Deep Dive: Early signs of recovery drive cautious optimism for energy storage trusts

Focus on cash flows and earnings

Shareholders of London’s battery energy storage trusts have had to stomach severe volatility since the last quarter of 2023, but early signs of recovery are starting to provide grounds for longer-term optimism.

The sell-off across the three London-listed energy storage trusts so far this year has reflected the impact of lower actual and forecast revenues on earnings, adding to the pressure their share prices were already under from a sharp rise in interest rates.  There are various drivers behind the weak revenue environment, including saturation in ancillary service markets due to the rapid build-out of Great Britain battery energy storage systems (BESS) and a reduction in wholesale power price volatility and spreads. Energy storage trust balance sheet resilience under scrutiny as revenue w...