REG - Gore Street Energy - Portfolio Update

Gore Street Energy Storage FundAnnouncement

31/05/2022 07:00

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RNS Number : 2927N  Gore Street Energy Storage Fund PLC  31 May 2022

31 May 2022

Gore Street Energy Storage Fund plc

(the "Company" or "Gore Street")

 

Strong Portfolio Performance and Further Construction Milestones Achieved

Gore Street, London's first energy storage fund supporting the transition to
low carbon power, is pleased to provide the following positive portfolio
update:

Operational Asset Performance and Trading Update

The Company's portfolio is performing strongly on every grid in which it
operates - Great Britain (GB), Ireland, Germany, and the USA (Texas). During
the final quarter of the Company's financial year (1 January - 31 March 2022):

·    All GB assets performed very well, averaging £19/MW/hour during the
quarter, with February being the strongest month. Revenue per MWh in Q1 2022
was 65 per cent. higher when compared with the same quarter last year and 22
per cent. higher than 2021 quarterly average.

·    GB assets again achieved good technical availability 1  of 96 per
cent. during the quarter.

·    Revenue from the Company's two Northern Ireland assets exceeded
forecast, particularly in February when they achieved an average price of c.
£31/MW/hour, contributing c. £2m of net revenue in February alone, towards
the £4.9m net revenue achieved in the quarter by these assets.

·    The newly acquired operational asset in Germany, Cremzow 2 , secured
an average price of c. €17/MW/hour in the quarter, above forecast at
acquisition, with March being the strongest month (c. €20/MW/hour).

·    The newly acquired three operational assets 3  in ERCOT, Texas,
generated net revenue within their budgeted range, averaging $18/MW/hour in
the month of March, following their acquisition in early March.

 

The strong performance across the Company's portfolio during the first quarter
of 2022 is a result of strong in-house expertise, selecting an optimal mix of
contracts available to its storage sites, and favourable market conditions,
consisting of: in GB, the Company's portfolio benefiting from trading
opportunities and high demand of ancillary services from service operators; in
Northern Ireland, wind penetration contributing to higher levels of revenue
for the Company's assets.

The new financial year has started well across the Company's asset base. In GB
in April, National Grid released an auction for a new service called Dynamic
Moderation, in which Gore Street successfully participated. Dynamic Moderation
is part of a suite of services aimed at replacing FFR in the near future. This
demonstrates: (i) the flexibility of Gore Street's assets to perform under new
contracts, (ii) the agility of the Investment Manager's team in participating
in new auctions from inception and, finally (iii) the diversification of the
portfolio's revenue streams.

 

Enderby (57MW/57MWh), England: EPC Contract Secured

Fluence Energy has been selected as the EPC (Engineering, Procurement,
Construction) contractor for the Company's energy storage asset currently
under construction in Enderby (57MW/57MWh), England. This asset is expected to
become operational in Q4 2023, in line with the timeline announced at the time
of its acquisition.

The contracts include the EPC agreements and long-term service agreements
(O&M) for maintenance and operation, including Availability and Energy
Capacity warranties, as well as stringent performance requirements to be
achieved by Fluence, a global leader in energy storage and digital
applications for renewables and storage.

Porterstown (30MW/30MWh 4 ), Republic of Ireland: DS3 Contract Agreed

Porterstown, the Company's energy storage asset near Dublin, Ireland, was
energised in May 2022 and will commence generating cash flow in July, under a
DS3 capped contract.

This milestone marks the completion of an initial capacity of 30MW/30MWh
(phase 1) of the total 90MW capacity available on the site, with the remaining
60 MW expected to be completed by 2024 (phase 2).

Porterstown is the first asset in Ireland to operate under the DS3 capped
contract. Porterstown will deliver DS3 services for a six-year term contract
beginning July 2022, under a fixed-rate, with EirGrid, Ireland's state-owned
electric power transmission operator.

System duration and yield optimisation

The Company has, on average, c.1-hour system duration for the nine projects
currently operational in GB.

Today, the optimal revenue mix that represents maximum payment for storage
batteries is primarily comprised of grid balancing services (FFR and Dynamic
Containment) - all of which are contracts that can be delivered by batteries
of up to 1-hour in duration. Gore Street's strategy is centred on profit
optimisation and the Company will continue to minimise capex by designing
assets that are best suited to the current optimal revenue mix. Gore Street
estimates the excess return on a 1-hour duration battery investment over long
duration batteries is increasing given the recent rise in battery procurement
costs.

In Northern Ireland, the Company has opted for sub-30-minute duration
batteries, which allows the Company to deliver six ancillary services under
DS3 uncapped contracts, and these delivered strong performance for the
quarter, as noted above.

In the case of the Company's operations in Texas, US, the market dynamics and
revenue mix are distinct from the ones in GB and Ireland. Gore Street seized
an attractive acquisition opportunity of assets with 2-hour duration, which
allows the Company to capture trading opportunities, as and when they become
increasingly prominent in the ERCOT market, alongside current lucrative
ancillary services contracts.

Texas (c. 80MW/ c. 160MWh), US: Acquisition Progress

Further to the announcement on 10 March of Gore Street's first acquisition in
the US, the Company is pleased to report that the required conditions have
been satisfied for the completion of four out of the eight energy storage
assets in Texas. Three of the four assets now acquired (Synder, Westover and
Sweetwater: c.30MW/c.60MWh) are fully operational and are of two-hour
duration. The fourth asset (Mineral Wells) is under construction and is
expected to become operational in Q4 2023.

The Company expects to complete the acquisition of the remaining four assets
in the coming months, once the various condition precedents have been met.

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

"The Company is delighted to update shareholders on the Company's successful
progress, both domestically and internationally, including a positive
performance of our operational portfolio, further capacity coming on stream
and significant developments for sites in construction.

"Performance during the last quarter of our fiscal year has been better than
expected, with assets outperforming across all our markets.

"We are also pleased to see our GB portfolio matching the same levels of
revenues with other market participants with longer durations. We continue to
base our strategy on current market conditions and revenue streams and
therefore continue to favour one hour battery systems for the GB market. We
believe this results in substantial cost efficiencies and has significantly
rewarded our shareholders.

"These assets offer important flexibility to participate in multiple
attractive revenue streams, including trading.  At times of material market
price dislocation, this is a highly profitable use for the Company's
portfolio, which is ready to participate when ideal market conditions become
available."

 ENDS

The Legal Entity Identifier of the Company is 213800GPUNVGG81G4O21.

For further information:

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

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

  Fiona Conroy (Corporate Broking)

 

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

 

Buchanan (Media enquiries)

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

 

JTC (UK) Limited, Company Secretary Tel: +44 (0) 20 7409 0181

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 a significant 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.

 

 1  Technical availability is the percentage of planned production time
without unexpected technical difficulties or maintenance needs.

 2  Acquisition closed on 4 March 2022 with a lock box date on 1 January 2022.

 3  Acquisition of the three operational sites closed in April 2022 with a
lock box date on 1 March 2022.

 4  Phase 1 capacity only.

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