REG - Gore Street Energy - Interim Results, NAV and Dividend Declaration
12/12/2024 07:00
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RNS Number : 7638P Gore Street Energy Storage Fund PLC 12 December 2024
12 December 2024
Gore Street Energy Storage Fund
('Gore Street' or the 'Company')
Interim Results
NAV and Dividend Declaration
Continued execution as the three remaining target assets progress through
construction, enabling the portfolio to benefit from a substantial increase in
operational capacity
Gore Street Energy Storage Fund plc, the internationally diversified energy
storage fund, is pleased to announce that it has today published its Interim
Results for the six-month period ended 30 September 2024.
Key Highlights
Financial:
• Net Asset Value ("NAV") per ordinary share of 100.5 pence (31
March 2024: 107.0p).
• NAV total return for the period was -3.0%, bringing NAV total
return since IPO to 42.7%.
• The Company and its investments had available cash of c.£36
million.
• At period end, the Group had drawn £66m from its borrowing
facilities, resulting in a debt-to-GAV ratio of 11.5%.
• The Company paid dividends amounting to 3.5 pence per share during
the period, equal to a 12.3% yield, based on the 30 September share price.
• Post-period end, the Company increased its existing revolving
credit facility with Santander to £100 million and converted and upsized its
project-level debt facility with First Citizens Bank from $60 million to $90
million.
• As previously noted, the Company's US construction assets are
expected to benefit from Investment Tax Credits (ITC) worth between $60- 80m.
The Company expects to receive the cash inflow in 2025.
• Cash generation and successfully securing the Resource Adequacy
contract at a price that exceeded the estimates from the Company's March-end
quarter valuations were the key positive drivers of NAV over the period.
• Macroeconomic factors, including updated third-party revenue
curves, were key offsets to the Company's NAV over the period, as detailed in
the NAV bridge below.
Movement in NAV between March 2024 - September 2024 Changes in NAV (Pence Per Share)
NAV March 2024 107.0
Dividends (3.5)
Revenue Curves (5.2)
Inflation (1.6)
Discount Rate 1.3
Net Portfolio Return 2.5
NAV September 2024 100.5
Operational:
• Total portfolio revenue for the period was £17.5 million (30
September 2023: £19.3 million).
• Operational EBITDA for the six-month period was £10.9 million (30
September 2023: £12.2 million).
• Operational capacity increased by 13% to 421.4 MW (31 March 2024:
371.5 MW).
• The Company's two US assets under construction, Big Rock, the 200
MW/400 MWh Californian asset, and Dogfish, the 75 MW/75 MWh asset in Texas,
have made material construction progress. The energisation process for Big
Rock is expected to be completed in the coming weeks. Dogfish remains on
schedule for energisation in February 2025.
• The Company's Enderby asset, a 57 MW/57 MWh asset in GB, has
completed all necessary milestones for energisation in preparation for the
National Grid Electricity Transmission (NGET) final outage. Energisation is
scheduled for January, with delays attributable to NGET and winter outage
season.
• Post-period end, the Company secured a highly attractive 12-year,
fixed-price Resource Adequacy contract for the Big Rock asset. The contract
adds over $14 million in contracted revenue per annum over the contract's
life. This is a fully stackable contract, enabling the asset to participate in
multiple revenue streams concurrently, similar to the Capacity Market
contracts that exist in GB.
Dividend Declaration
The Company's Board of Directors has approved a dividend of 1.0 pence per
share for the September end quarter. The ex-dividend date will be 24 December
2024, and the record date 27 December 2024. The dividend will be paid on or
around 15 January 2025.
Any such dividend payment to Shareholders may take the form of either dividend
income or "qualifying interest income", which may be designated as an interest
distribution for UK tax purposes and, therefore, subject to the interest
streaming regime applicable to investment trusts. Of this dividend declared of
1.0 pence per share, 0.87 pence is treated as qualifying interest income.
Alex O'Cinneide, CEO of Gore Street Capital, the Investment Manager of the
Company, commented:
"I am pleased to share this report, providing a comprehensive update on the
Company's recent performance. Although our diversification strategy has
continued to successfully reduce revenue volatility, updated third-party
revenue curves, a key input in the Company's valuations, resulted in a decline
across the period. Despite this, we have achieved significant progress across
the portfolio, highlighted by the execution of the Resource Adequacy contract,
which secures over $165 million in contracted revenue over its lifetime.
Further, the RA contract price exceeded the estimate used in the Company's
March-end quarter valuations, resulting in a positive impact on NAV. Other
milestones included the increase of both debt facilities and, crucially, the
progress across the Company's construction schedule. This includes the
commencement of the energisation process for Big Rock (200 MW / 400 MWh),
along with Dogfish (75 MW / 75 MWh), which is on track for energisation by
February 2025, and energisation for Enderby (57 MW / 57 MWh) is scheduled for
January 2025. Altogether, these projects will increase energised capacity
across the portfolio to over 750 MW by February. Our ongoing focus on capital
allocation, combined with well-diversified portfolio optimally managed through
innovative trading strategies, which are now controlled and executed in-house,
ensures we are well-positioned to navigate the current landscape and
ultimately deliver value to our stakeholders."
Results Presentation Today
There will be a presentation for sell-side analysts at 9.45 a.m. today, 12
December 2024. Please contact Burson Buchanan for details
at gorestreet@buchanancomms.co.uk (mailto:gorestreet@buchanancomms.co.uk)
A presentation for all existing and prospective investors will also be held
today, 12 December 2024, at 11:00 a.m. on the Investor Meets Company Platform.
Investors can sign up to Investor Meet Company for free and add to meet GORE
STREET ENERGY STORAGE FUND
PLC via: https://www.investormeetcompany.com/gore-street-energy-storage-fund-plc/register-investor
(https://www.investormeetcompany.com/gore-street-energy-storage-fund-plc/register-investor)
Report Access
The interim report will shortly be available from the Company's website,
www.gsfenergystoragefund.com (http://www.gsfenergystoragefund.com/) . Please
click on the following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/7638P_1-2024-12-11.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7638P_1-2024-12-11.pdf)
The Company has also submitted its interim report to the National Storage
Mechanism, which will shortly be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
For further information:
Gore Street Capital Limited
Alex O'Cinneide / Paula Travesso / Ben Paulden
Email: ir@gorestreetcap.com
(https://gorestreetcap01-my.sharepoint.com/personal/bpaulden_gorestreetcap_com/Documents/ir@gorestreetcap.com)
Tel: +44 (0) 20 3826 0290
Shore Capital (Joint Corporate Broker)
Anita Ghanekar / Sophie Collins (Corporate Advisory)
Tel: +44 (0) 20 7408 4090
Fiona Conroy (Corporate Broking)
J.P. Morgan Cazenove (Joint Corporate
Broker)
William Simmonds / Jérémie Birnbaum (Corporate
Finance) Tel:
+44 (0) 20 3493 8000
Burson Buchanan (Media Enquiries)
Charles Ryland / Henry Wilson / Samuel
Adams
Email: gorestreet@buchanan.uk.com (mailto:gorestreet@buchanan.uk.com)
Tel: +44 (0) 20 7466 5000
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
(https://www.gsenergystoragefund.com/index)
Half Year Report Gore Street Energy Storage Fund plc
For the six months ended 30 September 2024
Highlights and Key Metrics
Key Metrics
For the period ending 30 September 2024
NAV PER SHARE
100.5p
(March 2024: 107.0p)
OPERATIONAL CAPACITY
421.4 MW
(March 2024: 371.5 MW)
DIVIDEND YIELD
12.3%
(September 2023: 8.9%)
NAV TOTAL RETURN
for the 6 month period
-3.0%
(September 2023: 0.6%)
OPERATIONAL EBITDA
for the 6 month period
£10.9m
(September 2023: £12.2m)
DIVIDENDS PAID DURING THE PERIOD
3.5p
(September 2023: 3.5p)
Table 1: Key Metrics As at As at
30 September 2024
31 March 2024
Net Asset Value (NAV) £507.6m £540.7m
Number of issued Ordinary shares 505.1m 505.1m
NAV per share 100.5p 107.0p
NAV Total return since IPO * 42.7% 48.4%
Share price 56.9p 64.5p
Market capitalisation £287.4m £325.8m
Share price total return since IPO * -18.4% -10.2%
(Discount)/Premium to NAV * -43.4% -39.7%
Portfolio's total capacity 1.25 GW 1.25 GW
Portfolio's operational capacity 421.4 MW 371.5 MW
Average operational capacity 396.4 MW 311.5 MW
Gross asset value (GAV) * £573.6m £578.0m
Gearing * 11.5% 6.5%
Ongoing Charges Figure * 1.40% 1.42%
Key Metrics for the period (1 April - 30 September) As at As at
30 September 2024
30 September 2023
NAV Total return for the six month period * -3.0% 0.6%
Share Price Total return for the six month period * -8.2% -18.6%
Total portfolio revenue for the six month period £17.5m £19.3m
Average revenue per MW/hour £10.0 £15.1
Operational EBITDA for the six month period * £10.9m £12.2m
Total Fund earnings for the six month period * £6.1m £8.5m
Operational dividend cover for the period * 0.62x 0.72x
Total Fund dividend cover for the period * 0.35x 0.50x
Dividend Yield * 12.3% 8.9%
Dividends per Ordinary Share paid during the period 3.5p 3.5p
* Some of the financial measures above are classified as
Alternative Performance Measures, as defined by the European Securities and
Markets Authority and are indicated with an asterisk (*). Definitions of these
performance measures, and other terms used in this report, are given on page
43 of the 2024 Interim Report together with supporting calculations where
appropriate.
Chair's Statement
Overview and Performance
Since our IPO in 2018, the Company has experienced rapid expansion and
penetrated high-growth markets, resulting in a portfolio of assets across five
markets. This diversified approach serves as a solid investment foundation,
particularly for a predominantly merchant asset class. This enhances the
stability of our overall revenue profile and provides access to many other
revenue streams. A good example is the 12-year Resource Adequacy (RA) contract
secured for the Big Rock asset in California, worth over $14 million annually.
Following the successful completion of the Ferrymuir and Stony assets, with a
combined capacity of c.130 MW, I am pleased to report that construction at the
Big Rock asset continues to progress at pace, having begun the energisation
process which is scheduled to be completed in the coming weeks. At Enderby,
all necessary milestones for energisation have been completed in preparation
for the NGESO final outage, which has been pushed to January due to NGET
delays and the winter outage season. Dogfish remains on track for energisation
in February 2025.
As we approach the completion of our prioritised portfolio, we are beginning
to transition towards a more steady state. This maturation entails an
increased focus on asset performance, ensuring that these assets operate at
peak efficiency to maximise revenue generation. Our approach benefits from the
specialised in-house expertise of our management team, allowing us to
effectively oversee the entire value chain, from construction through asset
management and, more recently, route-to-market optimisation.
These critical functions support the Company and unlock the higher returns on
offer to an actively managed portfolio. They also allow us to take advantage
of efficiency gains, such as instant data access and asset-specific trading
strategies, from both a technical and geographical perspective while reducing
potential conflicts of interest with other external parties.
Investors familiar with the sector will be aware that third-party revenue
forecasts have shown a downward trend in Great Britain. Over the period, this
trend was the primary driver in the NAV decline from 107.0 to 100.5 pence per
share, although this was partly mitigated by our diversification across five
markets.
Macroeconomic Environment
The macroeconomic environment remains challenging, reflecting the recent
economic events in the UK. Rising inflation, central bank interest rates and
other factors have created uncertainty for investors, resulting in limited
access to the equity markets for investment trusts. However, we continue to be
encouraged by the strong deployment of renewables and associated policy
support for battery energy storage. These policies are further supported by
falling capex costs, increasing the attractiveness of retrofitting assets and
decreasing repowering costs.
NAV Performance
Updated key macroeconomic assumptions, notably revenue curves, reduced the
Company's NAV over the first half of the financial year from 107.0 pence per
share as at 31 March 2024 to 100.5 pence per share as at 30 September 2024. In
particular, Great Britain saw a decline in merchant revenue forecasts, which
was attributed to short-term weakness in the market. Our US assets in Texas
and California also saw a decline in their merchant revenue forecasts due to
lower US gas prices. The price secured for the RA contract, however, exceeded
the acquisition base case, and the estimate used in our March-end quarter
valuations, resulting in a net positive impact on the California asset's
NAV.
Debt
Post-period, the Company increased its non-recourse project finance by $30
million to $90 million, provided by First Citizens Bank for the 200 MW / 400
MWh Big Rock asset in California. This was achieved by completing key
construction milestones allowing the equipment loan to be converted into a
construction loan, as per the original agreement terms. Additionally, the
Company upsized its revolving credit facility with Santander Group from £50.0
million to £100.0 million, affording additional flexibility to the Company.
Notwithstanding the availability of these debt facilities, we remain committed
to a modest level of leverage, which is in line with the guidance previously
shared with the market.
Capital Allocation
Achieving long-term returns for shareholders through strategic capital
allocation remains a key goal. The Company is focused on completing the
remaining in-construction assets to reach the target energised capacity of
753.4 MW.
We are well-positioned to meet our current contractual commitments and will
continue to manage leverage carefully in the context of the ongoing
high-interest rate environment. Additionally, we are encouraging the
Investment Manager to explore opportunities for capital recycling within the
portfolio and will keep the market updated on any significant developments.
The Company holds 494.8 MW of pre-construction assets and is exploring the
optimal way to realise their value, including potential strategic disposals or
incremental capacity beyond the 753.4 MW target.
In light of the persistent discount of the share price and the cash the
Company expects to receive through Investment Tax Credits or any asset
disposal, prioritising our shareholders' interest will inform our priorities
and choices. Any proceeds or excess cash generated beyond the dividend target
could be allocated to retrofitting existing assets or rewarding shareholders
through the return of capital through various mechanisms.
Dividends
In line with the updated dividend policy, announced in the 2024 Annual Report
and Financial Statements, the Company paid a 1.0 pence per share dividend for
the June-end quarter. Subsequently, the Board of Directors approved a 1.0
pence per share dividend for the September-end quarter. The ex-dividend date
will be 24 December 2024, followed by a record date of 27 December 2024. The
dividend will be paid on or around 15 January 2025.
The Company has continued to pay dividends in accordance with the updated
policy, and it is the Board's intention to continue to do so.
Change of Registrar
As part of the regular review of service providers, the Company has appointed
Equiniti as its new Registrar. Further details are included in the Directors'
Interim Report.
Sustainability
The FCA has introduced a new ESG framework, the UK Sustainability Disclosure
Requirements (SDR), which includes a labelling and disclosure regime for
investment products and an anti-greenwashing rule. The anti-greenwashing rule
came into effect on 31 May, and funds have been able to use one of four labels
(Sustainability Focus, Improver, Impact, and Mixed Goals) since 31 July 2024.
The Company has therefore chosen to adopt the 'Sustainability Focus' label and
has published all relevant disclosures on the Investment Manager's website.
Outlook
The Company continues to make significant progress, marked by the commencement
of the energisation process at Big Rock in California, the largest asset in
the Company's portfolio (200 MW / 400 MWh). This diversity allows us to
harness the benefits each market can provide. We have proactively invested in
building expertise to enhance performance for our shareholders and to
successfully manage the added complexity that territorial diversification can
bring.
Investment Tax Credits (ITCs) are available for the Company's two construction
assets in the US. The Investment Manager expects a cash inflow from the sale
of these credits of the order of $60 to $80 million and remains confident of
their receipt, as detailed within the report. These proceeds are included in
the Company's NAV, but the specific allocation of the equity flow remains to
be determined by the board.
Despite challenging short-term volatility, we remain confident in our
long-term ability to deliver value to our shareholders.
Pat Cox
Chair
Investment Manager's Interim Report
Dr Alex O'Cinneide
CEO of Gore Street Capital, the Investment Manager
I am pleased to present this report, which offers a detailed overview of the
Company's recent performance and reinforces our dedication to sustainable,
long-term growth for our investors. Significant progress has been made across
the Company's in-construction assets; Big Rock, Dogfish and Enderby. Big Rock
(200 MW/400 MWh asset in California), the largest asset in the Company's
portfolio, has begun the energisation progress which is expected to be
completed in the coming weeks. All material works needed for Enderby's (57
MW/57 MWh) energisation have been completed, and is scheduled to be energised
in January, with Dogfish (75 MW / 75 MWh) scheduled to be energised shortly
after, by February 2025. These milestones are critical as we work toward
achieving the target energised capacity of over 750 MW by February 2025. Other
key highlights include the successful execution of a Resource Adequacy
contract, securing over $165 million in contracted revenue over the contract
life, and the upsizing of both existing debt facilities. Despite ongoing
challenges across the renewables sector, the fundamentals of the portfolio
remain strong.
Cash Generation and Valuations
• The portfolio generated £17.5m of revenue during the
reporting period (30 September 2023 £19.3m).
• Operational EBITDA of £10.9m achieved for the period (30
September 2023 £12.2m).
• Operational dividend cover for the period was 0.62x and
company level dividend cover was 0.35x.
• The portfolio valuation experienced a decline over the period,
primarily driven by updated third-party revenue curves. As at 30 September
2024, the Company's NAV was £508m (31 March 2024 £541m).
Strong Liquidity Position
• The Company and its investments had available cash of £36m.
• The Group had drawn £66m from its borrowing facilities,
resulting in a debt to GAV ratio of 11.5%.
• Post-period end, the Company upsized its RCF with Santander to
£100m.
• Post-period end, the Company also converted and upsized its
project-level debt facility from $60 to $90m as a result of the successful
completion of construction milestones.
• The Company's US construction assets are expected to benefit
from an Investment Tax Credits (ITC) of between $60-80m. The Company expects
to receive the cash inflow in 2025.
Key Portfolio Developments
• As of the date of publication, the Company's energised
portfolio reached 421.4 MW.
• The energisation of Big Rock (200 MW / 400 MWh) has begun and
is expected to be completed in the coming weeks.
• The Investment Manager has developed a Route-to-Market
capability and has subsequently onboarded five of the Company's assets and a
total 78.5 MW (POTL, Breach, Larport, Lascar and Hulley).
• The stackable Resource Adequacy contract was secured, which is
worth over $14m per annum, for the 200 MW / 400 MWh Big Rock asset.
The Portfolio
Figures 1-4 on page 6 in the 2024 Interim Report summarise the portfolio with
different charts. Figure 1(1) shows a breakdown of the revenue split per
market, Figure 2(2) shows revenue split per type, Figure 3 shows a breakdown
based on duration of the assets, and Figure 4 shows a breakdown by per
geography on an energised MW basis.
1, 2 Revenue split per market and revenue split per type is based on
revenue earned during the period
Revenue Generation and Portfolio Performance
Battery Energy Storage Systems (BESS) play a critical role in the markets
where the Company operates. The increasing integration of renewable energy and
the phase-out of thermal generators underscores the essential role of BESS in
future network design. Over the reported period, Great Britain saw the
decommissioning of its last coal power plant, marking a significant milestone
in the nation's decarbonisation efforts. Multiple policy announcements over
the period have also been aimed at promoting renewable and BESS build-out. The
new government in Great Britain has lifted restrictions on onshore renewable
energy development as part of a revision to the National Planning Policy
Framework. On 11 June 2024, Ireland published the implementation plan for
Accelerating Renewable Electricity (ARE) taskforce, which identified energy
storage as a critical component in achieving its renewable energy targets. The
Storage and System Services working group aims to deliver a policy framework
targeted at electricity storage. On 11 April, the European Parliament voted to
adopt measures to promote BESS deployment.
Germany stood out over the reported period, characterised by a large build-out
of subsidised solar, which led to frequent low-to-negative midday prices and
increased running costs for thermal generation in Frequency Containment
Reserve (FCR) and automatic Frequency Restoration Reserve (aFRR).
In Ireland, the System Non-Synchronous Penetration (SNSP) scalars serve as
indicators of renewable energy generation on the grid. Despite the expected
seasonal variations in the Irish grid, revenue remained relatively stable
throughout the reported period, largely due to consistent SNSP levels. The
Company's asset in the Republic of Ireland operates under a fixed-price
agreement known as the DS3 capped contract, meaning it continued to generate
revenue in line with the contract terms.
In Great Britain, revenue from BESS showed an upward trend during the period.
Increased competition in the ancillary service markets caused prices to
closely align with trading opportunities, as participants incorporate
opportunity costs into their bids. Throughout the period, wholesale markets
experienced heightened volatility on a quarter-on-quarter basis. This
positively impacted BESS revenue, reflecting a rise in parallel with the
improved trading opportunities. Market indices showed a c.15% increase in
revenue compared to the previous half-year period.
Texas experienced an uncharacteristically mild summer compared to the previous
two years, along with high renewable energy penetration. Major cities in Texas
recorded the fewest days above 38°C since 2021(3), reducing consecutive
high-temperature days, which are typically a major factor of grid load. As a
result, energy prices remained suppressed during the reported period, which
ultimately weighed on BESS revenue.
3
https://www.ercot.com/files/docs/2024/10/03/7-summer-2024-operational-and-market-review.pdf
Post-period end, the Investment Manager secured a Resource Adequacy (RA)
contract for the Big Rock asset (200 MW/400 MWh). The energisation process
for the asset has begun and is expected to be completed in the coming weeks.
RA is a capacity availability payment secured by load serving entities in
California. The contract secures over $14 million annually over the 12-year
life of the contract, on top of merchant revenue for the asset.
As highlighted in Figure 5 on page 7 in the 2024 Interim Report, variations in
revenues between grids are expected, as most grids follow seasonal patterns
linked to changes in demand linked to temperature or changes to the energy
generation mix. Ireland's revenues are directly linked to wind penetration on
the grid; German revenues have become highly correlated to solar generation;
Great Britain's revenue remain fairly level through the year and Texan revenue
is linked to constrained conditions on the grid due to weather events. The
Investment Manager's strategy of diversification between grids makes the
portfolio less prone to shocks in each grid. The differences in fundamental
drivers between grids and geography leads to each grid varying independently
from one another, ensuring a more stable revenue pattern. The addition of Big
Rock in California in the coming periods, supported by the lucrative RA
contract, will further diversify the portfolio's revenue streams, ensuring
further stability to future revenue.
Over the period the Company generated £17.5m across its operational
portfolio. Total revenue was lower than the same period last year (30
September 2023, £19.3m). This was a result of two factors; lower revenue from
Texas, caused by fewer high temperature days, and lower revenue from Northern
Ireland in part due to SNSP levels falling between May and July because of
less wind. Figure 5 in the 2024 Interim Report illustrates the total revenue
by market & capacity since IPO on a quarterly basis.
Great Britain (GB) Market
Table 2: Overview of the GB market
TSO National Energy System Operator (NESO)
GB Portfolio (operational) 239.5 MW / 230.8 MWh
Market Share 7%
Revenue during the period £7,230,000
Revenue per MW £7.66 / MW / hr
Revenue per MWh £7.98 / MWh / hr
% of Total Revenue 42%
The GB market performed broadly in line with previous reporting periods,
maintaining suppressed pricing levels. This trend is a consequence of lower
ancillary service prices resulting from market saturation and low wholesale
trading opportunities, consistent with the Investment Manager's forecasts.
Dynamic services pricing saw stabilisation throughout the period. Dynamic
Containment (DC) prices averaged £3.87/MW/hr, reflecting a c.4% increase on
the previous six-month period (October 2023 to March 2024). DC service
continued to be the ancillary service with the highest procurement volumes for
BESS. Dynamic Moderation (DM) and Dynamic Regulation (DR) showed similar
trends during the reporting period. Overall revenue across both quarters
remained relatively stable, with the portfolio generating £2.6m and £2.8m,
respectively (excluding liquidated damages).
The Investment Manager chose not to register Stony A & B in the Balancing
Mechanism (BM). This decision was made to strategically balance the portfolio
between BM-registered and non-BM registered assets. Non-BM assets operate
under different strategies, as they do not have to declare delivered positions
to the grid ahead of time, and do not get reimbursed for BESS imports and
exports in DC/M/R. This approach resulted in Stony capturing a 7% premium over
the rest of the GB portfolio during the reported period. The Investment
Manager is closely monitoring market conditions to enable swift registration
of Stony into the BM should market conditions shift.
BM revenue increased during the reporting period, which the majority of the
Company's front-of-the-meter assets registered in the BM captured. However,
despite updates by NESO (formerly NGESO) via its Open Balancing Platform (OBP)
resulting in increased dispatch rate of BESS in the BM, dispatch rates for the
asset class remain less frequent compared to other technologies due to
constraints of NESO's dispatch capabilities.
During the reported period, the portfolio saw an increased proportion of
revenues derived from trading and BM activities. The summer months experienced
increased volatility stemming from high wind generation and reduced grid
loads. Additionally, the British Government announced changes to the National
Planning Policy Framework, aimed at facilitating renewable energy development
in Great Britain. This is a positive step towards the continued development of
renewable energy systems on the grid and is likely to be a primary driver of
future volatility across the GB energy markets.
BESS build-out in GB during the reporting period was the lowest six-month
period since FY 22/23, with an increase of only 400 MW. This slowdown in
capacity deployment is due to the current level of revenue available to assets
connected to the GB grid, and global supply chain issues in the previous
periods. The deceleration of deployment of BESS illustrates the cyclical
nature of the GB market, as previously noted by the Investment Manager, where
the growth of renewable capacity may outpace the required BESS capacity,
reducing the current saturation the BESS markets and providing opportunities
for higher revenues.
A new ancillary service known as Quick Reserve (QR) is expected to be
introduced in December-end 2024. This service will initially be available to
BM-registered sites. The procurement volume of the service will be 300 MW.
The Investment Manager has claimed Liquidated Damages (LDs) for the reporting
period of c.£1.9 m. These LDs were claimed against delays in construction of
assets. The LD rate is favourable compared to the average revenue currently
achievable in this market.
Please refer to Figure 6(4) on page 9 in the 2024 Interim Report for a
quarterly breakdown of revenue in Great Britain. Figure 7 on page 9 in the
2024 Interim Report shows the historic BESS build-out in Great Britain.
4 Revenue received from Great Britain excludes revenue from
Liquidated Damages and Ferrymuir.
Irish Market
Table 3: Overview of the Irish Market
TSO SONI (Northern Ireland), EirGrid (Republic of Ireland)
Irish portfolio (operational) 130 MW / 72.6 MWh
Market Share 14%(5)
Revenue during the period £7,740,000
Revenue per MW £13.55 / MW / hr
Revenue per MWh £24.26 / MWh / hr
% of Total Revenue 44%
5 900 MW of BESS capacity in both ROI and NI, based on Aurora
Ireland Flexible Energy Market Report November 2024
The Company's Irish assets participate in the market under the DS3 programme,
which enables BESS to participate in grid frequency services. The portfolio's
Northern Ireland assets (Mullavilly and Drumkee) operate under a DS3 uncapped
contract, which has a variable price linked to the SNSP measure of renewable
penetration on the grid. The portfolio's Republic of Ireland asset,
Porterstown, has a fixed price contract known as the DS3 fixed price capped
contract.
SNSP levels varied significantly during the reporting period, due to seasonal
wind patterns which impact renewable energy generation. Peak SNSP levels
during the June-end quarter occurred in April and dropped from May to July.
Wind levels increased in August and September, leading to an increase in
revenue during these months as shown in Figure 8 on page 10 in the 2024
Interim Report.
At Porterstown, the Investment Manager pursued a monetisation strategy
consisting of DS3 capped and trading. Through the site optimiser, the site is
traded between markets Day-Ahead and Intraday energy markets, enabling full
participation in DS3 capped whilst benefitting from trading revenues.
Porterstown captured 14% of its total revenue from trading during the period,
resulting in a 6% uplift to the DS3 capped-only strategy.
On 14 May 2024, the Irish grid had a frequency event as a result of an
interconnector drop. Mullavilly and Drumkee responded to this event, in line
with the DS3 uncapped contract, to arrest the frequency variation and return
the Irish grid to operation. Porterstown was not triggered to respond, as
EirGrid had instructed the site to turn the response off.
In September 2024, EirGrid published the outcome of the DS3 uncapped scalars
consultation. The temporal scalars are the multiplying factors applied to DS3
uncapped rates to calculate revenue. As a result of the consultation, the
scalars that apply to the two highest bands of SNSP were reduced. From October
2024, the temporal scalar for the 60-70% SNSP band reduced to 2.25, and the
temporal scalar for the higher than 70% SNSP band reduced to 4.0.
EirGrid is expected to provide updates to the future market arrangements for
BESS. This concerns both the Scheduling and Dispatch Programme (SDP), which
will allow more open participation for BESS in the wholesale energy markets,
and the FASS programme, which seeks to introduce a new design to the combined
Irish market, bringing procurement of system services in line with other
markets where the Manager operates sites.
As previously noted and shown in Figure 9 on page 11 in the 2024 Interim
Report, there is clear seasonal variation in revenue in Ireland, with the
second half of the financial year consistently providing significantly higher
revenue when compared to the first half. The revenue in the June-end quarter
and September-end quarters 2024 was in line with the expected seasonal trends.
German Market
Table 4: Overview of the German Market
TSO 50 Hertz
German portfolio (operational) 22 MW / 29 MWh
Market Share 2%(6)
Revenue during the period £1,590,000
Revenue per MW £16.50 / MW / hr
Revenue per MWh £12.52 / MWh / hr
% of Total Revenue 9%
6 As at 30 September 2024, German had 1,447 MW of grid scale BESS
capacity operational
The German market emerged as the most lucrative markets for the Company during
the period, largely driven by the increase in solar generation connected to
the German grid. Peak solar generation increased by c.20% compared to the same
period last year. This increase in solar production was supported by
subsidies, and resulted in reduced midday energy prices.
As a result of this price suppression, thermal generation operated
uneconomically over the midday periods. To mitigate this, thermal generators
bid into the Frequency Containment Reserve (FCR) and automatic Fast Frequency
Response (aFRR) markets to recover some of the lost opportunities from the
reduced energy pricing. As these generators were positioned as the marginal
providers in these services, their participation contributed to rising prices
for other market participants, including BESS.
The Investment Manager's decision to qualify Cremzow in aFRR before the period
enabled the site to participate heavily in the service. In the June-end
quarter, c.32% of revenues were obtained in aFRR, increasing to c.58% in
September-end quarter. aFRR capacity carried a premium to FCR due to the
German grid's need for flexible dispatch during the period.
Cremzow was well placed to capture the opportunity and resulting revenue. June
and September-end quarter revenue remained in line with one another. Revenues
for the reported period were 75% higher than the preceding 6 months.
During the period, the German government put forward proposals for a German
Capacity Market. This is a positive move for Germany that would provide
supplemental contracted revenue for batteries. The Capacity Market is expected
to be introduced from 2028 onwards.
As illustrated in Figure 10 on page 12 in the 2024 Interim Report, revenue for
both the June-end and September-end periods saw a substantial increase when
compared to the same periods last year, increasing by £9.4 per MW/hr and
£6.1 per MW/hr, respectively. This improvement can be largely attributed to
the proactive management of the site, which ensured it was prequalified for
aFRR prior to the period. The aFRR strategy provided greater revenue potential
compared to a Frequency Containment Reserve (FCR) approach
Texas Market (US)
Table 5: Overview of the Texan Market
TSO ERCOT
Texan portfolio (operational) 29.85 MW / 59.7 MWh
Market Share 1%(7)
Revenue during the period £920,000
Revenue per MW £6.97 / MW / hr
Revenue per MWh £3.48 / MWh / hr
% of Total Revenue 5%
7 Based on 5.2 GW active batteries in ERCOT as of 30th September
2024
The performance of the Texan market was below expectations during the quarter.
Summer has typically provided the most revenues in Texas, as high temperatures
drive grid loads to their annual peaks. Sustained temperatures can also limit
the operational capacity of generation assets, which can have to cease
operations when operating above certain temperatures. The tight margins
resulting from these prolonged temperatures typically lead to increased energy
and ancillary service prices on the grid.
The summer of 2024 in Texas was notably milder than previous years, with lower
peaks and sustained temperatures throughout. The Texan Summer 2024 Operational
and Market Review(8) highlights the June to August 2024 period as
significantly cooler than the prior two years, despite it being the sixth
average hottest summer on record. Notably, major cities in Texas experienced
fewer days with temperatures above 38°C.
8
https://www.ercot.com/files/docs/2024/10/03/7-summer-2024-operational-and-market-review.pdf
These lower temperatures resulted in lower average peak demand on the grid. In
August 2024, which saw the highest overall load, daily average peak load was
over 2 GW lower than in 2023. Additionally, renewable energy generation
reached all-time highs, with average peak solar and wind generation in August
2024, reaching 35 GW, a 26% increase from the previous year. Renewable energy
outturn led to downward pressure on energy prices as fewer conventional
generators were required.
During the reported period, market benchmarks for BESS revenues decreased by
c.80% compared to the same period in the previous year.
As such, the revenue from the portfolio saw a decline, dropping by 82%. Energy
trading represented a higher percentage of total, accounting for c.32% of
revenues in the BESS benchmark over the reported period. Figure 11 on page 14
in the 2024 Interim Report is in line with the 34% of revenue achieved by the
Texas portfolio in trading over the same time period. BESS continues to be a
price taker in Texan markets as a marginal form of generation, making them
sensitive to annual and seasonal market changes.
Historically there has been a high correlation between revenue and
temperatures in this market, with milder conditions yielding lower revenue.
However, the increasing importance of renewable energy in the Texan generation
stack outside of the summer months, indicate a positive trend for BESS in the
region. Additionally, ramping of renewable energy presents an opportunity for
BESS in arbitrage, which the Company's Texan assets are well placed to
capture. The West Hub, where the Company's operational Texan assets are
located, continues to command a premium in trading compared to other hubs, due
to significant proportions of wind and solar generation.
Californian Market (US)
Table 6: Overview of the Californian Market
TSO CAISO
Californian portfolio (Construction) 200 MW / 400 MWh (2-hour duration), 100 MW/ 400 MWh (4 hour duration)
Available Revenue Streams Wholesale Trading, Resource Adequacy, Regulation up/Regulation Down
Post-period end, the energisation process of the Big Rock asset commenced,
with completion of the energisation process scheduled in the coming weeks. The
portfolio's Big Rock asset which has a capacity of 200 MW / 400 MWh, will
participate in the California Independent System Operator (CAISO) marketplace.
As a CAISO asset, Big Rock will benefit from a Resource Adequacy contract,
which was also announced and secured post-period end.
RA is a form of Capacity Market (CM) in CAISO. This mechanism ensures adequate
capacity is built by mandating Load Serving Entities (LSE) to contract with
generators for service delivery. The RA obligations require these contracted
entities to participate in energy and ancillary services during periods of
system peaks, thus ensuring load can be met systematically.
As previously announced, the Investment Manager has secured a fixed-price
contract for 100 MW/400 MWh of the site's capacity worth over $14 million
annually for a duration of 12 years. This contract will commence in Summer
2025, allowing Big Rock to stack the RA payments while fully participating in
CAISO energy and ancillary services concurrently.
Table 7: Overall Portfolio Performance
1 April - % within grid % of portfolio
30 September 2024
£(000s)
Great Britain - 239.5 MW / 230.8 MWh
Ancillary services 2,950 41% 17%
Capacity Market 1,440 20% 8%
Wholesale Trading 850 12% 5%
Other(9) 1,990 27% 12%
GB total 7,230 42%
Island of Ireland - 130 MW / 72.6 MWh
DS3 Capped/Uncapped 7,050 91% 40%
Capacity Market 520 7% 3%
Wholesale Trading 170 2% 1%
Island of Ireland total 7,740 44%
Germany - 22 MW / 29 MWh
Ancillary services 1,300 82% 7%
Wholesale Trading 290 18% 2%
Germany total 1,590 9%
Texas - 29.9 MW / 59.7 MWh
Ancillary services 610 66% 3%
Wholesale Trading 310 34% 2%
Texas total 920 5%
Portfolio total - 421.4 MW / 392.1 MWh 17,480 100%
Market Revenue £(000s) £/MW/hr £/MWh/hr
Great Britain 7,230 7.66 7.98
Island of Ireland 7,740 13.55 24.26
Germany 1,590 16.50 12.52
Texas 920 6.97 3.48
Weighted Average 10.03 10.83
Total Revenue £(000s)(10) FY23/24 FY23/24 FY23/24 FY23/24 FY24/25 FY24/25
Jun-end Sep-end Dec-end Mar-end Jun-end Sept-end
quarter quarter quarter quarter quarter quarter
Great Britain 1,860 1,780 1,650 4,780 2,560 4,670
Island of Ireland 3,930 5,790 7,140 6,740 3,840 3,900
Germany 340 510 530 380 790 800
Texas 800 4,330 340 520 620 300
Total 6,930 12,410 9,660 12,420 7,810 9,670
9 Inclusive of other revenue streams (ABSVD, REPs, TRIADs) and Liquidated
Damages
10 Please note values are rounded to the nearest £10,000
Asset Performance
The portfolio demonstrated maintained high levels of availability over the
period, with no projects experiencing extended periods of significant outage
and warranty claims limited to the smaller assets within the Ancala project.
Project capacity levels generally met or exceeded expectations, while
availability performance has held steady or improved.
The Investment Manager continues to implement strategic improvements to
facilitate benefits across the fleet. During the period, a portfolio-level
global insurance policy was put in place, which recognised the benefits of
geographic diversification and battery analytics to improve safety.
Post-period end, a framework deal was also announced, enabling standardised
and automated data collection from each project while providing valuable
insights and a range of operational benefits.
Asset Availability
Table 8: Asset Availability by Region
Region Sep-end 2024
Great Britain 94.9%
Island of Ireland 97.9%
Germany 92.7%
Texas 88.1%
Portfolio 95.3%
Great Britain:
The fleet showed strong availability over the reported period with a weighted
average of 94.9% achieved. This strong availability performance is expected to
continue, with upside as new projects are onboarded.
Island of Ireland:
The Irish portfolio (Mullavilly, Drumkee and Porterstown) maintained a high
level of availability during the period, with a weighted average of 97.9%
achieved. Some availability impacts were observed at the Northern Irish sites
due to minor concerns (HVAC and inverter issues were rectified relatively
quickly on-site) without any ongoing issues. There was a DS3 event in May that
led to no performance penalties from SONI or EirGrid for the assets, and the
excellent availability performance of each asset is expected to continue
throughout the current year.
Germany:
The German portfolio comprises one project (Cremzow), which achieved 92.7%
availability for the period. This 22 MW site comprises a 2 MW "trial" site and
a 20 MW "expansion" site. Material availability improvements have been
achieved at this project through lengthy discussions with the inverter
Original Equipment Manufacturer (OEM) to support very high availability of the
20 MW site and materially improve the performance of the 2 MW site.
Availability performance is expected to remain at, or above levels achieved
over the reported period.
Texas:
There was a modest availability improvement relative to the previous
half-year. The Investment Manager has been in discussions with O&M
providers and the inverter OEM to extend the period of this asset, with
improvements already delivered. Snyder now makes up the majority of the
availability shortfall, where a single inverter has caused a disproportionate
number of issues. The sites showed resilience to hot weather conditions over
the summer, with no notable issues in that regard.
Project Progress Overview
As of the date of publication, significant construction milestones have been achieved. The energisation process has begun for the largest asset in the Company's portfolio, Big Rock (200 MW / 400 MWh), and material works have been completed at Dogfish in Texas, and at Enderby in Great Britain. The Company is now focused on completing energisation of these assets to bring the portfolio to the full 753.4 MW target.
A project by project break down is provided below.
Great Britain (Enderby):
The project has completed all necessary milestones for energisation in
preparation for the National Grid Electricity Transmission (NGET) final
outage. Final energisation is currently scheduled for January, with delays
attributable to NGET and winter outage season.
California (Big Rock):
The 200 MW / 400 MWh Big Rock asset, has begun the energisation process
post-period end, and is expected to be completed in the coming weeks. The Big
Rock asset has been designed to also function as a 100 MW / 400 MWh asset to
meet the duration requirements of the resource adequacy contract. This is the
largest asset to date in the Company's portfolio with over 130 enclosures on
site.
Texas (Dogfish):
Dogfish, the 75 MW / 75 MWh asset in Texas, is progressing well and remains on
track for energisation in February. During the period, the works included the
access roads and inverter foundations, and the 21 containers arrived on site.
Post-period end, the batteries arrived on site and were installed.
Table 9: Sites in Construction
Construction Capacity Target Energisation
Big Rock 200.0 MW Ongoing
Enderby 57.0 MW Jan-25
Dogfish 75.0 MW Feb-25
Pre-construction Portfolio
The Company has completed extensive value-add works on its 494.8 MW of
pre-construction assets, including consenting, securing long-lead items and
signing long-term revenue contracts. The Company retains optionality over
value realisation of these projects. A project by project break down is
provided below:
Kilmannock I has secured revised planning permission for the 30 MW phase.
Detailed design is progressing well and is currently shovel ready. Grid
connection works being undertaken are also progressing well and expected to be
completed earlier than required.
Kilmannock II has secured revised planning for the 90 MW phase, with detailed
design also well progressed. The majority of earthworks required will be
completed during phase I which will derisk the phase II expansion programme.
Mucklagh has secured planning permission and has had a grid offer accepted. In
addition, early engagement with EirGrid is underway.
Middleton is currently undertaking lead procurement for the main grid
transformers.
Wichita Falls, Mesquite, Mineral Wells and Cedar Hill all have the potential
for grid availability from 2025.
Porterstown I is operational, with Porterstown II now shovel ready.
Q&A with Sumi Arima
Sumi Arima
Chief Investment Officer of Gore Street Capital, the Investment Manager
Q: How can the Company maximise its profitability?
In the markets where the Company operates, we observe significant variability
in the performance of route-to-market providers within a single market. This
variability is driven by the pace of adoption of service changes and the
selected trading algorithms. Furthermore, the timely implementation of new
revenue streams can have a material impact on revenue outcomes, with early
movers often reaping disproportionate benefits. To enhance portfolio
performance, we at Gore Street Capital have made a multi-year investment into
the development of in-house energy trading capability. This in-house expansion
along the value chain of BESS has multiple benefits for the Company; by
reducing reliance on external functions the Investment Manager can mitigate
the impact of conflicts of interest at the optimiser level, it removes any
reliance on external parties for the critical investment function and provides
better access to high quality asset data enabling better decision making, with
the aim of delivering higher revenue than third party providers have to date.
Post‑period end, five assets of the Company's GB portfolio have been
onboarded; Port of Tilbury (POTL), Breach and Larport, Lascar and Hulley, with
a combined capacity totalling 78.5 MW.
The proprietary trading platform has been developed by the Gore Street
Capital's trading arm, Gore Street Energy Trading, and has full access to the
wholesale markets, ancillary services and the balancing mechanism. This
trading arm does not work in isolation but is supported by the existing
in-house technical functions, construction, asset management and commercial
teams. Additionally, the asset management function has adopted a more data
driven approach to increase availability and therefore further increase
potential revenue generation.
This approach to managing assets reflects the growing and unique technical
expertise at the Investment Manager and its ability to continue to deliver
best-in-class revenue on a MW basis and deliver value for the Company's
investors.
Q: How do you mitigate risk across the portfolio?
Since the IPO in 2018, the battery storage market has continued to evolve
globally as the demand for grid stabilisation assets has increased. The
Company's first operational asset, Boulby, a 6 MW / 6 MWh asset in GB, was
monetised through an Enhanced Frequency Response (EFR) contract, the only
grid-balancing service available at the time. Since then, the GB market has
developed significantly, with the introduction of multiple types of ancillary
services, capacity markets, and wholesale trading.
These newer contracts are primarily merchant, not just in GB, but across all
the markets the Company operates in. This merchant profile presents an
opportunity for substantial outperformance over the original business plan but
can also lead to periods of underperformance.
Within each grid, opportunities to diversify are limited due to consistent
wholesale electricity prices across all regions (excluding Texas with nodal
pricing). This uniformity can result in fluctuations in annual revenue.
Seasonal variation also creates fluctuations in quarterly revenue. The
volatility from local market conditions can be mitigated through diversified
geographic exposure to multiple markets. However, macro drivers such as
battery capex and gas prices can have a fleet‑wide impact for a given
period.
The graph below highlights the tangible impacts of geographical
diversification, and the resulting reduction in revenue volatility. The
average quarterly revenue of £12.10 per MW/hr achieved in GB, compares to
£14.40 per MW/ hr from the total portfolio calculated from June 2021
excluding LDs. With a low correlation between GB revenue and non-GB revenue,
the entire operational portfolio has been able to maintain a higher absolute
level of revenue and reduce revenue volatility by 46%, compared to what would
be achieved by a GB-only strategy.
In addition to diversification of merchant revenue streams, the Company also
mitigates risk by securing long-term revenue contracts. Following the
energisation of the 400 MWh Big Rock asset in California (completion of the
energisation process is expected in the coming weeks), the portfolio's
contracted revenue is forecast to increase fourfold due to the long-term fully
stackable resource adequacy contract, which is worth in excess of $165 million
over the life of the contract.
The diversified merchant revenue mix complimented by a growing component of
contracted income, creates an increasingly attractive risk return profile for
the Company, which benefits from both the stability of contracted income, and
the opportunity to outperform the market through its retained merchant
exposure.
Please refer to Figure 12 on page 20 in the 2024 Interim Report for a
breakdown of quarterly revenue volatility (Great Britain only versus the
diversified portfolio).
Q: What is the Company's view on contracted revenue agreements, such as
tolling agreements and the RA contract in CAISO?
As the industry has evolved there has been an increased potential for
contracted revenue streams. Examples of these include capacity market
contracts, tolling agreements, and the Resource Adequacy (RA) contract in
California. A tolling agreement is a broad term, which can encompass a range
of contracts, however, in Great Britain, these typically refer to contracts
between an asset owner and the optimiser. The optimiser manages the asset on
behalf of the asset owner and purchases the returns opportunity on the asset
for a fixed price and gains exposure to the volatility on the market because
they see upside potential. In return, the asset owner is presented with a
headline fixed amount of revenue. Due to the changed risk return profile of
this investment approach, the returns on offer for the asset owner are
typically reduced.
Given the current market prices observed and that this strategy is not in
keeping with active management of a portfolio, the Company has chosen not to
enter tolling agreements for its Great Britain assets. The resource adequacy
contract in California is also stackable allowing the asset to participate in
multiple revenue streams at once, whereas a tolling agreement does not offer
this flexibility. Additionally, in light of the limited access to equity
markets across the sector, pressures from lenders may temporarily increase the
attractiveness of a tolling agreement, but leverage backed by tolling revenue
may not increase returns given the high-interest rate environment.
In addition to the lower secured pricing versus market expectations, cycling
rates of the batteries are typically higher, leading to increased degradation
rates of the assets, as well as strict performance requirements which are
typically imposed on the asset owner. These operational decisions can lead to
increased opex charges and/or penalties resulting from failure to meet these
requirements. Its factors such as these that ultimately directly impact the
bottom-line profitability of such an arrangement for equity holders of an
asset. As an active manager, we would not choose lightly to hand-over control
of the asset to a third-party optimiser without considering these operational
and revenue impacts on the portfolio.
Q: What will be the focus of the Company in the next calendar year?
The Company is committed to energising its three remaining in-construction
projects, Enderby, Big Rock & Dogfish, and working on grid compliance and
testing to bring all the energised assets to commercial operation. Dogfish
remains on track for energisation in February 2025. The energisation process
for Big Rock commenced post-period end and is scheduled to be completed in the
coming weeks. At Enderby, all necessary milestones for energisation were
completed in preparation for the National Grid Electricity Transmission (NGET)
final outage. Final energisation is currently scheduled for January, with
delays attributable to NGET and winter outage season.
Previously, construction and procurement have been a focus for the Company,
ensuring that projects were built at a competitive cost per MW, a consequence
of the decision to build assets with a duration which maximised operational
revenues while remaining cognisant of capex on a market-by-market basis.
However, as the Company is maturing and reaching a steady-state portfolio,
there is an increased focus on commercial performance. The novel in-house
energy-trading function could facilitate superior returns, a unique but
critical differentiator given the complexity of the asset class.
The blended approach to merchant and contracted revenue is a result of the
strategic positioning of the portfolio across different markets. This reduces
risk across the portfolio whilst still ensuring best-in-class revenue on a per
MW basis. Recently, the Company announced an expected fourfold increase in
contracted revenue through the long-term stackable Resource Adequacy (RA)
contract for the 200 MW Californian asset, which is only currently available
in California. Whilst there has been a sector-wide focus on contracted revenue
streams, the Company has reinforced its position to evaluate each revenue
strategy on a case-by-case basis. As BESS markets develop globally, the
Company will continue to leverage its expertise to ensure that merchant
revenue streams are pursued appropriately to deliver value for investors.
Q: What are the next steps for the remaining c.500 MW of pre-construction
assets?
The Company has c.500MW projects at preconstruction stage, in addition to the
753.4 MW of operational and construction assets. The Company will review the
strategy of pre-construction assets based on resale value versus the Company's
market views, and overall portfolio rebalancing. To proceed with construction,
there are multiple avenues of financing: debt, strategic use of third-party
capital, and capital recycling. Debt financing remains an option for the
Company given the recent increase in the existing facilities both at the
portfolio level and the project level. The Company has previously used third
party capital, such as equity issuances to Nidec and Low Carbon to increase
the Company's portfolio in Ireland and Texas. The Company remains open to
exploring other vendor financing options and is also open to more creative
financing solutions such as co-investment at the asset level to retrofit
assets with additional capacity or duration. Capital recycling also remains an
option for the Company through the sale of select pre-construction assets and
then reinvesting the proceeds appropriately.
NAV Overview & Drivers
Please refer to Figure 13 on page 21 in the 2024 Interim Report for the
Company's PLC NAV Bridge as at 30 September 2024.
The Company's independent valuer, BDO, conducted a valuation as at 30
September 2024, which included a review of the key assumptions set out in this
section. The findings from BDO's valuation aligned with the Investment
Manager's valuations and the key assumptions used to determine NAV.
Macroeconomic factors were the primary drivers of NAV during the period, with
updated third-party revenue curves having the largest impact. Updated
inflation assumptions also impacted NAV during the period, but to a lesser
extent. In aggregate, these two drivers had a 6.8p negative impact on the
Company's per share valuation.
Net portfolio returns refers to cash generation from the underlying
operational portfolio, the favourable pricing secured for the resource
adequacy contract, and revised buildout cost reflecting a positive impact from
the declining capex trend, net of the negative impacts of Company level costs
and adjustments to carrying values of the pre-construction portfolio, resulted
in a +2.5p to NAV per share. An itemised break down is provided below.
Table 10: NAV Bridge
£m Pence per share
NAV March 2024 541 107.0
Dividends (17) (3.5)
Revenue Curves (26) (5.2)
Inflation (8) (1.6)
Discount Rate 6 1.3
Net Portfolio Returns 12 2.5
NAV September 2024 508 100.5
Table 11: Reconciliation of Reported NAV
Sep-end quarter Mar-end quarter
Operational Portfolio 230,349,000 201,662,000
Construction Portfolio 290,188,000 290,887,000
Fair Value of Portfolio 520,537,000 492,549,000
Plc Cash 24,040,000 65,168,000
Other Net Assets / (Liability) (37,021,000) (17,021,000)
NAV 507,556,000 540,697,000
Aggregate Group Debt 66,021,000 37,345,000
GAV 573,577,000 578,042,000
Revenue Forecasts
The valuation as at 30 September 2024 reflects updated mid-case scenarios from
several third-party research houses. Where available, a blended average was
taken based on published curves to achieve a more balanced consensus of future
revenue generation across each of the markets the Company is active in.
During the period, key markets in Great Britain and the United States (both
Texas and California) saw a decline in merchant revenue forecasts, resulting
in a decrease of 5.2 pence per share in NAV. This decline was attributed to
incorporating expectations of further short-term weakness in the Great Britain
market, alongside a drop in gas prices in the US. In California, the decrease
in merchant revenue was countered by an increase in Resource Adequacy (RA)
contract prices, supported by tight supply conditions and stringent penalties
for non-compliance by load-serving entities, providing an opportunity for
resource capacity owners such as the Company and a net benefit to the
Californian asset's NAV. Germany did not see material changes in revenue
forecasts over the reporting period.
In the Republic of Ireland, the Porterstown asset secured a Capacity Market
contract for the period October 2024 to September 2025.
Please refer to Figure 14 on page 22 in the 2024 Interim Report for a blended
curve of ancillary services and trading, by grid and portfolio weighted
average.
The revenues displayed within Figure 14 are real as of 2023. The forecasts for
CAISO do not include Resource Adequacy revenues, which are expected to
constitute up to 40% of the revenue stack.
Inflation
Short-term and long-term US and European inflation assumptions have been
revised downward by 25 basis points in line with decreasing core inflation,
resulting in a net decrease of 1.6 pence per share. Inflation assumptions for
Great Britain remain unchanged from the previous reported period.
Table 12: Inflation Assumptions
Inflation Assumptions 2024 2025+
Great Britain 2.75% 2.50%
Europe 2.50% 2.25%
United States 2.50% 2.25%
Discount Rates
De-risking of assets in line with their respective construction progress
resulted in a positive NAV impact of 1.3 pence per share. This was due to the
discount rates for Enderby, Dogfish and Big Rock being reduced to reflect the
progress in construction. During the period, Big Rock completed the majority
of mechanical buildout, Dogfish completed foundational work, and Enderby has
completed all necessary milestones for energisation in preparation for the
NGET final outage, as per the Project Progress Overview section of the report.
Accordingly, the discount rates used in the September-end valuation were as
follows:
Table 13: Discount Rate Matrix
Discount Rate Matrix(11) Pre-construction Construction Energised
phase phase phase
Contracted Income 10.75-12.00% 9.25-10.00% 7.25-9.25%
Uncontracted Income 10.75-12.00% 9.25-10.00% 8.75-9.25%
MW 494.8 332.0 421.4
Net Portfolio Returns (+2.5 pence)
• Cash Generation (2.3 pence): This refers to the cash
generation of the underlying portfolio.
• Fund and Subsidiary Holding Companies Operating Expenses (-1.1
pence): this refers to the expenses at the fund level including debt service
cost of £0.9m.
• Resource Adequacy contract (3.0 pence): The secured pricing
exceeded the estimate used in the Company's March-end quarter valuations,
resulting in a positive impact on NAV.
• Other DCF Adjustments and rollover (1.0 pence): This refers to
items such as updated battery cell costs for repowering, decreases in capex
forecast due to lower lithium cell pricing, and rollover (being one less
period of discounting).
• Adjustment to carrying value of pre-construction portfolio
(-2.7 pence): The carrying value of the pre‑construction portfolio has been
adjusted as a prudent measure by reflecting asset specific factors such as
discount rate adjustment which has driven the weighted average discount rate
across the portfolio upward to 10.3%.
• A fair value breakdown of the Company's assets is provided by
grid and asset stage below:
Table 14: Fair Value breakdown per grid
FV Breakdown by Grid (in £m)(12) Construction and Energised
pre-construction
Great Britain 55.2 129.9
Ireland 9.9 71.9(13)
Germany n/a 14.9
Texas 45.3 13.6
California 175.9 n/a
11 Porterstown uses blended discount rates across energised (Phase I)
and pre-construction (Phase II) phases. MW capacity numbers for
pre‑construction phase includes assets held at book value.
12 Excludes pre-construction assets at book value
13 Includes Porterstown expansion
Sensitivities
To assess the impact of macroeconomic factors and key valuation assumptions on
the portfolio's NAV, the Company provides the below sensitivities. The
following sensitivities were applied:
a. Inflation rate: +/- 1.0%
b. FX volatility: +/- 3.0%
c. Discount rate: +/- 1.0%
d. EPC costs +/- 10.0%
Various scenarios have been considered to assess the impact on portfolio
valuations. Please refer to Figure 15 on page 24 in the 2024 Interim Report.
Capital Allocation:
The Company remains focused on increasing its energised capacity to over 750
MW by February 2025. As previously indicated the Company has the necessary
financing in place to support the construction schedule, using its cash on
balance sheet and available credit lines. The Company expects to maintain a
conservative approach to leverage, projecting gearing of between 15-20% of GAV
for the completion of the portfolio up to 750 MW. Figure 15 excludes expected
cash inflows from Investment Tax Credits (ITC), which are expected to be
between $60 million and $80 million in 2025 from the sale of ITCs associated
with the Big Rock and Dogfish projects. This forecast gearing ratio is
substantially lower than the listed subsector average of c.25%.
In addition to the prioritised assets, the Company has a pre-construction
portfolio of c.500 MW. The Company continues to assess the optimal strategy
for these assets. Significant value-additive works have been carried out on
the pre‑construction portfolio, such as expanding two sites from their
original 2x30 MW capacity with a combined incremental of 150 MW, consenting
works completed at multiple sites and securing several long-lead items secured
for assets, as well as signing long-term contracts. The Company expects to
realise the value of these improvements through asset sales or by constructing
select projects, increasing the Company's energised fleet above 750 MW. The
final decision will be driven by a review of available funding including the
cost of debt, secondary market pricing, portfolio structuring considerations
and sound risk management.
Beyond 750 MW the Company will ultimately seek to maximise shareholder value,
which may be determined to be through the return of capital to shareholders or
increasing the operational fleet.
Post-period end, the Company upsized its debt capacity by expanding its two
existing credit facilities. Both the revolving credit facility (RCF) and
project level facility included provisions for upsizing included in the
original agreements. The RCF included an accordion option and the project
level to be converted into a construction loan upon completion of certain
milestones. This incremental debt provides additional flexibility for the
in-construction assets and allows for the consideration of other projects
beyond the prioritised 750MW. Additionally, these facilities offer the ability
to consider duration extensions to existing assets and increased flexibility
for working capital.
With the scale and diversity of the portfolio, the Investment Manager remains
committed to continuously assessing and refining the capital allocation
strategy to maximise returns. This approach not only aims to create more value
for stakeholders but also ensures effective risk management.
Investment Tax Credits
Investment Tax Credits (ITC) are available for the Company's two construction
assets located in the United States: the Big Rock asset in California (200 MW)
and the Dogfish asset in Texas (75 MW). The Big Rock asset is eligible to
receive an investment tax credit worth up to 30% of qualifying capex. The
Dogfish asset can benefit from an additional 10% adder, allowing it to receive
up to 40% of qualifying capex. These tax credits function similarly to a
fast-tracked tax rebate and can be sold on a liquid secondary market. The
Investment Manager is actively engaging with this market, expecting to
monetise these credits via a sale to a counterparty with taxable income that
can use the credits for offsetting.
Typically, ITCs can be sold at a percentage of their face value. The
Investment Manager therefore expects a cash inflow from the sale to be in the
range of $60 to $80 million, depending on the final percentage negotiated on
the face value of the credits. The proceeds from the sale are included in the
Company's Net Asset Value, though the specific allocation of this equity
inflow is to be determined. The Company could use these funds for debt
repayment, dividends or expanding the operational capacity beyond the
previously mentioned 750 MW, or a combination of the above.
The Investment Manager remains confident in monetising the ITC following the
US election results for several reasons. For example, most investment from the
IRA has flowed into Republican states. Further, the US legislative process has
historically shown it is difficult and unlikely for an incoming president to
repeal an Act retrospectively, and there is a relatively short timeline until
ITC are expected to be received given the projects have already begun
construction.
Resource Adequacy Contract
The Resource Adequacy (RA) contract is available for assets located in
California and is a market mechanism that looks to ensure sufficient
electricity generation resources are available to meet demand, particularly
during peak periods. These contracts require load-serving entities to
demonstrate that they have secured adequate capacity, such as the Company's
Big Rock asset, to fulfil projected energy needs and maintain reserve margins.
Essentially, the contract helps stabilise the energy supply and provide
financial incentives for companies to invest in reliable energy sources and
systems.
On 18 October, the Company announced that it had secured a Resource Adequacy
contract for its 200 MW/400 MWh Big Rock asset in California, set to begin in
summer 2025. Valued at over $14 million annually, the contract requires a
minimum delivery duration of 4 hours and guarantees 100 MW of RA
deliverability at a fixed price exceeding $16 per MW/hr. The contract is
expected to contribute up to c.40% of total project revenue over the lifetime
of the contract. The contract allows for incremental revenue to be generated
concurrently through wholesale trading and ancillary services. Given the
long-term contracted nature of this mechanism, it is able to support long-term
project finance. The Investment Manager therefore expects to refinance the
current project level facility at this project with longer-term finance once
the secured RA contract commences in 2025.
CEO Statement Alex O' Cinneide
Dr Alex O'Cinneide
CEO of Gore Street Capital, the Investment Manager
CEO Statement
As we navigate the current landscape with equity markets for investment trusts
all but closed and changing geo-political situations, we are acutely aware of
the broader implications for global decarbonisation targets and the critical
role batteries play in facilitating the energy transition. This environment
also has direct consequences for near-term growth and liquidity at the company
level for both the Company and its broader peer group. In response, we have
placed an even stronger emphasis on liquidity management and capital
allocation. To this end, we are pleased to have secured additional funding,
reinforcing our commitment to the continued growth of our portfolio under
management. Post-period end, we successfully secured debt financing,
increasing the Company's Revolving Credit Facility to £100 million, alongside
an upsizing of our existing project-level debt facility in California to $90
million. This not only allows us to hedge currency risks but also enables us
to leverage our portfolio effectively while adhering to a strong risk
management framework. Not withstanding this incremental availability of debt,
the Company retains the lowest level of debt among listed peers, and will
continue to keep any borrowings within its previously stated policies. Rather
uniquely within the sector, we have also successfully completed multiple
equity funding rounds through share issuances at the prevailing NAV to
strategic partners, raising a total of c.£27m in additional equity. This
secures incremental capital for the build out of the Company's portfolio and
is also a strong mark of NAV, from two well established participants in the
renewable energy sector acutely familiar with the asset class.
Looking ahead to 2025, the Company's construction assets in the US will
benefit from tax credits under the Inflation Reduction Act, which can
subsequently be monetised to yield significant cash inflows for the Company,
expected to be in the region of $60-80 million. In this context, we find
ourselves in a strong growth phase. The portfolio is on track to be
self‑sufficient, and we expect it to be able to cover dividend distributions
once the construction of the one remaining construction asset is complete.
In California, we have secured a significant 12-year fixed-price contract
worth over $14 million annually, adding material contracted cash flow to the
portfolio. This diversified portfolio, not only provides stability through its
contracted revenue but also has the potential to outperform the market through
merchant exposure. To maximise this potential, we at Gore Street Capital have
undertaken a multi-year investment to develop an in-house trading platform, to
monetise the Company's assets. This allows us to leverage asset-specific
strategies without relying on third-party services. As of the publication
date, five of the Company's GB assets have been successfully onboarded, with
additional capacity expected to be onboarded throughout 2025.
Looking beyond this imminent increase in operational capacity, the Company
owns a portfolio of pre-construction assets, and we continue to actively
assess the best way to realise their value through land banking, development,
strategic disposal, co-development opportunities or a combination of
approaches. Whilst we are encouraged by the continued success of the
portfolio, we acknowledge that valuations are at the forefront of investors'
minds. Standard practice across the industry is to value these assets by
discounting future cash flows. While an important metric, this can introduce
volatility into valuations due to movements in third-party revenue curves. Our
use of prudent assumptions based on blended average mid-case scenarios from
leading industry providers has somewhat insulated the Company from large
movements in valuations. However, as reflected in these interim results, the
Company's valuations still experience some movement between valuations due to
these external assumptions.
Outlook
Governments across each of the markets the Company is active in continue to
prioritise renewable energy and grid resilience.
In the UK, the newly formed Labour government has set ambitious targets to
increase renewable energy deployment, aiming for 35 GW of onshore wind, 55 GW
of offshore wind, and 50 GW of solar energy by 2030. Although the Investment
Manager believes that the ratio of BESS to renewables will take some time to
recover from the current suppressed pricing in this market, the rapid
deployment of intermittent generation assets is a clear tailwind for the
sector.
The Irish government's Climate Action Plan 2024 targets the share of renewable
electricity to be 80% by 2030, which creates a further system need for
flexible assets such as BESS. Slow grid connections for BESS create a
significant barrier to entry, further supporting the Company's established
position within the market. While market changes are expected, with reductions
in scalars seen post-period end from October 2024, the Investment Manager has
developed experience operating within multiple market constructs. It is,
therefore, confident in its ability to successfully navigate the evolving
market dynamics and capitalise on new opportunities as they arrive.
Germany's policy also supports the investment case for energy storage, backed
by incentives aimed at integrating renewable sources and enhancing grid
stability. The proposed capacity market mechanism would provide an additional
long-term revenue stream for the Company. Germany has set a national renewable
energy target of 80% by 2030 and is also actively participating in European
Multi-Regional Coupling, facilitating energy trading within its markets and
across other European markets, adding further depth and liquidity to the
wholesale market opportunity.
In the United States, state-level policies increasingly acknowledge the
crucial role of energy storage in achieving renewable energy goals and
modernising the grid. States like Texas and California, where the Company
holds assets, are leading the way with regulatory frameworks and incentives
that support the deployment of energy storage. In Texas, ERCOT has emerged as
the fastest-growing renewable market in North America, with solar generation
forecasted to overtake coal by the end of the year. As of April 2024,
renewable generation reached c.38 GW, with a peak penetration rate of over
69%. California's grid operator (CAISO) is forecast to connect over 38 GW of
new solar capacity and significant wind and geothermal projects to fulfil the
state's Renewable Portfolio Standard objectives.
We remain confident that the ITCs will be secured following the US election
results for several reasons. For example, most investment from the IRA has
flowed into Republican states. Furthermore, the US legislative process has
historically shown it is difficult and unlikely for an incoming president to
repeal an Act retrospectively, and there is a relatively short timeline until
ITCs are expected to be received given the progressed status of the two US
assets construction schedules.
These ambitious targets across each of the geographies the Company is active
create a fundamental and ongoing system need for stabilisation assets. The
Company's proactive approach to navigating regulatory shifts and leveraging
policy incentives, such as the IRA in America, positions it well to take
advantage of future opportunities. While short-term market fluctuations may
occur, the depth and size of the market opportunity are and continue to be
unmistakably strong.
We remain committed to investing in an asset class that is vital for the
long-term infrastructure of energy grids and the transition to net zero. Thank
you for your continued support as we continue to execute against our given
mandate.
Directors' Interim Report
Change of Registrar
With effect from 2 December 2024 the Company transferred the management of its
share register from Computershare Investor Services plc to Equiniti Limited.
Shareholders should have received a letter with their new shareholder
reference number.
The contact details of the new Registrar can be found on the last page of the
2024 Interim Report and they can also be reached on: +44 (0)371 384 2030.
Principal Risks and Uncertainties
The principal risks and uncertainties with the Company's business fall into
the following categories: Changes to Market Design; Inflation; Exposure to
Lithium-Ion Batteries, Battery Manufacturers, and technology changes; Service
Provider; Valuation of Unquoted Assets; Delays in Grid Energisation or
Commissioning; Currency Exposure; Cyber-Attack and Loss of Data; and Physical
and transitional climate-related risks. A detailed explanation of the risks
and uncertainties in each of these categories can be found on pages 40 to 42
of the Company's published annual report for the year ended 31 March 2024.
These risks and uncertainties have not materially changed during the six
months ended 30 September 2024. However, the Board has also considered the
uncertainties caused by the conflict in Ukraine and Gaza, an uncertain
economic outlook and volatile energy prices although they are not factors
which explicitly impacted the Company's performance.
Going Concern
Having assessed the principal risks and uncertainties, and the other matters
discussed in connection with the viability statement as set out on page 43 of
the published annual report for the year ended 31 March 2024, the Directors
consider it appropriate to adopt the going concern basis in preparing the
accounts.
Related Party Transactions
There have been no transactions with related parties that have materially
affected the financial position or the performance of the Company during the
six months ended 30 September 2024.
Directors' Responsibility Statement
The Directors confirm that, to the best of their knowledge, this set of
condensed financial statements has been prepared in accordance with UK
adopted IAS 34 Interim Financial Reporting and with the Statement of
Recommended Practice, "Financial Statements of Investment Companies and
Venture Capital Trusts" issued in July 2022, and that this half year report
includes a fair review of the information required by 4.2.7R and 4.2.8R of the
FCA's Disclosure Guidance and Transparency Rules.
Patrick Cox
Chair
Interim Condensed Financial Statements
Interim Condensed Statement of Comprehensive Income
For the Period ended 30 September 2024
1 April 2024 to 30 September 2024 1 April 2023 to 30 September 2023
Notes Revenue Capital Total Revenue Capital Total
(£) (£) (£) (£) (£) (£)
Net loss on investments at fair value through profit and loss - (21,512,393) (21,512,393) - (4,742,507) (4,742,507)
Investment income 9,488,686 - 9,488,686 12,442,482 - 12,442,482
Administrative and other expenses (3,632,205) - (3,632,205) (3,834,334) - (3,834,334)
Profit/(loss) before tax 5,856,481 (21,512,393) (15,655,912) 8,608,148 (4,742,507) 3,865,641
Taxation 4 - - - - - -
Profit/(loss) after tax for the period 5,856,481 (21,512,393) (15,655,912) 8,608,148 (4,742,507) 3,865,641
Total comprehensive income/(loss) for the period 5,856,481 (21,512,393) (15,655,912) 8,608,148 (4,742,507) 3,865,641
(Loss)/profit per share (basic and diluted) - pence per share 5 (3.10) 0.80
All Revenue and Capital items in the above statement are derived from
continuing operations.
The Total column of this statement represents Company's Income Statement
prepared in accordance with UK adopted International Accounting Standards. The
total profit after tax for the period is the total comprehensive income and
therefore no additional statement of other comprehensive income is presented.
The supplementary revenue and capital columns are presented for information
purposes in accordance with the Statement of Recommended Practice issue by the
Association of Investment Companies.
The notes on pages 35 to 42 of the 2024 Interim Report form an integral part
of these financial statements.
Interim Condensed Statement of Financial Position
As at 30 September 2024
Company Number 11160422
Notes 30 September 31 March
2024 2024
(£) (£)
Non - current assets
Investments at fair value through profit or loss 6 489,979,235 481,659,515
489,979,235 481,659,515
Current assets
Cash and cash equivalents 8 19,101,965 60,667,572
Trade and other receivables 248,833 519,853
19,350,798 61,187,425
Total assets 509,330,033 542,846,940
Current liabilities
Trade and other payables 1,773,935 2,150,447
1,773,935 2,150,447
Total net assets 507,556,098 540,696,493
Shareholders equity
Share capital 10 5,050,995 5,050,995
Share premium 10 331,302,899 331,302,899
Merger reserve 10 10,621,884 10,621,884
Capital reduction reserve 10 57,605,411 75,089,894
Capital reserve 10 74,030,242 95,542,635
Revenue reserve 10 28,944,667 23,088,186
Total shareholders equity 507,556,098 540,696,493
Net asset value per share 9 1.00 1.07
The interim financial statements were approved and authorised for issue by the
Board of directors and are signed on its behalf by:
Patrick Cox
Chair
Date: 11 December 2024
The notes on pages 35 to 42 of the 2024 Interim Report form an integral part
of these financial statements.
Interim Condensed Statement of Changes in Equity
For the Period Ended 30 September 2024
Share Capital Total
Share premium Merger reduction Capital Revenue shareholders
capital reserve reserve reserve reserve reserve equity
(£) (£) (£) (£) (£) (£) (£)
As at 1 April 2024 5,050,995 331,302,899 10,621,884 75,089,894 95,542,635 23,088,186 540,696,493
(Loss)/profit for the period - - - - (21,512,393) 5,856,481 (15,655,912)
Total comprehensive (loss)/income for the period - - - - (21,512,393) 5,856,481 (15,655,912)
Transactions with owners
Dividends paid - - - (17,484,483) - - (17,484,483)
As at 30 September 2024 5,050,995 331,302,899 10,621,884 57,605,411 74,030,242 28,944,667 507,556,098
For the Period Ended 30 September 2023
Share Share Special Capital Capital Revenue Total
capital premium reserve reduction reserve reserve shareholders
(£) reserve (£) reserve (£) (£) equity
(£) (£) (£)
As at 1 April 2023 4,813,995 315,686,634 349,856 111,125,000 125,584,414 (1,295,054) 556,264,845
Profit/(loss) for the period - - - - (4,742,507) 8,608,148 3,865,641
Total comprehensive income/(loss) for the period - - - - (4,742,507) 8,608,148 3,865,641
Transactions with owners
Movement in special reserve - - (318,176) 318,176 - - -
Dividends paid - - - (16,848,982) - - (16,848,982)
As at 30 September 2023 4,813,995 315,686,634 31,680 94,594,194 120,841,907 7,313,094 543,281,504
Capital reduction reserve and revenue reserves are available to the Company
for distributions to Shareholders as determined by the Directors.
The notes on pages 35 to 42 of the 2024 Interim Report form an integral part
of these financial statements.
Interim Condensed Statement of Cash Flows
For the Period Ended 30 September 2024
Notes 1 April 2024 to 1 April 2023 to
30 September 30 September
2024 2023
(£) (£)
Cash flows used in operating activities provided by
(Loss)/profit for the period (15,655,912) 3,865,641
Net loss on investments at fair value through profit and loss 21,512,393 4,742,507
Decrease in trade and other receivables 271,020 54,442
Decrease in trade and other payables (376,512) (1,206,673)
Net cash generated from operating activities provided by 5,750,989 7,455,917
Cash flows used in investing activities
Funding of investments (29,832,113) (39,322,846)
Net cash used in investing activities (29,832,113) (39,322,846)
Cash flows used in financing activities provided by
Dividends paid (17,484,483) (16,848,982)
Net cash outflow from financing activities (17,484,483) (16,848,982)
Net decrease in cash and cash equivalents for the period (41,565,607) (48,715,911)
Cash and cash equivalents at the beginning of the period 60,667,572 123,705,727
Cash and cash equivalents at the end of the period 19,101,965 74,989,816
During the period, interest received by the Company totalled £9,488,686
(2023: £12,442,482).
The notes on pages 35 to 42 of the 2024 Interim Report form an integral part
of these financial statements.
Notes to the Interim Condensed Financial Statements
For the Period Ended 30 September 2024
1. General information
Gore Street Energy Storage Fund plc (the "Company") was incorporated in
England and Wales on 19 January 2018 with registered number 11160422. The
registered office of the Company is First Floor, 16-17 Little Portland Street,
London, W1W 8BP.
Its share capital is denominated in Pound Sterling (GBP) and currently
consists of ordinary shares. The Company's principal activity is to invest in
a diversified portfolio of utility scale energy storage projects primarily
located in UK, the Republic of Ireland, North America and Germany.
2. Basis of preparation
STATEMENT OF COMPLIANCE
The half yearly condensed financial statements for the period 1 April 2024 to
30 September 2024 have been prepared in accordance with UK adopted IAS 34
Interim Financial Reporting, and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
The half yearly financial statements do not include all the information and
disclosures required in the annual financial statements, and should be read in
conjunction with the Company's annual financial statements as at 31 March
2024.
The same accounting policies, presentation and methods of computation are
followed in these condensed financial statements as were applied in the
preparation of the Company's annual financial statements for the year ended 31
March 2024. These accounting policies will be applied in the Company's
financial statements for the year ended 31 March 2025.
The financial statements have been prepared on a historical cost basis except
for the investments which are accounted for at fair value through profit or
loss. The Company is an investment entity in accordance with IFRS 10 which
holds all its subsidiaries at fair value and therefore prepares separate
accounts only and does not prepare consolidated financial statements for the
Company.
The financial information for the year ended 31 March 2024 has been extracted
from the latest published audited financial statements which have been filed
with the Registrar of Companies. The Independent Auditor's Report on those
accounts contained no qualification or statement under Section 498 (2), (3) or
(4) of the Companies Act 2006.
The financial information contained in this Half Year Report does not
constitute statutory accounts as defined in Sections 434-436 of the Companies
Act 2006. The financial information for the six months ended 30 September 2024
and 30 September 2023 has not been audited by the Company's external auditor.
The financial statements do not contain any operating segment information on
the basis that there is only one reportable segment.
FUNCTIONAL AND PRESENTATION CURRENCY
The currency of the primary economic environment in which the Company operates
(the functional currency) is Pound Sterling ("GBP or £") which is also the
presentation currency.
Going Concern
The going-concern analysis takes into account expected increases to Investment
Adviser's fee in line with the Company's NAV and expected increases in
operating costs, as well as continued discretionary dividend payments to
shareholders at the annual target rate. Consideration has been given to the
current macro-economic environment and volatility in the markets. Based on the
analysis performed, the Company will continue to be operational and will have
excess cash after payment of its liabilities for at least the next 12 months
to 31 December 2025.
As at 30 September 2024, the Company had net assets of £507.6 million,
including cash balances of £19.1 million (excluding cash balances within
investee companies), which are sufficient to meet current obligations as they
fall due. The major cash outflows of the Company are the payment of
dividends, costs relating to the acquisition of new assets and further
investments in existing portfolio Companies, all of which are discretionary.
The Company had no contingencies and significant capital commitments as of 30
September 2024. The Company is guarantor to GSES 1 Limited's revolving credit
facility with Santander. Subsequent to period end this facility was upsized
from £50m to £100m, with an extended term to 2028. GSES 1 Limited has
£28,489,892 drawn from the facility at 30 September 2024.
The Directors acknowledge their responsibilities in relation to the financial
statements for the half year ended 30 September 2024 and the preparation of
the financial statement on a going concern basis remains appropriate and the
Company expects to meet its obligations as and when they fall due for at least
12 months until 31 December 2025.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amount of assets, liabilities, income and
expenses. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to the accounting estimates are recognised in the period in
which the estimates are revised and in any future periods affected.
During the period the Directors considered the following significant
judgements, estimates and assumptions:
ASSESSMENT AS AN INVESTMENT ENTITY
Entities that meet the definition of an investment entity within IFRS 10 are
required to measure their subsidiaries at fair value through profit or loss
rather than consolidate them unless they provided investment related services
to the Company. To determine that the Company continues to meet the definition
of an investment entity, the Company is required to satisfy the following
three criteria:
a) the Company obtains funds from one or more investors for the
purpose of providing those investors with investment management services;
b) the Company commits to its investors that its business purpose is
to invest funds solely for returns from capital appreciation, investment
income, or both; and
c) the Company measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Company meets the criteria as follows:
• the stated strategy of the Company is to deliver stable
returns to shareholders through a mix of energy storage investments;
• the Company provides investment management services and has
several investors who pool their funds to gain access to infrastructure
related investment opportunities that they might not have had access to
individually; and
• the Company has elected to measure and evaluate the
performance of all of its investments on a fair value basis. The fair value
method is used to represent the Company's performance in its communication to
the market, including investor presentations. In addition, the Company reports
fair value information internally to Directors, who use fair value as the
primary measurement attribute to evaluate performance.
Having assessed the criteria above and in their judgement, the Directors are
of the opinion that the Company has all the typical characteristics of an
investment entity and continues to meet the definition in the standard. This
conclusion will be reassessed on an annual basis.
VALUATION OF INVESTMENTS
Significant estimates in the Company's financial statements include the
amounts recorded for the fair value of the investments. By their nature, these
estimates and assumptions are subject to measurement uncertainty and the
effect on the Company's financial statements of changes in estimates in future
periods could be significant. These estimates are discussed in more detail in
note 7.
4. Taxation
The Company is recognised as an Investment Trust Company ("ITC") for
accounting periods beginning on or after 25 May 2018 and is taxed at the
main rate of 25%.
30 September 30 September
2024 2023
(£) (£)
(a) Tax charge in profit and loss account
UK Corporation tax - -
(b) Reconciliation of the tax charge for the period
(Loss)/profit before tax (15,655,912) 3,865,641
Tax at UK standard rate of 25% (2023: 25%) (3,913,978) 966,410
Effects of:
Unrealised loss on fair value investments not taxable 5,378,098 1,185,627
Expenses not deductible for tax purposes 67 621
Movement in deferred tax not recognised 907,984 957,964
Interest distribution (2,372,171) (3,110,621)
Tax charge for the period - -
There is no corporate tax charge for the period (2023: £nil). The Company may
utilise available tax losses from within the UK tax group to relieve future
taxable profits in the Company and may also claim deductions on future
distributions or parts thereof designated as interest distributions. Therefore
a deferred tax asset, measured at the prospective corporate rate of 25% (2023:
25%) of £6,705,533 (2023: £2,791,555) has not been recognised in respect of
the carried forward losses.
5. Earnings per share
Earnings per share (EPS) amounts are calculated by dividing the profit or loss
for the period attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares in issue during the period. As
there are no dilutive instruments outstanding, basic and diluted earnings per
share are identical.
30 September 30 September
2024 2023
Net (loss)/gain attributable to ordinary shareholders (£15,655,912) £3,865,641
Weighted average number of ordinary shares for the period 505,099,478 481,399,478
(Loss)/profit per share - Basic and diluted (pence) (3.10) 0.80
6. Investments
Percentage 30 September 31 March
Place of business ownership 2024 2024
GSES1 Limited ("GSES1") England & Wales 100% 489,979,235 481,659,515
The Company meets the definition of an investment entity. Therefore, it does
not consolidate its subsidiaries or equity method account for associates but,
rather, recognises them as investments at fair value through profit or loss.
The Company is not contractually obligated to provide financial support to the
subsidiaries and associate, except as guarantor to the revolving credit
facility entered into by GSES 1 Limited, and there are no restrictions in
place in passing monies up the structure.
The investment in GSES1 is financed through equity and a loan facility
available to GSES1. The facility may be drawn upon, to any amount agreed by
the Company as lender, and is available for a period of 20 years from 28 June
2018. The rest is funded through equity. The amount drawn on the facility at
30 September 2024 was £415,953,438 (31 March 2024: £375,354,326). The loan
is interest bearing and attracts interest at 8.5% per annum effective from 1
April 2023. Investments in the indirect subsidiaries are also structured
through loan and equity investments and the ultimate investments are in energy
storage facilities.
Realisation of increases in fair value in the indirect subsidiaries will be
passed up the structure as repayments of loan interest and principal. The
Company holds a direct investment in GSES 1, which in turn holds investments
in various holding companies and operating assets as detailed in Note 6 below.
Immediate Parent Place of business Percentage Ownership Investment
GSF Albion Limited ("GSF Albion") GSES1 England & Wales 100%
NK Boulby Energy Storage Limited GSF Albion England & Wales 99.998% Boulby
Kiwi Power ES B Limited GSF Albion England & Wales 49% Cenin
Ferrymuir Energy Storage Limited GSF Albion England & Wales 100% Ferrymuir
GSF England Limited ("GSF England") GSES1 England & Wales 100%
OSSPV001 Limited GSF England England & Wales 100% Lower Road and Port of Tilbury
GS10 Energy Storage Limited GSF England England & Wales 100% Beeches, Blue House Farm, Brookhall, Fell View, Grimsargh, Hermitage, Heywood
(formerly Ancala Energy Storage Limited) Grange, High Meadow, Hungerford, Low Burntoft
Breach Farm Energy Storage Limited GSF England England & Wales 100% Breach Farm
Hulley Road Energy Storage Limited GSF England England & Wales 100% Hulley Road
Larport Energy Storage Limited GSF England England & Wales 100% Larport
Lascar Battery Storage Limited GSF England England & Wales 100% Lascar
Stony Energy Storage Limited GSF England England & Wales 100% Stony
Enderby Battery Storage Limited GSF England England & Wales 100% Enderby
Middleton Energy Storage Limited GSF England England & Wales 100% Middleton
GSF IRE Limited ("GSF IRE") GSES1 England & Wales 100%
Mullavilly Energy Limited GSF IRE Northern Ireland 51% Mullavilly
Drumkee Energy Limited GSF IRE Northern Ireland 51% Drumkee
Porterstown Battery Storage Limited(1) GSF IRE Republic of Ireland 100% Porterstown
Kilmannock Battery Storage Limited(1) GSF IRE Republic of Ireland 100% Kilmannock
GSF Atlantic Limited ("GSF Atlantic") GSES1 England & Wales 100%
GSF Americas Inc. ("GSF Americas") GSF Atlantic North America 100%
GSF Green Power Cremzow Gmbh & Co KG GSF Atlantic Germany 90% Cremzow
GSF Green Power Cremzow Verwaltungs GmbH GSF Atlantic Germany 90% Cremzow
Snyder ESS Assets, LLC GSF Americas Delaware 100% Snyder
Sweetwater ESS Assets, LLC GSF Americas Delaware 100% Sweetwater
Westover ESS Assets, LLC GSF Americas Delaware 100% Westover
Mineral Wells ESS Assets, LLC GSF Americas Delaware 100% Mineral Wells
Cedar Hill ESS Assets, LLC GSF Americas Delaware 100% Cedar Hill
Wichita Falls ESS Assets, LLC GSF Americas Delaware 100% Wichita Falls
Mesquite ESS Assets, LLC GSF Americas Delaware 100% Mesquite
Dogfish ESS Assets, LLC GSF Americas Delaware 100% Dogfish
Big Rock ESS Assets, LLC GSF Americas Delaware 100% Big Rock
Mucklagh Battery Storage Facility Limited GSF IRE Republic of Ireland 51% Mucklagh
1) On 23 April 2024, further to the direct acquisition of the
remaining 49% of both Porterstown Battery Storage Limited and Kilmannock
Battery Storage Limited on 25 March 2024, the Company transferred these new
equity stakes down to GSF IRE Limited by way of an intercompany loan through
GSES 1 Limited.
GSES 1 is registered at First Floor, 16-17 Little Portland, London, England,
W1W 8BP.
GSF Albion, GSF England, GSF IRE and GSF Atlantic are registered at First
Floor, 16-17 Little Portland Street, London, United Kingdom, W1W 8BP.
All other subsidiaries that have a place of business in England & Wales
and Northern Ireland are registered at 8th Floor, 100 Bishopsgate, London,
EC2N 4AG.
All subsidiaries that have a place of business in Republic of Ireland, except
for Mucklagh Battery Storage Facility Limited, are registered at Block 5,
Irish Life Centre, Abbey Street Lower, Dublin 1. Mucklagh Battery Storage
Facility Limited is registered in Glen Erin, Caulstown, Dunboyne, Meath,
Ireland, A86 E306.
GSF Cremzow GmbH & Co KG and GSF Cremzow Verwaltungs GmbH are registered
at Schenkenberg, Gut Dauerthal 3, 17291.
All subsidiaries with a place of business in North America are registered at
1209 Orange Street, Wilmington, Delaware 19801.
7. Fair Value measurement
VALUATION APPROACH AND METHODOLOGY
There are three traditional valuation approaches that are generally accepted
and typically used to establish the value of a business; the income approach,
the market approach and the net assets (or cost based) approach. Within these
three approaches, several methods are generally accepted and typically used to
estimate the value of a business.
The Company has chosen to utilise the income approach, which indicates value
based on the sum of the economic income that an asset, or group of assets, is
anticipated to produce in the future. Therefore, the income approach is
typically applied to an asset that is expected to generate future economic
income, such as a business that is considered a going concern. Free cash flow
to total invested capital is typically the appropriate measure of economic
income. The income approach is the DCF approach and the method discounts free
cash flows using an estimated discount rate (WACC).
VALUATION PROCESS
The Company's portfolio of lithium-ion energy storage investments has a total
capacity of 1.25 GW (September 2023: 1.17 GW). As at 30 September 2024, 421.35
MW of the Company's total portfolio was operational (September 2023: 291.6 MW)
and 828.65 MW pre-operational (September 2023: 878.4 MW) (the "Investments").
The Investments comprise projects, based in the UK, the Republic of Ireland,
mainland Europe and North America. The Directors review and approve these
valuations following appropriate challenge and examination. The current
portfolio consists of non-market traded investments and valuations are
analysed using forecasted cash flows of the assets and used the discounted
cash flow approach as the primary approach for the purpose of the valuation.
The Investment Manager prepares financial models utilising revenue forecasts
from external parties to determine the fair value of the Company's investments
and the Company engages external, independent, and qualified valuers to verify
the valuations.
As at 30 September 2024, the fair value of all other investments has been
determined by the Investment Advisor and reviewed by BDO UK LLP.
The below table summarises the significant unobservable inputs to the
valuation of investments.
Significant Inputs Fair Value
Investment Portfolio Valuation technique Description (Range) 30 September 31 March
2024 2024
(£) (£)
Great Britain (excluding Northern Ireland) DCF Discount Rate Revenue/MW/hour 7.25% - 12% 185,084,878 197,453,898
£6 - £12
Northern Ireland DCF Discount Rate Revenue/MW/hour 8% - 9.25% 36,807,947 44,381,239
£9 - £27
Republic of Ireland DCF Discount Rate Revenue/MW/hour 8.25% - 11% 48,870,049 54,445,455
€8 - €13
Other OECD DCF Discount Rate Revenue/MW/hour 9.25% - 10.75% 249,773,402 196,268,784
€9 - €13/
$6 - $24
Holding Companies NAV (30,557,041) (10,889,861)
Total Investments 489,979,235 481,659,515
The fair value of the holding companies represents the net current assets
including cash, held within those companies in order to settle any operational
costs.
SENSITIVITY ANALYSIS
The below table reflects the range of sensitivities in respect of the fair
value movements of the Company's investments.
Significant Inputs Estimated effect on Fair Value
Investment Portfolio Valuation technique Description Sensitivity 30 September 31 March
2024 2024
(£) (£)
Great Britain (excluding Northern Ireland) DCF Revenue +10% 36,269,844 40,018,900
-10% (36,495,022) (40,636,523)
Discount rate +1% (25,955,710) (29,165,634)
-1% 30,388,486 34,203,482
Northern Ireland DCF Revenue +10% 4,629,127 4,773,587
-10% (4,634,023) (4,776,693)
Discount rate +1% (2,578,377) (2,657,793)
-1% 2,968,964 3,066,071
Exchange rate +3% (1,119,568) (1,222,696)
-3% 1,188,827 1,298,082
Republic of Ireland DCF Revenue +10% 14,728,570 7,892,427
-10% (15,218,848) (9,622,279)
Discount rate +1% (10,641,094) (8,951,937)
-1% 12,607,892 10,423,597
Exchange rate +3% (1,338,574) (1,202,234)
-3% 1,421,372 1,276,599
Other OECD DCF Revenue +10% 31,860,171 29,656,856
-10% (32,405,748) (30,077,236)
Discount rate +1% (17,180,236) (16,265,625)
-1% 19,521,432 18,675,891
Exchange rate +3% (7,427,731) (5,675,505)
-3% 7,886,531 6,026,567
High case (+10%) and low case (-10%) revenue information used to determine
sensitivities are provided by third party pricing sources.
VALUATION OF FINANCIAL INSTRUMENTS
The investments at fair value through profit or loss are Level 3 in the fair
value hierarchy and the reconciliation in the movement of this Level 3
investment is presented below. No transfers between levels took place during
the period.
Reconciliation 30 September 31 March
2024 2024
(£) (£)
Opening balance 481,659,515 434,762,146
Loan drawdowns during the period/year 59,561,496 69,850,873
Loan repayments during the period/year (18,962,383) (3,678,725)
Loan interest received during the period/year (8,675,960) (29,155,404)
Loan interest receivable from GSES 1 Limited during the period/year 17,167,334 29,971,133
(Transfer)/purchase of investments in Porterstown and Kilmannock during the (10,767,000) 10,767,000
period/year
Total fair value movement on equity investment during the period/year (30,003,767) (30,857,508)
489,979,235 481,659,515
8. Cash and cash equivalents
30 September 31 March
2024 2024
(£) (£)
Cash at bank 19,101,965 55,306,092
Restricted cash - 5,361,480
19,101,965 60,667,572
Restricted cash comprised cash held as collateral for future contractual
payment obligations and deferred payments payable from indirect subsidiaries
to third parties of the Company in relation to the Big Rock project. The final
payment to the supplier under the contractual agreement was made in April 2024
and subsequently the remaining £5,361,480 plus interest earned was released
from the collateral account in June 2024.
9. Net asset value per share
Basic NAV per share is calculated by dividing the Company's net assets as
shown in the Statement of Financial Position that are attributable to the
ordinary equity holders of the Company by the number of ordinary shares
outstanding at the end of the period. As there are no dilutive instruments
outstanding, basic and diluted NAV per share are identical.
30 September 31 March
2024 2024
Net assets per Statement of Financial Position £507,556,098 £ 540,696,493
Ordinary shares in issue as at 30 September/31 March 505,099,478 505,099,478
NAV per share - Basic and diluted (pence) 100.49 107.05
10. Share capital and reserves
Share capital Share Merger Capital reduction reserve Capital Revenue reserve Total
premium reserve
reserve
reserve
(£)
(£)
(£)
(£)
(£) (£) (£)
At 1 April 2024 5,050,995 331,302,899 10,621,884 75,089,894 95,542,635 23,088,186 540,696,493
Dividends paid - - - (17,484,483) - - (17,484,483)
Profit/(loss) for the period - - - - (21,512,393) 5,856,481 3,702,106
At 30 September 2024 5,050,995 331,302,899 10,621,884 57,605,411 74,030,242 28,944,667 507,556,098
Share Capital
Share premium Special Merger reduction Capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
(£) (£) (£) (£) (£) (£) (£) (£)
At 1 April 2023 4,813,995 315,686,634 349,856 - 111,125,000 125,584,414 (1,295,054) 556,264,845
Issue of ordinary £0.01 shares: 140,000 15,666,000 - - - - - 15,806,000
20 December 2023
Issue of ordinary £0.01 shares: 97,000 - - 10,670,000 - - - 10,767,000
25 March 2024
Share issue costs - (49,735) - (48,116) - - - (97,851)
Movement in special
Reserve - - (349,856) - 349,856 - - -
Dividends paid - - - - (36,384,962) - - (36,384,962)
Loss for the year - - - - - (30,041,779) 24,383,240 (5,658,539)
At 31 March 2024 5,050,995 331,302,899 - 10,621,884 75,089,894 95,542,635 23,088,186 540,696,493
11. Dividends
Dividend 30 September 30 September
per share
2024 2023
(£) (£)
Dividends paid during the period
For the 3 month period ended 31 December 2022 2 pence - 9,627,990
For the 3 month period ended 31 March 2023 1.5 pence - 7,220,992
For the 3 month period ended 31 December 2023 2 pence 9,907,990 -
For the 3 month period ended 31 March 2024 1.5 pence 7,576,493 -
17,484,483 16,848,982
An interim dividend of 2 pence for the period 1 October 2023 to 31 December
2023 was proposed by the Directors, and subsequently paid on the 12 April
2024.
An interim dividend of 1.5 pence for the period 1 January 2024 to 31 March
2024 was proposed by the Directors and subsequently paid on 15 July 2024.
12. Transactions with related parties
Since the listing of the ordinary shares in 2018, the Company and the
Directors are not aware of any person who, directly or indirectly, jointly or
severally, exercises or could exercise control over the Company. The Company
does not have an ultimate controlling party.
Details of related parties are set out below:
DIRECTORS
Patrick Cox, Chair of the Board of Directors of the Company, is paid a
director's remuneration of £79,000 per annum, (2023: £77,000), Caroline
Banszky is paid a director's remuneration of £59,000 per annum, (2023:
£57,000) with the remaining directors being paid directors' remuneration of
£49,000 per annum, (2023: £47,000).
Total director's remuneration and associated employment costs of £157,149
were incurred in respect of the period with £nil being outstanding and
payable at the period end.
INVESTMENT ADVISOR
The Investment Advisor, Gore Street Capital Limited (the "Investment
Advisor"), is entitled to advisory fees under the terms of the Investment
Advisory Agreement amounting to 1% of Adjusted Net Asset Value. The advisory
fee will be calculated as at each NAV calculation date and payable quarterly
in arrears.
For the avoidance of doubt, where there are C Shares in issue, the advisory
fee will be charged on the Net Asset Value attributable to the Ordinary Shares
and C Shares respectively.
For the purposes of the quarterly advisory fee, Adjusted Net Asset Value means
Net Asset Value, minus Uncommitted Cash. Uncommitted Cash means all cash on
the Company balance sheet that has not been allocated for repayment of a
liability on the balance sheet or any earmarked capital costs of any member of
the Group. At 30 September there was no uncommitted cash.
Investment advisory fees of £2,712,601 (30 September 2023: £1,411,254) were
paid during the period, there were £1,295,165 (30 September 2023:
£1,412,656) outstanding fees as at 30 September 2024 (31 March 2024:
£1,387,354 outstanding).
In addition to the advisory fee, the Advisor is entitled to a performance fee
by reference to the movement in the Net Asset Value of Company (before
subtracting any accrued performance fee) over the Benchmark from the date of
admission on the London Stock Exchange.
The Benchmark is equal to (a) the gross proceeds of the Issue at the date of
admission increased by 7 per cent. per annum (annually compounding), adjusted
for: (i) any increases or decreases in the Net Asset Value arising from issues
or repurchases of Ordinary Shares during the relevant calculation period; (ii)
the amount of any dividends or distributions (for which no adjustment has
already been made under (i)) made by the Company in respect of the Ordinary
Shares at any time from date of admission; and (b) where a performance fee is
subsequently paid, the Net Asset Value (after subtracting performance fees
arising from the calculation period) at the end of the calculation period from
which the latest performance fee becomes payable increased by 7 per cent. per
annum (annually compounded).
The calculation period will be the 12 month period starting 1 April and ending
31 March in each calendar year with the first year commencing on the date of
admission on the London Stock Exchange.
The performance fee payable to the Investment Advisor by the Company will be a
sum equal to 10 per cent. of such amount (if positive) by which Net Asset
Value (before subtracting any accrued performance fee) at the end of a
calculation period exceeds the Benchmark provided always that in respect of
any financial period of the Company (being 1 April to 31 March each year) the
performance fee payable to the Investment Advisor shall never exceed an amount
equal to 50 per cent of the Advisory Fee paid to the Investment Advisor in
respect of that period. Performance fees are payable within 30 days from the
end of the relevant calculation period. No performance fees were accrued for
the period ended 30 September 2024, (31 March 2024: £nil).
Gore Street Services Limited ('GSSL'), a direct subsidiary to the Investment
Advisor, provided commercial management services to the Company resulting in
charges in the amount of £161,611 (30 September 2023: £271,647) being paid
by the Company.
Post period, five assets of the Company's GB portfolio have been onboarded by
the Gore Street Capital's trading arm, Gore Street Energy Trading ('GSET').
INVESTMENTS
On 23 April 2024, further to the direct acquisition of the remaining 49% of
both Porterstown Battery Storage Limited and Kilmannock Battery Storage
Limited on 25 March 2024, the Company transferred these new equity stakes down
to GSF IRE Limited by way of an intercompany loan through GSES 1 Limited (see
notes 6 and 7).
13. Capital commitments
The Company together with its direct subsidiary, GSES1 Limited entered into
Facility and Security Agreements with Santander UK PLC in May 2021 for £15
million. The Facility was increased to £50 million in June 2023 and further
increased to £100 million in November 2024. Under these agreements, the
Company acts as chargor and guarantor to the amounts borrowed under the
Agreements by GSES1 Limited. As at 30 September 2024, an amount of
£28,489,892 had been drawn on this facility (31 March 2024: £5,535,292).
The Company had no contingencies and significant capital commitments as at the
30 September 2024.
14. Post balance sheet events
The Directors have evaluated the need for disclosures and/or adjustments
resulting from post balance sheet events through to 11 December 2024, the date
the financial statements were available to be issued.
On 10 September 2024, the Board approved a dividend of 1 pence per share for
the period from 1 April 2024 to 30 June 2024. This dividend totalling
£5,050,995 was paid to investors on the 18 October 2024.
The size of the revolving credit facility, within which the Company acts as
chargor and guarantor to amounts borrowed by its subsidiary GSES1 Limited, has
been increased in November 2024 from £50 million to £100 million. The term
of the facility has been extended to 2028.
Post period, the Company also converted and upsized its project- level debt
facility from $60 to $90m as a result of the successful completion of
construction milestones.
There were no adjusting post balance sheet events and as such no adjustments
have been made to the valuation of assets and liabilities as at 30 September
2024.
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