REG - Gore Street Energy - 200MW Battery Storage Acquisition, Business Update

Gore Street Energy Storage FundAnnouncement

31/10/2022 07:01

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221031:nRSe5574Ea&default-theme=true

RNS Number : 5574E  Gore Street Energy Storage Fund PLC  31 October 2022

Gore Street Energy Storage Fund Plc

("GSF" or the "Company")

 

 

200MW Battery Storage Acquisition and Business Update

 

Largest MW Project Acquisition to Date

 

Gore Street Energy Storage Fund plc (ticker: GSF), London's first listed
energy storage fund supporting the transition to low carbon power, is pleased
to announce that it has agreed to acquire from Kona Energy a 200MW
construction-ready energy storage project (the "Project") in Heysham, North
West England.  The Project is one of the largest storage projects in Europe
and GSF's largest acquisition to date. With this acquisition, GSF's portfolio
will consist of 25 projects with a total capacity of 898MW in operation and
construction in the UK, Ireland, Germany and the US.

 

The Project has secured all land rights, grid connection and planning consent.
The Project will connect to National Grid's main transmission network rather
than the local distribution network, meaning it will operate independently
from an intermediary distribution network operator. This will potentially open
additional revenue opportunities while reducing capex and operating costs.
This is GSF's second main transmission-connected site following the
acquisition of the 57MW Enderby project in 2021.

 

Grid connection is expected to be no later than Q4 2026; however, GSF's
Investment Manager, Gore Street Capital Limited (the "Investment Manager"),
will seek to accelerate the connection date while maintaining a cost-efficient
EPC procurement process. The final capex will depend on the selection of the
system duration. The Project has the flexibility to deploy a storage system
with a duration of up to 2 hours. The Project is expected to deliver an
unlevered IRR at least in line with GSF's target return.

 

Business Update

 

Energy security and affordability remain national priorities, key themes that
the Company's assets address daily. The Company's operational portfolio
continues to perform well, supported by strong demand and higher-than-expected
revenue.

 

The Company's capital structure leaves GSF exceptionally well placed in the
current environment and crucially not exposed to increases in debt servicing
costs. The Company is also benefiting from higher-than-expected interest rates
on its cash holdings, which have, in turn, positively impacted overall
dividend cover.

 

The Investment Manager believes that the Company is well positioned in the
context of the current macroeconomic environment, not least given de-minimis
borrowing exposure and strong geographical diversification, including:

 

·    Fixed price EPC contracts in place for all GB sites under
construction and are therefore not adjusted or affected by inflation;

·    The Company's current capital structure means that it is not exposed
to any meaningful increased debt servicing costs;

·    The Company's cash holdings are benefiting from increased interest
rates, supporting the Company's dividend coverage ratio;

·    The Company is well diversified geographically, with more than 60% of
its operational portfolio located outside Great Britain. In particular,
revenue from the portfolio companies located in Ireland, Germany and the US
have benefitted from favourable FX rates during the September end quarter;

·    The Investment Manager is pricing potential acquisitions with IRRs at
the upper end of the Company's target IRR of 10-12%; and

·    The Company would like to reiterate its commitment to a progressive
dividend policy with a target yield of 7% of NAV per annum.

 

Alex O'Cinneide, CEO of Gore Street Capital Limited, the Company's investment
manager, commented:

 

"We are delighted by the Company's continued good progress over the past 12
months. Despite recent market volatility, the Company's operational fleet
continues to yield higher-than-expected revenue across our markets.

With the acquisition of this landmark 200MW transmission-connected project
from Kona Energy, our largest acquisition yet, the Company has further
strengthened its leadership position in the GB market. We are encouraged that
an asset of this scale will benefit from being connected to the main
transmission network, providing attractive running cost savings and potential
additional revenue streams. We remain very selective on new acquisition
opportunities focusing on those, such as this project, with significant cost
and revenue advantages.

Additionally, the Company's portfolio now benefits from diversification across
four high-growth markets, having recently entered the European and North
American Markets. This strategy of avoiding country single risk is clearly of
benefit to our shareholders given recent events. These acquisitions are
indicative of the increasing number of international opportunities in the
Company's pipeline.

We are continually encouraged by the support of key stakeholders as we grow
GSF further and take advantage of potential new investments from our
compelling pipeline of domestic and international opportunities. Our continued
focus on acquisition pricing discipline and strength of revenue per MW/h all
support GSF in delivering its dividend target of 7% to shareholders."

 

  ENDS

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.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  STRPPGQGUUPPGQR