
clearing at a record high of £63k per derated MW per
year. These new contracts are expected to contribute
an additional £36mn
8
of contracted revenues over their
lifetime. This should see CM maintain an increasingly
larger percentage of total revenues, particularly from
October 2023 to September 2024. In line with the valuation
policy, these contracts are not included in the year end
valuations as they were not held at the valuation date. The
value of these contracts is c.4.2 pence per share, based on
shares outstanding at 31 December 2022, with the impact
expected to come through in future quarters, either at
the next valuation date or when an asset is acquired and
ÀÛv¨Ëvó®ËÈËÀvÃð³ÜÃƛ
8. Gresham House estimate assuming CPI of 2% p.a. applied to revenues
through to the end of the T-4 contracts
Portfolio revenue split by month
-
2,000,000
4,000,000
6,000,000
8,000,000
Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22
CM EFR/FFR Dynamic FR Trading
Gresham House Energy Storage Fund plc (GRID) 15
Financial StatementsAdditional Information Annual Report
Whilst revenues rose in 2022, we are yet to see potential
cost decreases come through as anticipated. For example,
insurance costs remain higher than expected due to
a lack of competition in the insurance market. We are
working on ways to utilise the scale of the portfolio to
reduce such costs going forward. In addition to this, we
have seen increases in business rates across a number of
our sites and are anticipating potential further increases
from April 2023, as new rateable values are applied,
ÀðÈ®®ðvȳ®³®vÈÀv¨³ÃÈÃƛSÀèÈȨÜv®
do with rates, but where we can we are feeding this back
into site designs. These increases have been factored
into the forecasts.
In the meantime, the Manager’s in-house O&M team has
increased its MW under management, which is leading to
a reduction in O&M costs for the portfolio. We anticipate
further reductions across the portfolio as more assets
are included under this lower cost option. The move
to in-house O&M also means greater control over O&M
activities for the Company’s portfolio, allowing more
optimal management of the sites and aligning works with
commercial opportunities to minimise outage costs and
maximise uptime.
Market update
The following section provides insights from the Manager
on the recent performance and outlook for the end
markets the Fund participates in, rather than a report on
its own performance.
i) Frequency Response services
There has been much change in the make-up of Frequency
Lý³®Ã½À³ËÈÃËÀ®È½vÃÈâvÀƜÈïÀÃÈ®
the end of the National Grid Electricity System Operator’s
ƪO?ƫïÀÃÈ$À¿Ë®âLý³®ÃÃÀÛv³½ÈâOO
with all 4-year EFR contracts coming to an end in the year.
SïÀÃȳ³ËÀ³®ÈÀvÈÃȳ®Üvî2v®ËvÀâŮŬŮŮƜÜÈ
Èï®v¨³®ÈÀvÈ®®®2˨âŮŬŮŮƛËÀ®ŮŬŮŮƜv¨¨ïÛ
of our previous EFR assets have entered the latest suite of
services alongside wholesale trading.
The next oldest remaining service, Firm Frequency
Response (FFR) has seen volume requirements reduced
through the year with the ESO still planning to phase out
the service and replace it with the new dynamic suite
of frequency response products. Despite the reducing
volume requirement, the service has proven valuable
throughout the year, with Q4 in particular demonstrating
greater value than Dynamic Containment (DC) due to a lag
in falling prices to hit FFR. Now prices have reduced to
levels aligned with DC and, as procured volume continues
to reduce over the next year, it is anticipated that FFR will
make up a smaller part of the revenue mix in future.
Finally, Dynamic Frequency Response through Dynamic
Containment (DC), Dynamic Moderation (DM) and Dynamic
Regulation (DR) are now the priority services for the ESO,
with the bulk of volume coming from these services. DM
and DR are still relatively low volume today, at typically
100MW each, but they are expected to take over from FFR
as the latter is phased out.
Monthly net revenue and EBITDA per MW
0
200
400
600
800
1000
1200
1400
1600
Capacity (MW)
Revenue and EBITDA (£)
Net Revenue (£) EBITDA (£) Capacity (MW) RHS Projected Capacity (MW) RHS
Source: Underlying investment accounts and Management commissioning forecasts
Gresham House Energy Storage Fund plc (GRID)16
Annual Report Financial Statements Additional Information
DC, and in particular, the low (export-only) service, has
been the main revenue driver for the whole market through
2022, as this is usually where the most volume is procured.
DC reached record levels in June 2022 on the back of
increased volume requirements, exceeding forecasts
made at the start of the year by the ESO. This, coupled with
a delay in new assets coming online across the market, led
to a period of undersupply at a time when requirements
increased. As can be seen from the chart above, since
August 2022, this has changed and we have been in a
period of regular oversupply which has driven DC prices
down. This decline was not unforeseen, and had actually
been expected to occur sooner in the year, but it is now
clear that high prices for frequency response revenues
have come to an end.
The investment case for all our assets is underpinned by
trading potential and therefore not reliant on frequency
response to meet our return levels. However, it is likely that
there will remain some element of frequency response
revenues for the near term, where frequency response
prices outweigh the trading opportunity on certain days.
As requirements for these services are linked to the
volume of renewable power on the system, it is likely that
overall volume requirements will grow slightly, although
the growth in BESS capacity in Great Britain is expected to
continue exceeding this.
There is also a degree of seasonality which should see
higher volume requirements during the summer months,
as seen in 2022, which could present opportunities on
occasion going forward.
ii) Trading/Merchant markets
While revenues for the portfolio during 2022 were
dominated by Frequency Response, the trading market
continued to offer additional value. As noted in the Interim
L½³ÀÈƜîïv®È³ËÈvÃvÀ³ÃÃÈ$À®®Ë¨vÀ
ðÈÀ³½À¨ŮŬŮŮÀÃ˨Ȯ%ÀvÈÀÈv®Ã®ÈÃ
ïÀÃȳ®ÈvÃv®Èá½³ÀÈÀ³¨ÈÀÈâîŮŬŭųƜ
something which continued for eight straight months.
With the gradual return of French nuclear power, the
interconnectors have returned to mostly importing to
Great Britain since December, which has reduced some of
the volatility seen earlier in 2022.
Peak gas prices in August further exacerbated the
challenging backdrop, resulting in consistently higher
electricity prices over this period as gas tended to set
the price, which meant that the minimum daily price in
the Nordpool day ahead auction over a 25-day period did
not fall below £200/MWh. A combination of strong LNG
ƪ4¿Ëï:vÈËÀv¨%vÃƫ½³ÀÈÃƜ®ÀvÃvýÀ³Ëȳ®
from Norway, mild weather and lower gas consumption
have meant gas prices have fallen consistently
since this peak.
Dynamic Containment Low - 10 day rolling average volume required headroom versus price
0
10
20
30
40
50
60
-400
-200
0
200
400
600
800
1000
1200
10 Day average DCL price £/MW/hour
10 Day average DCL auction volumes (MW)
10 day average volume bid 10 day average volume required
10 day average headroom 10 day average price
Oversubscribed
Source: National Grid ESO
Gresham House Energy Storage Fund plc (GRID) 17
Financial StatementsAdditional Information Annual Report
Average system price spreads have remained strong
throughout 2022 and in to 2023, leaving a positive
backdrop for trading revenues. The system price is set
by the actions taken by the ESO in the Balancing Market
(BM), this should indicate the opportunities available for
batteries in the BM. However, we have found that BESS
assets are often not being taken despite being lower cost
(the metric for tracking this is often referred to as the
skip rate) which has to date restricted some of the trading
revenues, this is something we are focussed heavily on
ȳ®ÃËÀÈ9ÃÀË®í®È¨âv®OOvÀÀȨâ
recognised for the value they bring to the system.
ÃvÀÃ˨ȳ®ÀâÃvÀÈâ³®À®Ã¨³v¨¨âƜîïv®È
preparations were made in the lead up to Winter 2022/23
to ensure security of supply. Firstly, National Grid ESO
delayed the closures of several coal plants. Secondly,
some examples of domestic demand destruction were
seen through incentives to consumers to reduce demand
during peak periods (while sharply higher prices for
consumers drove many customers to reduce demand).
Finally, the EU passed new rules requiring operators of gas
storage sites to reach a minimum 80% storage level by 1
November 2022, ensuring adequate reserve supply should
there be a prolonged period of low renewable generation.
The combination of these actions reduced gas prices
which, combined with above-average seasonal
temperatures, meant the energy markets have not seen
the consistent high power price volatility through the
winter of 2022/23 that were seen in Winter 2021/22. In a
break from the year’s trend of warmer temperatures, a
³¨Ã®v½³Ë½¨ÜȨ³ÜÀÜ®³ËȽËÈ®ÈïÀÃÈÈܳ
weeks of December did bring a brief period of exceptional
trading returns, along with a record £2,586/MWh day
ahead wholesale electricity price on 12 December
2022. The investment portfolio was ready to trade this
opportunity with the bulk of revenues able to be earned in
the day ahead market.
The actions taken by National Grid to increase reserve
capacity and reduce electricity prices have had an impact
on trading opportunity in the short term, however we
do not see this as likely to continue in the long term,
with the bulk of actions over the current winter being to
increase generation capacity from fossil fuels, something
the ESO, the UK Government and the EU have made
¨vÀÈâÜÃȳ³ÛvÜvâÀ³ƛ`vÀ³®ï®È
therefore that volatility will return as greater reliance is
placed on renewable energy and the demise of fossil-fuel
powered generation.
Half-hourly power prices and average spread since July 2020
Source: Elexon
-100
0
100
200
300
400
500
600
700
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
£/MWh
System Price (£/MWh) 30 day rolling average min 30 day rolling average max
Gresham House Energy Storage Fund plc (GRID)18
Annual Report Financial Statements Additional Information
iii) New revenue opportunities
As the Fund begins to expand internationally, we are
½À³ÀÃîÈÛÀÃïvȳ®³³ËÀÀÛ®ËvÃ
driving growth in BESS across wider geographies. Our
international investment decisions are based on the
same market fundamentals as the UK, namely growth in
renewable energy and increasing electricity price volatility
driving an ongoing trading opportunity.
We also look forward to demonstrating the value
BESS assets can provide when it comes to meeting
the objectives of the ESO’s new System Operability
Framework
9
- see the Regulatory Update section on page
22. As BESS assets are already capable of contributing
to each of the seven categories, we hope this will result in
a greater utilisation of our assets by the ESO and leads to
higher revenues.
9. The seven categories of the framework are: Stability,
Voltage,Thermal, Restoration, Frequency, Within-day
Flexibility, Adequacy
Valuations and NAV
NAV per share
10
has risen from 116.86 pence per Ordinary
Share at 31 December 2021 to 155.51 pence per Ordinary
Share at 31 December 2022. This equates to an NAV Total
Return of 39.1% for the year.
The largest increase in NAV came from revaluing new
investments (16.86 pence), including assets under
construction. Projects at, or near, commissioning, as well
vÃvîïv®È½½¨®³ËÈËÀ½À³¦ÈÃƜ½ÀîÈÀ³ÜÈ
opportunities for future quarters. Stairfoot and Enderby
(both operational in Q4 2022) as well as Coupar Angus
(operational in Q1 2023) are the next assets expected to
contribute further revaluation growth at the Q1 2023 stage,
as they start to be valued using operational discount rates.
ŭŬƛ¨ÈÀ®vȽÀ³Àv®vÃËÀÃvÀï®v®v¨Ë¨vȳ®page
114 of the Annual Report
Valuation basis Discount rate approach
MW
(31 Dec
2021)
MW
(30 Jun
2022)
MW
(31 Dec
2022)
Operational DCF
³®ÈÀvÈvÃð³ÜÃƛƛ9³®ÈÀvÈÀÛ®ËÃƝűƛűǦƪűǦvÈ
HY22 and FY21)
Merchant/uncontracted revenues: 10.85% (no change)
425 425 460
Commissioning
DCF
(energised)
vÃð³Üó½À³¦Èî³Ãó®®½vÃƝűŬ½Ã½ÀË
to Operational discount rates above (n/a in prior periods)
Applies until satisfactory completion of commissioning
--40*
Construction DCF
(energised)
vÃð³Üó½À³¦Èî³®ÃÈÀËȳ®½vÃƲ®ÀýÀ³¦È
but not achieved PAC at valuation date: 75bps construction
premium to Operational discount rates above (50bps premium at
HY22 and FY21)
--50**
Total MWs in operational portfolio 425 425 550
Construction DCF
vÃð³Üó½À³¦Èî³®ÃÈÀËȳ®½vÃƝųű½Ã³®ÃÈÀËȳ®
premium to Operational discount rates above (50bps premium at
HY22 and FY22)
150 487 437
Cost incurred to
date
Held at cost 225 115 230
Total portfolio MWs included in valuations 800 1,027 1,217
* Stairfoot (40MW) achieved both energisation and PAC by 31 December 2022 and is therefore operational. This has been valued with a 50bps
“commissioning premium” above the operational DCF until it has successfully completed a 60-day proving period post PAC. After this 60 day proving
period Stairfoot will be valued on an operational DCF basis with no premium.
** Enderby (50MW) was energised before the year end but did not achieve PAC until after 31 December 2022. It is therefore valued with a 75bps
“construction premium” until PAC when the construction premium will expire and be replaced by a 50bps commissioning premium. After PAC a proving
period of 30 days will apply (2022: 60 days) and after this period has expired Enderby will be valued on an operational DCF basis with no premium.
Gresham House Energy Storage Fund plc (GRID) 19
Financial StatementsAdditional Information Annual Report
A net increase in third party revenue forecasts,
predominantly in the short term, on the back of increased
volatility driven by concerns over security of supply and
higher gas costs, contributed the next largest increase
at 11.23 pence. This was further boosted by increasing
®ðvȳ®ÀvÈîÈóÀÈưÈÀƜÀðÈ®?í³À
ËÈLý³®Ã¨Èâƪ?LƫvÈvƛ*®¨vÈÀâvÀîðvȳ®
has been reduced versus the prior year assumptions,
ÀðÈ®v®§³®¨v®ÈvÀÈÀvÈÃƛ
The Company uses third-party curves for forecasting
revenues for each site. Due to the variety of durations
and locations of the portfolio, the Company has multiple
versions of curves in order to closely model the relevant
opportunity for each site. The revenue inputs range from
a frequency response only curve through to a 2-hour
trading curve in Great Britain. To illustrate the revenue
assumptions used across the portfolio for the purpose
of valuing the Company’s assets, we have summarised
the range of inputs applicable to its assets as well as the
weighted average revenue assumption used in the DCF
valued portfolio below.
Following a review of discount rates by the Company’s
independent valuer, the Company has increased its
discount rate for contracted revenues by 50bps to 5.5%.
A lengthening track record of the portfolio delivering
vv®ÃȳÀvÃÈÃƜvÃܨ¨vÃÈÃËÀ®³vîïv®È
debt facility (£335mn) against a merchant business model,
demonstrate the increasing maturity of the sector and
of our portfolio. All other factors being equal, this would
have driven a reduction of discount rates. However, the
Company has decided to hold the discount rate for non-
contracted revenues at 10.85%, with the higher interest
rate environment offsetting what might have otherwise
¦ËÃÈïvÀËȳ®®ÈÃóˮÈÀvÈƛ
A construction premium is added to discount rates for
assets under construction. This premium has been
increased by 0.25% in the period to account for the
increased risks and delays faced through 2022. This
results in a premium of 0.75% for assets in construction.
The additional 0.25% is removed once an asset is
commissioned and begins its 60-day proving period to
demonstrate operations and revenue generation, referred
to as the “in commissioning” period.
NAV (pence/share) bridge from 31 December 21 to 31 December 22
Modelled revenue inputs £/MW/Yr
116.86
155.51
2.32
7.90
11.23
16.86
6.68
8.80
(0.40)
(7.00)
(0.18)
(0.21)
(4.84)
(0.76)
(1.76)
100.00
110.00
120.00
130.00
140.00
150.00
160.00
170.00
31 December 2021 NAV
Net share issuance
Net fund and SPV
working capital
Debt costs
Dividends
Transaction fees
Roll forward
Revenue forecasts
New investments to FV
Site upgrades and
commissioning
changes
New CM contracts
Cost assumptions
Change in inflation
rates
Change in discount rate
31 December 2022 NAV
NAV/Share Increase Decrease
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
2023 2024 2025 2026 - 2030 2031 - 2035 2035+
Weighted average revenue forecast Revenue forecast range
Gresham House Energy Storage Fund plc (GRID)20
Annual Report Financial Statements Additional Information
Therefore, during this “proving period” the premium on
the discount rate is 0.5%. Once demonstrated successful
operations and revenue generation the discount rate
premium is removed, and valuations are on the basis of
operational discount rates.
As a result of the above changes, the weighted average
discount rate has increased to 10.9% at 31 December 2022
(2021: 10.8%). The net impact of the increase in discount
rates has been a small reduction in value of 1.76 pence per
share in Q4 2022.
³ïvȳ®ÜvÃvȳÈÛv¨Ëvȳ®½³¨âvÈÀÈ
year end. Based on the maturing nature of the operating
portfolio and experience of commissioning assets, the
“proving period”, or commissioning phase for operational
assets, was reduced from 60 to 30 days. A project may
therefore be revalued on an operational basis slightly
earlier in future, subject to successfully completing
commissioning.
SÃv¨Ã³ÀðÈÃÈv®®ÀÛ®ËÃÈÀvÃîÈ
original policy was set with 60 days originally representing a
2-month cycle from bidding into and performing FFR. With
Dynamic Frequency Response services being day ahead
auctions and trading being available to commissioned
assets immediately, the Board has determined this
reduction in the operational proving period to 30 days
was appropriate. There was no valuation impact from this
change in 2022.
As noted earlier in the report, there have been a series of
delays and cost increases in commissioning new projects.
This has reduced valuations by 4.84 pence per share during
the year. The Manager has updated forecasts using more
conservative commissioning dates and valued them using
an increased premium on discount rates. We thereby hope
to limit any future reductions as a result of delays.
In addition to this, increases in operating costs, largely
from business rates, has resulted in a reduction of 0.76
pence per share across the portfolio.
The large operational portfolio enabled the Fund to maintain
strong dividend coverage, leading to a net increase in NAV
(+0.55 pence) as a result of cash generation by the portfolio
exceeding fund costs (+7.9 pence), debt costs (-0.4 pence)
and dividends (-7.0 pence). We are pleased to demonstrate
again to investors the robust capital management by the
Manager, which has kept the effect of cash drag as small
as possible, whilst our focus on sustainable dividends has
helped enhance the value of the Company.
The issuance of shares priced at a premium to NAV
vÈÈîïv®È¨â³ÛÀÃËÃÀË®Àvî®9vâ
2022 generated an additional 2.32 pence of value
for shareholders.
The remainder of the NAV movements came from new
CM contracts awarded in February 2022 being modelled
(+6.68 pence), transaction fees (-0.18 pence) and the roll-
forward effect of the model (-0.21 pence). Subsequent
CM contracts awarded post year end in February 2023 are
not included in the valuation assumptions. The Manager
anticipates further value growth from the portfolio once
these are included from Q1 2023.
Aside from the NAV movements noted above, the main
factor driving growth in investment value of the Company
was the further investment of £220.7mn into Gresham
House Energy Storage Holdings for investment into
projects under construction. Most of these funds were
used for the building of the pipeline sites listed above,
including some small amounts used to future-proof
the new sites built to a 1-hour duration but prepared for
duration extensions in due course.
Change in investment value from December 2021 to December 2022 (£mn)
389.3
834.8
220.7
87.2
30.6
59.2
43.6
48.4
(1.9)
(4.1)
(25.6)
(9.5)
(3.2)
220
320
420
520
620
720
820
920
Valuation at 31
December 2021
Additional
investment at cost
New transactions to
FV
Roll forward
New CM contracts
Revenue forecasts
Cost assumptions
Site upgrades and
commissioning
changes
Change in inflation
rates
Change in discount
rate
Change in SPV
working capital
Change in GHESH
working capital
Valuation at 30 June
2022
Investment value (£mn)
Valuation Increase Decrease
Gresham House Energy Storage Fund plc (GRID) 21
Financial StatementsAdditional Information Annual Report
Regulatory update
We continue to engage with all parties leading the Review
of Electricity Market Arrangements (REMA) consultation,
released on 18 July 2022. This started with submitting
consultation responses in October and has continued
through regular discussion with Government, National Grid
ESO and supporting consultants. The key areas of focus
for BESS are wholesale market arrangements, Capacity
Market reforms and review of Contracts for Difference
(CfD). Since our Interim Report, we have fed back further
on each of these topics, but the largest focus has been on
proposed changes to wholesale markets.
Locational Marginal Pricing (LMP) (also known as ‘nodal
pricing’) appears to be considered more seriously given
there are already examples of this being in use abroad.
Whilst we can see some merit in this approach, we do not
¨ÛÈÃv®Ãv¨³®®ÃÃvÀ¨âïáÈÃÃËÃ
v®v®ÈçÀ³®ÀâÃâÃÈƛ
We continue to engage with Government departments on
this topic and are also part of a third-party industry study
into the possible impact of such changes and what such
a market could look like, which will be fed back through
future REMA consultations.
Other topics being considered for change to the wholesale
markets are the potential decoupling of electricity from fossil
fuels and changes to the design of the Balancing Mechanism
ƪ9ƫƛ:ÈÀ³ÈÃȳ½ÃvÀÃËí®È¨âðóËÈ
at this stage. Rather, we have emphasised the need for a
reduction in skip rates of batteries in the BM and pointed
towards previous successful trials such as BM reserve from
storage back in 2020, which demonstrate what is already
possible. In summary, we believe National Grid should focus
on making better use of batteries which are currently not fully
utilised, rather than looking at less effective reforms.
Away from REMA, National Grid ESO have updated
their System Operability Framework
11
for 2023. The
framework aims to combine insight from their Future
Energy Scenarios with technical assessments to identify
operability requirements over a medium to long term.
11. nationalgrideso.com/research-publications/system-
operability-framework-sof
The new framework is broken down into seven elements
across two broad categories of ‘Reliable Network’ and
‘Balancing the system’ (as shown above). BESS assets can
deliver all these operability needs but to date have only
really been used for Frequency and Stability.
Change is needed at the ESO in order to achieve the full
potential of BESS and maximise the value they can bring
®È³Ûȳv®ÈçÀ³®ÀâÃâÃÈƛS³vâƜ³Ãè
fuel generation is often used to deliver many of these
system needs. There is no reason why BESS cannot
already replace these legacy arrangements. With the
îïv®ÈÀ³ÜÈ®³½Àvȳ®v¨OOv®È½vȳÛÀ
the next few years, there will soon be the scale of MWs
available to challenge existing technologies on each of
these operability fronts, delivering on targets for reduced
emissions in the energy system and reducing costs
to end consumers.
National GRID ESO System Operability Framework
Frequency:
System Inertia
Stability:
System Inertia
Within-day Flexibility:
Demand shifting
Voltage:
Reactive Power
Thermal:
Constraint Management
Restoration:
Network restarts
Adequacy:
Long duration events
Gresham House Energy Storage Fund plc (GRID)22
Annual Report Financial Statements Additional Information
Outlook
The focus of the Manager through 2023 will be to
increase the operational capacity of the portfolio
through commissioning new projects totalling 477MW
in incremental capacity, which is the greatest driver of
earnings and shareholder value. The Manager is also
focused on increasing revenues from existing sources
by pushing the use case of BESS across all aspects of
National Grid ESO’s System Operability Framework, and
by working on new sources of revenue which we believe
are achievable. The Company is also targeting putting a
further c.500MW into construction by the end of 2023
ܨ³®È®Ë®È³Û¨³½Èîïv®È®À®Èv¨
pipeline behind this.
Growing the operational capacity via the acquisition and
construction of well-priced projects drives NAV growth
for GRID, as well as the scale and revenue earning capacity
supporting our Operational Dividend Cover.
In particular, in 2023, all MW under construction will be
completed using debt funding, driving the potential for
higher EBITDA per share.
With the falling away of Frequency Response markets in
recent months, 2023 is expected to be the year where
the value in tradable BESS assets is demonstrated. Our
experience tells us that upgrading of legacy sites is a
complex area and takes time to get right.
This is the reason our new projects are being built from
the outset with the potential to be upgraded to a longer
duration at short notice and minimal cost. The Fund
intends to diversify its revenue base in international
markets whilst playing to its strengths and know-how to
leverage the same fundamental market drivers which have
seen continued excellent performance for BESS assets
in Great Britain.
We believe the UK Government and National Grid ESO
remain supportive of BESS infrastructure and see its
ÃîÈv¨³®ÈÀËȳ®®³Û®È³v®ÈçÀ³¨ÈÀÈâ
system. We look forward to ongoing engagement with both
parties to ensure full use of BESS to meet their aims under
REMA and the ESOs System Operability Framework and in
³®Ã³®ïÈ®³®ÃËÀÃƛ`vÀ³®ï®È®È
³½½³ÀÈË®Èâ³ÀOO®ÈV3v®Ã¨vÀ¨âÃîïv®È
opportunities overseas for the Company to capitalise on
similar market drivers and growth trajectories.
The Manager remains excited about the opportunity ahead
v®Ã³®ï®È®ÈÃv¨Èâȳ³®È®Ëȳ¨ÛÀÈvÀÈ
returns in a market increasingly focused on trading, while
also exploiting new opportunities.
Gresham House Energy Storage Fund plc (GRID) 23
Annual ReportFinancial StatementsAdditional Information
As mentioned in the Chair’s statement, the Company’s
v½½À³vȳÃËÃÈv®v¨ÈâîÀ®È®ÈÃËîÃÃƲâ
increasing operational BESS capacity, the Company is
Ã˽½³ÀÈ®ÈvÀ³®Ãvȳ®v®¨ÈÀïvȳ®³
energy systems to help address climate change. The Board
is therefore focusing on several key indicators to monitor
and report the sustainability of its business: operational
BESS capacity in MW and MWh; carbon emissions; and
carbon emissions avoided. The Company’s sustainability
approach is exercised in the context of policies and
processes of the Manager, a unit of GH. Sustainability
policies, processes and activities of the Manager and GH
are described here.
The Board recognises that laws and reporting standards
vÀ½À³Û®ÜÈÈÀvÈïvȳ®³È®ÛÀ³®®ÈÈ
in the UK and the establishment of reporting standards
such as the EU Sustainable Finance Disclosure Regulation
(SFDR) and Taskforce for Climate-related Financial
Disclosures (TCFD). Although neither of these two
standards are compulsory for GRID at this time, the Board
has adopted them to demonstrate its commitment to
understanding and addressing climate-related risks and
opportunities and to aid consistency and comparability
for stakeholders.
The SFDR is an EU regulation which aims to improve
transparency and standardise disclosures in the market
of sustainable investments. The Company promotes
environmental and social characteristics in accordance
with Article 8 of the SFDR. Further information is provided
on the Company’s website. In addition to this, information
on sustainable investments is provided as part of the
Company’s SFDR periodic disclosure in Appendix 1 of
the Annual Report.
The TCFD report is provided after this Sustainability
Report on page 30. Each of the TCFD and SFDR reports
are written to be understood on a stand-alone basis, so
there may be some overlap in topics discussed.
This Sustainability Report is designed to cover the key
topics relevant to the Fund and as such focusses on the
following areas:
The Company’s core sustainability objective
Sustainability-related activities undertaken by the
Manager in 2022
Sustainable investment processes and commitments
applied by the Manager on behalf of the Company
Core sustainability focus
The central sustainability focus of the Company is
investing in and increasing Battery Energy Storage
System (BESS) capacity to support the decarbonisation
v®¨ÈÀïvȳ®³®ÀâÃâÃÈÃƛOO½¨vâv
fundamental role in supporting the decarbonisation of
energy systems and consequently the broader economy. In
this way, the Company, aims to contribute very positively to
¨vÈv®Èvȳ®v®®ÈçÀ³ÃÈÀvÈÃƛ
Through its provision of investment in, and development
of new BESS capacity, the Company demonstrates
additionality. “Additionality” is a term used by impact
investors that demonstrates the meaningful contribution
that an entity has in addressing environmental or social
challenges through the deployment of capital and
management expertise that enables the creation of
solutions that would otherwise not exist.
The Company aims to monitor and report on four
key metrics that demonstrate its additionality and
contribution to climate change mitigation going forward.
These metrics show the direction of travel and are most
important in demonstrating the positive sustainability
outcomes of the Fund.
Sustainability Report
This Sustainability Report describes the integration and enhancement
of sustainability in the Company’s investment processes and
asset operations.
24 Gresham House Energy Storage Fund plc (GRID)
Natural capital
Environment
SocialGovernance
Community care
and engagement
Governance and ethics
Waste management
Marketplace
responsibility
Supply chain
sustainability
Employment, health,
safety and wellbeing
Climate change
and pollution
Commitment
to sustainability
Risk and
compliance
More detail on why these metrics have been selected is
given below. These metrics are:
31 Dec
2022
31 Dec
2021*
Operational BESS connection
Capacity (MW)
550MW 425MW
Operational BESS Battery
Capacity (MWh)
598MWh 473MWh
Carbon emissions (tCO
2
)
Scope 1
Scope 2
Scope 3 (Transportation and
Distribution losses)
9,423
5,149
593
1,660
2,891
392
Carbon emissions avoided (tCO
2
) * 510,291 n/a
* Carbon emissions calculation methodology has been updated
from a UK government (BEIS) approach in 2021 to application of the
Partnership for Carbon Accounting Financials (PCAF) Global GHG
Accounting & Reporting Standard for the Financial Industry in 2022.
In addition, granularity has been increased from annual net metered
volumes to half-hourly metered volumes and carbon intensity in 2022.
Whilst the methodologies applied in each year are similar, they are not
an exact match. Some information was not available from the 2021
calculations to provide a consistent comparison.
As reliance on renewable power grows globally there will be
an increased need for energy storage to stabilise energy
networks and ensure supply and demand are balanced in
v³ÃÈÈÛv®®ÛÀ³®®Èv¨¨â®ïv¨v®®Àƛ
Therefore, operational BESS capacity (MW and MWh) is
the biggest indicator of the Fund’s impact on enabling the
ÈÀv®Ãȳ®È³v®ÈçÀ³¨ÈÀÈâÃâÃÈv®Ü¨¨v§â
focus for the Manager.
Being able to reliably calculate the carbon emissions of
our operations is important to understanding the role of
BESS in decarbonising the power grid. The Company aims
to maintain as accurate a calculation of carbon emissions
as possible. In this report we have included emissions as
well as emissions avoided through the operations of the
BESS calculated by an independent third-party consultant.
We are also working on factoring in all aspects of the
batteries’ life cycle contribution for future reporting.
Calculating the carbon dioxide emission avoidance via the
various roles that BESS play within the energy system can
be challenging. The Metrics & Targets section of the TCFD
Report provides more context on carbon avoidance, detail
of the current methodology applied and limitations in the
current methodology.
Sustainable Investment
Framework
Gresham House Energy Storage Fund plc (GRID) 25
Financial StatementsAdditional Information Annual Report
Objective 2022 Update 2023 plans
Commitment to sustainability:
Increase capacity under management
to increase GRID’s contribution to the
decarbonisation of the UK’s electricity
network and a reliable, low-cost
energy system.
Operational MW increased by 29% to
550MW at the year end.
The Company is committed to
the development of new BESS
capacity in the UK and overseas.
Climate change and pollution:
Report annual carbon footprint to
stakeholders.
Set targets and actions to reduce
operational carbon emissions.
Apply TCFD guidance and report in line
with recommendations.
Carbon footprint and avoided
emissions data calculated with support
from a third-party carbon consultant.
Carbon data provided as part of KPIs
above and reported in the
Director’s Report.
TCFD Report published see page 30.
Carbon footprint will be maintained
as a KPI and further carbon and
climate-related information will be
disclosed under TCFD.
Undertake to improve the Carbon
Avoided methodology and to
estimate the lifecycle carbon
impact. Carbon intensity reduces
as the build-out of renewables
progresses. BESS are vital to
accommodate the growth in
renewable generation (such as
by avoiding curtailment) and
will therefore contribute to the
reduction in carbon intensity.
Natural capital:
Measure and report on key natural capital
impacts and dependencies.
Enhance policies and processes to
reduce, restore and enhance biodiversity
and other key ecosystem services at
asset sites.
Consideration of the ecological and
biodiversity impact of all new assets is
embedded into the investment process
through inclusion in the ESG decision
tool used for each investment.
9³®È³ÀÈï®v¨³ÛÀÃÈâ
Regulation (expected in 2023)
and ensure Biodiversity Net Gain
requirements are met by all assets.
Biodiversity remains an important
aspect of our site designs however,
we plan to report only on exceptions
or particularly interesting examples
going forward.
Waste management:
Work with contractors to incorporate
full lifecycle analysis into BESS design to
maximise asset life, reduce the overall
carbon footprint of constructing and
operating projects, and consider end-of-
life use to reduce negative environmental
and social impacts of battery production
and the battery components including
raw materials.
Engage with contractors/suppliers on
their end-of-life process development
and technology.
Waste reduction during the
construction phase has been a
key area of focus, this has been
incorporated into the planning and
ÃÈî½vÃȳ®ÃËÀí®È
use of resources.
We have been in discussion with
battery manufacturers to ensure
effective end of life disposal and
recycling plans are in place.
Plan in 2023 and beyond is to
understand options relating to BESS
end-of-life use and next steps.
Many batteries could have a
second life before needing to be
recycled so we are looking at both
recycling and second use options
which may be available when
required in future.
Environmental objectives
Sustainability-related activities
The Company’s work in managing long-term risks and creating value from long-term opportunities linked to sustainability
factors comprises the following actions during 2022 and plans for further progress in 2023:
Gresham House Energy Storage Fund plc (GRID)26
Annual Report Financial Statements Additional Information
Objective 2022 Update 2023 plans
Supply chain management:
Update the supply chain policy to fully
ÀðÈÃȽÀvÈ®ÈvÀ§Èv®È
commitments of the Investment Manager.
Develop a comprehensive supply chain
monitoring and management process in
place to assess ESG risks in the supply
chain and to ensure the compliance of
suppliers with the Supply Chain Policy.
Include sustainability criteria into
supplier contract renewal and supplier
selection decisions.
Engage with key suppliers to enhance
their sustainability processes and reduce
the Fund’s ESG risk exposure.
During the year, a supply chain audit was
carried out on a major battery supplier.
Please see case study below for further
details on the review.
vó®ï®®ÃÀ³È
Supply Chain Audit results,
update the Supply Chain Policy
and supply chain
management processes.
Social objectives
Governance objectives
Objective 2022 Update 2023 plans
Governance & ethics: engaged and
active ownership
Identify and work with key industry bodies
to drive positive industry outcomes linked
to sustainability topics.
Track and report on engagement
activities and key outcomes.
Increase community engagement, where
applicable, continuing to educate the
public on the role of BESS in the UK’s
decarbonisation ambitions.
Solicit, where practical, feedback from
key stakeholders who are in a
position to contribute.
GRID shareholder questionnaire sent to
top 15 investors to better understand
shareholder sustainability requirements.
Sﮮó®ÈÀËÈȳÈèȳ®
of priority metrics and the reporting
framework adopted by the Company.
The Manager contributed to a Green
Finance Initiative workshop to provide
insights for a sector report on how to
®ÀvÃvÈÈÀâï®v®®È³Ã˽½³ÀÈ
decarbonisation of industry and solutions
to improve the sustainability of batteries.
The Manager provided feedback to the
L9³®Ã˨Èvȳ®³®®ÈưçÀ³
energy systems.
The Manager intends to
contribute to industry projects
to improve understanding
of the role of BESS in
decarbonising the energy
system. This includes projects
with governement departments
and ESO.
Marketplace responsibility: processes,
policies and education
Assess all assets against our Sustainable
Infrastructure Framework using the ESG
Decision Tool and establish plans to rectify
any material risks to create and protect
value for shareholders.
Ensure the ESG Decision Tool remains
˽ȳvÈȳÀðÈv®â®v®®ÈÃ
to the sustainable investment processes
and sustainability related policies.
Finalise ESG KPIs to monitor and measure
sustainability performance of the Fund and
report these regularly to stakeholders.
The ESG Decision Tool continues to be
applied for each asset prior to investment
and remains a helpful way to identify
the key ESG risks and opportunities
associated with investments.
The Tool was updated to include
³Àýï¨vÈưÀ¨vÈvȳÀÃ
and to explicitly address net gains in
biodiversity.
3I*ÃÜÀï®v¨Ãv®³Ë®È
above, the focus being on growth in
operational capacity and accurate
measurement of carbon emissions.
The team is also undertaking an exercise
to determine the availability of additional
sustainability data that might be gathered
to complement the priority metrics.
Finalise “Red, Amber, Green”
(RAG) rating of additional
sustainability data availability
v®ï®v¨Ã˨¨À¨Ãȳ3I*Ãȳ
be measured and monitored on
an ongoing basis.
Develop a system or platform to
½À³ÛÈí®â³vÈv
measurement and monitoring.
Gresham House Energy Storage Fund plc (GRID) 27
Financial StatementsAdditional Information Annual Report
Other sustainability-related activities
conducted in 2022
In addition to the core focus of the business and the
updates provided above, the Manager has also been
working on some other areas related to sustainability,
demonstrating the wider activity around the Company’s
underlying investments.
Battery supply chain audit
In 2022, the Manager engaged RCS to conduct a review of
the Manager’s Supply Chain policy and an audit of CATL, the
team’s primary supplier of batteries. The purpose of the
audit was to better understand CATL’s approach towards,
and policies for, managing its supply chain, particularly
in the key risk areas of labour and the environment.
A key component (cathode) supplier was also audited
in this process.
CATL’s policies were comprehensively reviewed and found
to be satisfactory. However, the audit of a key component
supplier highlighted that CATL may face challenges
ensuring its supply chain policies are implemented
âÈÃÃ˽½¨âv®ƛSvËÈÛÀïÈvÈS4v
a framework in place to manage ESG risks, providing
comfort to the Board that its main supplier is committed
to responsible business practices and has comprehensive
policies in place.
Whilst the information did not impact on the team’s
construction or asset management decisions, useful
feedback was obtained that will lead to an update of the
Gresham House New Energy’s Supply Chain Policy.
Follow up actions include updating the Manager’s
Supply Chain Policy and assessing whether and how the
9v®vÀƜvÃv§âËÃȳÀƜv®®ðË®OOÃ˽½¨ÀÃƺ
promotion of their policies further down the supply chain.
REMA/Industry consultation
The Government released its consultation document on
REMA in July 2022. REMA is a major review into the GB
electricity market design, with the aim to ensure cost
®ïÈÃȳËÃȳÀÃܨÃȳ®ÃÈÀËÈ®v¨³®ưÈÀ
®ÈưçÀ³®Àâ®ÈܳÀ§ƛS³®Ã˨Èvȳ®³Ë®È
outlined many ideas including changing the wholesale
market to Locational Marginal Pricing (LMP) (also known
as ‘Nodal pricing’), reforms to the Capacity Market and a
review of Contracts for Difference (CfD). These plans are
§âȳȽ³È®Èv¨ÃËÃóv®â®ÈưçÀ³½¨v®Ãv®vÃ
key infrastructure in enabling that plan the role of BESS is
a high priority.
Gresham House has taken an active role in the consultation
and has responded on all points raised. The New Energy
team continues to be involved (directly and through
industry networks) with government departments and
the ESO to ensure a sensible and effective solution is
found whilst protecting the returns case for renewable
and storage assets, highlighted as a priority in the
consultation document.
The review is expected to take several years, however
the team remains involved, through taking part in market
studies into the effects of various plans outlined and will
continue to communicate with the new Department for
Energy Security and Net Zero and the ESO to protect the
investment case.
Security (Physical and Cyber)
Without a safe and secure energy infrastructure, all the
³ÈÀóv¨v®®ÛÀ³®®Èv¨®ïÈÃÜvýÀȳܨ¨
amount to nothing. Whilst often overlooked in the context
of sustainability, thus the instability of national power
systems arising during the energy crisis has reinforced
È®v®Ã³Èv¨®ïÈóvÛ®vÀ¨v¨
national power grid. BESS are a fundamental and critical
³½³®®ÈȳÈÈÀv®Ãȳ®È³v®ÈçÀ³¨ÈÀÈâ
system. Ensuring that our sites are available to the
electricity network when needed and are not at increased
risk from cyber or physical attack is vitally important.
Gresham House Energy Storage Fund plc (GRID)28
Annual Report Financial Statements Additional Information
ÛÀâv¦³À³ËÈïȳ®®ÈȳȮvȳ®ƺÃÀvÃ
an incredibly important role to play in guaranteeing
the security of that network from hostile intruders.
The Company and Manager takes the security of its
investments seriously and so appointed an expert cyber
security company in the year to test the security of its
assets through three different tests:
Penetration test: to simulate a cyber-attack on
the BESS assets;
Network security: if gained access how vulnerable
different parts of the site equipment would be to
v§À®ðË®ƞ
Physical security: Simulating a break-in of sites.
The penetration test was concluded in December 2022
with strong results with few issues detected. The Network
and Physical security tests are ongoing, with some initial
feedback already implemented across the portfolio prior
ȳÈÃÈî³®¨Ëƛ`¨³³§³ÀÜvÀȳﮮ³ËÈ
the results of these tests and implementing any further
recommendations to ensure our sites remain as secure as
they need to be.
The Manager’s Sustainable Investment
policies, processes and commitments
The Manager’s work for the Company is part of its
commitment to be a leader in sustainable investment
as set out in the GH 2025 Strategy. The Manager
recognises the importance of environmental, social and
governance considerations and incorporating them into
the investment process to deliver long term, sustainable
growth and consistent positive outcomes across local and
national communities.
To support this ambition, as well as its commitment to
responsible investment as a signatory to the Principles for
Responsible Investment (PRI), the Manager has established
an approach to sustainable investment that is based on
three core components:
its Sustainable Investment Framework;
commitments and committees;
policies and processes.
These three core components drive a common approach
across all the Manager’s investments and ensure the
9v®vÀƺîÛÃÈ®ÈvÈÛÈÃÀðÈÈý˨
sustainable investment commitments.
These commitments are applied by the Manager in respect
of the investment processes and asset management
approach of the Company. The Manager has developed
and published a New Energy Sustainable Investment
Policy ÜÃýïȳȳ½v®âƺÃÃȳÀƛSÃ
policy describes the Manager’s approach to sustainable
investment for the New Energy division and highlights
the commitments to investing sustainably which apply
to the Company.
The Manager has also integrated sustainability into the
investment process for all divisions which starts with the
completion of a proprietary ESG Decision Tool. The ESG
ó®S³³¨ƪÈS³³¨ƫƜïÀÃÈv½½¨âÈ9v®vÀ®
ŮŬŮŬƜÃ˽½³ÀÈÃÈ®Èïvȳ®³½³È®Èv¨ƜvÈÀv¨O%
risks that need to be managed and mitigated and which
helps shape the due diligence process prior to investment
into a new battery site. The Tool aims to provide a rational
and replicable assessment of key ESG risks which should
be considered prior to an investment decision being made.
The Tool continues to be applied for all new investments
prior to acquisition.
More information on the Manager’s sustainable investment
activities can be found on its website and in its annual
Sustainable Investment Reports.
Gresham House Energy Storage Fund plc (GRID) 29
Annual ReportFinancial StatementsAdditional Information
In relation to ESG and climate considerations, the Company
follows the Gresham House New Energy Sustainable
Investment Policy.
Climate change and environmental pollution is a key topic
within the Sustainable Investment Framework which
is used to structure analysis, monitoring and reporting
of ESG issues and opportunities within the lifecycle of
our investments.
The Board reviews all aspects of the Investment Manager’s
performance annually, including their adherence to the
Company policies. The Board’s Audit Committee considers
the Company’s climate-related disclosures.
2 Describe management’s role in assessing and managing
climate-related risks and opportunities.
Whilst ESG considerations and risks are discussed
formally with the Board on a quarterly basis, the day-
to-day management of ESG and climate matters is the
responsibility of the Investment Manager. The Investment
9v®vÀvý³Ãȳ®È®ÛÃȮȽ³Àȳ¨³È³®ïÈ
from the increasing penetration of renewable energy
generation and monitors climate-related risks through the
risk matrix, utilising knowledge gained by its experience in
operating the investment portfolio, information gathered
through due diligence processes entered into when
acquiring new investments and by engaging with third
parties as appropriate.
The Investment Manager’s Sustainable Investment team
monitors the evolving climate-related government policy
and participates in industry forums and discussions
ȳ®ðË®ÃËÃÈv®v¨®ÛÃÈ®ÈưÀ¨vȽ³¨â
developments that may include climate change mitigation
and adaptation. In April 2022, Gresham House released its
second Sustainable Investment Report highlighting the
Manager’s increasing focus on ESG and climate change
related matters as part of its 2025 Corporate Sustainability
Strategy (CSS).
The Manager published a third Sustainable Investment
Report in April 2023 which will include updates on climate-
related activities across the group in the past year.
This will be available on the Gresham House website:
greshamhouse.com/sustainable-investing/
Whilst the Company is not required to comply
with TCFD, the Company supports the disclosure
recommendations and has therefore voluntarily adopted
the recommendations. The 2021 Annual Report provided
a preliminary assessment against all eleven of the TCFD
recommendations. In this 2022 Annual Report, the
Company builds on that preliminary assessment and
®¨ËèvÈưÀ¨vÈï®v®v¨Ã¨³ÃËÀÃÜv
to be consistent with the TCFD recommendations and
recommended disclosures. In relation to the disclosure
of GHG scope 3 emissions, the Company is engaging with
third-party providers to establish suitable methodologies
and data gathering has commenced. The Company has
provided scope 3 transportation and distribution losses in
this report and aims to provide further scope 3 emissions
data in its subsequent annual reports.
Governance
1 Describe the Board’s oversight of climate-related risks
and opportunities.
The Board has overall responsibility for the Company’s
sustainability risks, opportunities and compliance, which
include those related to climate change. The Board meets
at least once per quarter and in those meetings discusses
the Company’s approach to ESG considerations and
risks, which include the potential impact of the physical
consequences of climate change and changes to the
business outlook for BESS as a result of governmental
policy and the increased penetration of renewables.
Climate change risks are also captured by the Company’s
Risk Management Framework. A risk matrix is maintained
by the Investment Manager which is subject to review by
the Board and is discussed at its quarterly meetings and
updated accordingly.
The outcome of discussions around ESG considerations
v®¨vÈưÀ¨vÈÀçÃv®³½½³ÀÈË®ÈÃvÀÀðÈ®
the Company’s strategy, including the intention to continue
to expand the portfolio to capture opportunities arising
from the decarbonisation of energy use and the increased
penetration of renewable energy.
Task Force on Climate-related Financial
Disclosures (TCFD)
The recommendations of the Task Force on Climate-Related Financial Disclosures provide
a reporting framework based on a set of consistent disclosure recommendations. This
framework provides a level of comparability and transparency around climate-related risk
exposures and approaches.
30 Gresham House Energy Storage Fund plc (GRID)
Strategy
3 Describe the climate-related risks and opportunities
ȳÀv®Ãvȳ®vîÈï³ÛÀÈóÀÈƜËƜ
and long-term.
The Company is committed to investing in and developing
Battery Energy Storage Systems (BESS) to contribute
to the decarbonisation of energy systems. The Manager
and the Board support this commitment, and this guides
the Company’s activities. The portfolio is currently
geographically limited to Great Britain although the
Company has ambitions to develop internationally.
The Company’s investments in BESS are well positioned to
®ïÈÀ³¨vÈưÀ¨vȳ½½³ÀÈË®ÈóÛÀÈóÀÈƜ
medium and long-term by participating in the opportunities
arising in the UK and overseas from the decarbonisation
of energy usage and the increased penetration of
renewable energy.
S³½v®âÃv¨Àvâ®ïÈÈ®À³¨vÈưÀ¨vÈ
opportunities arising from the transition to renewable
energy technologies which are inherently intermittent,
creating additional requirements for ancillary services to
support the transmission network balancing mechanism
and presenting wholesale trading opportunities.
The Gresham House New Energy Sustainable Investment
Policy, which includes climate change considerations,
applies when making new investments and running of the
Company’s existing investments.
The Manager also ensures that climate change-related
risks are considered for individual investment projects.
The CSS and Sustainable Investment Policy inform the
application of the Company’s strategy and assessment
of the risks faced by the Company. This is complemented
by sustainable investment objectives that have been
established for the New Energy division and align to the
Investment Manager’s CSS. The New Energy division’s
sustainable investment objectives include Climate Change
& Pollution as a priority topic with an objective by 2025
to “Demonstrate the role of New Energy in the energy
transition and understand the carbon footprint of the full
lifecycle of assets with the intention of reducing it”.
The Investment Manager has also engaged with the
Company’s largest shareholders to better understand
the investor community’s perspective on sustainability-
related issues, including climate-related strategy,
disclosure, and metrics.
Timeframe Opportunity Risks
Short-term
& medium-term
The continuing rollout of
renewable generation,
encouraged by governments,
increases demand for BESS to
balance the energy system
Increased government and public
support for decarbonisation
increases the volume of
sustainable and impact investing
Implementation of carbon
pricing may lead to increased
investment in companies that
enable renewable deployment
Co-located batteries on renewable generation sites may
reduce the need for standalone BESS
Lower power prices due to over-deployment of renewables
may affect ability to earn revenues from wholesale
trading activities
OvÈËÀvÈvÀ§È³Àv®¨¨vÀâÃÀÛÃƜÀÛ®âîïv®È
capacity increases in BESS, may lead to low pricing
for those services
Increased competition for investment opportunities
will increase project costs and lead to a reduction in
ï®v®v¨ÀÈËÀ®Ã
Increased focus on BESS as a key enabler of renewable
deployment may lead to greater regulation and associated costs
Long-term As economies continue to move
away from fossil fuels, demand
for electricity will increase and
could increase power prices
Advances in battery technology
may lower cost of ownership
and provide new opportunities
to increase participation in
energy markets
Physical risks arising from extreme weather events including
ð³³®v®ÃȳÀvv
Extreme temperatures can affect the performance of
battery technologies
Development of alternative energy storage systems to support
the roll-out of renewable power generation may lead to early
obsolescence of BESS causing asset write-downs
Advances in battery technology may lead to lower cost of
½À³Ëȳ®¨v®È³vÀËȳ®®ï®v®v¨ÀÈËÀ®Ã³À
existing projects
Gresham House Energy Storage Fund plc (GRID) 31
Financial StatementsAdditional Information Annual Report
The Board and Investment Manager also recognise that
there are certain climate-related risks that could have
an impact on the Company in relation to changes in the
business environment and physical risks caused by
extreme weather events.
As described above, the Manager maintains a risk matrix,
which includes climate-related risks, and this is subject
to regular discussion with the Board. As part of this risk
management process the Board and Investment Manager
vÛ®ÈïÜvÈÈâ³®ÃÀȳȽÀ®½v¨ÀçÃ
facing the Company and this includes climate-related risks.
The table below sets out the key climate-related risks
v®³½½³ÀÈË®ÈîÈïâȳvÀv®*®ÛÃÈ®È
Manager over the short, medium and long-term, and
®¨ËÈÀ½³È®Èv¨½vȳ®Èï®v®v¨½À³Àv®
of the Company. Climate-related risks and opportunities
are embedded in the Company’s strategy.
4 Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy,
v®ï®v®v¨½¨v®®®ƛ
Investment portfolio
Opportunities
The Company’s operational BESS investments participate
®ÈvÀ§È³½½³ÀÈË®ÈîÈïv³Ûv®®ïÈ
from governmental and societal support for deployment
of renewable technologies. These operational entities
vÛv¨Àvâ®ïÈÈÀ³¨Û¨Ã³Û³¨vȨÈâv®
power prices, in part caused by increased renewables
penetration and a relative lack of BESS capacity.
S³½v®âvÃv¨Ã³Û¨³½vîïv®ÈËÈËÀ
portfolio by investing in projects which have been
constructing BESS assets. Large parts of this pipeline
have recently been commissioned or are expected to
³Ãó®Ã³ÀȨâv®Ü¨¨®ïÈÀ³vÀ§È
opportunities once operational.
Risks
The Company’s portfolio is focussed exclusively on BESS
and as such are exposed to the physical, technological and
vÀ§ÈÀçîÈïv³Ûƛ(³ÜÛÀƜÈ®ÛÃÈ®È
portfolio is geographically spread in the UK, and given the
nature of BESS technology, are not generally adversely
affected by weather patterns. Consideration is given
ȳ½³È®Èv¨½âÃv¨ÀçÃÃËvÃð³³®ËÀ®È
planning phase and the geographic spread provides
resilience against localised issues.
Strategy
Opportunities
Increasing awareness and attention to climate change
has spurred increased deployment of renewable energy
worldwide. The Board and the Manager believe that this
ܨ¨³®È®ËƜ½À³Û®Ã®ïv®È³½½³ÀÈË®ÈóÀOO
in the short, medium and long-term. The Company is a
¨v®½À³ÛÀ³OO®ÈV3v®vÃvîïv®È
future pipeline of investments in different stages of
development in the UK and overseas.
This awareness has spurred high levels of investor interest
and support for the Company, enabling it to raise equity
funds. This investor support has provided the Company
with the necessary capital to continue to invest in BESS
portfolio projects. The Company’s development is part of
a growing industry as BESS is rolled out by peers in the
UK and overseas.
Risks
Development of BESS capacity by the Company’s
portfolio investments and competitors is leading to the
saturation of the market for BESS ancillary services
in the UK. The Manager has anticipated this for some
time and sees exposure to the wholesale trading market
®ÀvËÀÃËȳ½À³ïÈÃÜvâÀÃ˨ȮÀvÈÀ
volatility of returns.
High levels of investment in BESS, and wider awareness
of the market opportunities, is leading to increased
competition for project rights and key equipment and
consequently increases in prices of those project rights
and the equipment required, which results in higher costs
to develop projects and may lead to a reduction in returns.
Financial planning
Opportunities
Strong investor demand for organisations with strong
ESG credentials that are addressing environmental and
social challenges, and on the back of attractive revenue
opportunities for BESS, is providing the Company with
capital to continue to grow its investment portfolio and the
potential for increases in the asset value of the portfolio.
The importance of BESS in supporting the further
deployment of renewable energy generation, and the
resulting strong investment case underpinning BESS,
is also opening up access to further sources of funding,
such as bank debt, further enabling the Company to
grow its portfolio.
Gresham House Energy Storage Fund plc (GRID)32
Annual Report Financial Statements Additional Information
Volatility of wholesale power prices, driven by volatility
in the availability of renewable energy generation, may
½À³Ûîïv®È³½½³ÀÈË®ÈóÀÈÀv®®ÀâvÃ
renewables become an increasing proportion of the energy
mix. As high energy prices are typically driven by fossil
fuel generation and low prices driven by high renewable
generation, any increase in carbon pricing is likely to
extend spreads with fossil fuel generation having to
increase pricing to cover the cost of running. This means
there is an opportunity for increased revenues resulting
from increasing carbon prices.
Risks
î³Èv³ÛƜËÈËÀvÃð³ÜóȽ³Àȳ¨³
®ÛÃÈ®ÈÃvÀ¨§¨âȳîïv®È¨âvÈâ
wholesale power prices as the market for BESS ancillary
services becomes saturated. During periods of high
renewable energy generation, the revenue opportunities
will be diminished. Over time this could lead to the
reduction in value of asset values.
Increased input prices linked to carbon-related raw
material costs may increase construction costs of
pipeline assets and therefore reduce returns available
to the Company.
The emergence of new energy storage technologies
may require the Company to invest in research and
development, thereby impacting on returns.
5 Describe the resilience of the organisation’s strategy,
taking into consideration different future climate
scenarios, including a 2°C or lower scenario.
Physical risks
Given the geographic spread of the Company’s
investment portfolio within the UK and the nature of
BESS technologies the Board and Investment Manager
³®³È³®ÃÀÈvÈÈÀvÀ¨§¨âȳîïv®È
physical risks to the current investment portfolio arising
from various climate scenarios. Potential physical risks
Èvȳ˨áÃÈƜÃËvÃð³³®®v®áÈÀÜvÈÀ
Û®ÈƜvÀ³®ÃÀvývÀȳîýïvȳ®Ã
and increased infrastructure costs to cope with potential
physical risks are not anticipated to be material. Flood
defences are already considered in the investment
portfolio with a number of projects having key equipment
elevated above the ground to reduce risk of damage in the
ۮȳvð³³ƛS³Àv½Ã½Àv½À³ÛÃÀè®
against localised issues.
Transition risks
As previously noted, the portfolio investment companies’
principal sources of revenue in the future are expected to
be focussed more towards the wholesale energy market
rather than the provision of ancillary services.
It is likely that wholesale energy markets will be
îïv®È¨â½vÈâv®ËÀ³¨vÈưÀ¨vÈ
factors. Some of the most important factors include:
government policy (including carbon cost regimes and
mandated plant closure);
penetration of renewables;
development in future technologies designed to deal
with climate-related matters (e.g. a move to a hydrogen-
based energy system); and
changing patterns of demand (including the impact
of electric vehicles, heat pumps and increased use of
air conditioning).
The Company uses the services of third-party experts to
estimate the impact of those factors in energy prices over
the short, medium and long-term to create low, high and
central case scenarios. These scenarios, which factor
in Government Net Zero commitments, a view on the
likelihood of their implementation, and expected carbon
½ÀÃƜvÀÈ®ÜÈ®ï®v®v¨³¨¨®ƛ
Although the scenarios are used within the Company’s
ï®v®v¨³¨¨®ƜȽÀÃȳ®½³ÜÀ½À
³v®â³È®ÈïvȳÀÃƜv®ÈÀÈ®ƜÃ
highly uncertain.
Sv¨Èâ³OOȳ½vÀȽvÈðá¨âÜÈ®È
wholesale market, or to provide ancillary services,
provides revenue opportunities even in low case scenarios.
6 Describe the organisation’s processes for identifying and
assessing climate-related risk.
Climate-related risks which may affect the Company or
ÈîÛÃȮȽ³Àȳ¨³vÀ®Èïv®vÃÃÃÃâ
the Investment Manager as part of the risk management
process described above. These risks are included within
the Company’s risk register which is maintained by the
Investment Manager and discussed and reviewed with
members of the Board including at its formal quarterly
meetings where strategic decisions are taken. When
preparing the risk matrix the Investment Manager draws
upon its experience of operating the investment portfolio
and its knowledge of developments that are taking place
within the BESS sector and wider energy industry gained
through its membership of relevant industry bodies and
ÃËÃó®ÃÜȧâÃ˽½¨ÀÃv®:vȳ®v¨%Àƛ*®Èï
ÀçÃvÀ®¨Ë®ÈÀçvÈÀáv®¿Ëv®Èï
with consideration given to likelihood and impact and
ranked accordingly.
I³È®Èv¨ÀçÃvâv¨Ã³®ÈïvývÀȳÈË
diligence process that is carried out by the Investment
Manager and independent experts prior to acquiring new
portfolio companies. The Investment Manager has created
a detailed ESG Decision Tool which is completed prior to
making acquisitions of portfolio companies.
Gresham House Energy Storage Fund plc (GRID) 33
Financial StatementsAdditional Information Annual Report
This decision tool includes consideration of numerous
ESG and climate factors including environmental
vÃÃÃîÈƜ½³È®Èv¨ð³³®ƨÀv®vv®È
suitability of construction contractors to adequately deal
with environmental or climate-related mitigation actions.
During investment appraisal, consideration is given to
available climate mitigation and the costs of putting this in
place are factored into the investment proposal which is
reviewed by the Board before such acquisitions are made.
Principal and emerging risks, which may include climate-
related risks, are disclosed within the Company’s Annual
Financial Statements.
S³½v®âܨ¨³®È®ËȳÀï®ÈèvÈÀç
assessment approach in line with the evolving nature
of climate factors and emergence of climate-related
tools and data.
7 Describe the organisation’s processes for managing
climate-related risks.
Discussions between the Board and the Investment
9v®vÀvÀ³ËÃó®È³ÃÈîïv®ÈÀçÃ
v®È³½v®âƜvÃÈÀ®v®¿Ëv®Èï®
the risk matrix.
Physical risks
As previously stated, the Investment Manager and the
³vÀ³®³È³®ÃÀÈvÈÈÀvÀ¨§¨âȳîïv®È
physical climate-related risks to the investment portfolio.
I³È®Èv¨½âÃv¨ÀçvȳÀÃÈvÈvÀ®ÈïvývÀȳ
È®Èv¨v¿ËÃȳ®½À³ÃÃƜ³À®ÈïÃËÿˮȨâ
via design reviews, site inspections or during routine
maintenance, may be mitigated via design changes.
Such design changes include the cooling systems used,
and heating where it may be required, as well as having
³®Èv®ÀÃÀv󮽨®ÈÃÜv®ÀËð³³
risks where applicable. The geographical spread of the
investment portfolio mitigates against local environmental
vȳÀÃÃËvÃð³³®ƛ$¨³³ÀçvÃÃÃîÈÃƜvÃ
on Environment Agency data, are undertaken and will
ÈÀ®vð³³ç³®®v®v½À³v¨ÃÈv®v¨âÃó
ð³³®Ɯ®¨Ë®Èó¨vÈv®ƛOOvÃÃÈÃ
have temperature managements (such as air conditioning
or liquid cooling), further mitigations of physical risks are
considered at the planning stage and are often required to
be considered as part of planning approval.
Transition risk
The anticipated growth of renewable energy generation,
which is likely to lead to increased volatility of wholesale
power prices, is considered to be an opportunity for the
investment portfolio rather than a risk. However, shifts in
power demand or supply and their effect on power market
pricing will impact the ability of the portfolio companies to
generate revenue which may impact the Company’s ability
to meet its dividend target.
The Investment Manager regularly updates the portfolio
vÃð³Ü³¨È³ÀðÈËÈËÀ®ÈÀÛ®Ëâ¨ËÀÛÃƛ
The Manager is engaged in the Review of Electricity Market
Arrangements (REMA) consultation with National Grid
ESO and UK Government departments, having submitted
initial consultation responses in October 2022 and
holding several meetings during this time on proposals
put forward. The Manager is also an active participant in
industry bodies. The Manager is currently involved in an
industry study looking into the possible effects of some
of the proposed changes such as locational pricing. The
results of these studies will be discussed with the ESO
and the UK Government to ensure an effective market
design is agreed on.
The Investment Manager keeps abreast of developments
in battery and storage technologies which may affect the
Company’s market opportunities in the future.
8 Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation’s overall risk management.
As noted above, climate-related risks are integrated into
the Company’s risk management framework through
the investment process and through the regular review
of the Company’s risks carried out by the Investment
Manager and are included in the risk matrix which is
reported quarterly to the Board. The Board considers
the completeness of the risks recognised and the
proposed mitigations.
Metrics
9 Disclose the metrics used by the organisation to assess
climate-related risks and opportunities.
The Company’s investments in BESS play an important
role in facilitating the continued deployment of renewable
energy generation. Renewable energy generation through
wind and solar is inherently intermittent and the increased
penetration of renewable energy generation therefore
increases the challenges facing energy system operators
to ensure a stable supply of energy.
BESS has the ability to help deal with some of those
challenges by providing ancillary services that support
the transmission network balancing system and by
storing energy from the electricity grid during period of
high supply / low demand and releasing energy to the Grid
during periods of low supply / high demand.
To date, the roll-out of BESS has lagged behind the
deployment of renewable energy. The Company has been
targeting rapid growth of its investments in BESS to help
close the gap and support the future increase in renewable
generating capacity and thereby reduce dependency
on fossil fuels.
Gresham House Energy Storage Fund plc (GRID)34
Annual Report Financial Statements Additional Information
The Board and Investment Manager consider that the most
important climate-related metrics for the Company relate
ȳÈÃv¨ƜvÛv¨v¨Èâv®í®â³È³½v®âƺÃ
BESS investments, measured as:
Total operational BESS capacity at the year-
end (MW and MWh)
Weighted average BESS capacity for the year (MW)
Carbon emissions avoided (tCO
2
e)
In addition, the Investment Manager will monitor carbon
emissions and carbon intensity metrics in line with TCFD
À³®vȳ®Ã³ÀÈï®v®v¨®ËÃÈÀâƜ®¨Ë®Ɲ
GHG emissions - scope 1,2 & 3 carbon emissions (tCO
2
e)
Weighted average carbon intensity (WACI) (scope 1+2
emissions/£mn revenue)
The methodology used to calculate the average carbon
intensity and carbon emissions is documented in sections
10 and 11 of this report respectively.
10 Disclose Scope 1, Scope 2, and if appropriate, Scope 3
greenhouse gas emissions, and the related risks.
The Company reports emissions using the Greenhouse Gas
(GHG) Protocol which is the most widely used framework
for reporting on carbon emissions and this framework
separates emissions into the following categories:
Scope 1: Direct emissions from owned or controlled sources
Scope 2: Indirect emissions from the generation of
purchased energy
Scope 3: Indirect emissions that occur in the value chain
The Company has calculated Scope 1, Scope 2 and Scope
3 (Transmission and distribution losses) CO
2
emissions for
the year ended 31 December 2022. The calculations were
supported with input from third-party carbon consultant,
Carbon Trust, and apply the Partnership for Carbon
Accounting Financials’ (PCAF) “The Global GHG Accounting
& Reporting Standard for the Financial Industry” (Nov,2020).
UK Government conversion factors and EEIO emissions
factors have been utilised to facilitate the calculations.
Metric 2022 2021*
Scope 1 emissions (tCO
2
e) 9,423 1,660
Scope 2 emissions (tCO
2
e) 5,149 2,891
Scope 3 (Transmission and
distribution losses) emissions (tCO
2
e)
593 392
WACI (tCO
2
e/£mn revenue in portfolio) 178 n/a
*Carbon emissions calculation methodology has been updated from a
UK government (BEIS) approach in 2021 to application of the Partnership
for Carbon Accounting Financials (PCAF) Global GHG Accounting &
Reporting Standard for the Financial Industry in 2022. In addition,
granularity has been increased from annual net metered volumes to
half-hourly metered volumes and carbon intensity in 2022. Whilst the
methodologies applied in each year are similar, they are not an exact
match. Some information was not available from the 2021 calculations to
provide a consistent comparison.
Carbon emissions methodology
All carbon emissions are calculated in line with PCAF
Ëv®³À½À³¦Èï®v®ƛO³½ŭƜŮv®ůÃó®Ã
are calculated using the following formula:
Emissions reported currently encompass only operational
assets and do not yet account for construction assets.
The Company intends to expand reporting to cover
construction assets in 2023 reporting.
More information on Scope 1, 2 and 3 emissions
O³½ŭÃó®Ã³Àȳ½v®âÀðÈèv®
gas fuel consumed by certain assets. Only one of the
³½v®âƺý³Àȳ¨³³½v®ÃËÃÃîïv®Èv³Ë®ÈÃ
of gas or diesel, with the bulk of generation coming from
gas at that site. Further, one other asset used a small
amount of Diesel for testing under its Capacity Market
contract obligations and did not represent a material
ÈÀv®ÀÈËÀ®ƛO³½ŮÃó®ÃÀðÈÀ®³ËÃvÃ
emissions released from indirect consumption of energy.
For battery assets, the presumed energy consumption
of an asset is calculated by deducting energy exported
from energy imported (kWh) by the asset. Half-hourly UK
electricity grid carbon emissions factors are then applied
to estimate the carbon footprint associated with this
energy consumption.
Scope 3 emissions in this reporting only include
SÀv®ÃÃó®ǪÃÈÀËȳ®¨³ÃÃÃƛSǪ¨³ÃÃÃÀðÈ
emissions associated with loss during transmission and
distribution of energy consumed by the BESS assets.
The Company intends to expand its metrics for Scope
3 emissions, which will give clarity on emissions within
its value chain and will enable the Company to engage
with suppliers to take action to reduce such emissions.
The Investment Manager is engaging with third-party
providers to establish suitable mechanisms to calculate
the Company’s Scope 3 emissions and data gathering
to support these estimates has commenced. For this
report the Company has stated Scope 3 Transmission
and distribution losses only and plans to extend further in
subsequent reporting periods.
It is likely that the Company’s Scope 3 emissions will
represent the majority of its carbon footprint.
Gresham House Energy Storage Fund plc (GRID) 35
Financial StatementsAdditional Information Annual Report
Weighted-average carbon intensity methodology
and metric
The Company’s weighted average carbon intensity
ÀðÈÃv½³Àȳ¨³ƺÃá½³ÃËÀȳvÀ³®ư®È®ÃÛvÃÃÈÃƜ
expressed in tCO
2
e/£mn revenue. It is calculated, as
per TCFD guidance for Financial Institutions, using the
following formula:
Note that “issuer” in the case of the Company refers to its
battery assets.
11 Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets.
BESS capacity
BESS capacity supports multiples of renewable generation
capacity and therefore incremental BESS deployment
is a key measure.
The Investment Manager continues to develop a pipeline
of BESS investments and the Company has made good
progress in expanding operational capacity despite
COVID-related construction and supply chain challenges.
The operational capacity and pipeline reported by the
Company, measured in MW capacity, has grown as follows:
Operational
capacity
Total pipeline
capacity
31 December 2020 315MW 1,227MW
31 December 2021 425MW 1,557MW
31 December 2022 550MW 1,967MW
GHG emissions avoided
As BESS generally store energy during periods of high
renewable energy generation / low demand and release
energy during periods of low renewable energy generation
ƨv®ƜÈÀÃv®®À®ÈvÀ³®®ïÈȳ
using BESS within the electricity grid. However, BESS
also displaces fossil fuel-based energy generation as a
backup system and it therefore enables the avoidance of
emissions greatly in excess of the differential between the
carbon associated with the energy imports and exports.
More detail on the methodology applied for this
is found below.
It should be noted that at this stage the carbon avoided
methodology only accounts for operational assets
and does not account for lifecycle carbon impact, i.e.,
carbon emissions associated with the supply chain and
production of the assets.
On this measure, the carbon avoided by the Company’s
BESS investments is calculated by a third-party consultant
(Carbon Trust) as follows:
YE 31 December 2022: 510,291 tCO
2
Carbon emissions avoided methodology
Scope 2 emissions show the net carbon emissions impact
of assets operations through energy consumption.
This methodology for BESS assets is such that the net
metering, i.e. import and exports of energy by each
battery, are assumed to be consumed/avoided at the
average intensity of the national grid for each half hour.
This calculation demonstrates the operational carbon
Ãó®Ã³ÈvÃÃÈÃËȳî³ÈÀðÈȽ³ÀÈv®È
role of BESS assets when it comes to broader grid
carbon emissions and their role in supporting increased
penetration of renewables and decreased use of carbon-
intensive energy generation.
Average metered volume against carbon intensity by settlement period in 2022
-15
-10
-5
0
5
10
15
150
160
170
180
190
200
210
1357911131517192123252729313335373941434547
Average metered volume per day
(MWh)
Average Carbon Intensity Factor
(gCO
2/kWh)
Carbon Intensity (gCO2/kWh) Average Metered volume (MWh)
Gresham House Energy Storage Fund plc (GRID)36
Annual Report Financial Statements Additional Information
The scope 2 methodology omits two key aspects of the
broader role of BESS that should be factored into carbon
avoidance methodologies:
1 no value is attributed to BESS services offered such as
Frequency Response and the renewable generation this
allows on the system; and
2 whilst trading, the battery exports would replace the
next marginal asset that would otherwise be called upon,
which would be a higher carbon intensity technology
such as gas or even coal, than the average intensity
on the grid. Therefore, the emissions avoided should
ÀðÈÈvÀ®v¨Ë®ÈvÀ³®³ÃÈv®®³ÈÈ
average intensity.
As shown in the chart on the previous page, imports
are typically carried out during half-hourly periods
when carbon intensity is lower, whilst exports are
typically delivered during higher carbon intensity
periods on the grid.
Low prices are typically driven by high output from
cheap renewables, leading to lower grid carbon intensity,
whilst high prices are typically driven by periods of lower
renewables output and instead power is delivered by
higher carbon-intensive and more expensive power
technologies such as gas or even coal.
The average carbon intensity of the grid currently does not
v®È³³Ã®ïv®È¨âËȳv®Àv¨½ÀÛv¨®
of gas today. Therefore, the difference between high and
low carbon intensity is often relatively small particularly
in a single day. The scope 2 emissions methodology of a
battery will therefore typically result in net consumption
of energy as a result of its round-trip losses, i.e. it imports
a greater volume of energy than exported with a resulting
“carbon consumption”. Unless consideration is given to the
ÜÀvÀ³®Ãó®®ïÈÃÈvÈOOvÃÃÈîv¨Ɯ
i.e. frequency response enabling greater reliance on
renewables, the carbon emissions impact of these assets
will be miscalculated.
Therefore, we have worked and continue to work with
Carbon Trust to use an updated methodology which also
vȳÀîȮïÈÀ³vÃÃÈýÀ³Û®À¿Ë®â
response services.
The avoided emissions are calculated by comparing
calculated emissions against a baseline emission if these
assets were not available to the grid and the grid had
continued to operate as usual. The baseline can vary
depending on the strategy adopted by a BESS asset.
The baseline for an asset performing frequency response
services is assumed to be a plant at the operating margin.
It is assumed a BESS asset would maintain headroom in
the battery in order to deliver upwards and downwards
actions, for simplicity, Carbon Trust assume the state of
charge of a battery is 50% in this scenario.
When comparing against the baseline it is therefore
assumed only half of the nominal battery capacity is used,
this is multiplied against the number of hours operational
in the service and then multiplied against the average
operational margin grid carbon intensity in the location.
The baseline calculation is therefore summarised as:
Grid stability baseline emissions = 50% BESS capacity x
No. hours in service x grid operational margin
This baseline is then compared to the actual calculated
emissions to calculate the emissions avoided. The
approach taken is a conservative estimation of the avoided
baseline emissions and today only factors in the emissions
avoided during periods of frequency response services.
Whilst we view this methodology as an improvement over
our previous calculations, the calculation still assumes
that exports, when batteries are trading, avoid only the
average carbon intensity on the system and not the
marginal asset intensity. We are working with Carbon
Trust as well as other data consultants to keep iterating
the calculation and derive a more detailed analysis of the
carbon emissions avoided both in frequency response
services and whilst trading, we hope to share further
updates in future reports.
Under the current methodology the estimated
carbon emissions avoided from our portfolio for 2022
was 510,291 tCO
2
.
Target for GHG emissions avoided
The Investment Manager is considering the setting of a
Science Based Target (SBT) for its Financed Emissions,
that is the emissions associated with investments
managed by the Investment Manager. As part of this
process, the Company is considering the potential
implications of setting a SBT.
Gresham House Energy Storage Fund plc (GRID) 37
Financial StatementsAdditional Information Annual Report
Business review and outlook
A detailed discussion of individual asset performance
and a review of the business in the period together
with outlook are covered in the Investment Manager’s
Report on page 10.
The Directors are of the view that the investment strategy,
incorporating both additional acquisitions and the existing
portfolio, is performing well. The Company has a strong
½³Àȳ¨³³ÛÀÃï®ÛÃÈ®ÈÃƜÜvÀܨ¨
positioned to take advantage of a growing opportunity set.
The equity fundraising during Q2 of 2022 demonstrates
strong investor support for the Company’s growth strategy
and the resilience of the Company’s income. One of the
Board’s key objectives for 2023 is to grow the operational
portfolio and pipeline by continuing to ensure an effective
v®í®È½¨³â®È³Èv½Èv¨ÀvÃâÈ
Company, augmented by a drawdown of the debt facility,
into a portfolio of accretive assets that are in line with the
Company’s Investment Policy.
Key Performance Indicators
The Board believes that the key performance indicators
detailed in the Highlights section on page 4 and
È*®ÛÃÈ®È9v®vÀƺÃL½³ÀÈƜÜ®¨Ë½À³ïÈƜ
projected revenues, dividend, NAV, total return, project
v½vÈÃv®vÈÈÀâÃçÃƜ½À³ÛÃvÀ³¨ÀÃÜÈ
balanced information to assess how the Company is
performing against its investment objectives. The Board
monitors these key metrics on a routine basis and is
encouraged by performance in the year: the capacity of
the batteries has increased; the pipeline of new batteries
is substantial; and the revenue earning opportunities for
these batteries are continually developing in line with
expectations. Further discussion of the KPIs and results
are included in the Chair’s Statement on page 6 and in
the Investment Manager’s Report on page 10.
S³½v®âvîÀvÈljŮŭųƛŭ®³½À³ïÈ®ÈâvÀ
ended 31 December 2022, including interest receivable
from subsidiaries. Total dividends paid in respect of 2022
were £36.1mn (including the dividend paid on 27 March
ŮŬŮůƫƛS³vÀv®Èv®Ãv³Ëó®³½ÀvÈ®½À³ïÈ
and Operational Dividend Cover to ensure underlying
½À³ïÈÃÀ³È³½v®âƺîÛÃÈ®ÈÃvÀvÛv¨v¨È³
cover dividends. As the capital raised is fully deployed and
underlying assets upgraded, the Board will continue to
ensure this is monitored closely.
Grid connection capacity (in MW) and the capacity of
the batteries (in MWh) are also crucial to ensure the
underlying investments are able to operate at full capacity:
the Investment Manager has ensured grid capacities
(both import and export) are optimised and symmetrical
wherever possible. Finally, as the Company has undertaken
several fundraisings following IPO, the Board monitors the
project pipeline to ensure quality projects are available to
meet investor demand and that funds raised are deployed
in a reasonable timeframe.
*®ÛÃÈ®ÈI³¨âƝÛÀÃïvȳ®³
assets and revenues
S³½v®â®ÛÃÈîvÛÀÃï½³Àȳ¨³³ËȨÈâư
scale energy storage systems, which utilise batteries.
The BESS Projects comprising the Portfolio will be
located in diverse locations across Great Britain and the
Overseas Jurisdictions.
Individual ESS Projects will be held within special purpose
vehicles into which the Company invests through equity
and/or debt instruments. It is intended that each BESS
Project Company will hold one BESS Project but a BESS
Project Company may own more than one BESS Project.
Strategic Report
The Directors present their Strategic Report for the period ended 31 December 2022. Details
³ÈÀȳÀÃܳ¨³íËÀ®È½À³v®vÃvÈÈvȳÈÃÀ½³ÀÈvÀÛ®
on page 50 of the Annual Report and Financial Statements. This Strategic Report has been
prepared in accordance with the requirements of Section 414 of the Companies Act 2006 and
best practice. Its purpose is to inform the members of the Company and help them to assess
how the Directors have performed their duty to promote the success of the Company, in
accordance with Section 172 of the Companies Act 2006.
38 Gresham House Energy Storage Fund plc (GRID)
The Company will typically seek legal control through
direct or indirect stakes of up to 100% in such BESS
Project Companies, but may participate in joint ventures
or co-investments, including, without limitation with other
investors or entities managed, operated or advised by the
Gresham House plc group where this approach enables the
Company to gain exposure to assets within the Company’s
investment policy. In such circumstances the Company will
seek to secure its shareholder rights through protective
provisions in shareholders’ agreements, co-investment
agreements and other transactional documents.
ÃÃÈÈâ½v®ÛÀÃïvȳ®
The Company invests primarily in BESS Projects using
lithium-ion battery technology as this technology is
considered by the Company to offer the best risk/return
½À³ï¨ƛ(³ÜÛÀƜȳ½v®âÃvv½Èv¨vÃȳÜ
energy storage technology is used by the projects in
which it invests and may invest in projects with alternative
vÈÈÀâÈ®³¨³ÃÃËvÃóËv®ç®ÀÛ
technologies, or other forms of energy storage technology
ƪÃËvÃð³ÜvÈÈÀÃƨv®Ãv®³½ÀÃÃ
air technologies), and will consider such investments
(including combinations thereof) where they meet the
Company’s investment policy and objectives.
The Company intends to invest with a view to holding
assets until the end of their useful life. BESS Projects
may also be disposed of, or otherwise realised, where the
Manager determines in its discretion that such realisation
is in the interests of the Company. Such circumstances
may include (without limitation) disposals for the purposes
of realising or preserving value, or of realising cash
resources for reinvestment or otherwise.
BESS Projects will be selected with a view to achieving
v½½À³½ÀvÈÛÀÃïvȳ®®ÀýȳÈI³Àȳ¨³ƛ
$ÀÃÈƜÛÀÃïvȳ®Ü¨¨Ã³ËÈâ³Àv½v¨
location of the BESS Projects in which the Company
invests across Great Britain and the Overseas
Jurisdictions, provided that no more than 30% of Gross
Asset Value (calculated at the time of investment) may be
invested in the Overseas Jurisdictions.
Second, it is the Company’s intention that at the point
at which any new investment is made, no single project
(or interest in any project) will have an acquisition price
(or, if an additional interest in an existing investment is
being acquired, the combined value of the Company’s
existing investment and the additional interest acquired
shall not be) greater than 20% of Gross Asset Value
(calculated at the time of investment). However, in order
ȳÀÈv®ðá¨ÈâƜȳ½v®âܨ¨½ÀÈÈȳ
invest in a single project (or interest in a project) that has
an acquisition price of up to a maximum of 30% of Gross
Asset Value (calculated at the time of acquisition).
S³½v®âܨ¨v¨Ã³ÈvÀÈvÛÀÃïá½³ÃËÀÜÈ
Èv³³¨®®ÈÀÃÈȨÃÃÈv®ïÛývÀvÈ
projects at any one time.
SÀƜȳ½v®â®È®ÃȳvÛÛÀÃïvȳ®â
securing multiple and varied revenue sources across the
I³Àȳ¨³â®ÛÃÈ®®OOIÀ³¦ÈÃÜv®®ïÈ
from a number of different income streams with different
³®ÈÀvȨ®ÈÃv®ÀÈËÀ®½À³ï¨ÃƛS³½v®â®È®Ã
that the BESS Projects in which it invests will primarily
generate revenue from in front of meter services, but may
also provide behind-the-meter services. The Company
may invest in changes to its equipment, technical
³®ïËÀvȳ®Ãv®È®³¨³â®³ÀÀȳvÃÃÀÛ®Ë
streams as they become available, noting that revenue
streams and revenue stacking continues to evolve not only
in Great Britain but also in the Overseas Jurisdictions as
the energy storage market matures.
BESS Projects in which the Company invests may diversify
their revenue sources further by collaborating with
renewable generators or large users of power in close
proximity to a BESS Project, or providing availability-
based services to restore electric power stations or part
of electric grids to operation. The Company may also
invest in BESS Projects with Co-Location Arrangements
in the Overseas Jurisdictions and may purchase solar
panels for use at such co-located BESS Projects in the
Overseas Jurisdictions provided that the proportion of an
investment spent on purchases of solar panels does not
exceed 6% of Gross Asset Value (calculated at the time of
such purchase).
$³ËÀÈƜȳ½v®âvÃȳvÛÛÀÃïvȳ®
across the Portfolio through the use of a range of third-
party providers, in so far as appropriate, in respect of each
energy storage project such as developers, Engineering,
procurement and construction (EPC) contractors, battery
manufacturers and landlords.
Finally, each BESS Project internally mitigates operational
risk because each BESS Project will contain a battery
system with a number of battery modules in each stack,
each of which is independent and can be repaired,
upgraded or replaced separately, thereby reducing the
impact on the project as a whole of the failure of one or
more battery modules.
Other investment restrictions
The Company will generally seek to acquire BESS Projects
where construction is substantially complete and where
BESS Projects are capable of commercial operations
(Operational Projects).
Gresham House Energy Storage Fund plc (GRID) 39
Financial StatementsAdditional Information Annual Report
?½Àvȳ®v¨IÀ³¦ÈÃܨ¨®È³vÛ®½¨vÃËí®È
land rights, either in the form of a freehold interest
or substantially similar interest in the Overseas
Jurisdictions or a completed lease on satisfactory
terms in relation to the land where that BESS Project
is situated, a grid connection agreement or grid
sharing or such other rights to import or export from
the relevant network as are market standard, and
³½¨È³®³À¨Ûv®È³Ãó®®ÈÃÈó®ïÀ®
commissioning completion.
The Company may also acquire BESS Projects or rights to
acquire BESS Projects which are considered “shovel ready”
ÈvÈvÃv®ËvÛ®½¨vÃËí®È¨v®ÀÈÃ
either in the form of a freehold interest or substantially
similar interest in the Overseas Jurisdictions or a
completed lease, lease option, or agreement for lease, on
satisfactory terms in relation to the land where that BESS
Project is situated, full planning permission enabling the
construction of a suitable BESS Project on that land, and a
grid connection offer or grid sharing or such other rights to
import or export from the relevant network as are market
standard prior to connection works being completed
(Ready to Build Projects).
The Company may invest in Ready to Build Projects
provided that no more than 10% of Gross Asset Value
(calculated at the time consideration is paid for such
acquisition) may be exposed in aggregate to such Ready
to Build Projects. If the Company wishes to acquire other
Ready to Build Projects in excess of the 10% of Gross
Asset Value restriction, it may acquire such Ready to Build
Projects for a nominal upfront consideration provided that
(i) any remaining consideration is paid by the Company
only where construction is substantially complete and
where such BESS Projects are capable of commercial
operations and (ii) the Company has a put option to
transfer back the Ready to Build Project to the seller in
certain circumstances.
S³½v®âvâ½À³Û¨³v®ï®v®È³OOIÀ³¦È
Companies before they hold Operational Projects so that
the BESS Project Companies can acquire equipment or
make payments in connection with the BESS Projects’
construction or delivery, provided that no more than 25%
³%À³ÃÃÃÃÈ_v¨Ëƪv¨Ë¨vÈvÈÈÈÈvÈï®v®Ã
provided based on the latest available valuations) may be
exposed in aggregate to any such loans.
Once an Operational Project is acquired, or after a Ready
to Build Project becomes an Operational Project, the
Company may invest in upgrades by loans or otherwise and
®ÈÀ®È³®Ü¨vÃvÀÀv®®ÈÃȳ®ÀvÃÈÃç³
the site, new planning permissions enabling construction
of an increased capacity BESS Project on that land, a
new and/or amended grid connection which provides
for increased capacity or altered technical parameters,
and/or an EPC contract, Enginerring procurement and
construction management (EPCm) contract suite or other
construction contracts to undertake construction of the
relevant upgrades.
The Company does not intend to invest in listed closed-
ended investment funds or in any other investment fund
(other than, potentially, in money market funds as cash
equivalents) and in any event shall not invest any more than
15% of its total assets in listed closed-ended investment
funds or in any other investment fund.
Investment in Developers
The Company may invest in one or more Developers of
BESS Projects through equity issued by the relevant
Developer, provided that investment in Developers
(calculated at the time of investment) shall be capped at
£1mn in aggregate.
Cash management
Uninvested cash or surplus capital may be invested on a
temporary basis in:
cash or cash equivalents, money market instruments,
money market funds, bonds, commercial paper or other
debt obligations with banks or other counterparties
having a “single A” or higher credit rating as determined
by any internationally recognised rating agency selected
by the Board which, may or may not be registered in the
European Union; and
v®âV3Ʒ³ÛÀ®®Èv®½Ë¨ÃËÀÈÃƸvÃ﮳À
the purposes of the FCA Rules.
Leverage and derivatives
The Company may raise debt and introduce leverage (at
the Company level and/or the level of one or more of its
subsidiaries, such leverage to be introduced directly or
through one or more subsidiaries) to the extent funding
is available on acceptable terms. In addition, it may
from time to time use borrowing for short-term liquidity
purposes which could be achieved through a loan facility
or other types of collateralised borrowing instruments.
The Group is permitted to provide security to lenders in
order to borrow money, which may be by way of mortgages,
charges or other security interests or by way of outright
transfer of title to the Group’s assets.
The Directors will restrict borrowing to an amount not
exceeding 50% of the Company’s Net Asset Value at the
time of drawdown. There will be no cross collateralisation
between the BESS Projects.
Derivatives may be used for currency, interest rate and
power price hedging purposes as set out below and for
í®È½³Àȳ¨³v®v®ÈƛS9³vîÈÀ
into interest rate swap agreements in relation to its debt
v¨ÈâȳïáÈ®ÈÀÃÈÀvÈv®vÃv¨Ã³®ÈÀ®È³
Forward Contract Share Purchase Agreements in relation
to certain pipeline assets.
Gresham House Energy Storage Fund plc (GRID)40
Annual Report Financial Statements Additional Information
However, apart from those contracts the Directors
do not anticipate that extensive use of derivatives
will be necessary.
í®È½³Àȳ¨³v®v®È
í®È½³Àȳ¨³v®v®ÈÈ®¿ËÃvâ
be employed by the Group, and this may include (as
relevant) currency hedging, interest rate hedging and
power price hedging.
Amendment to and compliance with
investment policy
No material change will be made to the investment
policy without the approval of Shareholders by
ordinary resolution.
In the event of any material breach of the investment
restrictions applicable to the Company, Shareholders will
be informed of the actions to be taken by the Manager
through a Regulatory Information Service.
Bribery and Corruption Policy
The Investment Manager has an Anti-Bribery and
Corruption Policy. The Company has considered whether
it needs to have an Anti-Bribery and Corruption Policy
that are separate from the Manager and its other service
providers and has concluded that separate policies
are not required.
Dividend policy
The Board expects that dividends will constitute the
principal element of the return to the holders of Ordinary
Shares. On the basis of current market conditions, the
Company will target dividend payments of 7.35 pence per
?À®vÀâOvÀ®Èï®v®v¨âvÀ®®ůŭÀ
ŮŬŮův®®ï®v®v¨½À³ÃÈÀvÈÀ
12
.
It is intended that dividends on the shares will be payable
quarterly for the quarters ending in March, June,
September, and December, all in the form of interim
dividends (the Company does not intend to pay any
ï®v¨Û®Ãƫƛ
12. This is a target only and is based on current market conditions as at
ÈvȳÈóˮÈv®Ã®³Èv½À³ïȳÀvÃÈƛSÀv®®³
assurance that this target will be met or that the Company will make
any distributions at all. This target should not be taken as an indication
of the Company’s expected or actual current or future results. The
Company’s actual return will depend upon a number of factors, including
ȳ½v®âƺîȮ³v®È³½v®âƺó®³®vÀÃïËÀƛ
Accordingly, investors should not place any reliance on these targets in
deciding whether to invest or assume that the Company will make any
distributions at all.
The Board reserves the right to retain, within a revenue
reserve, a proportion of the Company’s net income in any
ï®v®v¨âvÀƜÃËÀÃÀÛÈ®®vÛv¨v¨vÈÈ
Board’s absolute discretion for subsequent distribution to
shareholders, subject to the distribution requirements of
the Investment Trust Regulations.
The dividend policy will be subject to an annual vote at each
Annual General Meeting (AGM). The Company may, at the
discretion of the Board, and to the extent possible, pay all
or part of any future dividend out of capital.
Share buybacks
The Company may purchase Ordinary Shares in the market
at prices which represent a discount to the prevailing NAV
per Ordinary Share of that class so as to enhance the NAV
per Ordinary Share for the remaining holders of Ordinary
Shares of the same class. The Company is authorised to
make market purchases of up to 35,117,170 Ordinary Shares.
The Board intends to seek shareholder approval to renew
its authority to make market purchases of its own issued
Ordinary Shares once its existing authority has expired or
at subsequent AGMs.
Purchases of shares will be made within guidelines
established from time to time by the Board and only in
accordance with the Statutes and the Disclosure Guidance
and Transparency Rules. Any purchase of shares may
ÃvÈÃïâÈvÛv¨v¨vóÀvÿËÛv¨®È
resources of the Company, from borrowings, the
realisation of the Company’s assets or any combination of
these sources of liquidity, at the Directors’ discretion.
Ordinary Shares bought back by the Company may be held
in treasury or cancelled. Such shares may (subject to there
being in force a resolution of shareholders to disapply
the rights of pre-emption that would otherwise apply)
be resold by the Company. C Shares bought back by the
Company will be cancelled.
At the date of this Annual Report, the Company does not
hold any shares in treasury and has no intention to buy
back shares at the present time.
Continuation votes
Shareholders will have the opportunity to vote on an
ordinary resolution on the continuation of the Company
at the AGM of the Company to be held in 2023, and every
ïÈ%9ÈÀvÈÀƛ*v®âÃ˳À®vÀâÀó¨Ëȳ®Ã
not passed, the Directors shall draw up proposals for
the voluntary liquidation, unitisation, reorganisation, or
reconstruction of the Company for consideration by the
shareholders at a general meeting to be convened by the
Directors for a date not more than six months after the
date of the meeting at which such ordinary resolution
was not passed.
Gresham House Energy Storage Fund plc (GRID) 41
Financial StatementsAdditional Information Annual Report
Going concern and viability
The Strategic Report describes the Company’s business
activities, together with factors likely to affect its future
performance and development and an assessment of the
principal risks and uncertainties facing the Company.
The key risks facing the Company include, but are not
limited to, the risks mentioned on page 44. The Board
®³ÈÃÈvÈÈÃí˨Èȳ³ÀÃÈÛv¨Èâ³v®â
business over the long term given the inherent uncertainty
involved and that the risks associated with investments
within the infrastructure sector could result in a material
adverse effect on the Company’s performance.
Going concern
As at 31 December 2022, the Company had net current
assets of £6.9mn (excluding cash balances within investee
companies) and no debt. The Company is a guarantor to
the £305mn debt facility (£150mn capex facility, £155mn
incremental facility) and £30mn revolving credit facility
entered into by the MidCo in September 2021 and amended
and restated in November 2022 which was partially
drawn at the year end. It is anticipated that the capex and
incremental facilities will be further utilised during 2023
to make acquisitions, purchase equipment and make
construction related payments for pipeline projects.
The Company will hold a continuation vote in 2023 in
line with the Company’s Articles of Association and it is
anticipated that the shareholders will vote to continue
on the basis of the growth seen since IPO and future
opportunities available to the Company.
Current shareholder interaction has not indicated any
concerns around the continuation vote.
Financial models have been prepared for the going
concern period which consider liquidity at the start of the
½À³v®§âï®v®v¨vÃÃ˽ȳ®ÃvÈȳ½v®â¨Û¨
as well as at the operational project level.
SÃï®v®v¨vÃÃ˽ȳ®Ã®¨Ëá½ÈvÃ
generated by the portfolio companies, available to be
distributed to the Company. Financial assumptions also
®¨Ë®ð³ÜÃv®³ËÈð³ÜîÀ¨vȳ®È³ÈáÈÀ®v¨
debt and interest payments expected within the MidCo,
committed expenditure for investments, expected
dividends and the ongoing administrative costs of the
Company. It is also assumed that there is no vote to
terminate the Company in 2023.
The Directors have applied two scenarios to their going
concern assessment:
1 A base case assessment to consider the Company’s
ability to continue in operation under the current planned
strategy to fund and acquire the currently committed
Exclusivity Pipeline; and
2 A severe but plausible downside case scenario which
assumes a reduction in underlying portfolio EBITDA
of 33% to the base case. This would negatively impact
³®vÃưð³ÜvÛv¨v¨È³È³½v®âv®ÈÃv¨Èâ
to service shareholder dividends and the ability of the
MidCo to service interest payments. The downside
case also takes account of the availability of mitigating
actions available to the directors, such as reducing
discretionary spend and pausing the roll-out of projects.
Both the conservative base case and the downside case
óÜÈvÈȳ½v®âÃá½ÈȳvÛÃËí®ÈvÃ
available to meet current obligations and commitments as
they fall due and that the debt covenants of MidCo’s debt
facility, which include interest cover and leverage tests,
are expected to be met.
SÀȳÀó®ïÀÈâvÛvÀvó®v¨á½Èvȳ®
that the Company has adequate resources to continue its
operations for at least 12 months from the date of signing
ÈÃï®v®v¨ÃÈvÈ®ÈÃƛÃÃËƜÈÀȳÀÃvÛ
therefore adopted the going concern basis in preparing the
Annual Report and Financial Statements.
Gresham House Energy Storage Fund plc (GRID)42
Annual Report Financial Statements Additional Information
Viability statement
The Directors have assessed the prospects of the
Company for the period to October 2026. Although the
³½v®âv®Èv®ÃvÃð³Ü³¨ÃÜáȮܨ¨
beyond this period, there is less certainty over the later
vÃð³ÜÃvÃȽÀ³ïÈv¨Èâ³ÈË®À¨â®®ÛÃÈ®È
portfolio (and therefore available dividends to the Fund) is
driven by future pricing volatility in the electricity market.
We therefore limit the review to three and a half years to
reduce this uncertainty in forecasting.
SÃv¨Ã³ÀðÈÃÈËÀÀ®È®ÛÃÈ®ÈÃÈÀvÈâv®
cash deployment plan. The Company’s MidCo includes
vï®v®®v¨ÈâÜá½Àî?ȳÀŮŬŮŴƜ
ÈÛv¨ÈâÃÈvÈ®ÈvÃÃËÃÈÃÃÀï®v®
by October 2026.
As noted in the going concern assessment, an uncertainty
in the Company’s viability is the continuation vote which
will be held later this year in line with the Company’s
Articles of Association.
We believe the Company will continue on the basis of the
growth seen since IPO and the future opportunities to
drive valuation growth. As shown in the equity raise in
May 2022, the Company has experienced strong demand
for its shares.
ÃÜÈȳ®³®À®½À³Ɯï®v®v¨³¨ÃvÛ
been prepared for the viability period which consider
¨¿ËÈâvÈÈÃÈvÀȳȽÀ³v®§âï®v®v¨
assumptions at the Company level as well as at the
operational project level.
SÃï®v®v¨vÃÃ˽ȳ®Ã®¨Ëá½ÈvÃƜ
generated and distributed by the portfolio companies,
vÛv¨v¨È³ÃÈÀËÈȳȳ½v®âƜ®ð³ÜÃv®
³ËÈð³ÜîÀ¨vȳ®È³ÈáÈÀ®v¨Èv®®ÈÀÃÈ
payments expected within the MidCo, committed
expenditure for investments and expected dividends as
well as the ongoing administrative costs of the Company.
It is also assumed that there is no vote to terminate the
Company in 2023. Sensitivities similar to those undertaken
in the going concern period have been applied to the
viability period. The Company is expected to continue
ȳvÛÃËí®ÈvÃvÛv¨v¨È³ÈÈó¨vȳ®Ã
and is not expecting to need to utilise all of the debt
facilities available.
The principal risks are set out on page 44 and
management have considered the mitigation to those
risks when setting the downside case scenario, which,
given the revenue opportunities available to the portfolio
companies, the critical nature of the services provided
by the portfolio companies to the National Grid and the
continued volatility of power prices, is considered unlikely.
Sï®v®v¨³¨ÃóÜÈvÈÈȳۮv®ÈÃ
in relation to the debt entered into by the MidCo are
expected to be met throughout the period and the viability
assessment considers the Company/MidCo is able to
Àï®v®v®âáÈÀ®v¨ÈܮȳÃËƛ
The Directors believe that the Company is well placed
to manage its business risks successfully over both the
short and medium term and accordingly, the Board has a
reasonable expectation that the Company will be able to
continue in operation and to meet its liabilities as they fall
due for a period of at least three years.
vó®ÈvÃÃÃîȳȳ½v®âƺÃï®v®v¨
½³Ãȳ®ƜvÈÀvÃÃÃîÈÀçÃv®Ã®ïv®È
assumptions together with forecasts of the Company’s
future performance under the various scenarios, the
Board has a reasonable expectation that the Company
is well positioned to continue to operate and meet its
liabilities as they fall due over the period to October 2026.
Gresham House Energy Storage Fund plc (GRID) 43
Annual ReportFinancial StatementsAdditional Information
Existing risks in detail
Risk area Gross impact Mitigation Net impact
Availability and
cost of batteries
and other critical
components.
Residual risk: high
(2021 FY: high)
Inability of the Company
to deploy capital raised
into investments due to
incomplete or lengthening
project timescales.
Price increases for
components (including forex
risks) making investments less
attractive and impacting on
overall returns.
The Company’s investments
are within SPVs and these are
subject to a battery order with
a Tier 1 supplier which has been
ÃËÀƛËȳÈÃç³ÈÃ
order, advantageous terms have
been secured.
Demand for High Voltage
equipment is increasing due to
destruction of Ukrainian grid
assets: discussions are ongoing
between the Company and key
suppliers to ensure
continuing availability.
This will remain an issue in
ÈËÈËÀƜv¨È³ËÈÃç
and scale of the Company
provides the ability to
secure key components at
preferential rates.
Performance
and availability of
grid connections
and their impact
on project
commissioning dates
causing delay to
investment revenues
and earnings.
Residual risk: high
(2021 FY: N/A)
Grid Connections
performance affecting project
commissioning timescales.
Shortage of skilled industry
staff increasing issues.
This affects the ability of
the Company’s portfolio to
generate project revenues
to deliver earnings to pay
dividends on the timescales
expected by the markets.
Expertise bought into the
Manager via external consultants
to ensure GRID applications are
high quality. Future EPC(m) team
delivering investments will have
more resources to ensure DNO /
ESO are constantly reviewed for
their performance.
The existing pipeline has grid
connection certainty.
This issue will remain a
constraint across the whole
industry: the Manager has
taken measures to mitigate
delays as much as possible.
Financing risk of
existing investments
and availability
of future growth
capital.
Residual risk:
medium
(2021 FY: low)
¿ËÈâ³ÀÈï®v®®
is not available due to
macroeconomic issues and
the Company is unable to fund
its pipeline of assets.
The Company’s investments are
subject to banking covenants
which could be breached if the
Company’s investments do not
perform as expected.
Higher interest rates will
increase the Company’s
cost of debt.
The Company does not enter
into unfunded commitments: all
committed pipeline can be funded
À³áÃÈ®¿ËÈâï®v®³ÀÈ
existing debt facility.
The banking covenants have
been carefully modelled by the
Investment Manager to ensure
they are achievable and are
monitored on at least
a monthly basis.
Limited overall impact on
deployment of pipeline.
As the Company’s
investments draw down
more debt this risk will tend
to increase.
As debt is drawn the
Company enters into interest
rate hedging instruments to
manage this risk.
Risk management approach
The Company continues to recognise that effective
risk management is critical to enable it to meet its
strategic objectives. The Company has established
a clear framework with the Investment Manager for
identifying and managing risk, at both an operational
and strategic level through a detailed risk matrix and
quarterly risk reviews.
*ÈÃÀç®Èïvȳ®v®Èvȳ®½À³ÃÃÃvÛ
been designed to respond to the changing environment
in which it operates. The impact of emerging risks on the
Company’s business model are also considered and used
to make informed decisions, including as to the delivery
and evolution of the Company’s strategy. The table below
v½ÈËÀÃȳÃÀçÃÈvÈܳ˨vÛȳÃÈîïv®È
adverse impact on the Company (and the underlying
investments), based on their impact and/or likelihood.
Principal Risks and Uncertainties
44 Gresham House Energy Storage Fund plc (GRID)
Risk area Gross impact Mitigation Net impact
GB located assets
are based on a
business model
which relies on
certain revenue
streams sourced
from National Grid
mechanisms and
resulting from
overall roll-out
of intermittent
renewables.
Residual risk:
medium
(2021 FY: high)
Adverse changes by National
Grid in relation to services
contracted caused by either:
A. National Grid moving
away from their “Net Zero”
ambition (e.g. utilising
thermal plant rather than
BESS) may reduce the
Ãçƨó½³®³
earning opportunities
to the Company’s
investments and have
potential impact on
valuation; or
B. HM Government Energy
Strategy moves away
from intermittent
renewable assets
which create revenue
opportunities for BESS
and instead move to other
strategies which impact
on BESS future growth.
Either or both of the above
may impact on the revenues
available to BESS on
the GB grid.
The Company’s investments enjoy
several different income streams
ranging from BM, Capacity
Payments, FFR, TRIADs, and DC
as contracted services to National
Grid; the Company’s investments
are able to change which income
streams are contracted and
ascertain the most advantageous
on any given time period: this
is continuously monitored by
the Investment Manager and
optimisation partners.
Due to the progressive
decommissioning of other
carbon intensive options
available to National Grid for
managing these services,
and the need to support the
security of this critical national
infrastructure, BESS is expected
to form an integral part of
transforming the electricity
sector in the UK.
Battery energy storage is a
versatile asset, and it can
perform a variety of roles to
manage risk.
There is also the potential
to “revenue stack” and gain
multiple revenue streams
from different services.
The income stream
opportunities and usage
of battery energy storage
systems has and is expected
to continue to evolve
over time.
The risk is reducing due to
the lower reliance on National
Grid services and the move
into other jurisdictions.
Operational and
performance risk
in the underlying
investments leading
to loss of value.
Residual risk: low
(2021 FY: low)
The BESS investments do
not perform in the manner
expected (i.e. degradation
in performance) or are
not optimised in the best
commercial manner to capture
revenue streams leading to
reduction in valuations.
Performance within the
SPVs may not meet planning
or safety requirements
and result in curtailment
of operations and loss of
investment value.
The portfolio relies on
contracts with suppliers
to maintain certain key
equipment: these suppliers
may fail to provide adequate
support.
Poor market conditions create
lower volatility/FFR saturation
create lower revenue streams.
The Company underwent a
programme of upgrades to the
seed assets to optimise these
assets and has ensured that the
new assets being invested into
vÀî®vðá¨v®®Àƛ
The battery duration for the new
investments is also considered
ȳ®ÃËÀ˨¨ÃÈðá¨Èâ³À
future operation.
Design and commissioning
testing takes place in each
investment to ensure all relevant
planning and HSE conditions are
met. Fire risk, in particular, is
carefully assessed and sites are
designed and operated to ensure
this risk is as low as practicable.
Cyber security risk is managed
via secure systems used by
optimisation partners.
The portfolio has a number
of alternative suppliers and
optimisers to manage risk.
The portfolio relies on multiple
income streams to ensure
ÛÀÃïvȳ®ƛ
The Investment Manager
has substantial experience
managing BESS assets and
works with leading asset
optimisers to ensure assets
are designed and operated
as expected.
Health and safety
performance is rigorously
tested and reviewed.
Gresham House Energy Storage Fund plc (GRID) 45
Financial StatementsAdditional Information Annual Report
Risk area Gross impact Mitigation Net impact
Geographic risk.
Residual risk: low
(2021 FY: new)
UK assets dominate the
portfolio at present: there is
a concentration risk and over
reliance on the UK market.
Following investment
objective changes to
increase exposure to other
jurisdictions, this risk is new.
Over time, the international
exposure will be deployed: a
number of strategic relationships/
opportunities are in place.
The Company has advanced
plans and potential near term
deployment opportunities being
actively pursued.
The overall asset balance
will evolve: the Company
has been careful to ensure
market suitability and
regulations are clearly
understood before
capital deployment.
Investment in
development
and construction
projects.
Residual risk: low
(2021 FY: low)
The Company invests in
projects via loans before and
after the projects are owned
by the Company. There is a
risk that the project does not
complete, and the Company
®ËÀÃï®v®v¨¨³ÃÃƛ
The Company invests in
construction projects as part
of its investment portfolio.
SÀÃvÀç³ï®v®v¨
loss or delay of revenue
generation.
Late delivery of plant items may
lead to commissioning delays.
The Company does not
invest in speculative project
development. Any investments in
projects are carefully assessed
and vetted by the Investment
Manager: they will have secured
certain minimum requirements
and are expected to be ready
to proceed to construction in a
relatively short timescale.
Limited exposure to the
Company due to careful
vetting and management
of project development
activities and commercial
arrangements with the
Investment Manager to
manage construction risk.
The Company is usually
investing in the advance
purchase of equipment
which has inherent value
and can be used on other
projects if needed.
Valuation risk.
Residual risk: low
(2021 FY: medium)
The Company’s investments
are valued using discounted
vÃð³ÜÃv®vÃÃÃîȳ
future income streams: these
valuations may be materially
incorrect or not held at fair
value.
S½vȳ۳¨vȨ®ðvȳ®
and interest rates may impact
upon these valuations.
Compared to market peers
the risk is deemed to low when
discount rates are considered.
The Company’s investments are
impaired if income streams are
®³ÈvýÀ³ïÈv¨vÃá½È³À
costs are higher than expected.
Risk adjusted discount rates
drive valuation along with the
external pricing curves.
The Company utilises a
modelling methodology
which ensures income
streams are discounted
using appropriate discount
rates dependent on the
perceived risks.
The weighted average
discount rates are reviewed
regularly and the Company
believes the valuations are
conservative.
A third-party valuer reviews
Ûv¨Ëvȳ®Ãv®³®ïÀÃ
appropriateness.
Reliance on
the Investment
Manager.
Residual risk: low
(2021 FY: low)
The Company relies on the
Investment Manager and “key
persons” as a mission
critical supplier.
The Company has long-term
contractual arrangements
in place with the Investment
Manager, and the Investment
9v®vÀvó®ïÀȳÈ
Company that the growth of the
Company is a key focus area of
the Investment Manager.
The Investment Manager
remains incentivised
to continue to grow the
Company and drive value.
The growth in scale and
associated activity supplied
by the Investment Manager
on the one hand, will tend
to increase this risk. On the
other hand, the Investment
Manager has built out a
large team of experts which
reduces “key people” risks.
Gresham House Energy Storage Fund plc (GRID)46
Annual Report Financial Statements Additional Information
Risk area Gross impact Mitigation Net impact
Tax compliance.
Residual risk: low
(2021 FY: low)
The Company is registered as
an Investment Trust and must
comply with certain tests.
The Investment Manager
undertakes the relevant tests each
quarter and the Company’s tax
advisers review this regularly.
Under current tax laws there
is very little tax compliance
risk.
Environmental,
Social and
Governance:
production and
recycling of
batteries creates
risk.
Residual risk: low
(2021 FY: medium)
BESS are manufactured,
installed, and operated with
the intention of driving the
transformation to a low carbon
energy supply in the UK.
However, the lifecycle ESG
impact of the batteries needs to
be considered and minimised.
The supply for battery
manufacture relies on high
quality global partners who
ensure their supply chain does
not involve the use of illegally or
unethically sourced “rare earth”
materials or inadequate labour
standards.
The Company has undertaken a
Supply Chain review
(see page 28).
The recycling of the BESS
systems is subject to constant
development and research; the
importer of these batteries (not
the Company or SPV companies)
is responsible for their disposal,
but the Company will facilitate
this to ensure low environmental
impact. This is an industry wide
focus, and the residual value
of materials remains high and
therefore likely to be value from
recycling of materials in future.
Some aspects of this are
still evolving over time,
especially the end use/
recycling of BESS.
The ability of the BESS
market to drive a low carbon
electricity system needs to
be considered versus the
other, mainly fossil fuelled,
options when considering
the overall ESG impact of
BESS. Work will continue to
minimise this over time.
Emerging risks
Risk area Gross impact Mitigation Net impact
Emerging
technology replaces
battery energy
storage assets.
Residual risk: low
(2021 FY: low)
The Company invests in
battery storage projects: a
new or disruptive technology
might adversely impact on the
Company’s investments.
Future income streams may
be reduced if new entrants
vÛîïv®È¨â¨³ÜÀ
marginal costs.
The Company utilises proven
technologies with associated
Tier 1 supplier warranties and
performance guarantees.
The Company continues to
review available technologies.
It is currently viewed as unlikely
that a completely new reliable
and cost competitive technology
will appear during the lifetime of
these batteries and impact on
the lifecycle of these batteries.
The Company will also
®ïÈÀ³¨³ÜÀ³ÃÈÃ
and the valuation model
assumes continuing cost
reductions for replacement
assets over time.
Geopolitical risk of
potential equipment
shortages if China is
subject to sanctions.
Residual risk:
Medium
(2021 FY: low)
If China invades Taiwan or
takes other hostile measures
which cause sanctions (i.e.
supply of weapons to Russia)
the supply chain of crucial
equipment would be disrupted.
The Manager has relationships
with other non-Chinese suppliers,
but they are likely to source sub-
components from China.
The Company ensures payments
are protected via Letters of
ÀÈȳ®ÃËÀ®³ï®v®v¨¨³ÃÃƛ
The Company ensures it
is securing key equipment
orders in advance.
Gresham House Energy Storage Fund plc (GRID) 47
Financial StatementsAdditional Information Annual Report
The Board recognises that the Company should be run for
È®ïȳÃvÀ³¨ÀÃƜËÈÈvÈȨ³®ÈÀÃËÃÃ
of a business is dependent on maintaining relationships
with stakeholders and considering the external impact of
the Company’s activities.
S³½v®âvîÈïȳ¨¨³Ü®§âÃÈv§³¨ÀÃƝ
The Company’s shareholders and lenders
The Company’s Investment Manager
The communities in which the Company’s assets are located
The Company’s business partners and key service providers
Engagement with shareholders and lenders
Who they are?
The Company will require further funding to continue the
requirements of the investment strategy and obtain the
additional pipeline investments. As such, existing and
prospective equity investors and existing lenders are
vitally important stakeholders.
Why is it important to engage with this group of
stakeholders?
Through our engagement activities, we strive to obtain
investor buy-in into our strategic objectives and how
they are executed. Since IPO, the Company has issued a
îïv®È®ËÀ³ÃvÀÃȳv¨¨³Üȳ½v®âȳÈ
the investment strategy of the Company.
How has the Company engaged with the equity
investors and lenders?
The Company engaged with the stakeholder group in the
period through the following:
Interim and full year accounts
The Company’s corporate brokers and Investment
Manager are in regular communication with shareholders
and shareholder views are reported to the Board on at
least a quarterly basis
Company’s corporate brokers set up direct call between
investors the Board members
At the request of shareholders, the Chair and the Board
members have made themselves available to engage in
discussions around governance
One-to-one meetings with the Investment Manager
Regular news and quarterly NAV updates
A webinar and Q&A session with the Chair and the
Investment Manager
What came out of the engagement?
Through these engagement activities, the Company has
Û¨³½vÃÈÀ³®v®ÛÀÃï¨ÃȳÃvÀ³¨ÀÃ
who support the Company in its ambitions, including the
changes in investment policy. These shareholders were
instrumental in the successful equity raise in 2022.
In addition, the Company secured a £155mn incremental
term debt facility, in additional to the debt facility secured
in 2021. This will support the Company’s commitment to
continue to scale up its portfolio.
The Company also entered into Capacity Market contracts,
these offered valuable government backed contracts
and had a positive NAV uplift. This supported the UK
Government and the Company’s shareholders.
The Company also secured several new projects
ÈÀ³Ë³ËÈŮŬŮŮv®ÛÀÃïÈý³Àȳ¨³ƛS
Company added the York, Elland, West Bradford, Stairfoot,
Shilton Lane and Arbroath projects.
The Company tested investor’s priorities re ESG, including
Board composition and diversity.
Engagement with the Investment Manager
Who they are?
The Investment Manager implements and oversees the
investment strategy of the Company, including acquisition
®Èïvȳ®Ɯv®v®vÃÈÛv¨Ë®v®®È®È
underlying SPVs. The Investment Manager is crucial for the
³½v®âȳÈÛ®Ɯ½À³ïÈv®:_á½Èvȳ®Ãƛ
Why is it important to engage with the
Investment Manager?
Constructive engagement with the Investment Manager is
important in order to ensure that the expectations of the
shareholders are being met and that the Board is aware of
challenges being faced by the Investment Manager.
How does the Company engage with the
Investment Manager?
The Company, supported by its Management Engagement
Committee, conducts both ongoing reviews and an annual
review of the Investment Manager’s performance and the
terms of engagement of the Investment Manager.
Stakeholder Engagement and Statement under Section 172
48 Gresham House Energy Storage Fund plc (GRID)
The Board and the Investment Manager maintain an
ongoing open dialogue on key issues facing the Company
with a view to ensuring that key decisions such as
investment decisions, IM’s capabilities and resourcing,
trading partner performance in the SPVs and the
Company’s strategy are aligned with achieving long-term
shareholder value.
This open dialogue takes the form of a number of ad
hoc Board meetings, as discussed in the Corporate
Governance Report, and more informal contact, as
appropriate to the subject matter.
What came out of the engagement?
The Company and Investment Manager have aligned
interests to ensure the future success of the Company.
The Investment Manager sees the growth of the Company
as both a key element of its strategy and a Company which
ïÈÃܨ¨ÜÈÈO%ÃÈÀvÈâ³È*®ÛÃÈ®È9v®vÀƛ
Through this engagement the Company has been able to
carry out an additional equity raise during the year for an
increased pipeline of investments.
The Board and the Investment Manager also discussed and
revisited governance and resourcing arrangements going
³ÀÜvÀvÃȳ½v®âÀ³ÜîÃçƛ
Engagement with communities
During construction of investment projects, the Company
ensures all relevant planning and construction conditions
are met. In addition, the Company remains committed to
proactively engaging with the communities within which the
Company operates. The Investment Manager is part of the
Gresham House plc group and is focused on a sustainability
agenda which includes engagement with communities.
Engagement with business partners and key
service providers
Who they are?
The Company has various key service providers who
provide management services.
Why is it important to engage with the key
service providers?
The intention of the Company is to maintain long-term
and high-quality business partnerships to ensure stability
while the Company pursues its growth strategy.
How does the Company engage with the key
service providers?
The Company, supported by its Management Engagement
Committee, reviews all key service providers to the
Company and the terms of their engagement.
During the period, the Company conducted a review of the
terms of all service provider engagements along with their
fee levels to ensure appropriate levels of support to the
Company during the period. The Company seeks two-way
engagement between the Board and key service providers
on service delivery expectations and feedback on important
issues experienced by service providers during the period.
The intention of the Company is to maintain long-term and
high-quality business partnerships to ensure stability while
the Company pursues its growth strategy.
What came out of the engagement?
The Company has ensured that the interests of key service
providers are aligned with the Company. The support of the
Company’s key service providers was also fundamental in
the successful completion of the Company’s equity placing
and debt raise.
Key strategic decisions during 2022
The Company continued its growth phase in the period
ended 31 December 2022.
Key strategic decisions included:
Investment in future asset pipeline
Fund-raising decisions to align the investment
programme with available funds (including securing an
addition to the debt facility)
Continuing to further broaden the depth of the Investment
Manager’s team to match the increasing scale of the portfolio
Setting the level of dividends to meet expectations
In relation to these key decisions, stakeholders, such
as key contractors, were involved to ensure asset
pipeline was available to the Company on the timescales
required. As noted above, shareholder discussions
were held to ensure clear communication was made in
relation to progress and market interest for expansion
of the Company. Finally, the Company worked with the
Investment Manager to ensure the Company’s dividend
target of 7.0p per Ordinary Share for 2022 was delivered.
This Strategic Report is approved on behalf
of the Board by:
John S Leggate CBE, FREng
Chair
5 April 2023
Gresham House Energy Storage Fund plc (GRID) 49
Financial StatementsAdditional Information Annual Report
S³½v®âvÃv³vÀ³ïÛ*®½®®È:³®ư
Executive Directors. The Board has 40% female and
20% ethnic minority representation. The Board has also
adopted a formal diversity policy and considers diversity on
the Company’s Board as an important part of it’s existing
skills, experience and knowledge.
All appointments to the Board are, and will continue to be,
subject to a formal, rigorous and transparent procedure
as required by the AIC Code. The Board’s requirements for
vacancies on the Board are set with reference to objective
criteria and promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
Further, the Board reviews, at least annually, its
effectiveness and its combination of skills, experience and
knowledge. The Board will conduct an externally facilitated
ÈÛ®ÃÃÛv¨Ëvȳ®ÛÀâÈÀâvÀÃƛ*ÈÃïÀÃÈÃË
evaluation took place during 2021.
The Board’s Nomination Committee reviews the
requirement for succession planning on an annual basis
and during 2022 considered there to be no immediate
succession requirements. Additional detail can be found in
the Nomination Committee Report on page 76.
Board of Directors
Duncan Neale
Audit Committee Chair and
Independent Non-Executive Director
Duncan was appointed to the Board
on 24 August 2018.
John Leggate CBE, FREng
Chair and Independent Non-
Executive Director
John was appointed to the Board on
24 August 2018.
Catherine Pitt
Chair of the Nomination
Committee and Chair of the
Management Engagement
Committee and Independent Non-
Executive Director
Catherine was appointed to the
Board on 1 March 2019.
David Stevenson
Chair of the Remuneration
Committee and Independent
Non-Executive Director
David was appointed to the Board
on 24 August 2018.
Isabel Liu
Independent Non-Executive Director
Isabel was appointed to the Board
on 1 October 2022.
50
Gresham House Energy Storage Fund plc (GRID)
John Leggate CBE, FREng
John Leggate CBE, FREng - John is highly experienced
as an energy sector executive and is a venture investor
in the ‘’clean tech’’ and digital technologies. John has
îïv®È³vÀá½À®v®ÃËÀÀ®È¨â³®È³vÀ
³âÀÃËÀÈâïÀ%¨³v¨*®ÈÀÈâ®`vîȳ®
DC and is a senior advisor in the energy sector to “blue
chip” international consultants and senior advisor to Dial
IvÀÈ®ÀÃ44Iƨ¨vÀï¨*®ÈÀ®vȳ®v¨ƛ2³®ÜvÃv½½³®È
to the Board on 24 August 2018.
O®ïv®È®ÈÀÃÈÃƝ2³®ÃvÀȳÀ³%¨³v¨*®ÈÀÈâƜ
Inc. and Flamant Technologies.
Isabel Liu
Isabel Liu - Isabel has over 25 years global experience
investing equity in infrastructure, including the AIG Asian
Infrastructure Fund, the ABN AMRO Global Infrastructure
$Ë®v®ÜvÃv®v®ÀȳÀ³ÈÃvIvï
investment business of John Laing plc. Isabel served
as a non-executive director of Pensions Infrastructure
Platform, backed by UK pension schemes to invest in UK
infrastructure. She has been a board member of Transport
Focus, the consumer watchdog for public transport and
England’s highways, and Heathrow Airport’s Consumer
Challenge Board. Isabel was appointed to the Board on
1 October 2022.
O®ïv®È®ÈÀÃÈÃƝ*Ãv¨ÃvÀȳÀ³OÀ³À
Oriental Income Fund Limited and Utilico Emerging
Markets Trust plc.
Duncan Neale
Duncan Neale - Duncan is a CFO and Finance Director with
over 20 years of commercial experience working for both
publicly listed and privately-owned companies. Duncan
is a Fellow of the Institute of Chartered Accountants and
¿Ëv¨ïÜÈIÀ`vÈÀ³Ëî4³®³®ƛË®v®ÜvÃ
appointed to the Board on 24 August 2018.
O®ïv®È®ÈÀÃÈÃƝË®v®ÃvÈÀËÃȳÈ
Cambodian Children’s Fund UK and a Director of DJN
Consultancy Limited.
Catherine Pitt
Catherine Pitt - Cathy is a legal adviser who has specialised
in the investment company and asset management
sectors for over 20 years, specialising in governance,
regulation and capital markets. Cathy was appointed to the
Board on 1 March 2019.
O®ïv®È®ÈÀÃÈÃƝvÈâÃv³®Ã˨Èv®Èv®³ÀÀ
Partner at CMS Cameron McKenna Nabarro Olswang LLP,
a non-executive director of Baillie Gifford UK Growth Trust
plc and the Association of Investment Companies and a
member of the Advisory Council of Sex Matters, a not-for-
½À³ïȳ½v®â¨ÈâËvÀv®Èƛ
David Stevenson
vÛOÈۮó®ưvÛÃvï®v®v¨¦³ËÀ®v¨ÃÈv®
commentator for a number of leading publications
including The Financial Times (the Adventurous Investor),
Citywire, and MoneyWeek. He is also Executive Director
³ÈܳÀ¨ƺèv®v¨ÈÀ®vÈÛï®v®®ÜÃv®Û®ÈÃ
ÃÀÛÜÜÜƛv¨Èïƛ³ƜܳËÃó®³ÛÀ®v¦³À
trends in marketplace lending, crowdfunding, and working
v½Èv¨½À³Ûó®³ÀÃv¨¨È³ËÃç®ÈÀ½ÀÃÃvÃ
well as www.ETFstream.com. David was appointed to the
Board on 24 August 2018.
O®ïv®È®ÈÀÃÈÃƝvÛÃvÀȳÀ³vÃȨ®vË
Group Limited and the Secured Income Fund plc and
Aurora Investment Trust plc.
John, Duncan, David and Cathy were re-appointed
as Directors at the Company’s AGM in 2022. As is the
Company’s policy, all of the Directors will all stand for re-
election at the Company’s AGM every year. Isabel will stand
for election at the AGM in 2023.
Gresham House Energy Storage Fund plc (GRID) 51
Financial StatementsAdditional Information Annual Report
Investment Team
Bozkurt Aydinoglu
Investment Director, New Energy
Ben Guest
Managing Director, New Energy
Stephen Beck
Finance Director, Real Assets
Rupert Robinson
Managing Director, Gresham
House Asset Management Limited
Gareth Owen
Investment Director, New Energy
James Bustin
Investment Manager, New Energy
Fernando Casas Garcia
Head of Operations and Asset
Manager, New Energy
Paul George
Health and Safety
Manager, New Energy
Lefteris Strakosias
Investment Director, New Energy
Charlie Von Schmeider
Investment Director, New Energy
Nick Vest
Finance Director, New Energy
Ana Segizbayeva
Associate Director, project
Delivery, New Energy
52
Gresham House Energy Storage Fund plc (GRID)
Ben Guest
®ÜvÃȳˮÀv®v®v®½vÀÈ®À³(vç¨
Capital which was acquired by Gresham House in 2017. He
has 28 years of investment experience. Ben’s expertise
spans the investment spectrum, across infrastructure,
public equities and venture capital. Today, Ben is Managing
Director of Gresham House’s New Energy division, and
the Lead Manager of the Company. He is responsible for
the origination and execution of investment opportunities
and is responsible for the overall strategy and ongoing
portfolio management of the Fund. Ben started his fund
v®v®ÈvÀÀvÈ4vçvÀÃÃÈ9v®v®È®ŭŵŵŰ
before going on to co-found Cantillon Capital and later
³Ë®(vç¨v½Èv¨®ŮŬŬųƛ®ËÀÀ®È¨âÃÀÛÃvÃv
Director of many project companies.
James Bustin
James has nine years of experience across investments,
ï®v®v®v³Ë®È®v®¦³®ÈÈv®ŮŬŭŵvÛ®
previously worked on public equities and venture capital in
the Gresham House Ventures team. James’ role in the New
Energy team covers fund and portfolio management as
well as new investments.
James joined Gresham House in 2018 as part of the
acquisition of Livingbridge VC where he had been working
as an analyst since 2016. Prior to Livingbridge, James
worked in TMT audit at EY for three years, qualifying as a
Chartered Accountant.
Gareth Owen
%vÀÈÜvÃvIvÀÈ®ÀvÈ(vç¨v½Èv¨ƪ®³Ü%ÀÃv(³ËÃ
New Energy) and has over 20 years’ experience executing
structured transactions across a variety of sectors.
³À(vç¨v½Èv¨Ɯ%vÀÈܳÀ§vÈvÀ¨vâÃ
Natural Resource Investments, a captive private equity
fund investing in the natural resource and renewable
energy sectors.
Prior to this, Gareth worked in the Structured Capital
Markets divisions of Barclays Capital and Deutsche Bank,
handling the acquisition and disposal of various asset-
based companies.
Bozkurt Aydinoglu
³ç§ËÀȦ³®%ÀÃv(³ËîŮŬŭųvÃ*®ÛÃÈ®È
ÀȳÀvÛ®½ÀÛ³Ëèâ®vÈ(vç¨v½Èv¨v®
has 29 years’ investment, advisory and businesses
building experience.
³ç§ËÀÈƺýÀvÀâ³ËÃó®½À³ËÀ®ÈƜ³®ÈÀvÈ®Ɯ
delivery and evaluation of new energy storage
³½½³ÀÈË®ÈÃƜ®vȳ®³ç§ËÀÈv¨Ã³v®vÃÈ
Gresham House New Energy VCTs containing a portfolio of
solar and wind assets.
³ç§ËÀÈvÈÈvÀ¨â½vÀȳÃvÀÀȳˮ®
and advising companies in the telecommunications and
technology industries, whilst in roles at Nomura, Salomon
Brothers, Bowman Capital and Deloitte & Touche. In 2002,
³ç§ËÀȳ³Ë®v®Ë¨È:Ü®Àâ$®v®ƪ:$ƫƜ
which became the leading provider of data, research and
analysis to investors in the global cleantech industry.
Charlie von Schmieder
Charlie has over 20 years’ experience having started
his career as a commercial solicitor before moving to
Investment Management for the past nine years.
Charlie has extensive experience in the development,
funding and asset management of distributed energy
infrastructure projects and has worked on a wide range of
technologies including solar PV, hydroelectric, anaerobic
digestion, thermal heat networks, gas peaking and battery
energy storage.
Charlie’s current role began in February 2021, following
a year in the team as a contractor. He is responsible for
executing investments in energy storage systems, whether
acquired before construction or when already operational.
Lefteris Strakosias
Lefteris joined Gresham House in March 2023 and has
over 15 years of experience in infrastructure and energy
transition investments including solar PV, onshore and
offshore wind, anaerobic digestion, and hydroelectric
power. He has held principal investment and advisory roles
with large institutions such as Columbia Threadneedle
Investments, National Pension Service of South Korea
(NPS), Macquarie, and Société Générale, as well as
corporate and business development roles with Libra
Group and Maple Power.
Lefteris holds a MSc in Finance from Imperial College
London and a BSc in Management Science from Athens
University of Economics and Business.
Gresham House Energy Storage Fund plc (GRID) 53
Financial StatementsAdditional Information Annual Report
Ana Segizbayeva
Ana joined Gresham House in September 2022 and is
responsible for implementing the EPCM structure and
delivering the New Energy team’s project pipeline.
Ana is a multi-skilled professional with 12 years of
experience delivering innovative, award-winning
renewable energy projects in the UK.
Previously, Ana helped to establish quality management,
project delivery, and commercial project functions at
GRIDSERVE Sustainable Energy. She also successfully
¨ÛÀÈV3ƺÃïÀÃȨÈÀ$³À³ËÀÈv®ÃËÃâưÀ
solar and battery storage hybrid projects with bi-facial
panels and tracking technology. Prior to that, Ana was
part of the BELECTRIC projects team building utility-
scale solar farms.
Fernando Casas Garcia
Fernando has 15 years’ experience in the renewable
energy sector, mostly in solar PV. Since joining
the team in May 2021, Fernando has been focused
on the design, development and deployment of
processes and procedures that allow the growth
in MWs under management and improvement in
operational performance.
Prior to Gresham House Fernando was Global Head of
Technical for a 2.2GW solar PV portfolio at WiseEnergy
focused on the operation of their solar PV assets and
increasing overall revenues.
Paul George
Paul is responsible for building risk management
capabilities, systems, processes and culture to
support the management of health and safety risks and
opportunities in the New Energy team.
Paul has ten years’ experience in health and safety risk
management in the construction sector as well as a degree
in occupational health and safety management.
Prior to Gresham House Paul worked at HS2 Ltd in their
infrastructure integrated project team and prior to that,
Paul worked at Network Rail.
Gresham House Energy Storage Fund plc (GRID)54
Annual Report Financial Statements Additional Information
Stephen Beck
Stephen has 26 years of industry experience and
is a law graduate and Barrister called to the Bar in
1996. He is also a Fellow of the Institute of Chartered
³Ë®Èv®Èó®¨v®v®`v¨Ãv®¿Ëv¨ïÜÈ
PricewaterhouseCoopers.
(¨vÃv®®ư³ËÃï®v®Èvv®v®:Ü®ÀâƜ
Renewables, Commercial Forestry and Housing sectors.
Prior to this, Stephen worked at E.ON, where he held
vÛvÀÈâ³ï®v®v¨v®³Àv¨À³¨ÃÀ³ŮŬŬŬ
³®ÜvÀÃƜÀv®®À³¨v®¨vÀï®v®ÈvÃƜ
developing power station projects, M&A transactions,
and working with HM Government delivering low
carbon solutions.
Nick Vest
Nick joined Gresham House in January 2021. He has over
ŮŬâvÀÃƺv³Ë®È®v®ï®v®á½À®v®Ãv
Chartered Accountant and Chartered Tax Advisor.
Prior to Gresham House, Nick worked as Finance Director
for an internationally focused property investment group
and before that, Nick was an Associate Director of Tax at
S®³Ã%À³Ë½O®OÜÈçÀ¨v®ƛ
Rupert Robinson
Rupert Robinson has been the Managing Director of
Gresham House Asset Management Ltd since September
2015. Before joining Gresham House, Rupert was CEO and
CIO of Schroders (UK) Private Bank for 11 years and prior
to that spent 17 years at Rothschild where he was latterly
Head of Private Clients at Rothschild Asset Management.
L˽ÀÈvÃv½À³Û®ÈÀv§À³À³¨ÛÀ®Ã®ïv®È
value to shareholders.
He has over 30 years of experience in asset management,
private banking and wealth management, focusing on
product innovation, investment management, business
development, banking and wealth structuring. He is a
member of the Gresham House Group Management and
Investment Committees.
Gresham House Energy Storage Fund plc (GRID) 55
Annual ReportFinancial StatementsAdditional Information
Company performance
The Directors have reviewed the performance of
the Company throughout the period. Details of the
performance of each investment owned by the Company
are included in the Investment Manager’s Report on page
10 and the Chair’s Statement on page 6.
Financial risk management
Èv¨Ã®À¨vȳ®È³È³½v®âƺÃËóï®v®v¨
®ÃÈÀË®ÈÃƜï®v®v¨Àçv®v®È³¦ÈÛÃv®
policies, including policies for hedging each major type
of forecasted transaction for which hedge accounting is
used; the Company’s exposure to price, credit, liquidity, or
vÃð³ÜÀçv®³Ë®Ë®À:³ÈŭŴ³®page 107.
Share capital
At the period end, the Company had in issue 541,290,353
Ordinary Shares. There are no other share classes in issue
and the Company does not own any of its own shares.
All shares have voting rights; each Ordinary
Share has one vote.
Dividends
All Ordinary Shares are entitled to receive dividends and
interim dividends have been paid by the Company as shown
®ÈÈv¨¨³Üƛ:³ï®v¨Û®vî³Àܨ¨
declared, but the Company’s dividend policy of paying four
interim dividends will be tabled for approval at each AGM.
Û®ÃvÀ®³ÈÀ³®Ã®Èï®v®v¨ÃÈvÈ®ÈÃ
of the Company until paid, and therefore the dividend in
ÀýȳÈï®v¨½À³ƜÀ³ŭ?ȳÀȳůŭÀ
2022 is not recognised in the period to 31 December 2022.
On 10 February 2023, the Company announced its interim
dividend for Q4 2022 of 1.75 pence per Ordinary Share
successfully meeting its dividend target for the 2022
ï®v®v¨âvÀ³ųƛŬ½®½À?À®vÀâOvÀƪŮŬŮŭƝųƛŬ
½®½À?À®vÀâOvÀƫƛ$ËÀÈÀƜȳvÀ³®ïÀ
its commitment to targeting a 7.35 pence per Ordinary
Share dividend for 2023.
Substantial interests
As at 31 December 2022, and the date of this report, the
³½v®âv®®³Èï³È³¨¨³Ü®®ïv¨
interests exceeding 3% of the issued share capital, being
541,290,353 Ordinary Shares (see table on page 57).
Directors Report
The Directors present the Annual Report and Financial Statements of the Company for the period
ended 31 December 2022. The Company has no employees. The Directors during the period,
including their appointment dates, are set out in the Nomination Committee Report on page 76.
The Corporate Governance Report on page 65 forms part of this report.
Period in relation to which
dividend was paid
Announcement
date
Ex-dividend date Payment date
Amount per
Ordinary
Share
Tota l
amount
1 January to 31 March 2022 4 May 2022 12 May 2022 27 May 2022 1.75 pence £7,662,236
1 April to 30 June 2022 27 September 2022 6 October 2022 28 October 2022 1.75 pence £9,472,581
1 July to 30 September 2022 31 October 2022 24 November 2022 16 December 2022 1.75 pence £9,472,581
1 October to 31 December
2022
10 February 2023 2 March 2023 27 March 2023 1.75 pence £9,472,581
56
Gresham House Energy Storage Fund plc (GRID)
As at the date of this report the Company has not been
®³Èï³Ɯ³ÀvvÜvÀ³Ɯv®âv®Ãȳȳ¨®®
voting rights in the Company.
The Directors’ interests in the ordinary share capital of
the Company are disclosed in the Directors’ Remuneration
Report on page 61.
Annual General Meeting (AGM)
The Company’s AGM was held on 30 June 2022. All
resolutions proposed to the Company’s shareholders at
this AGM were duly passed on a poll vote.
The Company’s next AGM is expected to be held in May/
June 2023. The Notice of the AGM and Form of Proxy will be
circulated to all shareholders in advance of this meeting.
Auditor
A resolution proposing the reappointment of BDO LLP will
be submitted at the AGM.
Directors’ responsibilities
The Directors are responsible for preparing the Annual
Report and the Financial Statements in accordance with
applicable law and regulations.
³½v®â¨vÜÀ¿ËÀÃÈÀȳÀÃȳ½À½vÀï®v®v¨
ÃÈvÈ®ÈóÀvï®v®v¨âvÀƛV®ÀÈvȨvÜÈ
ÀȳÀÃvÀÀ¿ËÀȳ½À½vÀÈï®v®v¨ÃÈvÈ®ÈÃ
v®vÛ¨Èȳ½À½vÀȳ½v®âï®v®v¨
statements in accordance with UK adopted international
accounting standards.
Under company law the Directors must not approve
Èï®v®v¨ÃÈvÈ®ÈÃË®¨ÃÃÈâvÀÃvÈÃïÈvÈ
they give a true and fair view of the state of affairs of
ȳ½v®âv®³È½À³ïȳÀ¨³ÃóÀȳ½v®â
for that period.
*®½À½vÀ®ÈÃï®v®v¨ÃÈvÈ®ÈÃƜÈÀȳÀÃ
are required to:
select suitable accounting policies and then apply
them consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether they have been prepared in accordance
with UK adopted international accounting standards,
subject to any material departures disclosed and
Ὠv®®Èï®v®v¨ÃÈvÈ®ÈÃƞ
½À½vÀÈï®v®v¨ÃÈvÈ®Èó®È³®³®À®
basis unless it is inappropriate to presume that the
Company will continue in business; and
prepare a Director’s Report, a Strategic Report and
Director’s Remuneration Report which comply with the
requirements of the Companies Act 2006.
Shareholder
Number of Ordinary Shares
as at 31 Dec 2022
Percentage of Issued Share
Capital as at 31 Dec 2022
BlackRock Investment Mgt - Index (London) 43,199,825 7.98%
Sarasin & Partners 32,990,777 6.09%
Gresham House plc 28,928,388 5.34%
Border to Coast Pensions Partnership (Leeds) 26,083,839 4.82%
Schroder Investment Management 25,388,334 4.69%
Gravis Capital Management 24,492,210 4.52%
Close Asset Management Limited 23,758,366 4.39%
JM Finn & Co (London) 19,585,753 3.62%
Newton Investment Management 19,056,919 3.52%
Gresham House Energy Storage Fund plc (GRID) 57
Financial StatementsAdditional Information Annual Report
The Directors are responsible for keeping adequate
v³Ë®È®À³ÀÃÈvÈvÀÃËí®ÈȳóÜv®
explain the Company’s transactions and disclose with
Àvó®v¨vËÀvâƜvÈv®âÈƜÈï®v®v¨½³Ãȳ®³
ȳ½v®âv®®v¨Èȳ®ÃËÀÈvÈÈï®v®v¨
statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for ensuring that the Annual
Report and Financial Statements, taken as a whole,
are fair, balanced, and understandable and provide the
information necessary for shareholders to assess the
Company’s performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the annual
À½³ÀÈv®Èï®v®v¨ÃÈvÈ®ÈÃvÀvvÛv¨v¨
on the Company’s website. Financial statements are
published on the Company’s website in accordance
with legislation in the UK governing the preparation and
Ãîvȳ®³ï®v®v¨ÃÈvÈ®ÈÃƜÜvâÛvÀâ
from legislation in other jurisdictions. The maintenance
and integrity of the Company’s website is the responsibility
of the Directors. The Directors’ responsibility also extends
ȳȳ®³®®ÈÀÈâ³Èï®v®v¨ÃÈvÈ®ÈÃ
contained therein.
Directors’ responsibilities
pursuant to DTR4
SÀȳÀó®ïÀȳÈÃȳÈÀ§®³Ü¨Ɲ
Sï®v®v¨ÃÈvÈ®ÈÃvÛ®½À½vÀ®
accordance with UK adopted international accounting
standards and give a true and fair view of the assets,
¨v¨ÈÃƜï®v®v¨½³Ãȳ®v®½À³ïÈv®¨³ÃÃ
of the Company.
The annual report includes a fair review of the
development and performance of the business and
Èï®v®v¨½³Ãȳ®³È³½v®âƜȳÈÀÜÈ
a description of the principal risks and uncertainties
that they face.
Insurance cover
ÀȳÀÃƺv®?íÀÃƺ¨v¨Èâ®ÃËÀv®³ÛÀèâ
the Company in respect of the Directors.
Corporate governance
The Company’s corporate governance statement
and compliance with the 2019 AIC Code of Corporate
Governance which has been endorsed by the Financial
Reporting Council (www.frc.org.uk) is shown on page 65.
Streamlined energy and carbon
À½³ÀÈ®Ɲ¿Ëv®Èïvȳ®v®
reporting methodology
Associated greenhouse gases have been calculated in
accordance with the Partnership for Carbon Accounting
Financials (PCAF) Global GHG Accounting & Reporting
Standard for the Financial Industry, using National Grid
ESO half-hourly carbon intensity data and where applicable
2022 conversion factors published by the Department for
Business, Energy & Industrial Strategy.
Boundaries
We have used the equity share approach.
The Company itself is not an emitter of greenhouse gas.
However, the underlying investments within the Company’s
portfolio companies import and export electricity which
are sourced from either the grid or, in limited cases, from
gas or diesel generators.
These have been included in our emissions disclosures.
The energy used and produced by the companies is fully
metered and carefully monitored.
UK energy use covers the battery storage activities across
all the portfolio companies owned directly or indirectly
by the Company from the date of ownership. It does not
cover energy use of assets under construction where
construction is being carried out by third parties. All
operations are in the UK.
Gresham House Energy Storage Fund plc (GRID)58
Annual Report Financial Statements Additional Information
Intensity measurement
The chosen intensity measurement ratio is gross
emissions per £mn revenue in the underlying
investment portfolio.
This is considered a more appropriate ratio than
MWh due to variability in operation of assets and
different service types.
Energy used: 2022 2021*
Scope 1 emissions in metric tonnes CO
2
e
Gas consumption 9,299 1,596
Diesel consumption 124 64
Total Scope 1 9,423 1,660
Scope 2 emissions in metric tonnes CO
2
e
Consumption of electricity** 5,149 2,891
Total Scope 2 5,149 2,891
Scope 3 emissions in metric tonnes CO
2
e
Transmission and distribution losses 593 392
Total Scope 3 593 392
UK energy consumption used to calculate emissions (MWh) *
Gas 19,852 8,716
Diesel 173 233
Electricity** 28,985 12,509
Total UK energy consumption 49,010 21,458
Weighted Average Carbon Intensity ratio
CO
2
emissions per £mn revenue in underlying portfolio companies
178 N/A*
*Carbon emissions calculation methodology has been updated from a UK Government (BEIS) approach in 2021 to application of the Partnership for
Carbon Accounting Financials (PCAF) Global GHG Accounting & Reporting Standard for the Financial Industry in 2022. In addition, granularity has
been increased from annual net metered volumes to half-hourly metered volumes and carbon intensity in 2022. Whilst the methodologies applied in
each year are similar, they are not an exact match. Some information was not available from the 2021 calculations to provide a consistent comparison.
ƦƦSïËÀÃóܮvÀȮȽ³ÀÈƨƪá½³ÀÈƫ³¨ÈÀÈâÀ³ÈÀ
Scope 3 emissions
`vÛ®Èïȳ¨¨³Ü®vÃO³½ůÃó®Ã
ÜvÛ®½vÀÈv¨¨â¿Ëv®ÈïƝ
Carbon emissions from distribution system losses
End-to-end manufacturing, transport, and installation at
vÈÈÀâ®ÀâÃȳÀvÃâÃÈÃƪ®³È¿Ëv®Èïƫ
*®ÛÃÈ®È9v®vÀÃó®Ãƪƛƛ³í˨®Ãƫ
ƪ®³È¿Ëv®Èïƫ
Gresham House Energy Storage Fund plc (GRID) 59
Financial StatementsAdditional Information Annual Report
Measures taken to improve
®Àâí®â
The usage of diesel generators within the operational
½³Àȳ¨³vîîïv®È¨âÀËî*I?ƛè
generators are in place to meet CM contract requirements
and TRIAD operations on three of the sites but are also
available for trading activities. One of the seed portfolio
ÃÈÃv¨Ã³ËÃÃvÃưïÀ®Àvȳ®ƜÈÃýÀ³®v®È¨â
used for trading and to support the grid in periods of
higher demand. The use of gas has remained consistent
but represents an ever-decreasing percentage of the
overall portfolio. The Company is not currently making
new investments in projects which require either diesel or
gas generators.
Going concern
The going concern statement is detailed on page 42 of
this Annual Report.
Future developments
Future developments in the Company are detailed in the
Chair’s Statement on page 6.
Engagement with stakeholders
Further information on the Directors’ engagement with the
Company’s stakeholders can be found on page 48.
Post balance sheet events
Post Balance Sheet events are disclosed in Note 24 of the
Accounts on page 113.
Statement as to disclosure of
information to the Auditor
SÀȳÀî³ívÈÈvȳÈÀ½³ÀÈvÛ
³®ïÀƜvÃvÀvÃÈâvÀvÜvÀƜÈvÈÈÀî³
relevant audit information of which the Auditor is
Ë®vÜvÀƛv³ÈÀȳÀÃvó®ïÀÈvÈÈâ
have taken all the steps that they ought to have taken
as Directors in order to make themselves aware of any
relevant audit information and to establish that it has been
communicated to the Auditor.
This Directors’ Report is approved on behalf
of the Board by:
John Leggate CBE, FREng
Chair
5 April 2023
Gresham House Energy Storage Fund plc (GRID)60
Annual Report Financial Statements Additional Information
Under the requirements of Section 497 of the Companies
Act 2006, the Company’s Auditor is required to audit
certain disclosures contained within the report. Where
disclosures have been audited, they are indicated
as such. The Auditor’s opinion is included in their
report on page 80.
The Annual Remuneration Statement
The Chair of the Remuneration Committee has
summarised the major decisions on Directors’
remuneration, including the discretion which has been
exercised in the award of Directors’ remuneration, the
changes relating to Directors’ remuneration made during
the year and the context in which those changes occurred,
and decisions have been taken in the report from the
Remuneration Committee on page 74.
Remuneration Policy
The remuneration of Non-Executive Directors should be
determined with due regard to the experience of the Board
as a whole, the time commitment required and to be fair
and comparable to that of other Non-Executive Directors
of similar companies. The Company may also periodically
choose to benchmark Directors’ fees with an independent
review, to ensure they remain competitive, fair, and
reasonable. The Non-Executive Directors are entitled to an
v®®Ëv¨®ÀvîÀË®Àvȳ®ƜÈÛÀ³ÈïÀÃÈ
vȳvï®v®v¨âvÀƜvÈÈÀvȳÈV3³®ÃËÀ
IÀ*®ðvȳ®vÃvÈÀvâvÀƛ
This policy will be put to shareholders for approval at least
every three years and will be tabled for approval at the
Company’s AGM in 2023.
The fees for the Directors are determined within the limits
set out in the Company’s Articles of Association which
states that the Directors’ remuneration for their services
®È³í³ÀȳÀÃv¨¨Ɯ®ÈvÀvÈ®³Èá
ljűŬŬƜŬŬŬ½Àv®®Ë³ÀÃËÀïËÀvÃȳ½v®âƜ
by ordinary resolution, determines.
The Directors are entitled only to their annual fee and to
be reimbursed for any expenses properly and reasonably
incurred by them respectively in and about the business
of the Company or in the discharge of his or her duties
as a Director.
Any Director who performs services which in the opinion of
the Directors are outside the scope of the ordinary duties
of a Director, may be paid such reasonable additional
remuneration to be determined by the Directors or any
committee appointed by the Directors and such additional
remuneration shall be in addition to any remuneration
provided for by way of their annual fee and their
reasonable expenses.
No element of the Directors’ remuneration is performance
related, nor does any Director have any entitlement to
pensions, share options or any long-term incentive plans
from the Company.
SÀȳÀó¨ÈÀ³í®v³Àv®ÜÈÈ
Articles and their appointment letters. No Director
has a service contract with the Company, nor is any
such contract proposed. The Directors’ appointments
can be terminated in accordance with the Articles and
without compensation.
*®³ÀÀȳvÛ³³®ðÈó®ÈÀÃÈƜ®³ÀȳÀÃ
involved in the setting of their own remuneration and
remuneration is set by the Remuneration Committee,
in line with the Remuneration Policy and aggregate
remuneration levels are limited under the Company’s
Articles of Association.
John Leggate and David Stevenson signed letter of
appointments with the Company dated 14 October 2018.
Duncan Neale signed a letter of appointment with the
Company dated 15 October 2018. Catherine Pitt signed a
letter of appointment with the Company dated 28 February
2019. Isabel Liu signed a letter of appointment with the
Company dated 26 September 2022. These agreements
are available for inspection at the Company’s registered
³ív®vÈÈ%9ƛSvÀ®ÈÃvÀÈÀ®v¨³®
three months’ notice by either side. The Directors are not
entitled to any variable consideration or any other taxable
®ïÈÃË®ÀÈÃvÀ®ÈÃƛ
Directors Remuneration Report
The Board presents the Directors’ Remuneration Report for the period to 31
December 2022 which has been prepared in accordance with the requirements
of the Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 (SI2008/410) and the Companies Act 2006.
61Gresham House Energy Storage Fund plc (GRID)
The Annual Remuneration Report
The Remuneration Committee considers any change in
the Directors’ remuneration policy. The report from the
Remuneration Committee is set out on page 74.
2022
Fixed salary and fees
Period from 01/01/22 to
31/12/22
£
Total variable
remuneration Period from
01/01/22 to 31/12/22
£
S³Èv¨ÀË®Àvȳ®ƪïá
and variable) Period from
01/01/22 to 31/12/22
£
John Leggate 84,080 - 84,080
Duncan Neale 65,687 - 65,687
Catherine Pitt 47,295 - 47,295
David Stevenson 47,295 - 47,295
Isabel Liu 11,824 - 11,824
S³Èv¨ïáÀË®Àvȳ® 256,181 - 256,181
2021
Fixed salary and fees
Period from 01/01/21 to
31/12/21
£
Total variable
remuneration
Period from 01/01/21 to
31/12/21
£
Total remuneration
Period from 01/01/21 to
31/12/21
£
John Leggate 80,000 - 80,000
Duncan Neale 62,500 - 62,500
Catherine Pitt 45,000 - 45,000
David Stevenson 45,000 - 45,000
S³Èv¨ïáÀË®Àvȳ® 232,500 - 232,500
Directors’ remuneration and
interests (audited)
Directors’ remuneration (excluding National Insurance
Contributions) for the Company and dividend received for
the period under review was as follows:
2022 (unaudited)
Percentage increase from
31 December 2019 to 31
December 2020 on salary
annual fees
Percentage increase from
31 December 2020 to 31
December 2021 on salary
annual fees
Percentage increase from
31 December 2021 to 31
December 2022 on salary and
annual fees
John Leggate 0% 23.0% 5.1%
Duncan Neale 0% 38.8% 5.1%
Catherine Pitt 0% 12.5% 5.1%
David Stevenson 0% 12.5% 5.1%
Gresham House Energy Storage Fund plc (GRID)62
Annual Report Financial Statements Additional Information
SÀȳÀóȳ½v®âvȳ¨¨³Ü®®ïv¨
interests in the issued Ordinary Shares as at 31 December
2022 and at the date of this report:
Directors
As at the date of
this report
5 April 2023
As at
31 Dec 2022
John Leggate 133,170 133,170
Duncan Neale 23,575 23,575
Catherine Pitt 36,858 36,858
David Stevenson 22,330 22,330
Isabel Liu 9,385 5,958
The Company does not oblige the Directors to hold shares
in the Company, but this is encouraged to ensure the
appropriate alignment of interests.
2022/2023 remuneration
Subject to a further review, the remuneration levels for
the forthcoming year for the Directors are expected to
be at the annual fee level, as shown in the table above. In
line with the Remuneration policy described above, the
Directors’ remuneration increased at the rate of the UK
³®ÃËÀIÀ*®ðvȳ®vÃvÈÀŮŬŮŮƜÜÜvÃ
set at 10.5%. The Board reviews Directors’ remuneration at
least annually to ensure that it is in line with market rates.
Consideration of shareholders’ views
An ordinary resolution to approve the Remuneration
Report will be put to shareholders at the Company’s
2023 AGM and shareholders will have the opportunity to
express their views and raise any queries in respect of the
Remuneration Policy at this meeting.
Statement of voting at the 2022 Annual
General Meeting
The Directors’ Remuneration Report was subject to an
advisory vote at the 2022 AGM. The voting outcome is
shown in the table below:
Resolution to approve
Directors’
Remuneration Report
Votes %
Votes for* 321,900,359 96.93
Votes against 10,212,213 3.07
Total votes validly cast 332,112,572
Total votes cast as % of
issued share capital
61.36
Votes withheld** 34,281
* Includes discretionary votes
** A vote withheld is not a vote in law and is not counted in the calculation
of the votes for or against a resolution.
No concerns were noted from the shareholders as
part of the AGM.
Payments to past Directors or
³À¨³Ãó³í
There are no payments to disclose. Under the terms of
the Directors’ Remuneration Policy there would be no
³½®Ãvȳ®³À¨³Ãó³íƛ
Gresham House Energy Storage Fund plc (GRID) 63
Financial StatementsAdditional Information Annual Report
Performance graph
The graph below represents the Company’s performance
during the period since the Company’s Ordinary Shares
ÜÀïÀÃÈvÈÈȳÈÀv®³®È4³®³®Oȳ§
Exchange on 13 November 2018 and shows Ordinary Share
price total return and NAV total return performance on a
dividends reinvested basis. Both series are rebased to 13
November 2018, being the date the Company’s Ordinary
Shares were listed.
This graph has been chosen as a comparison as it is a
publicly available broad equity index which focuses on
smaller companies and is therefore more relevant than
most other publicly available indices.
Relative importance of spend on pay
The difference in actual spend between 31 December
2021 and 31 December 2022 on Directors’ remuneration
in comparison to distributions (dividends and share
Ëâv§Ãƫv®³ÈÀîïv®Èý®®vÀÃȳËÈ®
the table below.
Payments made
during
the year ended
31 December
2022
£
Payments made
during
the year ended
31 December
2021
£
Remuneration to
Directors
256,181 232,500
Dividends paid to
shareholders
34,269,634 25,961,445
Buy-back of
Ordinary Shares
--
Total 34,525,815 26,193,945
This Directors’ Remuneration Report is approved on behalf
of the Board by:
David Stevenson
Chair of the Remuneration Committee
5 April 2023
GRID vs FTSE All Share Total Return
70
90
110
130
150
170
190
210
230
GRID - Share price total return GRID - Nav Total Return FTSE All Share Total Return
Gresham House Energy Storage Fund plc (GRID)64
Annual Report Financial Statements Additional Information
The powers to issue the Company’s shares and any
amendments to the Company’s Articles of Association
require approval by shareholders.
The Board considers that reporting against the Principles
and Provisions of the AIC Code provides relevant
information to shareholders.
The Company has complied with the Principles and
Provisions of the AIC Code.
The AIC Code is available on the AIC website (www.theaic.
co.uk). It includes an explanation of how the AIC Code
adapts the Principles and Provisions set out in the UK Code
to make them relevant for investment companies.
Capital structure and voting rights
Information about the Company’s capital structure
and voting rights are set out in Note 20 of the Financial
Statements on page 111.
On 13 May 2022, the Directors were authorised at a
General Meeting of the Company to allot new ordinary
shares and/or C-Shares up to an aggregate nominal value
of £4,000,000. Further, on 25 May 2022, the Company
published a prospectus relating to its Placing and Share
Issuance Programme of Ordinary Shares. Under the
authority granted at the General Meeting and pursuant to
the Placing and Share Issuance Programme, the Company
raised gross new proceeds of £150mn through the issue of
103,448,275 ordinary shares.
The Directors were granted the authority at the 2022 AGM
to issue new ordinary shares, on a non-pre-emptive basis,
of up to up to an aggregate nominal value of £541,290.35,
representing approximately 10% of the issued ordinary
share capital as at June 2022. Further, the Directors were
also granted the authority to make market purchases of its
own ordinary shares from time to time of up to 81,139,424
of its ordinary shares, or, if less, 14.99% of the Company’s
issued ordinary share capital. No new share issues or
market purchased of the Company’s own ordinary shares
were conducted under these authorities.
Further, these authorities expire or the earlier of 29
September 2023 or at the Company’s next AGM.
Board leadership and purpose
The Board views its purpose as supporting the Investment
Manager, including providing constructive challenge, to
achieve the Company’s intended acquisition of a portfolio
³OO½À³¦ÈÃȳÈv§vÛv®Èv³Èîïv®È
market opportunity for battery-based energy storage
systems. The Board is also committed to delivering the
Company’s targeted dividends and NAV total return.
Further discussion of the Company’s strategy has been set
out within the Strategic Report on page 38.
The Board seeks to establish a culture of openness and
engagement. The Board considers this culture aligned with
the strategic purpose of the Company through its growth
phase. The Board met frequently with the Investment
Manager throughout the period in an effort to sustain
continuous dialogue on key issues.
During the year ended 31 December 2022, the Board
supported the Investment Manager with further
deployment of the available funds and in further
fundraising by way of both debt and equity.
As set out in the section on Stakeholder Engagement
and Statement under Section 172, page 48, the
Board seeks to understand the views of the Company’s
key stakeholders and to consider these views in Board
discussions and decision-making.
The Board assesses and monitors its own culture,
including its policies, practices, and behaviour to
ensure it is aligned with the Company’s purpose,
values, and strategy.
The Board remains committed to diversity and further
detail on the Company’s Diversity Policy and approach
to diversity is set out in the Nomination Committee
Report on page 76.
Corporate Governance Report
The Board of Gresham House Energy Storage Fund plc has considered the Principles and
Provisions of the AIC Code of Corporate Governance (AIC Code). The AIC Code addresses the
Principles and Provisions set out in the UK Corporate Governance Code (the UK Code), as well
vÃÃÈÈ®³ËÈvȳ®v¨IÀ³Ûó®Ã³®ÃÃËÃÈvÈvÀ³Ã½ïÀ¨Ûv®È³%ÀÃv(³ËÃ
Energy Storage Fund plc.
65Gresham House Energy Storage Fund plc (GRID)
Chair
The Chair, John Leggate, is responsible for the leadership
of the Board and ensuring its effectiveness. Further,
the Chair, supported by the Investment Manager
and key advisors, including the Broker and Company
Secretary, ensures that the Board, as a whole, has a clear
understanding of the views of the Company’s stakeholders,
including shareholders. The Board conducts an annual
review of the Company’s stakeholders and their interests.
Composition and succession
The Board was pleased to welcome Isabel Liu as a Non-
Executive Director in October 2022. Isabel’s appointment
has brought further knowledge in investment management
and international experience in infrastructure
investment. Further details on Isabel’s recruitment
process are included in the Nomination Committee
Report on page 76.
The Board has now reached 40% female representation
and Isabel’s appointment has also resulted in the Board
having a member from a minority ethnic background
ƪvÃï®®È4ÃÈ®L˨ÃƫƛS³vÀvÃv³½È
a formal diversity policy and strongly believes that
diversity in all its forms (whether of skills, background
or characteristic) is an important contributor to strong
decision-making and intends to prioritise diversity in its
ongoing succession planning.
All appointments to the Board are, and will continue to be,
subject to a formal, rigorous and transparent procedure
as required by the AIC Code. The Board’s requirements for
vacancies on the Board are set with reference to objective
criteria and promote diversity of sex, social and ethnic
backgrounds, cognitive and personal strengths.
Division of responsibilities
Matters reserved to the Board
Full Board meetings take place quarterly and the Board
ÈóÀ³Ë®vÈóÀÀ˨vÀ¨âȳvÀÃÃýï
issues. The Board has a formal schedule of matters
ýïv¨¨âÀÃÀÛ³ÀÈÃó®Ü®¨ËÃƜËÈÃ
not limited to, considering proposals from the Investment
Manager; making decisions concerning the acquisition or
disposal of investments; and reviewing, annually, the terms
of engagement of all third-party advisers (including the
Investment Manager) and the appointment and removal of
the Company Secretary.
The Board has also established procedures whereby
Directors, wishing to do so in the furtherance of their
duties, may take independent professional advice at the
Company’s expense.
Gresham House Energy Storage Fund plc (GRID)66
Annual Report Financial Statements Additional Information
All Directors have access to the advice and services of the
Company Secretary. The Company Secretary provides the
Board with full information on the Company’s assets and
liabilities and other relevant information requested by the
Chair, in advance of each Board meeting.
There is a clear division of responsibilities between the
Board and the Investment Manager. Under the AIFM
Agreement, the Investment Manager acts as discretionary
investment manager and AIFM to the Company within
the strategic guidelines set out in the Investment Policy
and subject to the overall supervision of the Board. The
asset management role encompasses the oversight of all
³½Àvȳ®v¨v®ï®v®v¨v®v®ÈƜȽ¨v®v®
managing of all operational contracts, management of all
health and safety operational risks, advising the Board on
the monthly and quarterly asset/portfolio performance,
management of power price/market exposure, progress
with the asset pipeline and reporting to the Board,
identifying any circumstances in which the manager
should refer to the board for approval before undertaking
transactions and reporting to the Board.
The Company also has a business relationship with
Gresham House DevCo Limited, a related party of the
Investment Manager, which:
sources, due diligences and acquires pipeline on a
speculative basis exclusively for the Company to ensure
the Company’s ability to grow in a burgeoning market
with few operational projects;
manages these projects through construction;
sells projects to the Company; and
takes development risk on behalf of the Company,
where the Company’s investment mandate prevents
taking this risk.
The Management Engagement Committee, on an
annual basis, reviews the Investment Manager’s
performance during the year along with its adherence
to the terms of the AIFM Agreement. Further details are
contained in the Management Engagement Committee
Report on page 78.
The capital structure of the Company is disclosed in the
Financial Statements.
Gresham House Energy Storage Fund plc (GRID) 67
Financial StatementsAdditional Information Annual Report
Board committees
The Board has four committees: the Audit Committee,
Remuneration Committee, Nomination Committee, and the
Management Engagement Committee (MEC).
All the Directors of the Company are Non-Executive
Independent Directors and served on all committees.
Isabel Liu was appointed to each of the Committees with
effect from 9 December 2022.
Board and committee meetings
The table on page 69 sets out the Directors’ attendance
at the Board and committee meetings during the period.
During the period the Board held a number of additional ad
hoc Board meetings outside of the regular quarterly Board
meetings. These Board meetings were mainly to discuss
the progress of investments proposed by the Company and
completion of such investments and further fundraising
completed by the Company during the period. Typically, there
was attendance by the full Board at these ad hoc meetings and
attendance was in line with the requirements of the AIC Code.
The primary focus at regular Board meetings is a review of
investment performance, asset allocation, marketing and
investor relations, peer group information and industry issues.
At the Company’s quarterly Board meetings, the Board
typically considers the following business:
Update from the Investment Manager, including:
Ʋ Investment portfolio commentary
Ʋ Health & Safety commentary
Ʋ Trading data and investment performance, by month
Ʋ ®v¨âÃóȳ½v®âƺÃï®v®v¨³¨Ɯ®¨Ë®
and updates to key assumptions
Ʋ Risk management and risk mitigation, including
climate change and ESG risks
Ʋ Review of any recommendations made by the
Investment Manager
Update from the Company’s Broker; including;
Ʋ Market commentary
Ʋ Share price performance against the Company’s peers
Ʋ Sales and trading commentary
Report from the Company’s Depositary
Report from the Administrator and Company
Secretary, including;
Ʋ Compliance monitoring
Ʋ Regulatory and governance updates
The Board has been focused on developing ongoing
and positive communication with the Investment
Manager and regular meetings are one way the
Board seeks to encourage open and constructive
engagement on key issues.
Relations with shareholders
Shareholders have the opportunity to meet the Board at
the AGM. The Board is also happy to respond to any written
queries made by shareholders to the Company or its broker
during the course of the period, or to meet with major
shareholders if so requested. The Board and Investment
Manager welcomed a number of shareholders at the
Company’s AGM and had constructive discussions on the
Company’s strategy. The Board was pleased with the level
of engagement with shareholders and is looking forward to
the Company’s AGM in 2023.
The Board ensured that the Company regularly kept
shareholders informed of investment activities and
¿ËvÀÈÀ¨âï®v®v¨½À³Àv®ÈÀ³Ëv½½À³½ÀvÈ
public announcements and the publication of quarterly
factsheets by the Investment Manager that are available
³®È³½v®âƺÃÜÃÈƛSÀÜÀ®³Ã½ï
actions arising from the Company’s interactions with
shareholders in the period.
Gresham House Energy Storage Fund plc (GRID)68
Annual Report Financial Statements Additional Information
In addition to the formal business of the AGM,
representatives of the Investment Manager and the Board
are available to answer any questions a shareholder may
have. If shareholders are not able to attend the AGM in
person, shareholders will be given the opportunity to ask
questions in advance of the AGM, with answers to any
questions received published on the Company’s website.
Separate resolutions are proposed at the AGM on each
substantially separate issue. The Registrar collates proxy
votes and the results (together with the proxy forms) are
forwarded to the Company Secretary immediately prior to
the AGM. Proxy votes are announced at the AGM, following
each vote on a show of hands, except in the event of a
poll being called.
Remuneration
The Board is committed to implementing remuneration
policies and practices that are designed to support
strategy and promote long-term sustainable success.
This policy is set on in the Directors Remuneration
Report on page 61.
This Corporate Governance Report is approved on behalf
of the Board by:
John Leggate, CBE, FREng
Chair
5 April 2023
Quarterly Board
meetings
Audit Committee MEC
Nomination
Committee
Remuneration
Committee
(4 held) (4 held) (1 held) (2 held) (1 held)
John Leggate 4 4 1 2 1
Duncan Neale 3 4 0 2 1
Catherine Pitt 4 4 1 2 1
David Stevenson 4 4 1 2 1
Isabel Liu* 1 2 0 1 1
*Isabel Liu was appointed on 1 October 2022 and has attended each QBM & Committee meeting during her tenure
Gresham House Energy Storage Fund plc (GRID) 69
Annual ReportFinancial StatementsAdditional Information
Building on its work during 2021, the Committee continued
to work with the Investment Manager and key service
providers in 2022, to ensure that the Company can
À¨â³®À³ËÃÈ®ÈÀ®v¨ï®v®v¨³®ÈÀ³¨Ãv®¨vÀÀç
management procedures.
Audit Committee composition
The Audit Committee is chaired by Duncan Neale, who is
a Chartered Accountant, CFO and Finance Director and
ÈÀ³ÀvÃÀ®Èv®À¨Ûv®Èï®v®v¨á½À®ƛ
Duncan is supported by the other four independent Non-
Executive Directors on this committee.
The Audit Committee meets at least twice a year and
³½ÀvÈÃÜÈ®¨vÀ¨âï®ÈÀóÀÀ®ƛS
Committee met four times during the period. These
meetings were also attended by representatives of the
Investment Manager, the Company Secretary (JTC (UK)
Limited) and the Auditor (BDO LLP).
%Û®ÈÃç³È³vÀv®ÈÛÀÃÀv®³
experience and skills possessed by the Directors, the
Board has considered it appropriate to have all Directors
serve on this Committee. The Board has also considered
it appropriate for the Chair of the Board to serve on the
Committee in order to allow the Chair to directly contribute
to the Committee’s work and provide input on the
Company’s reporting obligations.
Terms of reference
The Committee reviewed its terms of reference to ensure
that they remain in alignment with the pro-forma terms
of reference published by ICSA and the latest version
of the AIC Code.
Principal responsibilities
The principal responsibilities which the Board has
delegated to the Audit Committee are:
1 to monitor the integrity of the Financial Statements of
the Company and any formal announcements relating to
ȳ½v®âƺÃï®v®v¨½À³Àv®ƞ
2 ÀÛܮȳ½v®âƺîÈÀ®v¨ï®v®v¨³®ÈÀ³¨Ãv®
internal control and risk management systems, unless
expressly addressed by a separate Board risk committee
composed of independent Non-Executive Directors, or
by the Board itself;
3 conducting the tender process and making
recommendations to the Board, about the appointment,
reappointment, and removal of the external Auditor, and
approving the remuneration and terms of engagement of
the external Auditor;
4 reviewing the effectiveness of the external audit
process, taking into consideration relevant UK
professional and regulatory requirements;
5 to review and monitor the Auditor’s independence
and objectivity and the effectiveness of the
audit process; and
6 to develop and implement policy on the engagement of
the Auditor to supply non-audit services and considering
relevant guidance regarding the provision of non-audit
services by the Auditor.
The Chair of the Audit Committee is required to report
³Àv¨¨âȳȳvÀ³®È³ÈÈƺÃï®®Ã
after each meeting on all matters within its duties and
responsibilities.
Financial reporting
The Audit Committee is also responsible for reviewing the
ï®v®v¨À½³ÀÈ®v®®½À³Û®vÛȳȳvÀ
on whether the Annual Report and Financial Statements,
taken as a whole, is fair, balanced, and understandable, as
required under the AIC Code, and provides the information
necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
The Audit Committee considered the detailed reviews
undertaken at various stages of the production process by
the Investment Manager, Administrator and Auditor, which
are intended to ensure consistency and overall balance.
Audit Committee Report
During the year and since, the Committee has played an integral role in
ÀÛÜ®v®v¨¨®®È³½v®âƺÃï®v®v¨³¨¨®Ɯï®v®v¨
À½³ÀÈ®Ɯ§âï®v®v¨³®ÈÀ³¨ÃƜv®³ÈÀÀçv®v®Èȳ½Ãƛ
70 Gresham House Energy Storage Fund plc (GRID)
The Committee also sought additional comfort from
the Investment Manager in relation to the conclusion
reached by the Board.
As a result of the work performed by the Audit Committee,
the Board is able to conclude that the Annual Report
and Financial Statements for the period ended 31
December 2022, taken as a whole, is fair, balanced, and
understandable and provides the information necessary
for shareholders to assess the Company’s performance,
business model and strategy.
S³ÈÈv¨Ã³ÀÛÜÃÈîïv®Èï®v®v¨
reporting issues and judgements made in connection with
the preparation of the Company’s Financial Statements
and considers whether the accounting policies adopted
are appropriate.
The Committee has worked with the Investment Manager
to improve the Company’s impact on Sustainability and
Environmental, Social and Governance. As a result,
the Company has voluntarily adopted the Task Force
on Climate-related Financial Disclosures in the 2022
Annual Accounts.
Going concern and viability
The Committee considered the Going Concern Statement
and Viability Statement on page 42. The Committee
ÜvÃÃvÈÃïÈvÈȳ½v®âÀv®v³®³®À®
and was expected to remain well positioned to continue to
operate and meet its liabilities over the short term and the
outlook period.
Key accounting
judgements and estimates
The key accounting judgement reviewed by the Audit
Committee is the high level of judgement involved in
determining the unquoted investment valuations. The
Investment Manager’s fee is based on the value of the
net assets of the Company. The Investment Manager is
responsible for preparing the valuation of investments
which are reviewed by the Audit Committee and
approved by the Board.
During the period, the valuation of the Company’s
investments has been a focus point for the Audit
Committee and the Board. The Chair of the Audit
Committee has worked closely with the Investment
Manager to understand how the Company’s
investment valuations are calculated and this has been
reported to the Board.
The Board has also carefully considered the discount rates
used by the Investment Manager and considers these rates
to be appropriate given the strategic objectives of the
Company and the commercial risks associated with the
Company’s Investment activities.
The Audit Committee has also taken additional comfort
from the opinion of an external independent valuation
assessment prepared by Grant Thornton, which concluded
that the Investment Manager’s calculation of valuation is
fair and reasonable on a fair value basis.
Following the detailed and ongoing assessment of
investment valuations, the Audit Committee and the Board
are able to conclude that the Company’s investments are
valued fairly and reasonably.
Auditor independence, objectivity
and effectiveness
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the annual reporting process, and the Audit Committee
considered and agreed that BDO, the engagement team
and other partners and Directors conducting the audit had
complied with relevant ethical requirements including the
FRC’s Ethical Standard and were considered independent
of the Company.
The Audit Committee discussed the effectiveness of BDO
as Auditor and agreed that the Auditor had adhered to
high professional and ethical principles and demonstrated
the appropriate skills and knowledge about the business,
industry, and environment together with the regulatory
and legal frameworks in which the Company operates.
The Audit Committee also agreed that the audit partner
demonstrates experience in the energy sector and is well
informed about current topical issues with the FRC. The
Audit Committee concluded that it had no concerns with
BDO’s effectiveness.
Marc Reinecke has been BDO’s lead audit partner for the
Company since IPO in 2018. This is Mr Reinecke’s fourth
annual audit for the Company. In line with best practice,
the Company would under normal circumstances seek a
À³Èvȳ®³È¨vvËȽvÀÈ®ÀÛÀâïÛâvÀÃƜÜÈv®
vËÈïÀÈ®À½À³ÃÃÛÀâÈ®âvÀÃv®vv®vȳÀâ
vËÈïÀÀ³Èvȳ®vÈÀŮŬâvÀÃƛ?³®ïÀÈvÈ9À
Reinecke would be rotated out in 2024.
The Audit Committee has recommended that a
resolution to reappoint BDO is proposed to shareholders
at the next AGM.
Gresham House Energy Storage Fund plc (GRID) 71
Financial StatementsAdditional Information Annual Report
Internal controls and risk
management systems
The Audit Committee’s responsibilities in respect of
internal controls and risk management are to:
1 review the reports on the internal controls of the
Company’s service providers which identify the
risk management systems in place for assessing,
managing, and monitoring risks applicable to such
service providers;
2 establish a process for identifying, assessing, managing,
v®³®È³À®ÈÀçÃÜvâvÛvï®v®v¨
impact on the Company;
3 review reports on the conclusions of any testing carried
out by the Auditors;
4 carry out at least annually a robust assessment of the
emerging and principal risks facing the Company; and
5 review and approve the statements included in the
Annual Report in relation to internal control and the
management of risk.
The Audit Committee reviews the Company’s internal
controls on an annual basis with the last review being
conducted in November 2022. The Audit Committee
obtains evidence of the internal control frameworks of
both the Administrator and Investment Manager to review.
Further, the Company Secretary reports to the Board
quarterly on any potential internal control failures.
SËȳÈȳ®ïÀÃÈvÈÈvó½¨ÈÈÃ
assessment of the Company’s emerging and principal risks
and the details of this assessment are set out in emerging
risks, principal risks, and uncertainties assessment, and
going concern assessment on page 42.
The Audit Committee considers the Company’s risk
matrix on an annual basis with regular risk reporting being
presented to the Board by the Investment Manager on a
quarterly basis.
The Audit Committee Chair has engaged with the
Investment Manager during the year to improve the
risk reporting to the Board on an ongoing basis and this
improved reporting is expected to enhance the Board’s
oversight of principal risks. The Audit Committee
ÜvÃÃvÈÃïÜÈÈ*®ÛÃÈ®È9v®vÀƺóÛÀv¨¨
assessment of principal risks.
Although the Board is ultimately responsible for
safeguarding the assets of the Company, the Board has
delegated, through written agreements, the day-to-
vâ³½Àvȳ®³È³½v®âƪ®¨Ë®Èï®v®v¨
reporting process) to Gresham House Asset Management
Limited as Investment Manager and JTC (UK) Limited as
Administrator.
Whistleblowing
The Audit Committee has reviewed the arrangements by
which staff of the Investment Manager and Administrator
and other service providers as the Committee sees
ïÈvâƜ®³®ï®ƜÀvó®À®Ãv³ËȽ³Ãè
½À³½ÀÈîvÈÈÀóï®v®v¨À½³ÀÈ®³À³ÈÀ
matters and satisfy itself that arrangements are in place
for the proportionate and independent investigation
of such matters and for appropriate follow-up action.
These arrangements are embedded into the Investment
Manager‘s and Administrator’s internal policies.
There were no instances of whistleblowing during the period.
External audit
The Audit Committee also makes recommendations
to the Board in relation to the appointment of the
external Auditors and to ensure the independence of the
external Auditor.
Gresham House Energy Storage Fund plc (GRID)72
Annual Report Financial Statements Additional Information
It also reviews and comments on the audit strategy paper,
presented by the Auditor in advance of the audit, which
sets out the key risk areas to be covered during the audit
v®³®ïÀÃÈÀÃÈvÈËó®®½®®ƛ
The Audit Committee has reviewed the engagement of
the external Auditor on the supply of non-audit services
in order to ensure that the independence of the external
Auditor is maintained, considering the relevant regulations
and ethical guidance in this regard.
The Company’s Auditor did not provide any non-audit
services during the period.
The Audit Committee, after taking into consideration
comments from the Investment Manager and
Administrator, regarding the effectiveness of the audit
process; immediately before the conclusion of the
annual audit, will recommend to the Board either the re-
appointment or removal of the Auditors.
Internal audit
The Audit Committee discussed the need for an internal
audit function. The debate included input from the
Investment Manager and consideration of the assurance
received from third parties under the risk management
framework. In the light of this consideration, the Audit
Committee decided that there was no current requirement
for an internal audit as the internal controls and risk
management were adequate and effective.
Financial reporting
The Directors’ responsibilities statement for preparing the
accounts is set out in the Report of the Directors on page
56 and a statement by the Auditor about their reporting
responsibilities is set out in the Independent Auditor’s
Report on page 80.
Statement on Investment Manager’s
risk management and internal controls
During the period the Audit Committee has reviewed and
has received appropriate evidence of the Investment
Manager’s risk management and internal control systems.
SËȳÈÈÃÃvÈÃïÈvÈÈÃÀvܳÀ§ÃïÈ
for purpose and appropriately designed to safeguard the
shareholder’s investment and the Company’s assets. The
Board and the Audit Committee will continue to review
the Investment Manager’s risk management and internal
control systems on a quarterly basis.
Audit Committee evaluation
An evaluation of the Audit Committee was undertaken as
part of the overall Board evaluation in 2022. The evaluation
concluded that the Audit Committee was found to be
working well and the skills and experience of the members
was found to be appropriate.
The Audit Committee will continue to concentrate on
development and training of committee members, as the
regulatory focus on audit and audit committees increases.
Isabel Liu’s appointment in December 2022 was welcomed
âÈÀÃvÃÈÀ³ËÈËÀÈÀÛÀÃïvȳ®³
skills and experience to the Committee.
This Audit Committee Report is approved on behalf
of the Board by:
Duncan Neale
Chair of the Audit Committee
5 April 2023
Gresham House Energy Storage Fund plc (GRID) 73
Annual ReportFinancial StatementsAdditional Information
Remuneration Committee composition
The Remuneration Committee is chaired by David
Stevenson. David is supported by the other four
independent Non-Executive Directors on this Committee.
The Remuneration Committee meets at least once a year
v®³½ÀvÈÃÜÈ®¨vÀ¨âï®ÈÀóÀÀ®ƛ
The Remuneration Committee met once during the
period. The Remuneration Committee’s meeting was also
attended by representatives of the Company Secretary
(JTC (UK) Limited) and the Company’s Investment manager
(Gresham House Asset Management Limited).
%Û®ÈÃç³È³vÀv®ÈÛÀÃÀv®³
experience and skills possessed by the Directors, the
Board has considered it appropriate to have all Directors
serve on this Remuneration Committee. The Chair of the
Board was independent on appointment to the Board and
remains independent and is therefore eligible to serve on
the Remuneration Committee.
Terms of reference
The Remuneration Committee reviewed its terms of
reference to ensure that they were in alignment with the
pro-forma terms of reference published by ICSA and the
latest version of the AIC Code.
Principal responsibilities
The main role and responsibilities of the Remuneration
Committee include:
in conjunction with the Chair, setting the Directors’
remuneration levels; and
considering the need to appoint external
remuneration consultants.
Remuneration Committee Report
During the period, the Board was mindful of the requirements under
the AIC Code and the Company’s objective of maintaining high
governance standards.
Gresham House Energy Storage Fund plc (GRID)74
Review of Directors’ remuneration
The Remuneration Committee considered that the
appointment of an external remuneration consultant was
not required for 2022. During the year, the Remuneration
Committee considered the appropriate level of increases
to the Directors’ fees for 2023.
The Directors’ remuneration was set at launch at a level
that was considered to be appropriate for a Company of its
Ãçv®®vÈËÀvÈÈÈƜv®ÜȳËȧ®³Ü¨³È
level of commitment that would be involved. Over the past
three years, that commitment has grown as the Company
itself has grown.
In 2021, the Remuneration Committee decided to increase
the Directors’ remuneration in line with Consumer Price
*®ðvȳ®ƪI*ƫvâvÀȳ®ÃËÀÈvÈÀȳÀÃÃ
Àv®³½ÈÈÛv®®¨®ÜÈ®ðvȳ®ƛ
Director 2022 Fee 2023 Fee
John Leggate £84,080 £92,908
Duncan Neale £65,687 £72,585
Cathy Pitt £47,295 £52,261
David Stevenson £47,295 £52,261
Isabel Liu £47,295 £52,261
The Remuneration Committee considers the increases
in Directors’ fees to be in line with the Company’s
Remuneration Policy approved by the Company’s
shareholders at the Company’s 2020 AGM. The
Remuneration Committee has delegated authority to
set the remuneration of the Non-Executive Directors,
including the remuneration of the Chair of the Board,
under its terms of reference. David does not receive
additional remuneration for his role as Senior Independent
Director (SID).
Committee evaluation
An evaluation of the Remuneration Committee was
undertaken as part of the overall Board evaluation in 2022.
The evaluation concluded that there was a good balance of
稨ÃÈÜ®ÈïÛÀȳÀÃȳÃ˽½³ÀÈÈܳÀ§³È
Remuneration Committee.
This Remuneration Committee Report is approved on
behalf of the Board by:
David Stevenson
Chair of the Remuneration Committee
5 April 2023
Gresham House Energy Storage Fund plc (GRID) 75
Annual ReportFinancial StatementsAdditional Information
Nomination Committee composition
The Nomination Committee is chaired by Cathy Pitt. Cathy
is supported by the other four independent Non-Executive
Directors on this Nomination Committee.
The Nomination Committee meets at least once a year
v®³½ÀvÈÃÜÈ®¨vÀ¨âï®ÈÀóÀÀ®ƛ
The Nomination Committee met twice during the
period. The Nomination Committee’s meeting was also
attended by representatives of the Company Secretary,
(JTC (UK) Limited).
%Û®ÈÃç³È³vÀv®ÈÛÀÃÀv®³
experience and skills possessed by the Directors, the
Board has considered it appropriate to have all Directors
serve on this Nomination Committee.
Terms of reference
The Nomination Committee reviewed its terms of
reference to ensure that they were in alignment with the
pro-forma terms of reference published by ICSA and the
latest version of the AIC Code.
Principal responsibilities
The Nomination Committee’s principal responsibilities are:
leading the process for appointments;
ensuring plans are in place for orderly succession to
the Board; and
overseeing the development of a diverse pipeline for
succession to the Board.
The Nomination Committee is also responsible for
supporting the Chair of the Board in an annual review of the
effectiveness of the Board, its Nomination Committee and
each of its Directors.
Composition,
succession and evaluation
Composition
S³½v®âvÃv³vÀ³½ÀîïÛ:³®ưáËÈÛ
Directors, with the Chair being John Leggate.
All of the Directors are independent from the Investment
9v®vÀvÃï®®È*³v®®³ÀËÃÈv®Ã
vÛ®®ÈïÈvÈvÀ¨§¨âȳ½vÀƜ³À
could appear to impair, a Non-Executive Director’s
®½®®ƛ$ËÀÈÀƜv¨¨ÀȳÀÃƺîïv®È®ÈÀÃÈÃƜ
vÛ®ÀÛÜv®®³³®ðÈó®ÈÀÃÈÜÈÈ
®ÈÀÃÈóȳ½v®âvÛ®®ÈïƛS³vÀ
³Ã®³È³®ÃÀÈîÈÀÃÈÃȳvÛv®âîïv®È
impact on the Directors’ ability to discharge their duties
to the Company.
Biographical details of all Board members (including
îïv®È³ÈÀ³È®ÈÃƫvÀóܮ³®page 50.
When making new appointments, the Board will consider
other demands on Directors’ time. Prior to appointment,
îïv®È³È®ÈÃܨ¨Ã¨³ÃÜÈv®
indication of the time involved. Additional external
appointments should not be undertaken without prior
approval of the Nomination Committee and Board, with the
Àvó®Ã³À½ÀÈȮîïv®Èv½½³®È®ÈÃὨv®
in the Annual Report.
S:³®vȳ®³ÈÈÀÛÜÈÃçv®
composition of the Board having regard to the skills of
each Director and the commitment involved in service
on the Board. The Committee procured the services of
an external recruitment consultant, Trust Associates, to
®Èâv®vÈóÀvïÈ:³®ưáËÈÛÀȳÀƛ
Trust Associates has no other connection to the Company
³À³ÈÀÀȳÀóȳvÀƛSvÀ®ÈïvóÀÈ
list of potential candidates for the Committee members
to interview and through careful consideration, the
Committee recommended to the Board the appointment of
*Ãv¨4ËvÃÈïÈ:³®ưáËÈÛÀȳÀȳȳvÀƛ
Further, Isabel Liu was appointed to each of the Company’s
committees on 9 December 2022.
Nomination Committee Report
During the period, the Board, mindful of the requirements of the AIC Code
and the Company’s objective of maintaining high governance standards,
constituted the Nomination Committee during 2022.
76 Gresham House Energy Storage Fund plc (GRID)
The Nomination Committee also considered the
opportunity for scholarship initiatives and Board
apprenticeship programmes.
The Nomination Committee considered that access
to experience would be valuable for disadvantaged
individuals and for the Nomination Committee to support
the wider community. The Nomination Committee resolved
to pursue initiatives to support scholarship initiatives and
Board apprenticeship programmes during 2023.
Board evaluation
During the period, the Board, supported by the Company
Secretary undertook an internal Board evaluation. The
evaluation involved the completion of board surveys
prepared by the Company Secretary and completed by the
Directors. The evaluation was a comprehensive internal
review, by the Committee as a whole, of the effectiveness
of the Board, individual Directors, the Chair and each
of the Board’s Committees. The evaluation concluded
there was generally a good balance of skills on the Board
and external communication with shareholders required
improvement. Improving engagement with the Company’s
shareholders remains a focus from the Board evaluation
and the Board intends to continue to make improvements
on this during 2023. While the Committee concluded that
there was good balance of skills and experience on the
Board, the Committee would seek opportunities to refresh
the composition of the Board and to further support the
Board’s diversity.
Re-election and succession
John Leggate, David Stevenson and Duncan Neale were
appointed to the Board on 24 August 2018 and re-elected
by the shareholders at the 2022 AGM. Catherine Pitt was
appointed to the Board on 1 March 2019 and duly elected
by the shareholders at the 2022 AGM. Isabel Liu was
appointed to the Board on 1 October 2022 and will be
eligible for election by the Company’s shareholders at the
Company’s 2023 AGM.
In accordance with the AIC Code, all Directors are required
to retire at the forthcoming AGM, and being eligible, offer
themselves for re-election.
Further, in relation to the tenure of the Chair, the Board
³®ÃÀÃÈv½½À³½ÀvÈȳvÛ®³ïáÈÀ³ÀÈ
tenure of the Chair and deems this appropriate given the
long term nature of the Company’s investments. However,
the Nomination Committee will review this policy on
an annual basis.
Diversity
S³½v®âÀ³®ÃÃÈ®ïÈóvÛ®vÛÀÃ
Board and sees increasing diversity at Board level as an
essential element in maintaining an effective Board. The
Company has adopted a formal Diversity Policy, which
sets out the Company’s approach to and commitment
to diversity. The policy was reviewed by the Nomination
Committee during 2022.
The Company’s policy is to ensure that there is broad
experience and diversity on the Board. Diversity includes,
and makes good use of, differences in knowledge and
understanding of relevant diverse geographies, peoples
and their backgrounds including race or ethnic origin,
sexual orientation, sex, age, disability, and religion.
Appointments to the Board should be made on merit, in
the context of complimenting and expanding the skills,
knowledge and experience of the Board as a whole (and in
accordance with the Equality Act 2010). Accordingly, with
ÈÀÀËȮȳÈïÈÀȳÀƜȳvÀ¨vÃÜÈ
an external independent recruitment consultant to ensure
a wide pool of candidates from a diverse background were
considered for the position.
The Nomination Committee will be responsible for the
implementation of the Company’s Diversity Policy and
for monitoring progress towards the achievement of
its objectives.
This Nomination Committee Report is approved on behalf
of the Board by:
Cathy Pitt
Chair of the Nomination Committee
5 April 2023
Gresham House Energy Storage Fund plc (GRID) 77
Financial StatementsAdditional Information Annual Report
During the year, the Management Engagement Committee
played an integral role in:
reviewing the contractual relationship and performance
of the Investment Manager; and
evaluating key service providers, including the Company
Secretary, Depositary, Registrar, and Broker.
Management Engagement
Committee composition
The Management Engagement Committee is chaired by
Cathy Pitt. The Chair of the Management Engagement
Committee is supported by the other four independent
Non-Executive Directors.
The Management Engagement Committee meets at least
³®vâvÀv®³½ÀvÈÃÜÈ®¨vÀ¨âï®ÈÀó
reference. The Management Engagement Committee met
once during the period. This meeting was also attended
by representatives of the Investment Manager and the
Company Secretary (JTC (UK) Limited).
%Û®ÈÃç³È³vÀv®ÈÛÀÃÀv®³
experience and skills possessed by the Directors, the
Board has considered it appropriate to have all Directors
serve on the Management Engagement Committee.
Terms of reference
The Management Engagement Committee reviewed its
terms of reference to ensure that they remain in alignment
with the pro-forma terms of reference published by ICSA
and the latest version of the AIC Code.
Principal responsibilities
The Management Engagement Committee’s principal
responsibilities include:
monitoring and evaluating the Investment Manager’s
investment performance and, if necessary, providing
appropriate guidance;
putting in place procedures by which the Board regularly
reviews the continued retention of the Investment
Manager’s services;
considering the merit of obtaining, on a regular basis, an
independent appraisal of the Investment Manager’s services;
reviewing the level and method of remuneration, the basis
of performance fees (if any) and the notice period; and
putting in place processes to review the Company’s risk
management and internal control systems designed to
safeguard shareholders’ investment and the Company’s
assets. A review of the effectiveness of these systems
should be made annually by the Board and reported to
shareholders in the annual report.
Management Engagement Committee Report
Building on its work during 2022, the Management Engagement
Committee continued to work with the Investment Manager and key
service providers to ensure that the Company had a robust system of
®ÈÀ®v¨ï®v®v¨³®ÈÀ³¨Ãv®v¨vÀÀçv®v®È½À³ËÀƛ
Gresham House Energy Storage Fund plc (GRID)78
The Management Engagement Committee also reviews the
performance of other service providers to the Company
and makes recommendation to the Board, including by:
reviewing and considering the appointment and
remuneration of service providers to the Company; and
³®ÃÀ®v®â½³®Èó³®ðÈÜvâvÀÃ
between the providers of services to the Company.
Performance of the
Investment Manager
The Management Engagement Committee reviewed
the performance of the Investment Manager and the
Management Engagement Committee was generally
ÃvÈÃïÈvÈÈ*®ÛÃÈ®È9v®vÀv½À³Àܨ¨
during the period, with the Company completing a number
of acquisitions during the period, driving the performance
of the operating assets, successfully deploying the capital
raised during 2021 and conducting a further successful
fundraising during 2022.
The Management Engagement Committee continues
to collaborate with the Investment Manager to improve
À½³ÀÈ®v®®³Àvȳ®ð³ÜȳȳvÀv®
its committees.
The Management Engagement Committee reviewed the
Ãç³È*®ÛÃÈ®È9v®vÀƺÃܳÀ§¨³vƜ§âư½Àó®
policies and resources to handle the anticipated workload.
The Committee reviewed the diversity of the Investment
Manager and its capacity to the Company’s ambitions
for growth. The Management Engagement Committee
also noted the additional resources being added to the
Investment Manager’s team, in particular the additional
v½vÈâȳÃ˽½³ÀÈȳ½v®âƺÃï®v®v¨³¨¨®ƛ
The Management Engagement Committee reviewed
the remuneration of the Investment Manager and found
these fees to be in line with market rates for the services
delivered to the Company during the period.
S9v®v®È®v®È³ÈÈÃÃvÈÃïÈvÈ
the Investment Manager has performed well under the
terms of the AIFM Agreement and is of the view that the
continued engagement of the Investment Manager is in
the best interests of the Company and would support the
Company’s long-term sustainable success.
Performance of key service providers
The Management Engagement Committee undertook at
review of all key service providers to the Company and
there were no issues to report.
S9v®v®È®v®È³ÈÈýïv¨¨â
discussed the performance of JTC (UK) Limited
appointed by the Company both as Administrator and as
Company Secretary and concluded that the performance
as Administrator and Company Secretary remained
satisfactory. The Company is responsible for the
appointment or removal of the Company Secretary.
Committee evaluation
An internal evaluation of the Management Engagement
Committee was undertaken as part of the overall Board
evaluation. The Management Engagement Committee was
found to be working well and the skills and experience of
the members was found to be appropriate for their roles.
This Management Engagement Committee Report is
approved on behalf of the Board by:
Cathy Pitt
Chair of the Management Engagement Committee during
the reporting period
5 April 2023
Gresham House Energy Storage Fund plc (GRID) 79
Annual ReportFinancial StatementsAdditional Information
?½®³®³®Èï®v®v¨ÃÈvÈ®ÈÃ
In our opinion:
Èï®v®v¨ÃÈvÈ®ÈÃÛvÈÀËv®vÀÛܳÈ
state of the Company’s affairs as at 31 December 2022
v®ÈýÀ³ïȳÀÈâvÀÈ®®ƞ
have been properly prepared in accordance with UK
adopted international accounting standards ; and
Èï®v®v¨ÃÈvÈ®ÈÃvÛ®½À½vÀ
in accordance with the requirements of the
Companies Act 2006.
`vÛvËÈÈï®v®v¨ÃÈvÈ®Èó%ÀÃv
House Energy Storage Fund plc (the ‘Company’) for the
year ended 31 December 2022 which comprise Statement
of Comprehensive Income, Statement of Financial
Position, Statement of Changes in Equity, Statement
³vÃ$¨³ÜÃv®®³ÈÃȳÈï®v®v¨ÃÈvÈ®ÈÃƜ
®¨Ë®vÃËvÀâ³Ã®ïv®Èv³Ë®È®½³¨Ãƛ
Sï®v®v¨À½³ÀÈ®ÀvܳÀ§ÈvÈvîv½½¨
in their preparation is applicable law and UK adopted
international accounting standards.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
Èï®v®v¨ÃÈvÈ®ÈÃÃȳ®³³ËÀÀ½³ÀÈƛ`¨Û
ÈvÈÈvËÈÛ®ÜvÛ³Èv®ÃÃËí®Èv®
appropriate to provide a basis for our opinion. Our audit
opinion is consistent with the additional report to the
audit committee.
Independence
Following the recommendation of the audit committee,
we were appointed by the Board of Directors in December
ŮŬŭŵȳvËÈÈï®v®v¨ÃÈvÈ®ÈóÀÈâvÀ®®
ůŭÀŮŬŭŵv®ÃËÿˮÈï®v®v¨½À³Ãƛ
The period of total uninterrupted engagement including
retenders and reappointments is four years, covering the
years ending 31 December 2019 to 31 December 2022.
We remain independent of the Company in accordance
with the ethical requirements that are relevant to our
vËȳÈï®v®v¨ÃÈvÈ®ÈîÈV3Ɯ®¨Ë®
the FRC’s Ethical Standard as applied to listed public
®ÈÀÃÈ®ÈÈÃƜv®ÜvÛ˨﨨³ËÀ³ÈÀÈv¨
responsibilities in accordance with these requirements.
The non-audit services prohibited by that standard were
not provided to the Company.
Conclusions relating to going concern
*®vËÈ®Èï®v®v¨ÃÈvÈ®ÈÃƜÜvÛ³®¨Ë
that the Directors’ use of the going concern basis of
v³Ë®È®®È½À½vÀvȳ®³Èï®v®v¨ÃÈvÈ®ÈÃ
is appropriate. Our evaluation of the Directors’ assessment
of the Company’s ability to continue to adopt the going
concern basis of accounting included:
assessing the reasonableness of the Company’s cash
ð³Ü³ÀvÃÈâ³½vÀ®Èá½ÈvÃð³ÜÃȳ
contractual obligations and that these are covered by the
available cash reserves for the period of 12 months from
Èvȳv½½À³Ûv¨³Èï®v®v¨ÃÈvÈ®ÈÃƞ
considering the appropriateness of the approach and
model used by the Directors;
assessing the reasonableness of the Directors
judgement on the impact of the continuation vote;
assessing the reasonableness of the stress test
performed by the Directors which assumed that there
ܳ˨vůůǦÀËȳ®®®ð³ÜÃv®vÀËȳ®®
dividends of 33% and all existing funding obligations
towards the investments would still be met over the
next 12 months;
Independent Auditor’s Report to the Members of
Gresham House Energy Storage Fund plc
80 Gresham House Energy Storage Fund plc (GRID)
assessing the covenants which are relevant to the debt
facility, which the Company is party to as Guarantor
and the ability to meet these covenants even under the
stress test scenario; and
reviewing the adequacy and consistency of the
disclosure in line with the Directors’ assessment.
Based on the work we have performed, we have not
®Èïv®âvÈÀv¨Ë®ÀÈv®ÈÃÀ¨vȮȳۮÈÃ
or conditions that, individually or collectively, may cast
îïv®È³Ëȳ®È³½v®âƺÃv¨Èâȳ³®È®ËvÃv
going concern for a period of at least twelve months from
Ü®Èï®v®v¨ÃÈvÈ®ÈÃvÀvËȳÀóÀÃÃËƛ
Our responsibilities and the responsibilities of the
Directors with respect to going concern are described in
the relevant sections of this report.
Overview
Key audit matters
2022 2021
Valuation of
unquoted
investments
Materiality
Financial statements as a whole
£12.6mn (2021: £7.6mn) based on
1.5% of net assets
O½ïvÈÀv¨Èâ
£1.3mn (2021: £870k) based
³®űǦ³½À³ïȳÀÈvá¨ÃÃ
fair value gains
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the
Company and its environment, including the Company’s
system of internal control, and assessing the risks of
vÈÀv¨ÃÃÈvȮȮÈï®v®v¨ÃÈvÈ®ÈÃƛ`v¨Ã³
addressed the risk of management override of internal
controls, including assessing whether there was evidence
of bias by the Directors that may have represented a risk of
material misstatement.
Key audit matters
Key audit matters are those matters that, in our
½À³Ãó®v¨¦Ë®ÈƜÜÀ³³ÃÈîïv®®³ËÀ
vËȳÈï®v®v¨ÃÈvÈ®ÈóÈËÀÀ®È½À³v®
®¨ËȳÃÈîïv®ÈvÃÃÃÃÀçóvÈÀv¨
misstatement (whether or not due to fraud) that we
®ÈïƜ®¨Ë®È³ÃÜvÈÀvÈÃÈÈ
on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement
team. These matters were addressed in the context of our
vËȳÈï®v®v¨ÃÈvÈ®ÈÃvÃvܳ¨Ɯv®®³À®
our opinion thereon, and we do not provide a separate
opinion on these matters.
Gresham House Energy Storage Fund plc (GRID) 81
Financial StatementsAdditional Information Annual Report
Key audit matter
How the scope of our audit addressed the key audit
matter
Valuation of
unquoted
investments
Refer to note 11
on page 98
and note 17 on
page 102 of
Èï®v®v¨
statements.
As detailed in Note 11, the Company
owns an investment portfolio
of unquoted equity and loan
investments, which as described
in the accounting policies in Note 5
are held at fair value in the Company
Financial Statements.
The valuations of the investments
is a subjective accounting estimate
where there is an inherent risk of
management override arising from
investment valuations being prepared
by the Investment Manager, who is
remunerated based on the Net Assets
Value (NAV) of the Company.
The Company has engaged an
independent expert valuer to help
mitigate the risk.
The fair value was determined
through the use of a discounted
vÃð³Ü³¨ƛSÛv¨Ëvȳ®
®Û³¨Ûîïv®È¦Ë®ÈÃ
and estimates from management
including, but not limited to discount
rates, changes in net revenue yield
and changes in energy production.
Changes to the estimates and/or
judgements can result, either on an
individual or aggregate basis, in a
material change to the valuation of
unquoted investments and therefore
we considered this to be a key audit
matter.
Our procedures in relation to management’s valuation of
the unquoted investments include:
`vÃÃÃÃȳ½È®âƜ¿Ëv¨ïvȳ®Ɯ
independence and objectivity of the external valuer
engaged by the Company and reviewed the terms of
their engagement for any unusual arrangements or
limitation on the scope of their work.
With the assistance of our internal valuation experts,
we challenged the appropriateness of the selection and
v½½¨vȳ®³§âÃÈvÈîÈóˮÈvÃð³Ü
model including discount rate, net energy yield, annual
®Àvȳ®Ɯ®ðvȳ®ÀvÈƜË®À¨â®³ÃÈÃv®vÃÃȨ
by benchmarking to available industry data and actual
results in the year.
Agreed net energy yield and annual generation used in
ÈóˮÈvÃð³Ü³¨È³®½®®ÈÈÀ
party pricing curve report. We held discussions with
them to understand the model assumptions and how the
models are produced.
For new investments, we obtained and reviewed the
sale and purchase agreements and loan contracts
v®§ÈâÜÀvËÀvȨâÀðÈ®È
valuation model.
For new investments which were either acquired or
committed we challenged the appropriate valuation
through consideration of the stage of construction
of the underlying battery storage project and our
understanding of the associated risks.
For investments where the battery asset is under
construction, we have challenged the policy applied
to fair value these investments through obtaining an
understanding of the status of each project and the
risks of the projects. For the construction risk premium
applied, we benchmarked this against other companies
and considered the risks in the projects. We discussed
the premium with management’s independent external
valuer and involved our internal valuations experts in
assessing the appropriateness of the premium.
Agreed period end working capital adjustments in
determining the fair value of the portfolio companies
to the working capital recognised in the management
accounts of the portfolio companies as well as bank
statements, invoices and VAT returns.
Agreed the movements in loans provided to the
portfolio companies including interest rates
to underlying loan agreements, vouched cash
movements to bank statements and re-performed the
calculation of interest.
Key observations:
Based on the audit procedures performed, we found the
estimates and judgements made by the management in
relation to the valuation to be appropriate.
Gresham House Energy Storage Fund plc (GRID)82
Annual Report Financial Statements Additional Information
Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect
of misstatements. We consider materiality to be
the magnitude by which misstatements, including
³Ãó®ÃƜ³Ë¨®ðˮȳ®³Ã³®Ã
of reasonable users that are taken on the basis of the
ï®v®v¨ÃÈvÈ®ÈÃƛ
In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality,
to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the
®vÈËÀ³®ÈïÃÃÈvÈ®ÈÃƜv®È½vÀÈ˨vÀ
circumstances of their occurrence, when evaluating their
ȳ®Èï®v®v¨ÃÈvÈ®ÈÃvÃvܳ¨ƛ
Based on our professional judgement, we determined
vÈÀv¨Èâ³ÀÈï®v®v¨ÃÈvÈ®ÈÃvÃvܳ¨v®
performance materiality as follows:
³½v®âï®v®v¨ÃÈvÈ®ÈÃ
2022
£
2021
£
Materiality £12,600,000 £7,600,000
Basis for
determining
materiality
1.5% net assets
Rationale for
the benchmark
applied
We consider that net assets is the
most relevant performance measure
³ÀËÃÀóÈï®v®v¨ÃÈvÈ®ÈÃƛ
Performance
materiality
£8,750,000 £5,110,000
Basis for
determining
performance
materiality
70% of materiality based on
consideration of factors including
the level of historical errors and
nature of activities, which resulted
in an increase in the performance
materiality benchmark.
O½ïvÈÀv¨Èâ
We also determined that for transactions and balances
that impact on the Company’s return other than
the valuation of the unlisted investment portfolio, a
ÃÃÈvȮȳ¨ÃÃÈv®vÈÀv¨Èâ³ÀÈï®v®v¨
ÃÈvÈ®ÈÃvÃvܳ¨ƜýïvÈÀv¨ÈâƜ³Ë¨
®ðˮȳ®³Ã³®Ã³ËÃÀÃƛÃvÀÃ˨ÈƜ
we determined materiality for these items based to be
ljŭƛŮŲ®ƪŮŬŮŭƝljŬƛŴų®ƫvó®űǦ³½À³ïȳÀÈvá
less fair value gains.
We further applied a performance materiality level
³ųŬǦ³Ã½ïvÈÀv¨Èâȳ®ÃËÀÈvÈÈ
Àç³ÀÀ³ÀÃá®Ã½ïvÈÀv¨ÈâÜvÃ
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would
report to them all individual audit differences in excess
of £63,000 (2021:£43,500). We also agreed to report
differences below this threshold that, in our view,
warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information.
The other information comprises the information included
in the Annual Report and Financial Statements other than
Èï®v®v¨ÃÈvÈ®ÈÃv®³ËÀvËȳÀƺÃÀ½³ÀÈÈÀ³®ƛ
?ËÀ³½®³®³®Èï®v®v¨ÃÈvÈ®Èóî³È³ÛÀ
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is
to read the other information and, in doing so, consider
whether the other information is materially inconsistent
ÜÈÈï®v®v¨ÃÈvÈ®ÈóÀ³ËÀ§®³Ü¨³Èv®
in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise
ȳvvÈÀv¨ÃÃÈvȮȮÈï®v®v¨ÃÈvÈ®ÈÃ
themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Gresham House Energy Storage Fund plc (GRID) 83
Financial StatementsAdditional Information Annual Report
Other Companies Act 2006 reporting
Based on the responsibilities described below and our
work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to
report on certain opinions and matters as described below.
Strategic
report and
Directors’
report
In our opinion, based on the work
undertaken in the course of the audit:
the information given in the
Strategic report and the Directors’
À½³ÀȳÀÈï®v®v¨âvÀ³À
ÜÈï®v®v¨ÃÈvÈ®ÈÃvÀ
prepared is consistent with the
ï®v®v¨ÃÈvÈ®ÈÃƞv®
the Strategic report and the
Directors’ report have been prepared
in accordance with applicable
legal requirements.
In the light of the knowledge and
understanding of the Company and
its environment obtained in the
course of the audit, we have not
®ÈïvÈÀv¨ÃÃÈvÈ®ÈÃ
in the Strategic report or the
Directors’ report.
Directors’
remuneration
In our opinion, the part of the
Directors’ remuneration report
to be audited has been properly
prepared in accordance with the
Companies Act 2006.
Matters on
which we
are required
to report by
exception
We have nothing to report in respect
of the following matters in relation
to which the Companies Act 2006
requires us to report to you if,
in our opinion:
adequate accounting records have
not been kept , or returns adequate
for our audit have not been received
from branches not visited by us; or
ȳ½v®âï®v®v¨ÃÈvÈ®ÈÃ
and the part of the Directors’
remuneration report to be audited
are not in agreement with the
accounting records and returns; or
certain disclosures of Directors’
ÀË®Àvȳ®Ã½ïâ¨vÜ
are not made; or
we have not received all the
information and explanations we
require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the
½À½vÀvȳ®³Èï®v®v¨ÃÈvÈ®ÈÃv®³À®
ÃvÈÃïÈvÈÈâÛvÈÀËv®vÀÛÜƜv®³ÀÃË
internal control as the Directors determine is necessary
ȳ®v¨È½À½vÀvȳ®³ï®v®v¨ÃÈvÈ®ÈÃÈvÈ
are free from material misstatement, whether due to
fraud or error.
*®½À½vÀ®Èï®v®v¨ÃÈvÈ®ÈÃƜÈÀȳÀÃ
are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless the Directors either
intend to liquidate the Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit
³Èï®v®v¨ÃÈvÈ®ÈÃ
Our objectives are to obtain reasonable assurance about
ÜÈÀÈï®v®v¨ÃÈvÈ®ÈÃvÃvܳ¨vÀÀÀ³
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
vÀvÈƜÈâ³Ë¨Àvó®v¨âá½Èȳ®ðË®
the economic decisions of users taken on the basis of
ÈÃï®v®v¨ÃÈvÈ®ÈÃƛ
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below:
We obtained an understanding of the legal and
regulatory framework that is applicable to the Company
and determined that the relevant laws and regulations
related to the elements of the Company Act 2006 and
Èvá¨Ã¨vȳ®ƜÈï®v®v¨À½³ÀÈ®ÀvܳÀ§ƜÈ
supervisory requirements of LSE Listing and Disclosure
Rules, Financial Conduct Rule ‘FCA’ Listing rules, and the
Association of Investment Companies ‘AIC’ SORP.
Gresham House Energy Storage Fund plc (GRID)84
Annual Report Financial Statements Additional Information
We understood how the Company is complying
with these laws and regulations by making
enquiries of management and those responsible
for legal and compliance matters. We reviewed
correspondence between the Company and
regulated bodies and reviewed minutes of meetings
and gained an understanding of the Company’s
approach to governance.
`vÃÃÃÃÈÃËýȨÈâ³Èï®v®v¨
statements to material misstatement, including fraud
and made enquiries of the Investment Manager, the
management service provider and the Board of Directors
of any known or suspected instances of fraud. The key
area for fraud and manipulation is around the unquoted
investment valuation (see related key audit matter) and
management override of controls.
Obtaining an understanding of management’s internal
controls that are relevant to preventing and detecting
irregularities including fraud.
Challenging assumptions made by management in their
îïv®Èv³Ë®È®ÃÈvÈî½vÀÈ˨vÀ®À¨vȳ®
to valuation of unquoted investments (see related key
audit matters).
Identifying and testing journal entries, in particular
any journal entries posted with unusual account
combinations, journals posted by the investment
manager and journals posted and reviewed by the same
individual by agreeing to supporting documentation.
³Ë®vÈ®À¨Ûv®È®Èï¨vÜÃv®À˨vȳ®Ã
and potential fraud risks to all engagement team
members who were all deemed to have appropriate
competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks
³vÈÀv¨ÃÃÈvȮȮÈï®v®v¨ÃÈvÈ®ÈÃƜ
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
À˨vȳ®ÃÃÀ³ÈÛ®ÈÃv®ÈÀv®Ãvȳ®ÃÀðÈ
®Èï®v®v¨ÃÈvÈ®ÈÃƜȨÃ觨âÜvÀȳ
become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council’s website at: www.frc.org.
uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members
those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Marc Reinecke (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
5 April 2023
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
Gresham House Energy Storage Fund plc (GRID) 85
Financial StatementsAdditional Information Annual Report
The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance
with UK adopted International Accounting Standards (IFRS). The supplementary revenue return and capital columns
have been prepared in accordance with the Association of Investment Companies Statement of Recommended
Practice (AIC SORP).
All results are derived from continuing operations. The notes starting on page 90 form an integral part of these
Financial Statements.
Statement of Comprehensive Income
For the year ended 31 December 2021 Notes Revenue
(£)
Capital
(£)
Tota l
(£)
:Èv®³®®ÛÃÈ®ÈÃvÈvÀÛv¨ËÈÀ³Ë½À³ïÈv®¨³Ãà 722,470,83763,058,52885,529,365
Other income 298,500 - 298,500
Total income 22,769,337 63,058,528 85,827,865
Administrative and other expenses:
Transaction fees - 56,539 56,539
Legal and professional fees - (560,589) (560,589)
Other administrative expenses 8 (4,932,056) - (4,932,056)
Total administrative and other expenses (4,932,056) (504,050) (5,436,106)
IÀ³ïȳÀÈvá 17,837,281 62,554,478 80,391,759
Taxation 9 - - -
IÀ³ïÈv®È³Èv¨³½À®ÃÛ®³³ÀÈâvÀ 17,837,281 62,554,478 80,391,759
Earnings per share (basic and diluted) - pence 10 4.57 16.02 20.59
For the year ended 31 December 2022 Note Revenue
(£)
Capital
(£)
Tota l
(£)
:ÈÀÈËÀ®³®®ÛÃÈ®ÈÃvÈvÀÛv¨ËÈÀ³Ë½À³ïÈv®¨³Ãà 7 32,868,283 191,828,651 224,696,934
Other income 747,218 - 747,218
Total income 33,615,501 191,828,651 225,444,152
Administrative and other expenses:
Legal and professional fees (713,709) - (713,709)
Other administrative expenses 8 (7,592,943) - (7,592,943)
Total administrative and other expenses (8,306,652) - (8,306,652)
IÀ³ïȳÀÈvá 25,308,849 191,828,651 217,137,500
Taxation 9 - - -
IÀ³ïÈv®È³Èv¨³½À®ÃÛ®³³ÀÈâvÀ 25,308,849 191,828,651 217,137,500
Earnings per share (basic and diluted) - pence 10 5.07 38.46 43.53
For the year ended 31 December 2022
Company number 11535957
86 Gresham House Energy Storage Fund plc (GRID)
The Financial Statements were approved and authorised for issue by the Board of Directors and were signed on
its behalf by:
John Leggate CBE, FREng
Chair
Date: 5 April 2023
The notes starting on page 90 form an integral part of these Financial Statements.
Statement of Financial Position
As at the year ended 31 December 2022
Company number 11535957
Note 31 December 2022
(£)
31 December 2021
(£)
Non-current assets
*®ÛÃÈ®ÈîÃËÃvÀÃvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³Ãà 11 834,771,492 389,346,748
Current assets
Cash and cash equivalents 13 7,327,492 122,175,081
Trade and other receivables 14 217,698 359,467
7,545,190 122,534,548
Total assets 842,316,682 511,881,296
Current liabilities
Trade and other payables 15 (571,020) (210,255)
Total net assets 841,745,662 511,671,041
Shareholders' equity
Share capital 20 5,412,904 4,378,421
Share premium 20 495,230,993 349,058,720
Merger relief reserve 20 13,299,017 13,299,017
Capital reduction reserve 20 3,892,537 38,162,172
Capital reserves 20 267,250,491 75,421,840
Revenue reserves 20 56,659,720 31,350,871
Total shareholders' equity 841,745,662 511,671,041
Net Asset Value per Ordinary Share (pence) 19 155.51 116.86
87
Gresham House Energy Storage Fund plc (GRID)
Statement of Changes in Equity
For the year ended 31 December 2022
Note Share
capital
(£)
Share
premium
(£)
Merger
relief
reserve
(£)
Capital
reduction
reserve
(£)
Capital
reserves
(£)
Revenue
reserves
(£)
To ta l
shareholders'
equity
(£)
Shareholders’ equity
at 1 January 2021
3,485,564 251,601,260 13,299,017 64,123,617 12,867,362 13,513,590 358,890,410
IÀ³ïȳÀÈâvÀ - - - - 62,554,478 17,837,281 80,391,759
Total comprehensive
income for the year
- - - - 62,554,478 17,837,281 80,391,759
Transactions with owners:
Ordinary Shares
issued at a premium
during the year
20 892,857 99,107,143 - - - - 100,000,000
Share issue costs 20 - (1,649,683) - - - - (1,649,683)
Dividends paid 20 - - - (25,961,445) - - (25,961,445)
Shareholders’ equity
at 31 December 2021
4,378,421 349,058,720 13,299,017 38,162,172 75,421,840 31,350,871 511,671,041
Note Share
capital
(£)
Share
premium
(£)
Merger
relief
reserve
(£)
Capital
reduction
reserve
(£)
Capital
reserves
(£)
Revenue
reserves
(£)
To ta l
shareholders'
equity
(£)
Shareholders’ equity
at 1 January 2022
4,378,421 349,058,720 13,299,017 38,162,172 75,421,840 31,350,871 511,671,041
IÀ³ïȳÀÈâvÀ ----191,828,65125,308,849217,137,500
Total comprehensive
income for the year
----191,828,65125,308,849217,137,500
Transactions with owners:
Ordinary Shares
issued at a premium
during the year
20 1,034,483 148,965,516 - - - - 149,999,999
Share issue costs 20 - (2,793,243) - - - - (2,793,243)
Dividends paid 20 - - - (34,269,635) - - (34,269,635)
Shareholders’ equity
at 31 December 2022
5,412,904 495,230,993 13,299,017 3,892,537 267,250,491 56,659,720 841,745,662
The total distributable reserves available at 31 December 2022 are £60,552,257 (2021: £69,513,043). Distributable
reserves consist of the capital reduction reserve and revenue reserve.
The notes starting on page 90 form an integral part of these Financial Statements.
88
Gresham House Energy Storage Fund plc (GRID)
The notes starting on page 90 form an integral part of these Financial Statements.
Statement of Cash Flows
For the year ended 31 December 2022
Note 31 December 2022
(£)
31 December 2021
(£)
vÃð³ÜÃËî³½ÀvÈ®vÈÛÈÃ
IÀ³ïȳÀÈâvÀ 21 7,13 7,5 00 80,39 1,7 59
:Èv®³®®ÛÃÈ®ÈÃvÈvÀÛv¨ËÈÀ³Ë½À³ïÈv®¨³Ãà 7(224,696,934) (85,529,365)
Interest income (312,217) -
Decrease/(increase) in trade and other receivables 141,769 (85,040)
Increase/(decrease) in trade and other payables 360,765 (74,431)
Net cash used in operating activities (7,369,117) (5,297,077)
vÃð³ÜÃËî®ÛÃÈ®vÈÛÈÃ
Deferred consideration paid - (1,030,530)
Disposal of investments - 458,331
Loans made to subsidiaries (220,727,811) (55,730,831)
Loans repaid by investments - 419,291
Bank interest received 312,218 -
Net cash used in investing activities (220,415,593) (55,883,739)
vÃð³ÜÃËîï®v®®vÈÛÈÃ
Proceeds from issue of Ordinary Shares at a premium 20 149,999,999 100,000,000
Share issue costs 20 (2,793,243) (1,649,683)
Dividends paid 20 (34,269,635) (25,961,445)
:Èvîð³ÜÀ³ï®v®®vÈÛÈà 112,937,121 72,388,872
Net (decrease)/increase in cash and cash equivalents for the year (114,847,589) 11,208,056
Cash and cash equivalents at the beginning of the year 122,175,081 110,967,025
Cash and cash equivalents at the end of the year 7,327,492 122,175,081
89
Gresham House Energy Storage Fund plc (GRID)
1 General information
Gresham House Energy Storage Fund plc (the Company) is a company limited by shares and is listed on the special fund
Segment of the London Stock Exchange. The Company was incorporated in England and Wales on 24 August 2018 with
Company number 11535957 as a closed-ended investment company. The Company’s business is as an investment trust
ÜÈ®Èv®®³v½ÈÀŰ³IvÀÈŮŰ³È³À½³Àvȳ®SváÈŮŬŭŬƛSÀÃÈÀ³í³È³½v®âÃS
Scalpel, 18th Floor, 52 Lime Street, London, EC3M 7AF. Its share capital is denominated in Pounds Sterling (GBP or £) and
currently consists of Ordinary Shares. Through its subsidiaries, the Company’s principal activity is to invest in SPVs which
³½ÀvÈvÛÀÃï½³Àȳ¨³³³½ÀvÈ®ËȨÈâưÃv¨vÈÈÀâ®ÀâOȳÀvOâÃÈÃƪOOƫƜÜËȨÃvÈÈÀÃ
and may also utilise generators. The BESS projects comprising the investment portfolio are located in diverse locations
across Great Britain.
These Annual Financial Statements cover the year ended 31 December 2022 with comparatives for the year ended 31
December 2021 and comprise only the results of the Company as all its subsidiaries are measured at fair value.
2 Basis of preparation
Statement of Compliance
The Annual Report and Financial Statements have been prepared in accordance with UK adopted international
v³Ë®È®ÃÈv®vÀÃƪV3*OƫƛSv³Ë®ÈÃvÛ®½À½vÀ³®vÃȳÀv¨³ÃÈvÃÃá½È³Àï®v®v¨vÃÃÈÃvÈ
vÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƛ¨¨v³Ë®È®½³¨ÃvÛ®v½½¨³®ÃÃȮȨâ®ÈÃï®v®v¨ÃÈvÈ®ÈÃƛ
Where presentational guidance set out in the Statement of Recommended Practice (the SORP) ‘Financial Statements
of Investment Trust Companies and Venture Capital Trusts’, issued by the Association of Investment Companies (AIC)
is consistent with the requirements of UKIAS, the Directors have prepared the annual Financial Statements on a basis
compliant with the recommendations of the SORP. The supplementary information which analyses the Statement of
Comprehensive Income between items of revenue and a capital nature is presented in accordance with the SORP.
Functional and presentation currency
The currency of the primary economic environment in which the Company operates (the functional currency) is Pound
Sterling (GBP or £) which is also the presentation currency.
Going Concern
As noted in the Strategic Report, as at 31 December 2022, the Company had net current assets of £6.9mn including cash
v¨v®Ã³ljųƛů®ƪá¨Ë®vÃv¨v®ÃÜÈ®®ÛÃȳ½v®ÃƫƜÜvÀÃËí®ÈȳÈÈvÃð³ÜÃ
³Àv½À³³®³È¨ÃÃÈv®ŭŮ³®ÈÃÀ³Èvȳî®Èï®v®v¨ÃÈvÈ®ÈÃƛSv¦³ÀvóËÈð³ÜÃ
of the Company are the costs relating to the acquisition of new assets and payment of dividends, both of which are
discretionary (other than committed transactions). These acquisitions are funded through drawdowns under the debt
facility within MidCo which had available capacity of £275mn at year end. All committed acquisitions at the end of the year
v®ÃËÿˮÈȳâvÀ®vÀÃËí®È¨â³ÛÀÈÀ³ËËÀÀ®ÈvÃÀÃÀÛÃv®vÛv¨v¨Èv¨ÈÃƜ®9³Ɯ
already in place.
Notes to the Financial Statements
For the year ended 31 December 2022
90 Gresham House Energy Storage Fund plc (GRID)
The Company had no outstanding debt owing as at 31 December 2022. The Company is a guarantor of the debt facility
entered into by the MidCo in 2021, of which £60mn was drawn as at 31 December 2022.
Having performed the assessment of going concern, the Directors have adopted the going concern basis in preparing the
Annual Report and Financial Statements.
Shareholders will have the opportunity to vote on an ordinary resolution on the continuation of the Company at the
%9³È³½v®âȳ¨®ŮŬŮůƜv®ÛÀâïÈ%9ÈÀvÈÀƛ*v®âÃ˳À®vÀâÀó¨Ëȳ®Ã®³È½vÃÃƜ
the Directors shall draw up proposals for the voluntary liquidation, unitisation, reorganisation, or reconstruction of the
Company for consideration by the shareholders at a general meeting to be convened by the Directors for a date not
more than six months after the date of the meeting at which such ordinary resolution was not passed. The Board have
considered this when evaluating the Going concern assessment for the Company.
3 O®ïv®Èv³Ë®È®¦Ë®ÈÃƜÃÈvÈÃv®vÃÃ˽ȳ®Ã
The preparation of the Financial Statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amount of assets, liabilities, income, and expenses.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
ËÀ®ÈâvÀÈÀȳÀó®ÃÀȳ¨¨³Ü®Ã®ïv®È¦Ë®ÈÃƝ
Assessment as an investment entity
®ÈÈÃÈvÈÈÈï®È³®³v®®ÛÃȮȮÈÈâÜÈ®*$LOŭŬvÀÀ¿ËÀȳvÃËÀÈÀÃËÃvÀÃvÈ
vÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃÀvÈÀÈv®³®Ã³¨vÈÈË®¨ÃÃÈâ½À³Û®ÛÃÈ®ÈÀ¨vÈÃÀÛÃȳÈ
³½v®âv®vÀ®³ÈÈèÛîÛÃȮȮÈÈÃƛS³ÈÀ®ÈvÈȳ½v®â³®È®ËÃȳÈÈï®È³®³
an investment entity, the Company is required to satisfy the following three criteria:
a the Company obtains funds from one or more investors for the purpose of providing those investors with investment
management services;
b the Company commits to its investors that its business purpose is to invest funds solely for returns from capital
appreciation, investment income, or both; and
c the Company measures and evaluates the performance of its investments on a fair value basis.
The Company meets the criteria as follows:
the stated strategy of the Company is to deliver stable returns to shareholders through a mix of battery energy
storage investments;
the Company provides investment management services and has several investors who pool their funds to gain access
to infrastructure-related investment opportunities that they might not have had access to individually; and
the Company has elected to measure and evaluate the performance of all of its investments on a fair value basis. The
fair value method is used to represent the Company’s performance in its communication to the market, including
investor presentations. In addition, the Company reports fair value information internally to Directors, who use fair
value as the primary measurement attribute to evaluate performance.
Based on the above factors the Directors are of the opinion that the Company meets the characteristics of an investment
®ÈÈâv®ÈÃÈï®È³®®ÈÃÈv®vÀƛSÀȳÀÃܨ¨ÀvÃÃÃÃÈó®¨Ëó®³®v®v®®Ëv¨vÃÃƛ
Assessment of the MidCo as an investment entity
The MidCo (see Note 11) is not consolidated as the MidCo is also considered to be an investment entity. The Board of the
9³vó®ÃÀÈÀ¿ËÀ®Èó*$LOŭŬvýÀv³Ûv®³®ïÀÈ9³ÈÃÈÃÀÈÀvƛ*È9³
ÜÀ®³È³®ÃÀȳÈÈï®È³®³v®®ÛÃȮȮÈÈâƜȮȳ½v®âܳ˨À¿ËÀȳ³®Ã³¨vÈ
the entity. The net assets of the MidCo have been set out in Note 11. The impact of consolidating the MidCo would be to
increase the investment value to £855,652,343 (2021: £401,115,427) and recognise a reduction in net working capital of
£20,880,856 (2021: additional net working capital of £11,768,679)).
91
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
Note 11 includes an overview of the balances within the MidCo and what would be included in the accounts of the Company
if the Company were required to consolidate the entity.
Investment Manager not a related party:
S*$9î³Èè³Ãvçâv®v®È½À󮮨®Èï®v®v¨ÃÈvÈ®ÈÃƛS³Èȧâv®v®È
½À󮮨ï®È³®È*$9ܳ˨®È³vÛvËȳÀÈâv®Àý³®Ã¨Èâ³À½¨v®®®ƜÀÈ®Ɯv®³®ÈÀ³¨¨®È
activities of the entity. The Directors are of the opinion that the AIFM does not meet these criteria as the Board has to
approve key decisions. The AIFM are restricted to the delivery of the investment policy.
ËÀ®ÈâvÀÈÀȳÀó®ÃÀȳ¨¨³Ü®Ã®ïv®ÈÃÈvÈÃƝ
Valuation of investments in subsidiaries
O®ïv®ÈÃÈvÈîȳ½v®âƺÃ$®v®v¨OÈvÈ®Èî¨ËÈv³Ë®ÈÃÀ³À³ÀÈvÀÛv¨Ë³È
investments. By their nature, these estimates and assumptions are subject to measurement uncertainty and the effect
³®È³½v®âƺÃ$®v®v¨OÈvÈ®Èóv®Ã®ÃÈvÈîËÈËÀ½À³Ã³Ë¨Ã®ïv®ÈƛO:³Èŭų³À
further details.
4 New standards, amendments and interpretations published but
not yet adopted
Certain new accounting standards, amendments to accounting standards and interpretations have been published that
are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Company. These
standards, amendments or interpretations are not expected to have a material impact on the Company in the current or
future reporting periods and on foreseeable future transactions hence they have not been presented in detail in these
ï®v®v¨ÃÈvÈ®ÈÃƛ
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance
³È³½v®âƺÃï®v®v¨ÃÈvÈ®ÈÃvÀè³Ã¨³ÜƛS³½v®â®È®Ãȳv³½ÈÈîÜv®v®
standards and interpretations, if applicable, when they become effective.
®®ÈÃȳ*OŭƝ¨vÃÃïvȳ®³4v¨ÈÃvÃËÀÀ®È³À:³®ưËÀÀ®È
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying
liabilities as current or non-current. The amendments clarify:
What is meant by a right to defer settlement
That a right to defer must exist at the end of the reporting period
SvȨvÃÃïvȳ®ÃË®vÈâȨ§¨³³ÈvÈv®®ÈÈâܨ¨áÀÃÈÃÀÀv¨ÀÈ
That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability
®³È½vÈÈèvÃÃïvȳ®
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied
retrospectively. The Company is currently assessing the impact the amendments will have on current practice and
whether existing loan agreements may require renegotiation.
92
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
ï®È³®³³Ë®È®ÃÈvÈÃư®®ÈÃȳ*OŴ
*®$ÀËvÀâŮŬŮŭƜÈ*OÃÃËv®®ÈÃȳ*OŴƜ®ÜÈ®ÈÀ³ËÃvï®È³®³ƹv³Ë®È®ÃÈvÈÃƺƛ
The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies
and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop
accounting estimates.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and apply to changes
in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier
application is permitted as long as this fact is disclosed.
Sv®®ÈÃvÀ®³Èá½ÈȳvÛvvÈÀv¨½vȳ®È³½v®âƺÃï®v®v¨ÃÈvÈ®ÈÃƛ
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements, in
which it provides guidance and examples to help entities apply materiality judgements to accounting policy disclosures.
The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the
À¿ËÀ®È³À®ÈÈÃȳè³ÃÈÀƹîïv®Èƺv³Ë®È®½³¨ÃÜÈvÀ¿ËÀ®Èȳè³ÃÈÀƹvÈÀv¨ƺ
accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about
accounting policy disclosures.
The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023 with earlier application
permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the application of the
ï®È³®³vÈÀv¨È³v³Ë®È®½³¨â®³Àvȳ®Ɯv®ÈÛvȳÀÈÃv®®ÈÃî³È®ÃÃvÀâƛ
The Company is currently revisiting their accounting policy information disclosures to ensure consistency with the
amended requirements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction -
Amendments to IAS 12
In May 2021, the Board issued amendments to IAS 12, which narrow the scope of the initial recognition exception under
IAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences.
The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative
period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset
ƪ½À³ÛÈvÈÃËí®ÈÈváv¨½À³ïÈÃvÛv¨v¨ƫv®vÀÀÈvá¨v¨Èâó˨v¨Ã³À³®Ã³Àv¨¨ËȨ
and taxable temporary differences associated with leases and decommissioning obligations.
The Company is currently assessing the impact of the amendments.
The Company does not expect any other standards issued by the IASB, but not yet effective, to have a material impact
on the Company.
5 OËvÀâ³Ã®ïv®Èv³Ë®È®½³¨Ã
The principal accounting policies applied in the preparation of these Financial Statements are set out below:
Segmental information
The Board is of the opinion that the Company is engaged in a single segment business, being the investment in the United
Kingdom in battery energy storage assets.
93
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
Income and expenses (excluding investments)
Income and expenses are accounted for on an accruals basis. The Company’s income and expenses are charged
to the Statement of Comprehensive Income. Costs directly relating to the issue of Ordinary Shares are charged to
share premium.
:Èv®³À¨³Ãó®®ÛÃÈ®ÈÃvÈvÀÛv¨ËÈÀ³Ë½À³ïÈv®¨³ÃÃ
S³½v®âÀ³®ÃóۮÈîÈvÀÛv¨Ë³®ÛÃÈ®ÈîÃËÃvÀÃÈÀ³Ë½À³ïÈv®¨³ÃÃƛ
Other income
Other income consists of bank interest and management fee income which are accounted for on an accruals basis.
Taxa tion
The Company is approved as an Investment Trust Company (ITC) under sections 1158 and 1159 of the Corporation Taxes Act
2010 and Part 2 Chapter 1 Statutory Instrument 2011/2999 for accounting periods commencing on or after 25 May 2018.
The approval is subject to the Company continuing to meet the eligibility conditions of the Corporations Tax Act 2010
and the Statutory Instrument 2011/2999. The Company intends to ensure that it complies with the ITC regulations on an
ongoing basis and regularly monitors the conditions required to maintain ITC status.
From 1 April 2015 there was a single corporation tax rate of 19%. This rate is increasing to 25% from 1 April 2023. Tax
ÃÀ³®Ã®È½À³ïÈv®¨³ÃÃá½ÈȳÈáÈ®ÈÈvÈÈÀ¨vÈÃȳÈÈÃÀ³®ÃvÃÀȳۮÈî
equity, in which case it is similarly recognised as a direct movement in equity. Current tax is the expected tax payable on
any taxable income for the period, using tax rates enacted or substantively enacted at the end of the relevant period. The
³½v®âvâËÃÈváv¨¨³ÃÃÃÀ³ÜÈ®È%À³Ë½È³À¨ÛÈváv¨½À³ïÈîȳ½v®âv®v¨Ã³®³ÃÈÀvÃ
½vÀȳÈۮýv®È³®ÈÀÃȽvâ®ÈÃȳvÛÈváí®â³Àȳ½v®âƛS®ÀvîÈv¨®
rate of corporation tax does impact on the valuation of the Company’s investments.
Investment in subsidiaries
*®ÛÃÈ®ÈîÃËÃvÀÃvÀ¨vÈvÀÛv¨ËÈÀ³Ë½À³ïÈv®¨³ÃÃƛ
Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed, or has rights, to
variable returns from its involvement with the subsidiary entity and has the ability to affect those returns through its
power over the subsidiary entity. In accordance with the exemption under IFRS 10 Consolidated Financial Statements, the
Company is an investment entity and only consolidates subsidiaries that provide investment management services and
which are not themselves investment entities. As a result, the Company does not consolidate any of its subsidiaries.
Financial instruments
*®v³Àv®ÜÈ*$LOŵƜȳ½v®â¨vÃÃïÃÈÃï®v®v¨vÃÃÈÃv®ï®v®v¨¨v¨ÈÃvÈ®Èv¨À³®È³®®È³È
vȳÀóv³ÀÈóÃȳÀvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƛ
Financial assets
S³½v®â¨vÃÃïÃÈÃï®v®v¨vÃÃÈÃvÈv³ÀÈóÃȳÀvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³Ãó®ÈvÃó³ÈƝ
È®ÈÈâƺÃËîÃó¨³Àv®v®Èï®v®v¨vÃÃÈÃƞv®
ȳ®ÈÀvÈËv¨vÃð³ÜvÀvÈÀÃÈóÈï®v®v¨vÃÃÈƛ
94
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
Financial assets measured at amortised cost
ï®v®v¨vÃÃÈÃvÃËÀvÈv³ÀÈóÃÈÈèÜÈ®vËîÃó¨Ü³Ã³¦ÈÛÃȳ³¨ï®v®v¨
vÃÃÈî³ÀÀȳ³¨¨È³®ÈÀvÈËv¨vÃð³ÜÃv®Èó®ÈÀvÈËv¨ÈÀÃÛÀó®Ã½ïvÈÃȳvÃð³ÜÃÈvÈ
are solely payments of principal and interest on the principal amount outstanding.
S³½v®â®¨ËîÈÃvȳÀâóÀÈưÈÀ®³®ưï®v®®ÀÛv¨ÃÜ®¨ËvÃv®ÈÀvv®³ÈÀÀÛv¨Ãƛ
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and term deposits held with the bank with maturities of up to three
months which can be readily converted to cash.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently stated at amortised cost which is
calculated using the provision matrix of the expected credit loss model.
Financial liabilities measured at amortised cost
SÃvȳÀ⮨ËÃv¨¨ï®v®v¨¨v¨ÈÃƜ³ÈÀÈv®È³ÃvÃËÀvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƜ®¨Ë®
short-term payables.
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently stated at amortised cost.
Deferred consideration
Deferred consideration relates to consideration payable in terms of the purchase price stated in the Share Purchase
Agreement (SPA) and are recognised initially at fair value and reassessed at the end of each reporting period.
$®v®v¨vÃÃÈvÃËÀvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƪ$_I4ƫ
ï®v®v¨vÃÃÈÃvÃËÀvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƝ
a Èó®ÈÀvÈËv¨ÈÀó®³ÈÛÀÃȳvÃð³Üó®Ã½ïvÈÃÈvÈvÀó¨¨â½vâ®Èó½À®½v¨v®®ÈÀÃÈ
(SPPI) on the principal amount outstanding; or
b Èî³È¨ÜÈ®vËîÃó¨Ü³Ã³¦ÈÛÃÈÀȳ³¨¨È³®ÈÀvÈËv¨vÃð³ÜÃƜ³Àȳ³È³¨¨È
³®ÈÀvÈËv¨vÃð³ÜÃv®Ã¨¨ƞ³À
c ÈèvÃÃïvè³ÀÈÀv®ƪÀÛvÈÛ³®ÈÀvÈîv®vÃÃȽ³Ãȳ®ƫƛ
S³½v®âƺîÛÃȮȮÃËÃvÀÃƪܳ½ÀÃóÈÈv®¿ËÈâƫèvÈvÀÛv¨ËÈÀ³Ë½À³ïÈ
or loss under IFRS 9 as the equity portion of the investment does not meet the SPPI test nor will the Company elect to
designate the investments at fair value through other comprehensive income. The debt investment forms part of a group
of assets that are managed, and the performance evaluated on a fair value basis.
The Company includes in this category equity instruments including investments in subsidiaries (which comprises both
debt and equity). There are no consolidated subsidiaries.
Recognition and derecognition
$®v®v¨vÃÃÈÃvÀÀ³®Ã³®Èvȳ®Üȳ½v®â³ÈÃȳ½ËÀvóÀè¨v®vÃÃÈƛï®v®v¨
vÃÃÈÃÀ³®ÃÜÀÈÀÈÃȳÀÛvÃð³ÜÃÀ³ÈvÃÃÈvÛá½ÀƜ³Àȳ½v®âvÃÈÀv®ÃÀÀ
ÈÃÀÈÃȳÀÛvÃð³ÜÃÀ³ÈvÃÃÈƛS³½v®âÀ³®ÃÃvï®v®v¨¨v¨Èâܮȳ¨vȳ®Ë®À
the liability is discharged, cancelled, or expired.
95
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
*½vÀ®È³³ÈÀï®v®v¨vÃÃÈÃ
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, there has been
®³½vÀ®È¨³ÃîÈïƛ*®ÛÃÈ®ÈèvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃvÀ®³ÈÃ˦Èȳ*$LOŵ
impairment requirements.
Dividends
Dividends are recognised as a reduction in equity when they become legally payable. In the case of interim dividends this
is when they are paid. Final equity dividends will be recognised when approved by the shareholders.
Equity
Equity instruments issued by the Company are recorded at the amount of the proceeds received, net of directly
attributable issue costs. Costs not directly attributable to the issue are immediately expensed in the Statement of
Comprehensive Income.
Fair value measurement and hierarchy
Fair value is the price that would be received on the sale of an asset, or paid to transfer a liability, in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction takes place either in the principal market for the asset or liability, or in the absence of a principal market, in
the most advantageous market. It is based on the assumptions that market participants would use when pricing the asset
³À¨v¨ÈâƜvÃÃË®ÈâvÈ®ÈÀ³®³ÃÈ®ÈÀÃÈƛvÀÛv¨ËvÃËÀ®È³v®³®ưï®v®v¨vÃÃȳ®ÃÀÃ
the best and highest value use for that asset.
The fair value hierarchy to be applied under IFRS 13 is as follows:
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
4Û¨ŮƝ_v¨Ëvȳ®È®¿ËóÀÜȨ³ÜÃȨۨ®½ËÈÈvÈÃîïv®ÈȳÈvÀÛv¨ËvÃËÀ®ÈÃÀȨâ
or indirectly observable.
4Û¨ůƝ_v¨Ëvȳ®È®¿ËóÀÜȨ³ÜÃȨۨ®½ËÈÈvÈÃîïv®ÈȳÈvÀÛv¨ËvÃËÀ®È
is unobservable.
$³ÀvÃÃÈÃv®¨v¨ÈÃÈvÈvÀvÀÀvÈvÀÛv¨Ëv®Üܨ¨À³À®Èï®v®v¨®³Àvȳ®³®vÀËÀÀ®
basis, the Company will determine whether transfers have occurred between levels in the hierarchy by reassessing
categorisation at the end of each reporting period.
6 Fees and expenses
Accounting, secretarial and Directors
JTC (UK) Limited has been appointed to act as Secretary and Administrator for the Company through the Administration
and Company Secretarial Agreement. JTC (UK) Limited is entitled to a £60,000 annual fee for the provision of Company
Secretarial services and a £55,000 annual fee for the provision of fund accounting and administration services, based
on a Company Net Asset Value of up to £200mn. An ad valorem fee based on total assets of the Company which exceed
£200mn will be applied as follows:
0.04% on the Net Asset Value of the Company in excess of £200mn
During the year, expenses incurred with JTC (UK) Limited for administrative and secretarial services amounted to
£409,798 (2021: £235,934) with £192,258 (2021: £29,210) being outstanding and payable at the year end.
96
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
AIFM
The AIFM, Gresham House Asset Management Limited (the Investment Manager), is entitled to receive from the Company,
in respect of its services provided under the AIFM agreement, a fee as follows:
ŭǦ³®ÈïÀÃÈljŮűŬ®³È:_³È³½v®â
0.9% on the NAV of the Company in excess of £250mn and up to and including £500mn
0.8% on the NAV of the Company in excess of £500mn
There were no changes in the AIFM agreement during the year and remains consistent with the prior year.
During the year Investment Manager fees amounted to £6,245,057 (2021: £4,052,956) with no outstanding payables at the
year-end (2021: nil).
S*®ÛÃÈ®È9v®vÀÃvܳ¨¨â³Ü®ÃËÃvÀâ³%ÀÃv(³Ëý¨Ɯvîïv®ÈÃvÀ³¨À®È³½v®â
holding 5.34% (2021: 6.05%) of total issued Ordinary Shares. Ben Guest (a Director of the Investment Manager), holds
2.66% (2021: 3.29%) of total issued Ordinary Shares, including direct and indirect holdings.
7 :Èv®³®®ÛÃÈ®ÈÃvÈvÀÛv¨ËÈÀ³ËȽÀ³ïÈv®¨³ÃÃ
31 December 2022
(£)
31 December 2021
(£)
V®Àv¨Ãv®³®®ÛÃÈ®ÈÃvÈvÀÛv¨ËÈÀ³ËȽÀ³ïÈv®¨³Ãà 191,828,651 62,838,290
Lv¨Ãv®³®®ÛÃÈ®ÈÃvÈvÀÛv¨ËÈÀ³ËȽÀ³ïÈv®¨³Ãà -220,238
Interest on loans to subsidiaries 32,868,283 22,470,837
224,696,934 85,529,365
8 Administrative and other expenses
31 December 2022
(£)
31 December 2021
(£)
Administration and secretarial fees 409,798 235,934
Remuneration received by the Company’s Auditor for the audit of these
ï®v®v¨ÃÈvÈ®ÈÃ
263,800 144,400
Remuneration received by the Company’s Auditor for the audit of the prior
âvÀï®v®v¨ÃÈvÈ®ÈÃ
-34,400
Remuneration received by the Company’s Auditor for the audit of the
ÃËÃvÀâv³Ë®ÈÃƪÀ³®Ã®Ë®À¨â®®ÛÃÈ®ÈÃï®v®v¨
statements)
17,200 15,600
Depositary fees 77,079 54,949
Directors’ remuneration salary 256,181 232,500
Directors’ remuneration social security contributions and similar taxes 31,285 23,209
Investment Manager fee 6,245,057 4,052,956
Sundry expenses 292,543 138,108
7,592,943 4,932,056
97
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
9 Taxation
The Company is recognised as an Investment Trust Company (ITC) and is taxed at the main rate of 19%.
For the year ended 31 December 2022, the Company may utilise group relief or make interest distributions to reduce
Èváv¨½À³ïÈÃȳ®¨ƛSÀî³³À½³Àvȳ®ÈvávÀ³ÀÈâvÀƪŮŬŮŭƝ:¨ƫƛ
31 December 2022
(£)
31 December 2021
(£)
ƪvƫSvávÀ®½À³ïȳÀ¨³ÃÃ
ËÀÀ®ÈÈvá³®½À³ïÈóÀÈâvÀ --
Adjustments for current tax of prior periods - -
--
(b) Reconciliation of the tax charge for the year
IÀ³ïȳÀÈvá 217,137,500 80,391,7 59
Tax at UK main rate of 19% 19.00% 41,256,125 15,274,434
Tax effect of:
Non-taxable income (36,447,444) (11,981,120)
Non-deductible expenses - 31,350
Subject to group relief/designated as interest distributions (4,808,681) (3,324,664)
Tax charge for the year - -
10 Earnings per Ordinary Share
vÀ®®Ã½À?À®vÀâOvÀƪIOƫv³Ë®ÈÃvÀv¨Ë¨vÈâۮȽÀ³ïȳÀ¨³ÃóÀȽÀ³vÈÈÀËÈv¨È³
ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period. As
there are no dilutive instruments outstanding, basic, and diluted EPS are identical.
Revenue Capital 31 December 2022
Tota l
:ȽÀ³ïÈvÈÈÀËÈv¨È³³À®vÀâÃvÀ³¨ÀÃƪljƫ 25,308,849 191,828,651 217,137,500
Weighted average number of Ordinary Shares for the year 498,777,363 498,777,363 498,777,363
IÀ³ïȽÀÃvÀƪvÃv®¨ËÈƫư½® 5.07 38.46 43.53
Revenue Capital 31 December 2021
Tota l
:ȽÀ³ïÈvÈÈÀËÈv¨È³³À®vÀâÃvÀ³¨ÀÃƪljƫ 17,837,281 62,554,478 80,391,759
Weighted average number of Ordinary Shares for the year 390,386,109 390,386,109 390,386,109
IÀ³ïȽÀÃvÀƪvÃv®¨ËÈƫư½® 4.57 16.02 20.59
11 *®ÛÃÈ®ÈîÃËÃvÀÃvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃ
S³½v®âÈÃÈï®È³®³v®®ÛÃȮȮÈÈâƛSÀ³ÀƜȳî³È³®Ã³¨vÈÈÃÃËÃvÀÃËÈƜÀvÈÀƜ
À³®ÃÃÈvîÛÃÈ®ÈÃvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƛS³½v®âî³È³®ÈÀvÈËv¨¨â³¨vÈȳ½À³Û
ï®v®v¨Ã˽½³ÀÈȳÈÃËÃvÀÃƜá½ÈvÃvËvÀv®È³ÀȳÈÈv¨Èâ®ÈÀ®È³âÈ9³Ɯv®ÈÀvÀ®³
restrictions in place in passing monies up the structure.
98
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
Immediate
parent
Projects Place of business LÃÈÀ³í
Percentage
ownership
Gresham
House Energy
Storage
Holdings plc
The Company “MidCo” The Scalpel, 18
th
Floor, 52 Lime
Street, London,
EC3M 7AF
Gresham House Asset
Management Limited, 5 New
Street Square, London, England,
EC4A 3TW
100%
Refer to Note 17 for valuation disclosures relating to the investments in subsidiaries.
The Directors evaluate the performance of the portfolio of energy storage investments through its subsidiary companies
on a fair value basis. The income approach is used to value investments as it indicates value based on the sum of the
economic income that a project, or group of projects, is anticipated to earn in the future.
When acquiring new investments, the Company will recognise value as these investments are effectively derisked. If
under construction but not expected to be completed within nine months, the project will be held at cost. After this date,
during construction and once certain key milestones which reduce risk are met, the project will be fair valued. However,
a construction premium of 0.75% (increased from 0.50% in 2021) will be added to the discount rate. When the investment
reaches “PAC” a project will be fair valued with a reduced construction premium for 60 days as a Proving Period. After
60 days the project will be fair valued without a construction premium. From 2023 onwards this Proving Period will be
reduced to 30 days.
S³½v®â®vÜÈ%Àv®ÈS³À®È³®vî½®®Èv®¿Ëv¨ïÛv¨ËÀÃȳvÃÃÃÃÈvÀÛv¨Ë³È
Company’s investments and have provided their opinion on the reasonableness of the valuation of the Company’s
investment portfolio.
SÀ³ÀƜÈ®ÛÃÈ®ÈîÃËÃvÀÃvÀvÃËÀvÈ$_SI4Ë®À*$LOŵƜvÃÈÃï®v®v¨vÃÃÈÃvÀv®v
and their performance evaluated on a fair value basis.
Reconciliation 31 December
2022
(£)
31 December
2021
(£)
Opening balance 389,346,748 248,964,175
Less: disposals during the year - (238,095)
Add: loans advanced 220,727,810 55,730,831
Less: loan repayments -(419,290)
Add: accrued interest on loans 32,868,283 22,470,837
S³Èv¨vÀÛv¨Ë³Û®ÈÈÀ³ËȽÀ³ïȳÀ¨³Ãà 191,828,651 62,838,290
Closing balance 834,771,492 389,346,748
31 December
2022
(£)
31 December
2021
(£)
Equity 260,952,789 69,124,138
Loans 573,818,703 320,222,610
Total equity and loans 834,771,492 389,346,748
The loan attracts an interest rate of 8% per annum from the date of advance. Interest compounds on 31 December of each
period and the loan is unsecured.
Unless otherwise agreed, the loan principal and any interest accrued shall be repayable on the earlier of (i) written
demand from the Company, or (ii) 31 December 2030.
99
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
Percentage ownership Total Investment
31 December
2022
31 December
2021
31 December
2022
(£)
31 December
2021
(£)
Noriker Staunch Ltd 100% 100% 20,725,873 17,342,193
HC ESS2 Ltd 100% 100% 26,249,676 23,881,200
HC ESS3 Ltd 100% 100% 21,021,765 20,066,324
West Midlands Grid Storage Ltd 100% 100% 4,649,291 3,961,609
Cleator Battery Storage Ltd 100% 100% 12,635,799 7,612,741
Glassenbury Battery Storage Ltd 100% 100% 55,572,940 38,507,279
HC ESS4 Ltd 100% 100% 50,735,176 46,118,825
Bloxwich Energy Storage Ltd 100% 100% 26,329,677 25,088,436
HC ESS6 Ltd 100% 100% 49,672,338 44,737,484
HC ESS7 Ltd 100% 100% 51,549,996 46,055,369
Tynemouth Energy Storage Ltd 100% 100% 17,276,210 15,956,108
Gridreserve Ltd 100% 100% 22,494,647 19,569,973
Nevendon Energy Storage Ltd 100% 100% 11,646,848 5,028,954
Port of Tyne Energy Storage Ltd 100% 100% 35,279,004 17,551,881
Enderby Storage Ltd 100% 100% 35,056,336 19,189,475
West Didsbury Storage Ltd 100% 100% 31,816,696 14,917,971
Penwortham Storage Ltd 100% 100% 30,637,328 15,073,790
Grendon Storage Ltd 100% 100% 37,124,697 2,943,599
Melksham East Storage Ltd and Melksham West Storage Ltd 100% 100% 60,303,907 10,066,239
UK Battery Storage Ltd 100% - 172,918,927 -
Stairfoot Generation Ltd 100% - 32,367,129 -
GreenGridPower1 Ltd 100% - 4,763,091 -
Gresham House Energy Storage Solutions Ltd 100% - 8,899,321 -
Arbroath Ltd 100% - 31,781,429 -
Investments in subsidiaries - subtotal 851,508,101 393,669,450
4³v®Ãȳví¨vÈ®ÈÈóÈ*®ÛÃÈ®È9v®vÀư
Arbroath Ltd (prior to acquisition)
---3,926,248
Coupar Ltd - - 4,144,247 3,519,729
Total investments 855,652,348 401,115,427
Working capital in MidCo (20,880,856) (11,768,679)
Total investment in MidCo 834,771,492 389,346,748
Further analysis
The Company owns 100% of the Ordinary Shares in Gresham House Energy Storage Holdings plc (the MidCo) which itself
holds a number of 100% owned subsidiaries. The investment in the MidCo of £834,771,492 (2021: £389,346,748) comprises
underlying investments as follows:
The place of business for all the investments is 5 New Street Square, London, England, EC4A 3TW.
An example of what the Company would look like if the MidCo was consolidated is included in Note 3.
100
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
12 Loans receivable
The only loans receivable at 31 December 2022 are loans to the MidCo, which are accounted for as investments in
ÃËÃvÀÃƲÃNote 11.
13 Cash and cash equivalents
31 December 2022
(£)
31 December 2021
(£)
Cash at bank 7,327,492 122,175,081
7,327,492 122,175,081
14 Trade and other receivables
31 December 2022
(£)
31 December 2021
(£)
Prepayments 59,479 88,666
Accrued income 147,302 41,397
VAT receivable 10,917 229,404
217,698 359,467
15 Trade and other payables
31 December 2022
(£)
31 December 2021
(£)
Administration and secretarial fees 192,258 29,210
Audit fee accrual 166,468 95,804
Other accruals 212,294 85,241
571,020 210,255
101
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
16 vȳÀóï®v®v¨®ÃÈÀË®ÈÃ
31 December 2022
(£)
31 December 2021
(£)
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents 7,327,492 122,175,081
Trade and other receivables 147,302 130,063
$vÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƝ
Investment in subsidiaries 834,771,492 389,346,748
S³Èv¨ï®v®v¨vÃÃÈà 842,246,286 511,651,892
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables (571,020) (210,255)
:Èï®v®v¨vÃÃÈà 841,675,266 511,441,637
As at 31 December 2022, the Company had an outstanding charge with Santander UK plc in respect of its position as
guarantor to the debt facility, held against all the assets and undertakings of the Company.
ÈÈv¨v®ÃÈvÈƜv¨¨ï®v®v¨vÃÃÈÃv®¨v¨ÈÃÜÀvÃËÀvÈv³ÀÈóÃÈá½È³ÀÈ®ÛÃȮȮ
subsidiaries which are measured at fair value.
17 Fair Value measurement
Valuation approach and methodology
The Company, via the MidCo, used the income approach to value its underlying investments. The income approach
indicates value based on the sum of the economic income that an asset, or group of assets, is anticipated to produce in
the future. Therefore, the income approach is typically applied to an asset that is expected to generate future economic
®³ƜÃËvÃvËîÃÃÈvÈó®ÃÀv³®³®À®ƛ$ÀvÃð³ÜȳȳÈv¨®ÛÃÈv½Èv¨ÃÈâ½v¨¨âÈ
appropriate measure of economic income. The income approach is the DCF approach and the method discounts free
vÃð³ÜÃËîv®ÃÈvÈóˮÈÀvÈƛ
Valuation process
The Company, via the MidCo, held a portfolio of energy storage investments with a capacity of 550 Megawatt (MW)
operational and 507MW in construction (together the investments). The investments comprise 29 projects held in 25
special project vehicles.
All of the investments are based in the UK. The Directors review and approve the valuations of these assets following
appropriate challenge and examination. The current portfolio consists of non-market traded investments, and
Ûv¨Ëvȳ®ÃvÀv®v¨âÃËî³ÀvÃÈvÃð³ÜóÈvÃÃÈÃv®ËÃÈóˮÈvÃð³Üv½½À³v³À
Ûv¨Ëvȳ®½ËÀ½³ÃÃƛS³½v®â®vÃáÈÀ®v¨Ɯ®½®®ÈƜv®¿Ëv¨ïÛv¨ËÀÃȳÈÀ®ÈvÀÛv¨Ë³È
Company’s investments or valuations are produced by the Investment Manager. As at 31 December 2022, the fair value of
the portfolio of investments has been determined by the Investment Manager and reviewed by Grant Thornton UK LLP.
SÛv¨Ëvȳ®ÃvÛ®ÈÀ®ËîóˮÈvÃð³Üȳ³¨³âƜÜÀâÈÃÈvÈËÈËÀvÃð³ÜÃ
relating to the Company’s equity investment in each project have been discounted to 31 December 2022, using discount
ÀvÈÃÀðÈ®ÈÀçÃvÃóvÈÜÈv®ÛÃȮȽÀ³¦Èv®ÈÈÛv¨Ë³³®âƛSÛv¨Ëvȳ®ÃvÀvÃ
³®Èá½ÈËÈËÀvÃð³ÜÃƜËîÀvó®v¨vÃÃ˽ȳ®Ãv®³ÀvÃÈóÀÀÛ®ËÃƜ³½ÀvÈ®³ÃÈÃƜvÀ³ư
level factors and an appropriate discount rate.
102
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
When acquiring new investments, the Company will recognise value as these investments are effectively derisked. If
projects are under construction but not expected to be completed within nine months the project will be held at cost.
After this date, during construction and once certain key milestones which reduce risk are met the project will be fair
valued. However, a construction premium of 0.75% (increased from 0.50% in 2021) will be added to the discount rate.
When the investment reaches “PAC” a project will be fair valued with a reduced construction premium for 60 days as a
Proving Period. After 60 days the project will be fair valued without a construction premium. From 2023 onwards this
Proving Period will be reduced to 30 days. Conditional acquisitions, where the price of an acquisition has been agreed but
shares have not been transferred, result in the recognition of a derivative at fair value.
The determination of the discount rate applicable to each individual investment project considers various factors,
including, but not limited to, the stage reached by each project, the period of operation, the historical track record, the
terms of the project agreements and the market conditions in which the project operates.
S*®ÛÃÈ®È9v®vÀáÀÃÃÈæˮȮvÃÃÃîÈá½ÈËÈËÀvÃð³ÜÃÀ³v®ÛÃÈ®Èƛ
S*®ÛÃÈ®È9v®vÀ½À³ËÃÈv¨ï®v®v¨³¨Ã³ÀvË®À¨â®½À³¦ÈƛS*®ÛÃÈ®È9v®vÀv§Ã
amendments where appropriate to:
a discount rates (i) implied in the price at which comparable transactions have been announced or completed in the
UK energy storage sector (if available); (ii) publicly disclosed by the Company’s peers in the UK energy storage sector
(if available); and (iii) discount rates applicable for other comparable infrastructure asset classes and regulated
energy sectors;
b changes in power market forecasts from leading market forecasters;
c changes in the economic, legal, taxation or regulatory environment, including changes in retail price index
expectations;
d technical performance based on evidence derived from project performance to date;
e the terms of any power purchase agreement arrangements;
f accounting policies;
g ÈÈÀóv®âÈï®v®®vȽÀ³¦È¨Û¨ƞ
h claims or other disputes or contractual uncertainties; and
i changes to revenue, cost, or other key assumptions (may include an assessment of future cost trends, as appropriate).
Valuation assumptions include consideration of climate-related matters such as expected levels of renewable energy
entering the grid system, demand patterns and current regulatory policy. These are factored into the pricing assumptions
which are prepared by an independent consultancy.
S³vÀÀÛÜÃȳ½ÀvÈ®v®ï®v®v¨vÃÃ˽ȳ®ÃƜ®¨Ë®ÈóˮÈÀvÈÃƜËîÈÛv¨Ëvȳ®³È
Company’s underlying portfolio and approves them based on the recommendation of the Investment Manager.
31 December 2022 31 December 2021
Key valuation input Range Weighted average Range Weighted average
WACC/WADR 9.7 - 11.6% 10.9% 9.9 - 11.4% 10.8%
RPI ŮƛųƲůƛŭǦ 2.7% ŮƛŴƲŮƛŵǦ 2.8%
Another key assumption in the valuation models is the volatility of power prices. Due to the Asset Optimisation strategy,
È®ÛÃÈ®ÈÃvÀv¨È³®ïÈÀ³vÀv®³ÀÛ®ËÃÈÀvî¨Ë®vÀÈÀv³®½³ÜÀ½ÀÛ³¨vȨÈâ³À$$L
and other similar income streams. Due to the nature of the assets owned by the investments, should one revenue stream
be impacted the asset is able to switch to alternative sources of revenue to seek to maintain total revenue targets, as
mentioned in the Investment Manager’s report.
103
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
Sensitivity analysis
S¨³ÜÈv¨ÀðÈÃÈÀv®³Ã®ÃÈÛÈîÀýȳÈvÀÛv¨Ë³Û®Èóȳ½v®âƺÃ
investments, via the MidCo.
The sensitivity analysis does not include an assessment of the fall in the power price as underlying power information is
provided on a net revenue basis as the investment portfolio generates value through maximising on the volatility in the
market, therefore adjusting revenue as a total is a more relevant measure. We have therefore provided a sensitivity based
on percentage changes in revenue overall.
Investment Project Valuation
technique
O®ïv®È
inputs
description
Sensitivity Estimated effect
on fair value
31 December 2022
(£)
Estimated effect
on fair value
31 December 2021
(£)
Noriker
Staunch Ltd
Staunch DCF Discount
rate
+1%
-1%
(1,267,783)
1,424,331
(1,188,112)
1,346,462
Revenue +10%
-10%
1,754,827
(1,767,537)
1,307,467
(1,321,450)
HC ESS2 Ltd L˳ÀƜ4³§¨vçƜ
Littlebrook
DCF Discount
rate
+1%
-1%
(1,490,168)
1,672,160
(1,622,287)
1,844,065
Revenue +10%
-10%
2,065,501
(2,163,631)
1,594,147
(1,947,003)
HC ESS3 Ltd Roundponds DCF Discount
rate
+1%
-1%
(1,347,472)
1,547,308
(1,504,951)
1,744,638
Revenue +10%
-10%
1,603,570
(1,599,661)
1,475,139
(1,505,125)
West
Midlands
Grid Storage
Two Ltd
Wolverhampton DCF Discount
rate
+1%
-1%
(240,241)
269,205
(271,807)
308,750
Revenue +10%
-10%
435,117
(440,407)
399,734
(435,547)
Cleator
Battery
Storage Ltd
Cleator DCF Discount
rate
+1%
-1%
(432,857)
486,654
(743,633)
851,165
Revenue +10%
-10%
649,849
(650,364)
883,206
(886,715)
Glassenbury
Battery
Storage Ltd
Glassenbury A and B DCF Discount
rate
+1%
-1%
(2,410,337)
2,715,542
(3,576,483)
4,092,515
Revenue +10%
-10%
3,363,710
(3,366,223)
4,201,276
(4,216,089)
HC ESS4 Ltd Red Scar DCF Discount
rate
+1%
-1%
(3,510,236)
4,091,406
(3,751,022)
4,416,962
Revenue +10%
-10%
4,670,803
(4,670,761)
4,393,203
(4,420,195)
104
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
Investment Project Valuation
technique
O®ïv®È
inputs
description
Sensitivity Estimated effect
on fair value
31 December 2022
(£)
Estimated effect
on fair value
31 December 2021
(£)
Bloxwich Energy
Storage Ltd
Bloxwich DCF Discount rate +1%
-1%
(1,497,684)
1,687,936
(1,822,905)
2,074,137
Revenue +10%
-10%
2,838,453
(2,843,308)
2,690,591
(2,719,548)
HC ESS7 Ltd Thurcroft DCF Discount rate +1%
-1%
(3,460,667)
3,996,481
(3,605,403)
4,203,128
Revenue +10%
-10%
4,981,152
(4,925,842)
4,234,266
(4,284,189)
HC ESS6 Ltd Wickham DCF Discount rate +1%
-1%
(3,025,000)
3,440,682
(3,207,419)
3,680,717
Revenue +10%
-10%
4,373,582
(4,332,843)
4,004,174
(4,060,406)
Tynemouth Battery
Storage Ltd
Tynemouth DCF Discount rate +1%
-1%
(862,114)
1,000,169
(1,661,999)
1,956,686
Revenue +10%
-10%
1,605,779
(1,606,256)
2,037,818
(2,044,741)
Gridreserve Ltd Byers Brae DCF Discount rate +1%
-1%
(1,343,939)
1,516,214
(1,436,577)
1,638,084
Revenue +10%
-10%
2,262,625
(2,264,247)
2,013,383
(2,048,092)
Nevendon Energy
Storage Ltd
Nevendon DCF Discount rate +1%
-1%
(764,076)
849,082
(646,090)
729,222
Revenue +10%
-10%
1,439,471
(1,450,232)
1,097,594
(1,104,807)
Port of Tyne Energy
Storage Ltd
Port of Tyne DCF Discount rate +1%
-1%
(830,756)
897,888
(1,377,801)
1,510,192
Revenue +10%
-10%
1,779,700
(1,783,821)
2,248,320
(2,243,005)
Enderby Storage
Ltd
Enderby DCF Discount rate +1%
-1%
(2,603,101)
2,980,365
(2,598,696)
3,026,012
Revenue +10%
-10%
3,779,732
(3,801,665)
3,466,831
(3,516,511)
West Didsbury
Storage Ltd
West
Didsbury
DCF Discount rate +1%
-1%
(2,599,789)
2,977,481
(2,605,119)
3,035,333
Revenue +10%
-10%
3,662,585
(3,682,752)
3,426,385
(3,472,099)
105
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
Investment Project Valuation
technique
O®ïv®È
inputs
description
Sensitivity Estimated effect
on fair value
31 December 2022
(£)
Estimated effect
on fair value
31 December 2021
(£)
Penwortham
Storage Ltd
Penwortham DCF Discount rate +1%
-1%
(2,353,004)
2,662,278
(2,640,548)
3,079,486
Revenue +10%
-10%
3,523,047
(3,539,812)
3,361,519
(3,402,072)
Melksham East
Ltd and Melksham
West Ltd
Melksham DCF Discount rate +1%
-1%
(5,240,274)
6,016,075
N/A
Revenue +10%
-10%
7,108,029
7,141,352)
N/A
Arbroath Ltd Arbroath DCF Discount rate +1%
-1%
(2,062,233)
2,384,896
N/A
Revenue +10%
-10%
2,830,840
(2,847,661)
N/A
Grendon Ltd Grendon DCF Discount rate +1%
-1%
(3,434,102)
3,946,188
N/A
Revenue +10%
-10%
4,975,944
(5,031,805)
N/A
UK Battery
Storage Ltd
Elland DCF Discount rate +1%
-1%
(3,213,603)
3,625,829
N/A
Revenue +10%
-10%
4,763,463
(4,831,907)
N/A
UK Battery
Storage Ltd
York DCF Discount rate +1%
-1%
(2,729,687)
3,083,764
N/A
Revenue +10%
-10%
4,360,138
(4,401,773)
N/A
UK Battery
Storage Ltd
West
Bradford
DCF Discount rate +1%
-1%
(5,480,685)
6,186,530
N/A
Revenue +10%
-10%
8,220,846
(8,317,154)
N/A
Stairfoot Ltd Stairfoot DCF Discount rate +1%
-1%
(2,105,812)
2,416,662
N/A
Revenue +10%
-10%
3,118,903
(3,142,585)
N/A
All other projects are held at cost.
106
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
Portfolio Sensitivity of RPI Sensitivity Estimated effect on fair value
31 December 2022
(£)
Estimated effect on fair value
31 December 2021
(£)
*®ðvȳ® +0.25%
-0.25%
15,848,661
(15,370,105)
9,733,718
(9,417,405)
The level in the fair value hierarchy within which the fair value measurement is categorised is determined on the basis
³È¨³ÜÃȨۨ®½ËÈÈvÈÃîïv®ÈȳÈvÀÛv¨ËvÃËÀ®È®ÈîÈÀÈâƛ$³ÀÈýËÀ½³ÃƜîïv®³
È®½ËÈÃÃvÃÃÃÃvv®ÃÈÈvÀÛv¨ËvÃËÀ®È®ÈîÈÀÈâƛÃÃÃîÈîïv®³v½vÀÈ˨vÀ®½ËÈ
ȳÈvÀÛv¨ËvÃËÀ®È®ÈîÈÀÈâÀ¿ËÀæˮÈƜ³®ÃÀ®vȳÀÃýïȳÈvÃÃȳÀ¨v¨Èâƛ*v
vÀÛv¨ËvÃËÀ®ÈËÃóÃÀÛv¨®½ËÈÃÈvÈÀ¿ËÀîïv®Èv¦ËÃÈ®Èvó®Ë®³ÃÀÛv¨®½ËÈóÀv®â
³ÈÀîïv®ÈË®³ÃÀÛv¨®½ËÈÃƜÈvÈvÃËÀ®ÈÃv4Û¨ůvÃËÀ®Èƛ
SvÀÛv¨ËÀvÀâ³ï®v®v¨®ÃÈÀË®ÈÃvÃËÀvÈvÀÛv¨ËýÀ³Û¨³Üƛ
31 December 2022 Level 1
(£)
Level 2
(£)
Level 3
(£)
Investment in subsidiaries - - 834,771,492
- - 834,771,492
31 December 2021 Level 1
(£)
Level 2
(£)
Level 3
(£)
Investment in subsidiaries - - 389,346,748
--389,346,748
_v¨Ëvȳ®³ï®v®v¨®ÃÈÀË®ÈÃ
S®ÛÃÈ®ÈvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃÃv4Û¨ů®ÈvÀÛv¨ËÀvÀâv®ÈÀ³®¨vȳ®®È
movement of this Level 3 investment is presented in Note 11. No transfers between levels took place during the period.
18 Financial risk management
S³½v®âÃá½³ÃȳÀÈv®ÀçÈÀ³ËȳÀ®vÀâ³ËÀóËîÃÃv®È³½v®âƺÃï®v®v¨Àç
management objective is to minimise the effect of these risks. The management of risks is performed by the Directors of
ȳ½v®âv®Èá½³ÃËÀȳvï®v®v¨Àç³®ÃÀ½³È®Èv¨¨âvÈÀv¨È³È³½v®âƜ³ÜÈvÀÃÃv®È
policy for managing it is summarised below:
Counterparty risk
The Company is exposed to third party credit risk in several instances and the possibility that counterparties with which
the Company and its subsidiaries, together the Group, contracts may default by failing to pay for services received
from the Company or its subsidiaries or fail to perform their obligations in the manner anticipated by the Group. Such
counterparties may include (but are not limited to) manufacturers who have provided warranties in relation to the supply
of any equipment or plant, EPC contractors who have constructed the Company’s plants, who may then be engaged to
operate assets held by the Company, property owners or tenants who are leasing ground space and/or grid connection
to the Company for the locating of the assets, contractual counterparties who acquire services from the Company
underpinning revenue generated by each project or the energy suppliers, demand aggregators, insurance companies who
may provide coverage against various risks applicable to the Company’s assets (including the risk of terrorism or natural
disasters affecting the assets) and other third parties who may owe sums to the Company. In the event that such credit
risk crystallises, in one or more instances, and the Company is, for example, unable to recover sums owed to it, make
claims in relation to any contractual agreements or performance of obligations (e.g. warranty claims) or unable to identify
alternative counterparties, this may materially adversely impact the investment returns.
107
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
Management has completed a high-level analysis which considers both historical and forward-looking qualitative and
quantitative information, to assess the credit risk of these exposures and has determined that the credit risk as at 31
ÀŮŬŮŮè³ÜËȳÈï®v®v¨½³Ãȳ®³ÈóˮÈÀ½vÀÈÃƛ
$ËÀÈÀƜȽÀ³¦ÈîÜȳ½v®âvâ®ÛÃÈܨ¨®³Èv¨ÜvâîïÈÀ³vÈËÀ®§â³®ÈÀvÈÜÈvî¨
contractor and so will be reliant on the performance of several suppliers. Therefore, the key risks during battery
installation in connection with such projects are the counterparty risk of the suppliers and successful project integration.
The Investment Manager regularly assesses the creditworthiness of its counterparties and enters into counterparty
vÀÀv®®ÈÃÜvÀï®v®v¨¨âóˮv®®ÃËÀÃƜÜÀ®ÃÃvÀâƜÈóËÀ®³v¨ÈÀ®vÈÛvÀÀv®®ÈîÈ
event of changes in the creditworthiness of its present counterparties.
Concentration risk
The Company’s investment policy is limited to investment (via its subsidiary) in battery energy storage infrastructure,
Üܨ¨½À®½v¨¨â³½ÀvÈ®ÈV3ƛSÃv®ÃÈvÈȳ½v®âvÃvîïv®È³®®ÈÀvȳ®ÀçÀ¨vȮȳÈ
V3vÈÈÀâ®ÀâÃȳÀv®ÀvÃÈÀËÈËÀÃȳÀƛO®ïv®È³®®ÈÀvȳ®³®ÛÃÈ®Èîv®â³®ÃȳÀvâÀÃ˨È
in greater volatility in the value of the Company’s investments via its subsidiary, and consequently the NAV and may
materially and adversely affect the performance of the Company and returns to shareholders.
The Fund’s BESS projects generate revenues primarily from Firm Frequency Response (FFR), Asset Optimisation,
Capacity Market (CM) and other grid connection-related charges, including TRIADs and Dynamic Containment. Revenues
from the portfolio’s seed BESS projects have historically been skewed to FFR revenues, FFR being the provision to the
:vȳ®v¨%À³vâ®vÀý³®ÃÃÀÛȳv®Èv®ÈÀƺèÈÀv¨À¿Ë®âvÈűŬ(çƛ*®(ŮŮŬŮŮƜ³½Àvȳ®Ã
ÜÀ®Àvî¨âÈvÀÈȳÜvÀÃÃÃÈ?½ÈÃvȳ®ƜvÃÈóÃȳÀ½À³ïÈv¨ËîÃÃvÈÛÈâƛSÀvÀ
several additional revenue opportunities emerging for the portfolio as a series of regulatory changes are implemented.
The Investment Manager is of the view that the UK’s exposure to renewable energy generation has increased
îïv®È¨â³ÛÀȨvÃÈÜâvÀÃv®È½vvî³È¨ÃîýÈÈÀ³Ûv¨³¨vâÃËÃÃȳ³®Ã³À
wind and solar. This is largely because the development of offshore wind installations has continued apace. As a result,
generation from wind is having a growing impact on the grid, generating a volatile supply of energy which underpins the
opportunity for BESS.
Credit risk
Cash and other assets that are required to be held in custody will be held at bank. Cash and other assets may not be
treated as segregated assets and will therefore not be segregated from the bank’s own assets in the event of the
insolvency of a custodian. Cash held with the bank will not be treated as client money subject to the rules of the FCA
and may be used by the bank in the ordinary course of its own business. The Company will therefore be subject to the
creditworthiness of the bank. In the event of the insolvency of the bank, the Company will rank as a general creditor in
relation thereto and may not be able to recover such cash in full, or at all.
The Investment Manager regularly assesses its credit exposure and considers the creditworthiness of its customers and
³Ë®ÈÀ½vÀÈÃƛvÃv®v®§½³ÃÈÃvÀ¨ÜÈvÀ¨vâÃv®§½¨ƜvÀ½ËÈv¨ï®v®v¨®ÃÈÈËȳ®ÜÈv9³³âƺÃ
credit rating Baa2.
*®ÛÃÈ®ÈèvÈvÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃvÀ®³ÈÃ˦Èȳ*$LOŵ½vÀ®ÈÀ¿ËÀ®ÈÃƛ
For interest receivables on cash balances and loans receivable, the Company uses a 12-month expected loss allowance.
The Company has completed some high-level analysis and forward looking qualitative and quantitative information to
determine if the interest and receivables are low credit risk. Based on this analysis the expected credit loss on interest
and receivables are not material and therefore no impairment adjustments were accounted for.
Liquidity risk
The objective of liquidity management is to ensure that all commitments made by the Company which are required to be
funded can be met out of readily available and secure sources of funding. As noted below, this includes debt funding.
108
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
BESS projects have limited liquidity and may not be readily realisable or may only be realisable at a value less than their
book value. There may be additional restrictions on divestment in the terms and conditions of any sale agreement in
relation to a particular BESS project.
In 2021, the Company assessed its ability to raise debt and the MidCo entered into a debt facility for £180mn, which was
subsequently amended and restated in 2022 for a total of £335mn. The Company is permitted to provide security to
lenders in order to borrow money, which may be by way of mortgages, charges, or other security interests or by way of
outright transfer of title to the Company’s assets. The Company is a guarantor to the Midco debt facility - should there be
a default by the Midco the Company may be liable to repay all debt drawn. The total amount drawn at year end was £60mn.
The Directors will restrict borrowing to an amount not exceeding 50% of the Company’s NAV at the time of drawdown.
As at 31 December 2022, Midco had drawn down £60mn on the facility. The Company is required to provide semi-annual
³Û®v®È³½¨v®ÀÈïvÈÃȳÈv®§ƜvÃvÈÈâvÀ®È³½v®âÜvî³½¨v®ÜÈv¨¨È³Û®v®ÈÃ
è³Ã®È¨³v®vÀ®Èv®vv¨Ã³ï¨ÈÀ¿ËÀ³Û®v®ÈÀÈïvÈÃƛ
S³½v®âƺó®¨âï®v®v¨¨v¨ÈÃvÀÈÀvv®³ÈÀ½vâv¨ÃƛS³½v®âvÃÃËí®ÈvÃÀÃÀÛÃȳ³ÛÀ
ÈîÈóÀÈȳËÈÀƛS³½v®âƺÃvÃð³Ü³ÀvÃÈÃvÀ³®È³ÀÀ˨vÀ¨âȳ®ÃËÀȳ½v®âÃ
able to meet its obligations when they fall due.
S³¨¨³Ü®Èv¨ÀðÈÃÈvÈËÀÈâv®v¨âÃóï®v®v¨vÃÃÈÃv®¨v¨ÈÃƛ
As at 31 December 2022
< 1
year
(£)
1 to 2
years
(£)
2 to 5
years
(£)
>5 years
(£)
Tota l
(£)
Financial assets
Cash and cash equivalents (Note 13) 7,327,492 - - - 7,327,492
Trade and other receivables (Note 14)* 147,302 - - - 147,302
$vÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƝ
Investment in subsidiaries* - - - 834,771,492 834,771,492
S³Èv¨ï®v®v¨vÃÃÈà 7,474,794 834,771,492 842,246,286
Financial liabilities
Financial liabilities at amortised cost
Trade and other payables (Note 15) 571,020 - - - 571,020
S³Èv¨ï®v®v¨¨v¨Èà 571,020 - - - 571,020
As at 31 December 2021
< 1
year
(£)
1 to 2
years
(£)
2 to 5
years
(£)
>5 years
(£)
Tota l
(£)
Financial assets
Cash and cash equivalents (Note 13) 122,175,081 - - - 122,175,081
Trade and other receivables (Note 14)** 41,397 - - - 41,397
$vÀÛv¨ËÈÀ³Ë½À³ïȳÀ¨³ÃÃƝ
Investment in subsidiaries*
- - - 389,346,748 389,346,748
S³Èv¨ï®v®v¨vÃÃÈà 122,216,478 - - 389,346,748 511,563,226
Financial liabilities
Financial liabilities at amortised cost
Trade and other payables (Note 15) 210,255 - - - 210,255
S³Èv¨ï®v®v¨¨v¨Èà 210,255 - - - 210,255
* excludes prepayments and VAT
109
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
Market risk
9vÀ§ÈÀçÃÈÀçÈvÈÈvÀÛv¨Ë³ÀvÃð³Üóvï®v®v¨®ÃÈÀË®Èܨ¨ðËÈËvÈËȳv®Ã®
vÀ§È½ÀÃƛ9vÀ§ÈÀçÀðÈîÈÀÃÈÀvÈÀçƜËÀÀ®âÀçv®³ÈÀ½ÀÀçÃƛS³¦ÈÛÃȳ®Ã
market risk through managing and controlling these risks to acceptable parameters, while optimising returns. The
³½v®âËÃÃï®v®v¨®ÃÈÀË®ÈîȳÀ®vÀâ³ËÀóËîÃÃƜv®v¨Ã³®ËÀÃï®v®v¨¨v¨ÈÃƜ®³ÀÀȳ
manage market risks.
IÀÀçÃÈÀçÈvÈÈvÀÛv¨Ë³ÀvÃð³Üóvï®v®v¨®ÃÈÀË®Èܨ¨ðËÈËvÈËȳv®Ã®vÀ§È
prices. At 31 December 2022, the valuation basis of the Company’s investments was valued at market value. This
investment is driven by market factors and is therefore sensitive to movements in the market. The Company relies on
market knowledge of the Investment Manager, the valuation expertise of the third-party valuer and the use of third-
½vÀÈâvÀ§È³ÀvÃÈ®³Àvȳ®È³½À³Û³³ÀÈÜÈÀvÀȳvÀvÀ§ÈÛv¨Ëó®ÛÃÈ®ÈÃÀðÈ®È
Financial Statements. Refer to Note 17 for trading revenue sensitivities.
Interest rate risk
*®ÈÀÃÈÀvÈÀçvÀÃÃÀ³È½³ÃèÈâÈvÈv®Ã®®ÈÀÃÈÀvÈÃܨ¨vÈËÈËÀvÃð³ÜóÀÈvÀÛv¨Ëó
ï®v®v¨®ÃÈÀË®ÈÃƛS³½v®âÃá½³Ãȳ®ÈÀÃÈÀvÈÀç³®ÈÃvÃv¨v®Ã¨ÜȳˮÈÀ½vÀÈÃƜv®§
deposits, loans receivable, advances to counterparties and through loans to subsidiaries. Loans to subsidiaries carry a
ïáÀvȳ®ÈÀÃÈˮȨÀ½vâ®ÈvÈÈvÀ¨À³ÜÀÈÈ®v®À³È¨®À³ÀůŭÀŮŬůŬƛS³½v®â
may be exposed to changes in variable market rates of interest and this could impact the discount rate and therefore the
valuation of the projects as well as the fair value of the loan receivables. The debt held within MidCo is subject to interest
rate hedging.
Currency risk
All transactions and investments during the current year were denominated in Pounds Sterling, thus no foreign exchange
À®ÃvÀ³ÃƛS³½v®â³Ã®³È³¨v®âï®v®v¨®ÃÈÀË®ÈÃvÈâvÀ®ÜvÀ®³È®³®vÈ®
I³Ë®ÃOÈÀ¨®v®ÃÈÀ³À®³Èá½³Ãȳv®âîïv®ÈËÀÀ®âÀçƛOËÃvÀâ®ÈÈÃvâƜÀ³ÈȳÈƜ
incur expenditure in currencies other than Pounds Sterling.
Capital risk management
The capital structure of the Company at year end consists of equity attributable to equity holders of the Company,
comprising issued capital and reserves. The Board continues to monitor the balance of the overall capital structure so as
ȳv®Èv®®ÛÃȳÀv®vÀ§È³®ï®ƛS³½v®âî³ÈÃ˦Èȳv®âáÈÀ®v¨v½Èv¨À¿ËÀ®ÈÃƛ
19 Net Asset Value (NAV) per Ordinary Share
Basic NAV per Ordinary Share is calculated by dividing the Company’s net assets as shown in the statement of
ï®v®v¨½³Ãȳ®ÈvÈvÀvÈÈÀËÈv¨È³È³À®vÀâ¿ËÈ⳨Àóȳ½v®ââÈ®ËÀ³?À®vÀâOvÀÃ
outstanding at the end of the period. As there are no dilutive instruments outstanding, basic, and diluted NAV per Ordinary
Share are identical.
31 December 2022 31 December 2021
:ÈvÃÃÈýÀÃÈvȮȳï®v®v¨½³Ãȳ®ƪljƫ 841,745,662 511,671,041
Ordinary Shares in issue 541,290,353 437,842,078
NAV per Ordinary Share - Basic and diluted (pence) 155.51 116.86
110
Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
20 Share capital
Ordinary
Shares
number
Share
capital
(£)
Share
premium
reserve
(£)
Merger
relief
reserve
(£)
Capital
reduction
reserve
(£)
Tota l
(£)
Allotted and issued share capital
As at 31 December 2021 437,842,078 4,378,421 349,058,720 13,299,017 38,162,172 404,898,330
Issue of Ordinary Shares of £0.01 103,448,275 1,034,483 148,965,516 - - 149,999,999
541,290,353 5,412,904 498,024,236 13,299,017 38,162,172 554,898,329
Share issue costs - - (2,793,243) - - (2,793,243)
Dividends paid - - - - (34,269,635) (34,269,635)
As at 31 December 2022 541,290,353 5,412,904 495,230,993 13,299,017 3,892,537 517,835,451
Ordinary
Shares
number
Share
capital
(£)
Share
premium
reserve
(£)
Merger
relief
reserve
(£)
Capital
reduction
reserve
(£)
Tota l
(£)
Allotted and issued share capital
As at 31 December 2020 348,556,364 3,485,564 251,601,260 13,299,017 64,123,617 332,509,458
Issue of Ordinary Shares of £0.01 89,285,714 892,857 99,107,143 - - 100,000,000
437,842,078 4,378,421 350,708,403 13,299,017 64,123,617 432,509,458
Share issue costs - - (1,649,683) - - (1,649,683)
Dividends paid - - - - (25,961,445) (25,961,445)
As at 31 December 2021 437,842,078 4,378,421 349,058,720 13,299,017 38,162,172 404,898,330
Share capital
The Company’s capital is represented by the Ordinary Shares.
Share premium
The surplus of net proceeds received from the issuance of new shares over their par value is credited to this account and
the related issue costs are deducted from this account. The reserve is non-distributable.
Merger relief reserve
The Merger reserve relates to shares issued for shares to acquire investments. This reserve is not distributable.
Revenue reserves
SLۮˮȽÀ³ïÈvÀî®ÈOÈvȮȳ³½À®ÃÛ*®³Ãvȳ³ÀËÈÀ³ÈÃÀÃÀÛ
which is a distributable reserve.
Capital reserves
The Capital reserve comprises of increases and decreases in the fair value of investments held at the period end, gains
and losses on the disposal of investments, transaction, and legal fees. The capital reserves are not distributable.
111
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
Capital reduction reserve
Following a successful application to the High Court and lodgement of the Company’s statement of capital with the
Registrar of Companies in a prior period the Company was permitted to cancel its Share premium account. This was
completed on 13 February 2019 by a transfer of the balance of £97,009,475 from the Share premium account to the Capital
reduction reserve. The Capital reduction reserve is classed as a distributable reserve and dividends to be paid by the
Company may be offset against this reserve.
Share capital, Share premium account and Capital reduction reserve
On 14 July 2021, the Company announced the successful raise of gross proceeds of £100mn through the issue of
89,285,714 new Ordinary Shares at an issue price of 112 pence per Ordinary Share.
On 27 May 2022, the Company announced and published the successful raise of gross proceeds of £150mn through the
issue of 103,448,275 new Ordinary Shares at an issue price of 145 pence per Ordinary Share.
Dividends
For the year ending 31 December 2022
Period in relation to which
dividend was paid
Announcement
date
Ex-dividend
date
Payment
date
Amount per
Ordinary Share
Tota l
amount
1 January to 31 March 2022 4 May 2022 12 May 2022 27 May 2022 1.75 pence £7,662,236
1 April to 30 June 2022 27 September 2022 6 October 2022 28 October 2022 1.75 pence £9,472,581
1 July to 30 September 2022 31 October 2022 24 November
2022
16 December 2022 1.75 pence £9,472,581
1 October to 31 December
2022
10 February 2023 2 March 2023 27 March 2023 1.75 pence £9,472,581
For the year ending 31 December 2021
Period in relation to which
dividend was paid
Announcement
date
Ex-dividend
date
Payment
date
Amount per
Ordinary Share
Tota l
amount
1 January to 31 March 2021 28 April 2021 13 May 2021 4 June 2021 1.75 pence £6,099,736
1 April to 30 June 2021 1 July 2021 8 July 2021 30 July 2021 1.75 pence £6,099,736
1 July to 30 September 2021 15 November 2021 25 November
2021
17 December 2021 1.75 pence £7,662,236
1 October to 31 December
2021
14 February 2022 3 March 2022 25 March 2022 1.75 pence £7,662,236
Ordinary shareholders are entitled to all dividends declared by the Company and, in a winding up, to all of the Company’s
assets after repayment of its borrowings and ordinary creditors. Ordinary shareholders have the right to vote at meetings
of the Company. All Ordinary Shares carry equal voting rights.
21 vÃv®®³®ưvÃð³ÜÈÃ
The non-cash movements for the year ended 31 December 2022 predominantly relate to movement in the investments.
These non-cash movements are reconciled and discussed in Note 11.
112 Gresham House Energy Storage Fund plc (GRID)
Annual Report Financial Statements Additional Information
22 SÀv®Ãvȳ®ÃÜÈÀ¨vȽvÀÈÃv®³ÈÀîïv®È³®ÈÀvÈÃ
The Company and the Directors are not aware of any person who, directly or indirectly, jointly, or severally, exercises or
could exercise control over the Company. The Company does not have an ultimate controlling party.
Details of related parties are set out below:
Directors
31 December 2022
(£)
31 December 2021
(£)
Directors’ remuneration 256,181 232,500
Employers’ NI 31,285 23,209
Total key management personnel 287,466 255,709
All directors’ remuneration is short term salary.
The remuneration arrangements of Directors are disclosed in the Director’s Remuneration Report on page 61.
Dividends paid by the Company to the Directors are disclosed in the Director’s Remuneration Report on page 61. No
dividend amounts were payable as at 31 December 2022 (2021: none).
The aggregate fees of the Directors will not exceed £500,000 per annum. There are no performance conditions
attaching to the remuneration of the Directors as the Board does not believe that this is appropriate for Non-Executive
ÀȳÀÃƛSÀȳÀÃvÀ®³È¨¨³À³®ËÃÃƜ½®Ã³®®ïÈÃƜÃvÀ³½È³®ÃƜ¨³®ưÈÀ®®ÈÛÃóÀ
³ÈÀ®ïÈÃƛ
Loans to related parties
Loans receivable represent amounts due to the Company from its subsidiary and are disclosed in Note 11.
31 December 2022
(£)
31 December 2021
(£)
Principal advanced 540,950,420 297,751,773
Interest accrued 32,868,283 22,470,837
Total loans 573,818,703 320,222,610
23 Capital commitments
ÃvÈůŭÀŮŬŮŮƜÈÀvÀ®³³ÈÀîïv®È®®³À³®È³®v¨ËÈËÀv½Èv¨³È®ÈÃƪŮŬŮŭƝ®³®ƫƛ
24 Post balance sheet events
On 9 February 2023, the Board approved the payment of an interim dividend in respect of Q4 2022 of 1.75 pence per
Ordinary Share. It was proposed that the Dividend would be paid on 27 March 2023 to the members whose names
appeared on the Company’s register of members on 3 March 2023, with an ex-dividend date of 2 March 2023.
On 14 February 2023, MidCo made a further draw down of £50mn on the Santander loan facility.
There were no further events after the reporting date which require disclosure.
113
Gresham House Energy Storage Fund plc (GRID)
Annual ReportFinancial StatementsAdditional Information
1 Dividend per Ordinary Share
Dividend per Ordinary Share is a measure to show the distributions made to shareholders during the year.
Dividend period: 12 months to 31 December 2022 Dividend paid
per share
(£)
Number of shares
on dividend payment
date
Total dividend paid
(£)
Q1 2022 (declared 4 May 2022) 0.0175 437,842,078 7,662,236
Q2 2022 (declared 27 September 2022) 0.0175 541,290,353 9,472,581
Q3 2022 (declared 31 October 2022) 0.0175 541,290,353 9,472,581
Q4 2022 (declared 10 February 2023) 0.0175 541,290,353 9,472,581
0.0700 36,079,979
Dividend period: 12 months to 31 December 2021 Dividend paid
per share
(£)
Number of shares
on dividend payment
date
Total dividend paid
(£)
Q1 2021 (declared 28 April 2021) 0.0175 348,556,364 6,099,736
Q2 2021 (declared 1 July 2021) 0.0175 348,556,364 6,099,736
Q3 2021 (declared 15 November 2021) 0.0175 437,842,078 7,662,236
Q4 2021 (declared 14 February 2022) 0.0175 437,842,078 7,662,236
0.0700 27,523,944
2 Ordinary Share price total return
Ordinary Share price total return is a measure of the return that could have been obtained by holding a share since initial
public offering.
31 December 2022
(pence)
31 December 2021
(pence)
Share price at end of the year 161.50 130.50
Dividends paid from inception to end of the year 23.75 16.75
Dividend reinvestment impact 11.10 4.26
Share price at initial public offering (100.00) (100.00)
Ordinary Share price total return since inception 96.35 51.51
Ordinary Share price total return since inception % 96.4% 51.5%
Alternative Performance Measures
For the period from 1 January 2022 to 31 December 2022
114 Gresham House Energy Storage Fund plc (GRID)
3 Net asset value (NAV) per Ordinary Share
31 December 2022 31 December 2021
NAV at end of the year £841,745,662 £511,671,041
Ordinary Shares in issue 541,290,353 437,842,078
NAV per share (pence) – Basic and diluted 155.51 116.86
4 NAV per Ordinary Share total return for the period
NAV per Ordinary Share total return is a measure of the success of the Investment Manager’s strategy to grow the
NAV, showing how the NAV has changed over a period of time, considering both capital returns and dividends paid
to shareholders.
31 December 2022
(pence)
31 December 2021
(pence)
NAV per Ordinary Share at end of the year 155.51 116.86
Dividends paid from inception to end of the year 23.75 16.75
Dividend reinvestment impact 10.03 2.51
NAV per Ordinary Share at end of the year including dividend reinvestment 189.29 136.12
NAV per Ordinary Share at beginning of the year including dividend
reinvestment
(136.12) (113.13)
NAV Total Return for the year 53.17 22.99
NAV per Ordinary Share total return for the year 39.1% 20.3%
5 Gross asset value (GAV)
GAV is a measure of the total value of the Company’s assets.
31 December 2022
(£’000)
31 December 2021
(£’000)
Total assets reported in the Company at end of period 842,317 511,881
Debt held by intermediate holding company (A) 60,000 -
GAV (B) 902,317 511,881
%vÀ®vÃï®âȳ½v®âƪƨƫ 7% 0%
115
Gresham House Energy Storage Fund plc (GRID)
Additional Information Financial Statements Annual Report
6 ?®³®vÀÃïËÀƪ?$ƫ
OCF measures the Company’s recurring fund management costs incurred during the year expressed as a percentage of
the average of the net assets at the end of each quarter during the year.
7 Operational Dividend Cover
Operational Dividend Cover is a measure to demonstrate the Company’s ability to pay dividends from the earnings of its
underlying investments, including interest earned on construction capital deployed to non-operational SPVs, and after
accounting for external interest costs and administrative costs of the Company but excluding transaction costs and debt
arrangement fees.
8 Dividend yield
31 December 2022 31 December 2021
Dividend per share declared in respect of the period (pence) 7.00 7.00
Share price at end of period (pence) 161.50 130.50
Dividend yield for the period 4.3% 5.4%
31 December 2022
(£'000)
31 December 2021
(£'000)
EBITDA of underlying group companies 48,788 42,522
Interest income on construction capital deployed to SPVs 8,173 405
Bank interest received 312 -
Ongoing costs in the Company (8,284) (5,271)
External interest costs (2,852) (1,405)
Net earnings for Operational Dividend Cover 46,137 36,251
Dividends declared by the Company for the year 36,080 27,524
Operational Dividend Cover 1.28x 1.32x
31 December 2022
(£'000)
31 December 2021
(£'000)
Fees to Investment Manager 6,245 4,053
Legal and professional fees 714 561
Other transaction fees - (57)
Administration fees 558 312
Directors’ remuneration 287 256
Audit fees 264 194
Other ongoing expenses 239 117
Total expenses 8,307 5,436
Non-recurring expenses not in OCF calculation (23) (165)
Total ongoing expenses 8,284 5,271
Average NAV for the year 704,188 429,192
Ongoing charges for the year 1.18% 1.23%
116
Gresham House Energy Storage Fund plc (GRID)
Additional InformationFinancial StatementsAnnual Report
Company Information
Non-Executive Directors
John Leggate - Chair
Isabel Liu
Duncan Neale
Catherine Pitt
David Stevenson
LÃÈÀ³í
The Scalpel
18th Floor
52 Lime Street
London
EC3M 7AF
Investment Manager and AIFM
Gresham House Asset Management Limited
5 New Street Square
London
EC4A 3TW
Corporate Broker and Financial Advisor
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
Tax Advisor
Blick Rothenberg Chartered Accountants
16 Great Queen Street
London
EC4V 6BW
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Administrator and Secretary
JTC (UK) Limited
The Scalpel
18th Floor
52 Lime Street
London
EC3M 7AF
Registrar and Receiving Agent
Computershare Investor Services plc
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
Legal Adviser
Eversheds LLP
1 Wood Street
London
EC2V 7WS
Depositary
INDOS Financial Limited
54 Fenchurch Street
London
EC3M 3JY
Investment Valuer
Grant Thornton LLP
30 Finsbury Square
London
EC2A 1AG
Ticker: GRID
117
Gresham House Energy Storage Fund plc (GRID)
Asset Optimisation (Trading)
Asset Optimisation involves buying and selling electricity
in order to capture a spread between the high and low
electricity prices on any given day. This can be done via
one or more market mechanisms, hence the expression
‘‘Asset Optimisation’’ and includes trading in the wholesale
market and offering the battery to National Grid via the
Balancing Mechanism.
Asymmetric
An asymmetrical grid connection is where the import and
export capacities are different.
AUM
Assets Under Management: the total net assets
of the Company.
Balancing Mechanism (BM)
A tool used by the ESO to balance the electricity supply
and demand close to real time. The BM is used to balance
supply and demand in each half hour trading period of
every day. Where the ESO predicts that there will be a
discrepancy between the amount of electricity produced
and the level of demand during a certain period, they
may accept a ‘bid’ or ‘offer’ to either increase or decrease
generation (or even increase consumption in the case
of storage assets). Sites must be registered in the BM to
receive such actions but once registered they are able to
set their own prices for being used.
Balancing services
National Grid procure services to balance demand
and supply and to ensure the security and quality
of electricity supply across Britain’s transmission
system. These include:
Black Start
Demand side response
Dynamic Containment (DC)
Enhanced Frequency Response (EFR)
Firm Frequency Response (FFR)
Optional Downward Flexibility Management (ODFM)
Short Term Operating Reserve (STOR)
nationalgrideso.com/balancing-services
Black start
A total or partial shutdown of the national electricity
transmission system (NETS) is an unlikely event. However,
if it happens, National Grid are obliged to make sure
there are contingency arrangements in place to ensure
electricity supplies can be restored in a timely and
orderly way. Black start is a procedure to recover from
such a shutdown.
nationalgrideso.com/balancing-services/system-
security-services/black-start/
Capacity Market (CM)
The income received by generators to ensure generation
capacity is available to meet short falls.
Combined Cycle Gas Turbine (CCGT)
®Àâ®Àvȳ®È®³¨³âÈvȳ®ÃvvÃưïÀ
turbine with a steam turbine. The design uses a gas turbine
to create electricity and then captures the resulting waste
heat to create steam, which in turn drives a steam turbine.
Curtailment
Large wind farms are connected to the UK’s high-voltage
network and National Grid balances electricity supply
and demand. As demand rises and falls during the day,
electricity supply mirrors these peaks and troughs.
National Grid accepts bids and offers from electricity
generators to increase or decrease electricity generation
as and when required. As such it may mean that there are
times when generators are paid to curtail their output
(constraint payments).
nationalgrideso.com/news/grounds-constraint
Dividend Yield
The annual dividends expressed as a percentage of the
current share price.
EBITDA of underlying group companies
EBITDA includes earnings before interest, tax,
depreciation and amortisation and includes liquidated
damages earnt by SPVs. Earnings are calculated on an
accruals basis and therefore only SPVs which were owned
in the accounting period have their earnings included here.
Transactions completing after the period will have locked
box income recognised once the transaction is completed.
Glossary
118 Gresham House Energy Storage Fund plc (GRID)
This is important to measure the underlying performance
of the investments and ensure cash earnings are available
to payment of costs in the Company and dividends
to shareholders.
Electricity System Operator (ESO)
Refers to National Grid ESO. The ESO is responsible for
ensuring Great Britain has the essential energy it needs so
that supply meets demand on the electricity system every
second of every day.
nationalgrideso.com/
Frequency Response services (FR)
A subset of Balancing Services which relate to services
performed by batteries to manage the frequency on the
electricity system. This includes the following services:
Dynamic Containment (DC)
Dynamic Moderation (DM)
Dynamic Regulation (DR)
Enhanced Frequency Response (EFR)
Firm Frequency Response (FFR)
Optional Downward Flexibility Management (ODFM)
nationalgrideso.com/balancing-services
Gross Asset Value (GAV)
Gross Asset Value is the total value of the investments and
cash under the management of the Company including
debt held by the MidCo.
International Financial Reporting Standards (IFRS)
International Financial Reporting Standards are
accounting standards issued by the International
Accounting Standards Board (IASB) and have been
applied by the Company in the preparation of the
ï®v®v¨ÃÈvÈ®ÈÃƛ
Liquidated Damages (LD)
Liquidated damages are presented in certain legal
contracts as an estimate of losses to one of the parties.
*ÈÃv½À³Ûó®ÈvÈv¨¨³ÜóÀȽvâ®È³výï
sum should one of the parties be in breach of contract.
Liquidated damages are meant as a fair representation
of losses in situations where actual damages are
í˨ÈȳvÃÀÈv®ƛ
4¿ËvÈvvÃvÀ³È®®¨Ë®Ã½ï³®ÈÀvÈ
clauses to cover circumstances where a party faces a loss
from an asset.
The Company typically uses these in EPC arrangements
to protect earnings from an asset in the result of delays to
construction but are also common in other contracts such
as for O&M arrangements.
Load Factors
The load factor is usually expressed as the percentage
of the actual output of a generator compared to its
theoretical maximum output in a year.
Locked box income
On some acquisitions the Company agrees a date at which
È®ïȳv®âÃËÿˮÈvÀ®®ÃÈ®ð³ÜȳÈ
acquirer. This date agreed is referred to as the Locked box
vÈƛvÀ®®Ãð³Ü®È³Èv¿ËÀÀvÀÀÀÀȳvÃ
the Locked box income. This mechanism is often used by
the Company and aims to prevent the Company losing out
on value as a result of delays to transactions completing.
The period to which Locked box income is earnt varies
between transactions.
Net Asset Value (NAV) per Ordinary Share
The total net assets in the Company divided by the total
number of Ordinary Shares in issue. This is an important
measure to understand the capital return to shareholders.
NAV Total Return
A measure showing how the NAV per share has performed
over a period of time, considering both capital returns and
dividends paid to shareholders.
NAV Total Return is shown as a percentage change from
the start of the period. It assumes that dividends paid to
shareholders are reinvested at NAV at the time the shares
are quoted ex-dividend.
NAV Total Return shows performance which is not affected
by movements in discounts and premiums (share prices).
It also considers the fact that different investment
companies pay out different levels of dividends.
Ongoing Charges Figure (OCF)
The Ongoing Charges Figure includes all charges and
costs incurred by the Company which relate to the ongoing
operation of the Company. This includes management
fees, administration fees, audit fees, Director’s
remuneration, depositary services costs and other similar
costs. It excludes capital costs and costs of raising new
capital. The Ongoing Charges are then divided by the
weighted average NAV and annualised.
119
Gresham House Energy Storage Fund plc (GRID)
Additional Information Financial Statements Annual Report
Operational Dividend Cover
Operational Dividend Cover for the purpose of this report
refers to a calculation for the ratio between net earnings
of the underlying investment portfolio in the review period
and dividends paid in respect of the same review period.
This measure aims to add clarity on the Company’s ability
to pay dividends from the earnings and cash generation of
its underlying investments after deducting Company costs.
This measure includes the EBITDA of underlying group
companies less Company and holding company costs
(excluding capital- related costs and debt arrangement
fees but including external interest expense).
Ordinary Share
Share in the Company with a nominal value of 1 pence.
Ordinary Share price total return
A measure showing how the share price has performed
over a period of time, considering both capital returns and
dividends paid to shareholders.
Share price total return is shown as a percentage change
from the start of the period. It assumes that dividends paid
to shareholders are reinvested in the shares at the time the
shares are quoted ex dividend.
Share price total return shows performance which is
affected by movements in discounts and premiums. It also
considers the fact that different investment companies
pay out different levels of dividends.
Proving Period
A period of 60 days after a project has achieved PAC.
During this time, the project is fair valued subject to a
premium added to the base discount rates of 50 bps to
capture risk during the commissioning of the project.
Atter this period (being reduced to 30 days in 2023), the
project is fair valued without any additional premium.
Applying a proving period of 30 days instead of 60 days as
at the year-end would have had no impact on valuations
due to no assets being between 30 and 60 days since PAC
as at 31 December 2022.
Seed Assets
The assets acquired at IPO known as Staunch, Littlebrook,
4³§¨vçƜL˳Àv®L³Ë®½³®Ãƛ
Skip rates
*®Èv¨v®®9v®ÃƜvç½ÃÀ³v¨âï®vÃ
when an action is taken by the control room even though
there is a cheaper alternative to achieving the same
outcome - so the cheaper action is ‘skipped’.
Site uptime
Calculation for the average level of availability in the
portfolio or for an asset in Frequency Response Services.
This is calculated by taking the average MWs available in
each period as a percentage of total capacity contracted.
Symmetrical
A symmetrical grid connection is where the import and
export capacities are the same.
System inertia
Inertia works to keep the electricity system running at
the right frequency by using the kinetic energy in spinning
parts in power plant generator turbines. When needed,
the spinning parts in generator turbines can rotate slightly
faster or slower to help balance out supply and demand.
The more turbines you have, the more energy there is in
the system and the greater the system inertia, which helps
to stabilise the frequency.
nationalgrideso.com/information-about-great-britains-
energy-system-and-electricity-system-operator-eso/
technical-terms-explained
TRIADs
SL*ÃvÀï®vÃÈÈÀv¨ư³ËÀóÃÈ
demand on the Great Britain electricity transmission
system between November and February each year,
the TRIADs are part of a charge-setting process. This
®Èïýv§¨ÈÀÈâv®vÈÈÀ½³®ÈÃËÀ®
the winter in order to minimise energy consumption.
However, TRIADs must be at least ten days apart. This is
to avoid all three potentially falling in consecutive hours
on the same day, for example during a particularly cold
spell of weather.
nationalgrideso.com/news/triads-why-
three-magic-number
120
Gresham House Energy Storage Fund plc (GRID)
Additional InformationFinancial StatementsAnnual Report
S
Sustainabl
e
e Financ
e
e Disclosure
s
s Regulatio
n
n (SFDR)
Under the EU SFDR, the Company is required to provide periodic disclosure as referenced in Article 8 of Regulation
(EU) 2019/2088. The following section provides required disclosures as per Annex IV.
Produc
t
t name:
Gresham House Energy Storage Fund PLC
Lega
l
l entit
y
y identifier:
213800MSJXKH25C23D82
Sustainabl
e
e investment
means an investment in
an economic activity
that contributes to an
environmental or social
objective, provided that
the investment does not
significantly harm any
environmental or social
objective and that the
investee companies
follow good governance
practices.
Environmenta
l
l and/o
r
r socia
l
l characteristics
Doe
s
s thi
s
s financia
l
l produc
t
t hav
e
e
a
a sustainabl
e
e investmen
t
t objective?
տ
Yes
ց
No
܈
It made s
sustainabl
e
e investment
s
s wit
h
h a
n
n
environmenta
l
l objective:
___
%
in economic activities that
qualify as environmentally
sustainable under the EU
Taxonomy
in economic activities that do
not qualify as environmentally
sustainable under the EU
Taxonomy
տ
It p
promote
d
d Environmental/Socia
l
l (E/S
)
)
characteristics
and while it did not have as its
objective a sustainable investment, it had a
proportion of ___% of sustainable investments
with an environmental objective in
economic activities that qualify as
environmentally sustainable under the EU
Taxonomy
with an environmental objective in
economic activities that do not qualify as
environmentally sustainable under the EU
Taxonomy
with a social objective
The E
E
U
U Taxonomy
is a
classification system
laid down in Regulation
(EU) 2020/852,
establishing a list of
environmentall
y
y
sustainabl
e
e economi
c
c
activities
. That
Regulation does not lay
down a list of socially
sustainable economic
activities. Sustainable
investments with an
environmental objective
might be aligned with
the Taxonom
y
or not.
տ
It made s
sustainabl
e
e investment
s
s wit
h
h
a
a
socia
l
l objective:
%
ց
It promoted E/S characteristics, but d
di
d
d no
t
t mak
e
e
an
y
y sustainabl
e
e investments
To
o wha
t
t exten
t
t wer
e
e
t
th
e
e environmenta
l
l and/o
r
r socia
l
l characteristic
s
s
p
romote
d
d b
y
y thi
s
s financia
l
l produc
t
t met?
The environmental characteristic promoted by the Gresham House Energy Storage Fund
plc (the “Company”) is its commitment to investing in and increasing Battery Energy Storage
System (BESS) capacity to support the decarbonisation and electrification of energy
systems. BESS play an essential role in supporting the decarbonisation of energy systems
and consequently the broader economy. In this way, the Company aims to contribute
positively to climate change mitigation and net zero strategies.
The Company retains its commitment to invest in and increase BESS capacity to support
the decarbonisation of energy systems. In the last reporting year, the Fund invested
£[221]mn into BESS assets and successfully completed the development of 125MW of new
operational capacity.
The increased adoption of BESS contributes, through enabling increased penetration of
renewables, to the decarbonisation of the UK energy system where the Company has
historically focused its investment activity.
܆
܆
܆
܆
܆
S
Sustainabilit
y
y indicators
measure how the
environmental or social
characteristics promoted by
the financial product are
attained.
H
Ho
w
w di
d
d th
e
e sustainabilit
y
y indicator
s
s perform?
T
he Manager uses the following sustainability indicators to assess the adherence of the
Company to the environmental characteristics:
x Total operational battery energy storage capacity (megawatts (MW) and megawatt
hours (MWh))
x Total battery energy storage capacity under construction (megawatts (MW) and
megawatt hours (MWh))
As identified in pre-contractual and website SFDR disclosures, the Company intended to
measure, monitor, and report on carbon emissions avoided (tCO2e) as a result of the
operation of BESS and increase in BESS capacity. Since previous disclosures, the
Manager has determined an interim methodology to estimate the carbon emissions
avoided through the increased adoption of BESS in energy systems. This is reported
below for 2022.
The table below shows the performance of the Company against its sustainability
indicators for 2022 and 2021. The indicators show an increase in the total operational
battery energy storage capacity and an increase in capacity under construction. This
demonstrates that the Company is continuing to contribute to supporting the
decarbonisation of energy systems.
Indicator 2021 2022
Total operational BESS capacity (MW) 425 550
Total operational BESS capacity (MWh) 473 598
Total BESS capacity under construction (MW) 375 477
Total BESS capacity under construction (MWh) 425 689
Total carbon emissions avoided [from operations]
(tCO2)
n/a 510,291
*Carbon emissions calculation methodology has been updated to align with the Partnership for Carbon
Accounting Financials (PCAF) Global GHG Accounting & Reporting Standard for the Financial Industry in 2022. In
addition, the calculation has been performed at a half-hourly granularity across the portfolio for 2022 versus
annually in 2021. No comparable figure under a consistent methodology for emissions avoided is available for
2021.
The EU Taxonomy sets out a “do not significant harm” principle by which Taxonomy-aligned
investments should not significantly harm EU Taxonomy objectives and is accompanied by specific
EU criteria.
The “do no significant harm” principle applies only to those investments underlying the financial
product that take into account the EU criteria for environmentally sustainable economic activities.
The investments underlying the remaining portion of this financial product do not take into account
the EU criteria for environmentally sustainable economic activities.
Any other sustainable investments must also not significantly harm any environmental or social
objectives.
W
Wha
t
t wer
e
e th
e
e to
p
p investment
s
s o
f
f thi
s
s financia
l
l product?
The list includes the
investments constituting t
th
e
e
g
greates
t
t proportio
n
n o
f
f
i
investments
of the financial
product during the reference
period which is: 1
1 Januar
y
y t
o
o
3
1
1 Decembe
r
r 2022
Larges
t
t
i
investments
Sector
%
% o
f
f portfoli
o
o b
y
y valu
e
e
a
a
t
t 3
1
1 Decembe
r
r 2022
Coun
t
tr
y
y
Wes
t
t Bradford
*
*
BESS
6.74%
Unite
d
d Kingdom
Glassenbury
BESS
6.49%
Unite
d
d Kingdom
Thurcroft
BESS
6.02%
Unite
d
d Kingdom
Re
d
d Scar
BESS
5.93%
Unite
d
d Kingdom
Wickham
BESS
5.81%
Unite
d
d Kingdom
Ellan
d
d 2
*
*
BESS
5.33%
Unite
d
d Kingdom
Grendon
BESS
4.34%
Unite
d
d Kingdom
Por
t
t o
f
f Tyne
BESS
4.12%
Unite
d
d Kingdom
Elland
*
*
BESS
4.11%
Unite
d
d Kingdom
Enderby
BESS
4.10%
Unite
d
d Kingdom
*West Bradford, Elland and Elland 2 projects along with a further project, York, are held under
one SPV (UK Battery Storage Ltd).
Wha
t
t wa
s
s th
e
e proportio
n
n o
f
f sustainability
-
-relate
d
d investments?
Asse
t
t allocatio
n
n
describes the share of
investments in specific
assets.
Wha
t
t wa
s
s th
e
e asse
t
t allocation?
All assets invested in by the Company were battery energy storage system assets.
c96% of the Company’s investments, based on connection capacity (MWs), are aligned with the
environmental and/or social characteristics of the Company.The remaining 4% of the
Company’s investments qualified as "#2 Other" investments. The Company did not make any
sustainable investments.
#
#
1
1 Aligne
d
d wit
h
h E/
S
S characteristics
includes the investments of the financial product used to
attain the environmental or social characteristics promoted by the financial product.
#
#
2
2 Other
includes the remaining investments of the financial product which are neither aligned
with the environmental or social characteristics, nor are qualified as sustainable investments.
I
I
n
n whic
h
h economi
c
c sector
s
s wer
e
e th
e
e investment
s
s made?
All assets invested in by the Company (100%) were in the energy sector, more specifically the
investments in the year were into battery energy storage system assets.
Taxonomy-aligned
activities are expressed
as a share of:
- t
turnover
reflects the
“greenness” of
investee companies
today.
- c
capita
l
l expenditure
(CapEx) shows the
green investments
made by investee
companies, relevant
for a transition to a
green economy.
- o
operationa
l
l
expenditure
(OpEx)
reflects the green
operational activities
of investee
companies.
T
o
o wha
t
t exten
t
t wer
e
e th
e
e sustainabl
e
e investment
s
s wit
h
h a
n
n environmenta
l
l
o
objectiv
e
e aligne
d
d wit
h
h th
e
e E
U
U Taxonomy?
Di
d
d th
e
e financia
l
l produc
t
t inves
t
t i
n
n fossi
l
l ga
s
s and/o
r
r nuclea
r
r energ
y
y relate
d
d
a
activitie
s
s complyin
g
g wit
h
h th
e
e
E
U
U Taxonomy
1
?
?
տ
Yes
:
:
տ
I
n
n fossi
l
l gas
տ
I
n
n nuclea
r
r energ
y
y
ց
N
o
o
Th
e
e graph
s
s belo
w
w sho
w
w i
n
n gree
n
n th
e
e percentag
e
e o
f
f investment
s
s tha
t
t wer
e
e aligne
d
d wit
h
h th
e
e E
U
U
Taxonomy
.
. A
s
s ther
e
e i
s
s n
o
o appropriat
e
e methodolog
y
y t
o
o determin
e
e th
e
e
taxonomy-
alignmen
t
t o
f
f
sovereig
n
n bonds*
,
, th
e
e firs
t
t grap
h
h show
s
s th
e
e Taxonom
y
y alignmen
t
t i
n
n relatio
n
n t
o
o al
l
l th
e
e investment
s
s o
f
f
th
e
e financia
l
l produc
t
t includin
g
g sovereig
n
n bonds
,
, whil
e
e th
e
e secon
d
d grap
h
h show
s
s th
e
e Taxonom
y
y
alignmen
t
t onl
y
y i
n
n relatio
n
n t
o
o th
e
e investme
nt
s
s o
f
f th
e
e financia
l
l produc
t
t othe
r
r tha
n
n sovereig
n
n bonds.
* For the purpose of these
g
raphs, ‘soverei
g
n bonds’ consist of all soverei
g
n exposures
1
Fossil gas and/or nuclear related activities will only comply with the EU Taxonomy where they contribute to limiting climate change (“climate
change mitigation”) and do not significantly harm any EU Taxonomy objective - see explanatory note in the left hand margin. The full criteria
for fossil gas and nuclear energy economic activities that comply with the EU Taxonomy are laid down in Commission Delegated Regulation
(EU) 2022/1214.
0% 50% 100%
Turnover
CapEx
OpEx
1. Taxonomy-alignment of investments
including sovereign bonds*
Taxonomy-aligned (no gas and nuclear)
Non Taxonomy-aligned
0% 50% 100%
Turnover
CapEx
OpEx
2. Taxonomy-alignment of investments
excluding sovereign bonds*
Taxonomy-aligned (no gas and nuclear)
Non Taxonomy-aligned
Investments
#1 Aligned with E/S
characteristics –
96%
#2 Other – 4
4%
E
Enablin
g
g activities
directly enable other
activities to make a
substantial contribution
to an environmental
objective.
T
Transitiona
l
l activitie
s
s
a
are
activities for which
low-carbon alternatives
are not yet available and
among others have
greenhouse gas
emission levels
corresponding to the
best
p
erformance.
W
Wha
t
t wa
s
s th
e
e shar
e
e o
f
f investment
s
s mad
e
e i
n
n transitiona
l
l an
d
d enablin
g
g activities?
The Company did not make any Taxonomy-aligned investments, including investments in
transitional and enabling activities. The share was therefore 0%.
are sustainable
investments with an
environmental objective
that d
d
o
o no
t
t tak
e
e int
o
o
accoun
t
t th
e
e criteri
a
a
for
environmentally
sustainable economic
activities under
Regulation (EU)
2020/852.
Wha
t
t wa
s
s th
e
e shar
e
e o
f
f sustainabl
e
e
i
investment
s
s wit
h
h a
n
n environmenta
l
l
objectiv
e
e no
t
t aligne
d
d wit
h
h th
e
e E
U
U Taxonomy?
The Company did not make any sustainable investments, including sustainable investments with
an environmental objective not aligned with the EU Taxonomy. The share was therefore 0%.
Wha
t
t investment
s
s wer
e
e include
d
d unde
r
r “other”
,
, wha
t
t wa
s
s thei
r
r purpos
e
e
a
an
d
d wer
e
e ther
e
e an
y
y minimu
m
m environmenta
l
l o
r
r socia
l
l safeguards?
“Other” category investments include a legacy asset that uses mostly gas engine technology to
provide power to the grid although it does have a small amount of BESS (used as primary energy
source before gas takes over) and a small amount of diesel generator capacity across three sites
(
primarily used as back up for Capacity Market Obligations). The Company no longer makes, and
is not able to make under its investment policy, new investments in assets using fossil fuels.
Wha
t
t action
s
s hav
e
e bee
n
n
t
take
n
n t
o
o mee
t
t th
e
e environmenta
l
l and/o
r
r socia
l
l
characteristic
s
s durin
g
g th
e
e referenc
e
e period?
As discussed above, the Company continued to invest in and build out BESS Capacity during the period.
In addition, the Manager worked to improve carbon emissions data measurement and quality, and to
develop a methodology to estimate carbon emissions avoided through the Company’s BESS assets.
The Manager continues to work to gather more carbon-related data at construction stage and across the
lifecycle of BESS components to understanded the lifecycle carbon emissions impact.
In addition, the Manager continues to engage with relevant government and industry stakeholders to drive
forward initiatives to support the decarbonisation of energy systems and understanding of the
mechanisms required to support greater renewables penetration in the future. A key example of this has
been the Manager taking part in the Review of Electricity Market Arrangements (REMA) consultation
through 2022 and ongoing through meetings with BEIS and the ESO. As a result of this consultation the
Manager has combined with other energy market leaders to form part of an industry study into the
possible impact and design of a wholesale market using locational pricing.
