Advising on a landmark debt funding for the energy storage market

Eversheds Sutherland advises Gresham House on its new £180m debt facility

Eversheds Sutherland has advised Gresham House Energy Storage Fund plc (GRID) on its new £180m debt facility with a syndicate of major international financial institutions. As a corporate facility funding merchant energy storage projects in the UK, this is the first transaction of its kind for the battery storage market.

A team from Eversheds Sutherland’s Global Energy Group advised GRID on the debt facility which comprises a £150m capex term facility and a £30m revolving working capital facility. The capex facility also includes an accordion which could increase the total available borrowings up to £380m over time to support further expansion.

Whilst the UK energy storage market has recently seen project finance funding based on underlying revenue contracts with a floor price, this is the first facility of its kind funding projects that rely on merchant trading revenues. The facility was agreed with a syndicate of international financial institutions including Commonwealth Bank of Australia, Lloyds Bank, NatWest and Santander.

The Eversheds Sutherland Global Energy Group has advised GRID since its initial public offering in November 2018 and worked closely with the Fund to create a consistent contractual suite of project contracts across the portfolio.

Eversheds Sutherland’s multi-disciplinary Energy team led by Caroline Clapham, Partner, Corporate, and also included: Mark Dennison, Partner, Banking; Peter Greenall, Principal Associate, Project Finance; Ben Brown, Principal Associate, Regulatory; Solomon Olukoya, Associate, Banking; and Julie Chemla, Associate, Corporate.

Caroline Clapham, Partner, commented:

“Since its IPO, GRID has stated its goal of obtaining debt finance to support its expansion aspirations and we are delighted to have supported our longstanding client and its lenders on this landmark transaction. This funding represents the culmination of nearly four years of careful planning to create a contractual framework across a portfolio of projects that lenders would determine were bankable, notwithstanding that the facility is not structured as project finance and does not feature contracts with a fixed floor price. I have believed for many years now that banks could get comfortable with merchant battery storage in the UK once a trading history was established across a large enough portfolio, and this transaction should open the door to other companies seeking to obtain debt funding provided their portfolio can satisfy lenders as to its bankability. For GRID, this transaction enables them to fund their expanding pipeline of battery storage projects which are becoming increasingly essential as we see energy challenges in the UK and globally.”

Ben Guest, Investment Manager for GRID, commented:

“We are very grateful to have been advised and supported so diligently by the Eversheds Sutherland team over the last three years as well as on this transaction. This deal is integral to the strategy we put in place at IPO, unlocking funding for strong growth over the next 18 months.”

John Leggate, Chair of the Board of GRID, commented:

“The Board of GIRD really appreciates that Eversheds Sutherland have unlocked this very innovative debt funding structure. This will really support the delivery of our growth agenda which allows us to operate at significant scale and make a material contribution to the dynamic management of the power grid.”