JEFF PRESTRIDGE: Energy storage trusts that could help you generate a profit

Ensuring households always have access to electricity to light and heat their homes is the responsibility of National Grid. It’s a Herculean task that is becoming more difficult, especially at times of great demand when cold snaps bite and with Russia’s continued disruptive influence in the energy market.

Early this year, several energy suppliers encouraged customers to join a National Grid initiative where they were paid for reducing their usage at specific times. The idea was to ward off the threat of blackouts.

It seems the scheme – the jazzily named Demand Flexibility Service – was an overall success and will become a regular feature although some participants complained irritably that the cash rewards could be counted in pence, rather than pounds.

But, crucially, this service is not the solution to keeping the country’s lights burning.

Of far more importance is the building of a network of storage facilities that in effect allows National Grid to regulate the amount of electricity in the system at any one point in time. The units top up supply during high demand while storing it when demand is more subdued.

Investment opportunity: There is a need to build a network of storage facilities that allows National Grid to regulate the amount of electricity in the system at any one point in time

These storage units – not particularly aesthetic and at their crudest looking like shipping containers dumped in the middle of a field – have taken on greater importance with the move (both in the UK and worldwide) towards renewable energy such as solar and wind.

While the supply of nuclear power and that of energy generated from coal-fired power stations is reliable, renewable energy isn’t. When the sun doesn’t shine and the wind drops, solar panels and giant wind turbines generate little energy.

Equally, when the sun burns brightly and the wind is blowing like a gale, they overdeliver. Storage facilities iron out this supply inconsistency, delivering electricity to National Grid when it is needed and tucking it away for another day when not.

Major energy storage players in the UK include Highview Power. A few days ago, it published research by consultancy firm Stonehaven which revealed that wind power sufficient to supply 1.2 million homes a day was wasted over a four-month period (October to January this year) because of insufficient facilities to store surplus energy generated when the weather is blowy or the sun shines.

Rupert Pearce, chief executive, said: ‘Renewable energy storage is essential to powering a cleaner, cheaper, always-on Britain.

‘By capturing and storing excess renewable energy – which is now the UK’s cheapest, most secure and most abundant form of fuel – we can power Britain’s homes and businesses with renewable green energy, taking millions of tons of carbon out of the atmosphere and ending a culture of reliance on expensive foreign imports.’

While Highview Power is a pioneer in this field, a number of stock market-listed investment trusts are also stepping into the breach by funding the building of new energy storage units.

This is resulting in investment opportunities for those who would like to diversify their sources of dividend income – while indirectly supporting the move towards the elimination of greenhouse gas emissions.

Investment trusts batting in this space include Gore Street Energy Storage, Gresham House Energy Storage and Harmony Energy Income.

A few days ago, I had a long chat with Alex O’Cinneide, chief executive of Gore Street Capital, the private equity company that manages Gore Street Energy Storage.

The trust has storage assets worth £527 million in its portfolio – located in the UK, Ireland and overseas. The units it owns can store electricity at scale. They are rented out to the likes of National Grid which can use them to either receive surplus energy or deliver extra electricity when the grid is under pressure.

The income that the trust generates is split three ways. It is used to pay management fees; a chunk is put aside to fund the construction of more storage facilities; and the rest (the bit you may be interested in) is used to pay dividends to shareholders.

The trust’s dividend record is steady. In the three full financial years it has negotiated so far, it has paid an annual dividend of 7pence a share. With shares trading at around £1.09, this means a healthy dividend equivalent to around 6.4 per cent a year.

As the trust’s assets increase in value, O’Cinneide says there is every chance that the dividend payments could also rise. Capital return is of secondary importance. Echoing Rupert Pearce’s words, O’Cinneide told me: ‘Without storage, we can’t rely upon more renewable energy to light our homes and power UK-based industries. It means relying upon gas imports from terrible regimes.’

Coincidentally, Gresham House Energy Storage has also paid annual dividends of 7pence a share, although its shares look rather expensive compared to the value of the trust’s underlying assets. Harmony Energy Income only launched late last year.

These trusts are not without risk. There can be significant delays between storage units being built and then connected to the grid. Building costs – including key components such as lithium batteries – are also rising. Greater reliance on nuclear energy could also upset the apple cart.

But these storage units will play an increasingly important part in our country’s energy infrastructure (as well as elsewhere in the world). Income seekers should run the rule over them.

Better, I would say, than earning a dividend from BP.

Pleas to rate really grate 

It seriously grates when financial organisations ask me to rate their customer service before they have delivered an ounce of it.

It happened 12 days ago when I reported a Heathrow savings bond scam to the Financial Conduct Authority through the online channel it asks consumers to use. I wrote about the fraudulent bonds a week ago.

Rather than act on the information I had already sent, its response (two days later) was to email asking for more details. It then asked me to complete a survey rating my experience – stating it would help to improve its future service.

How can I rate a ‘service’ when none has been given? Rather than getting consumers to fill in questionnaires so it can proclaim its service is wunderbar, the FCA should be devoting all its energies to catching fraudsters.

When it comes to fraud, procrastination on behalf of the regulator can cost consumers serious money.

Beware these cash machine crooks 

Cash machines continue to attract criminals, intent on stealing our card details through techniques such as skimming (capturing your PIN) and trapping (nicking your card).

Of all the card machines I use – when at work, home or on my travels – one set of two ATMs is more prone to crime than any other: the NatWest cash machines located outside its branch on Kensington High Street in West London.

I have been a victim of skimming on at least two occasions when using these machines. I’ve even complained to the bank, only to be told they are not particularly targeted by criminals.

Of course I should trust my instincts, but nine days ago I stupidly used one of the machines to withdraw some cash. When I opted for cash, out spewed £10 (without me choosing how much I wanted) and then my debit card. All hugely suspicious. When I looked at the adjoining ATM, someone had scribbled a note: ‘Do not use, police contacted.’

I rang my bank straightaway and the card was cancelled before any fraud was committed. But it has left me without a debit card – and access to cash – while a replacement is issued.

I won’t be using the machines again, that’s for sure. Lesson learnt. Have you fallen victim to cash machine fraud? Do let me know by emailing: [email protected].