REG - Gore Street Energy - Portfolio and Trading Update

Gore Street Energy Storage FundAnnouncement

10/01/2024 07:00

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RNS Number : 1401Z  Gore Street Energy Storage Fund PLC  10 January 2024

10 January 2024

Gore Street Energy Storage Fund plc

(the "Company" or "GSF")

Consistent strong performance and positive outlook

 

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

 

 

Key FY Q3 Highlights:

 

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

 

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

 

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

 

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

 

 

Operational Portfolio Update:

 

The portfolio achieved strong performance in Q3 and delivered an estimated
average revenue of £15.1/MW/hr (excluding Stony 1  (#_ftn1) ), with the
non-GB fleet averaging an estimated £20.5/MW/hr. This was driven by high wind
generation in Ireland, which translated into increased revenue for the Irish
portfolio, and builds on a strong summer period delivered largely by the
operational US assets. Revenues achieved by the US and Irish assets in the
financial year to date have now passed their FY 2023 total revenue figures.

 

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

 

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

 

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

 

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

 

Capital Structure:

 

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

 

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

 

Construction Progress per Geography:

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

For further information:

 

Gore Street Capital Limited

Alex O'Cinneide / Paula Travesso
 
Tel: +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 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/)

 1  (#_ftnref1) Stony commenced commercial operations as of 18(th) December

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