REG - Gore Street Energy - 200 MW acquisition in California

Gore Street Energy Storage FundAnnouncement

17/02/2023 07:00

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RNS Number : 2204Q  Gore Street Energy Storage Fund PLC  17 February 2023

17 February 2023

Gore Street Energy Storage Fund Plc

('GSF' or the 'Company')

 

200 MW acquisition in California

 First acquisition in CAISO grid, and the largest acquisition to date in the
US

Gore Street Energy Storage Fund plc (ticker: GSF), London's first listed
energy storage fund supporting the transition to low carbon power in the UK
and internationally, is pleased to announce that it has agreed to acquire Big
Rock, a 200 MW / 400 MWh energy storage project (the "Project") located in
Imperial County, California, United States from Avantus (the "Seller" -
formerly 8minute).

Following this acquisition, GSF's internationally diverse portfolio will
consist of 27 projects with a total capacity of 1,173.2 MW of operational and
construction assets across the UK, Ireland, Germany and the Electric
Reliability Council of Texas (ERCOT) and California Independent System
Operator (CAISO) grids within the US, offering investors exposure to five
different grid partners. Big Rock will be the Company's first investment in
California and further diversifies the Company's revenue streams and
geographic exposure. The Project will be connected to CAISO, one of nine
independent system operators (ISO) in North America. The CAISO grid provides
electricity to 80% of California and a small part of Nevada.

CAISO offers a particularly attractive opportunity for energy storage
investment due to California's significant deployment of solar capacity and
ongoing retirement of baseload thermal generation across the state, creating
significant opportunities for services that aim to deliver stability to the
grid. The asset will support CAISO's grid by providing ancillary services
while also participating in the capacity market (Resource Adequacy) and
wholesale trading.

The construction-ready Project has secured material land rights, planning
consents and a grid connection scheduled for H2 2024. Commercial operations
will commence shortly thereafter as a battery supply contract for all battery
cells for the two-hour duration site, and engineering procurement and
integration contracts have been secured.

The Project will be eligible to benefit from an investment tax credit for up
to 30% of qualifying capital expenditure via the Inflation Reduction Act,
which was passed in late 2022.

The Project acquisition costs, including capex spent on or around the closing
date, is approximately $110 million, including development fees and milestone
payments to date for an EPC contract of all battery cells. Following the
transaction, the Company's cash position is c.£144 million, of which c.£66
million is already committed through contractual obligations to construct
announced portfolio projects. The remaining funds are allocated to the
Company's pre-construction / construction projects but are not yet
contractually committed.

Gore Street's investment manager, Gore Street Capital Limited (the "Investment
Manager"), estimates the Project will have an unlevered IRR in the range of
10-12%, in line with GSF's target.

 

Patrick Cox, Chair of the GSF Board, commented:

"We are delighted to announce this landmark international acquisition for the
Company. This is the Company's first acquisition in the Californian market and
follows our successful entry into the energy storage markets of Texas and
Germany in 2022.

With this acquisition, the Company is now diversified across five high-growth
grids, underpinning our push into international markets, where we continue to
see attractive new investment opportunities in line with our target returns.
We remain dedicated to performing competitively across the sector's core
metrics - cost per MW and revenue per MW / MWh - as this ultimately drives
returns for shareholders.

We look forward to updating the market over the next 18 months as 361.7 MW of
projects are set to become operational across Great Britain, Ireland and
Texas."

 

Alex O'Cinneide, CEO of the Investment Manager, is a non-executive director of
the Seller and holds employee ownership plan units in the Seller. In order to
manage any actual or perceived conflict of interest arising in relation to the
acquisition of the Project, Mr O'Cinneide has not participated in any
discussions concerning the approval of the acquisition and the Company's board
of directors has approved the transaction.

 

For further information:

 Gore Street Capital Limited
 Alex O'Cinneide / Paula Travesso                                  Tel: +44 (0) 20 3826 0290

 Shore Capital (Joint Corporate Broker)
 Anita Ghanekar / Rose Ramsden / Iain Sexton (Corporate Advisory)  Tel: +44 (0) 20 7 408 4090

  Fiona Conroy (Corporate Broking)

 

 J. P. Morgan Cazenove (Joint Corporate Broker)
 William Simmonds / Jérémie Birnbaum (Corporate Finance)    Tel: +44 (0) 20 7742 4000

 

Buchanan (Media enquiries)

 Charles Ryland / Henry Wilson / George Beale  Tel: +44 (0) 20 7466 5000
                                               Email: Gorestreet@buchanan.uk.com

 

Notes to Editors

About Gore Street Energy Storage Fund plc

Gore Street is London's first listed energy storage fund and seeks to provide
Shareholders with an opportunity to invest in a diversified portfolio of
utility-scale energy storage projects. In addition to growth through
exploiting its considerable pipeline, the Company aims to deliver consistent
and robust dividend yield as income distributions to its Shareholders.

 

 

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