Portfolio and Trading Update

Gore Street Energy Storage Fund PLC

10 January 2024

 

10 January 2024 

Gore Street Energy Storage Fund plc 

(the "Company" or "GSF") 

Consistent strong performance and positive outlook

Gore Street Energy Storage Fund plc, the internationally diversified energy storage fund, is pleased to share an update for the FY Q3 ending 31 December 2023. The quarter continued to highlight the stability of the Company's revenue, with the consolidated portfolio generating an estimated £15.1/MW/hr, consistent with the £15.1/MW/hr generated during the prior six months to 30 September 2023.  In addition, operational capacity increased by 27% and a new strategic partnership with Nidec was established with 14,000,000 new Ordinary Shares issued at NAV. The Company closed the quarter with continued strong performance and a positive outlook from the Investment Manager.

Key FY Q3 Highlights:

Positive Market Outlook: the Company continues to observe favourable market trends, particularly across the US, Irish and mainland European markets and has positioned itself for sustained growth in the energy storage markets globally. The demand for flexibility services, provided by assets like those of the Company, remains robust.

•     Strong Revenue Stability Continues: the Company achieved an estimated quarterly revenue of £15.1/MW/hr, consistent with the £15.1/MW/hr generated during FY H1. This stable revenue profile has been achieved through the Company's diversified portfolio incorporating multiple uncorrelated markets, system chemistries and durations. The Company's Northern Irish assets, for example, delivered record high estimated revenue of £31.4/MW/hr during FY Q3, building on the strong revenue performance of the Company's Texas portfolio during FY Q2. The seasonal patterns of revenue generation across grids aligns with expectations and emphasises the significance of uncorrelated revenue cycles between markets, underscoring the advantages of activity across diverse, uncorrelated grids within an energy storage portfolio.

•     Operational Capacity: the Company reports a 27% increase in operational capacity during the quarter to 372 MW following the 79.9 MW Stony asset becoming commercially operational during the period. The Company remains on target to achieve an operational portfolio exceeding 800 MW by the end of 2024.

•     Strategic Partnership: the Company was pleased to announce its strategic partnership with Nidec Motor Corporation at the end of 2023 and looks forward to leveraging this partnership over the coming years. The Company's Board was also pleased to see Nidec take a material position in the Company, with 14,000,000 shares issued at the September NAV.

Operational Portfolio Update:

The portfolio achieved strong performance in Q3 and delivered an estimated average revenue of £15.1/MW/hr (excluding Stony[1]), with the non-GB fleet averaging an estimated £20.5/MW/hr. This was driven by high wind generation in Ireland, which translated into increased revenue for the Irish portfolio, and builds on a strong summer period delivered largely by the operational US assets. Revenues achieved by the US and Irish assets in the financial year to date have now passed their FY 2023 total revenue figures.

·      Ireland: the combined Irish portfolio generated an estimated £25.8/MW/hr during the quarter, continuing the strong performance experienced in the summer months. This was further boosted by high estimated December revenue of £37.2/MW/hr resulting from strong and consistent winds on the island. All assets benefitted from trading in periods when DS3 revenue dipped.

·      Germany: Averaged an estimated £10.9/MW/hr during the period due to lower Frequency (Primary) Control Reserve (FCR) prices caused by low daytime demand resulting from a warmer start to the winter period. Despite the high volumes of renewable generation, the reduced demand for gas, which sets FCR prices, translated into lower revenue. Wholesale trading, meanwhile, added to the revenue stack with the German asset able to take advantage of periods of zero or negative prices when charging, alongside ancillary services and discharging into peak periods.

·      Texas: Operational assets delivered an estimated £4.5/MW/hr in line with seasonal variations expected in this market as warmer weather and low demand reduced the need for ancillary services.

·      GB: the GB fleet (excluding Stony) generated an estimated £6.1/MW/hr, less than half the Company's estimated average revenue during the quarter. Highly anticipated reforms to the Balancing Mechanism began in December 2023, with the impact on revenues yet to be seen.

Capital Structure:

·      Fundraise: 14,000,000 new ordinary shares in the capital of the Company were issued to Nidec Motor Corporation at 112.9p (Net Asset Value as at 30 September 2023).

·      Liquidity: The Company maintains a strong balance sheet and remains well capitalised. As of 31 December 2023, the Company had £66m in cash or cash equivalents. Available credit facilities include the Santander RCF of £50m and the Project Level Debt Facility on the Big Rock Project from First Citizen Bank of $60m. As at period end, c.$15.8m had been drawn down from the Big Rock Facility and the Santander facility remained undrawn.  

Construction Progress per Geography:

·      Great Britian: Stony (79.9 MW) became commercially operational during the period and Ferrymuir (49.9 MW) remains on track to meet its energisation target. All other GB projects remain on schedule.

·      California: All material procurement for Big Rock (200 MW) is complete, including a contract with RES for BESS balance of plant. Construction teams have been mobilised on site and civil works began on schedule.

·      Texas: An advance order for long lead HV equipment was completed in September for Dogfish (75 MW) and was followed by the completion of a turnkey EPC contract with Nidec in December. Design works are underway with mobilisation planned for summer.

·      Ireland: At Porterstown Phase II (60 MW), initial civil engineering works preparing the ground for BESS installation were completed. An engineering and construction management contract has been signed with RES and procurement remains on schedule. At Kilmannock, necessary planning applications have been made and the detailed design stage is underway.

Alex O'Cinneide, CEO of Gore Street Capital, the Investment Manager of the Company, commented:  

"As we begin 2024, we are optimistic about the trajectory of the Company. Demand for the asset class continues to grow at pace, with renewable energy targets pushing multiple grids to a critical turning point. Fossil fuel use in the UK fell to its lowest level ever in 2023, with consumption of intermittent renewable energy sources surpassing that of traditional base load power, leading to an even greater demand from grid operators for flexible assets like ours.

"While 2023 posed challenges, I believe it served as a valuable illustration of the value we have always seen in a diversified portfolio. Energy storage is fundamentally a merchant asset class and one that requires diversification as a solid foundation. Despite fluctuations in the share price, our NAV and revenue generation across the portfolio have remained strong.

"In addition to showcasing operational excellence throughout the year, we achieved significant milestones. We successfully secured project-level debt for the Big Rock asset in California, the kind of financing uniquely available to GSF given its international exposure. Moreover, our strategic partnership with Nidec marks the beginning of a promising long-term alliance.

"We also increased trading activity over the period as part of a more dynamic strategy aided by new route-to-market partners. The Company's revenue stack has always included some share of trading and we are now leveraging this experience to carry out higher levels of trading than ever before within the portfolio, particularly in European markets where opportunities for innovative trading are scales above what is possible in GB.

"Looking ahead, we anticipate the Company's most pivotal year yet with operational capacity scheduled to expand to over 800 MW, including 200 MW coming online in the Company's fifth market to date; potential capital recycling; and a strengthening dividend cover from a diverse source of revenue streams. The Company is poised for significant growth and we look forward to updating the market regularly as these plans progress."

For further information: 

Gore Street Capital Limited          

Alex O'Cinneide / Paula Travesso                                                                              Tel: [phone] 

Shore Capital (Joint Corporate Broker)   

Anita Ghanekar / Rose Ramsden / Iain Sexton (Corporate Advisory)                Tel: [phone] 

Fiona Conroy (Corporate Broking)             

J.P. Morgan Cazenove (Joint Corporate Broker)                                                  

William Simmonds / Jérémie Birnbaum (Corporate Finance)                             Tel: [phone] 

Buchanan (Media Enquiries)       

Charles Ryland / Henry Wilson / George Beale                                                     Tel: [phone] 

Email: [e-mail] 

Notes to Editors 

About Gore Street Energy Storage Fund plc 

Gore Street is London's first listed and internationally diversified energy storage fund dedicated to the low-carbon transition. It seeks to provide Shareholders with sustainable returns from their investment in a diversified portfolio of utility-scale energy storage projects. In addition to growth through increasing operational capacity and a considerable pipeline, the Company aims to deliver consistent and robust dividend yield as income distributions to its Shareholders. 

https://www.gsenergystoragefund.com 

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[1] Stony commenced commercial operations as of 18^th December

 

END