REG - Gore Street Energy - Portfolio and Trading Update

Gore Street Energy Storage FundAnnouncement

06/07/2023 07:00

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RNS Number : 1182F  Gore Street Energy Storage Fund PLC  06 July 2023

6 July 2023

Gore Street Energy Storage Fund plc

(the "Company" or "GSF")

Portfolio and Trading Update

Energisation of 79.9 MW asset scheduled for July, trading update and a
potential increase to ITC

Gore Street Energy Storage Fund plc, the internationally diversified energy
storage fund, is pleased to announce the scheduled energisation of its 79.9 MW
asset, "Stony", a positive portfolio update and potential qualification for
increased ITC benefit for its US assets.

 

Energisation of 79.9 MW asset

The Company is pleased to announce that the energisation process of the Stony
asset in Milton Keynes, GB, with a capacity of 79.9 MW, has been scheduled
with National Grid ESO to begin on 31 July 2023.  The process is expected to
take up to two weeks to complete. Once operational, the asset will bring the
Company's total operational portfolio to 371.5 MW.

 

Operational assets: revenue performance

 01.01.23 - 30.06.23                   £ / MW / hr   £ / MWh / hr
 GB average (1-hour system duration)*

                                       6.83          6.92(1)

                                                     ( )
 GB average (2-hour system duration)*  8.20

                                                     4.10

 GSF GB average*                       7.62

                                                     8.59

*Based on Modo Energy data; Note (1) - classification for 1 hr system duration
may differ slightly from exact integer value

 

Based on data provided by Modo Energy, the Company's Great Britain (GB) assets
generated an average revenue of £7.62 / MW / hr for the 6-month period from
January - June 2023. This compares favourably to the GB average for a one-hour
system, which was reported to be £6.83 / MW / hr during the same period.
Two-hour systems were reported to have generated, on average, just 7.6% more
per MW than the Company's average during this period. Given the material
increased capex required to build the additional duration, this supports the
Company's view of optimal duration in this market.

As the GB market faces increased saturation and declining prices, portfolios
solely dedicated to this market are experiencing decreasing revenues. The
Company has effectively offset this impact through the strong performance of
its international assets.

The Company's Irish portfolio, with a capacity of 130 MW / 72.6 MWh, generates
the majority of its revenues from the DS3 (Delivering a Secure Sustainable
Electricity System) program, which is Ireland's ancillary services market.
This program was established to integrate non-synchronous generation, led by
wind power, and rewards assets for their availability during periods of
heightened grid volatility caused by System Non-Synchronous Penetration
(SNSP).

From 01 January - 31 March 2023, the Company's operational Northern Irish
assets, Drumkee and Mullavilly, played a significant role in driving revenue
for the portfolio. They achieved an average revenue of £24.60 / MW / hr
across the quarter. This high level of revenue was due to increased SNSP and
strong asset-wide availability.

While Irish revenues declined as weather conditions stabilised and moved out
of the winter months, extreme weather conditions in Texas resulted in a surge
in revenues from the Company's operational portfolio in the ERCOT market from
01 April - 30 June 2023. Heatwaves experienced in the state caused power
prices to spike; as a result, the Company's assets generated an estimated
hourly average of $175 / MW / hr between 18 - 21 June 2023. In managing this
volatility, the demand for energy storage enabled the Texas portfolio to
deliver estimated average revenues of $14.76 / MW / hr for these three months.

In addition, the Company is pleased to announce that it has formed two new
engagements with Tenaska and Enspired. These companies provide route-to-market
services for the Company's assets in the US and Germany, respectively. Since
establishing these relationships, the Company has achieved cost savings and
gained access to additional revenue streams.

 

ITC benefit increased for US assets

The Investment Tax Credit ("ITC") forms part of the $369bn energy security and
climate change initiatives available under the recently introduced US
Inflation Reduction Act (IRA). This enables asset owners to deduct a
percentage of the total cost of qualifying renewable energy projects from
their federal taxes, including energy storage technologies.

Under the IRA, a basic tax credit of 30% is available, and additional ITCs can
be obtained based on specific requirements. Per the 2022 unemployment data
published by the Bureau of Labour and Statistics (BLS), the sites: Dogfish,
Wichita Falls, and Mineral Wells (combined 95MW) all qualify for 40% ITC,
provided that unemployment rates in these regions remain equal to or higher
than the national average. This additional 10% ITC adder has yet to be
factored into the assets' underwriting and represents a significant potential
upside for shareholders.

 

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

"The continued strength of the Company's international portfolio further
cements the success of our diversified strategy.

While GB has proved fruitful ground since the Company's IPO five years ago, we
have anticipated for some time that market saturation will lead to a decline
in GB revenue. The Company's decision to extend its portfolio across Ireland,
mainland Europe and the US was driven by this foresight, and the performance
of our entire portfolio illustrates the sound judgement of both the Company
and the Investment Manager.

As well as currently benefiting from access to 19 revenue streams across four
uncorrelated markets, the Company's established presence in the US means we
are able to benefit from the positive legislative environment set by the
Inflation Reduction Act.

These benefits will support the continued build-out of our construction
portfolio, and we're delighted to have received a firm date for the
energisation of the Stony asset. Building scale remains a key element of our
strategy, with this site forming the first of over 500 MW the Company is set
to bring online by the end of 2024."

 

 

For further information:

 Gore Street Capital Limited
 Alex O'Cinneide / Paula Travesso                                        Tel: +44 (0) 20 3826 0290
 Shore Capital (Joint Corporate Broker)
 Anita Ghanekar / Rose Ramsden / Iain Sexton (Corporate Advisory)        Tel: +44 (0) 20 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

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

Notes to Editors

About Gore Street Energy Storage Fund plc

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

 

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