TIDMGSF
RNS Number : 8610P
Gore Street Energy Storage Fund PLC
12 October 2023
12 October 2023
Gore Street Energy Storage Fund plc
(the "Company" or "GSF")
Positive Portfolio Update and Share Price Commentary
Positive revenue trends continue, driven by the international
assets. The consolidated portfolio outperformed the GB fleet by
circa 3x during the quarter
Gore Street Energy Storage Fund plc, the internationally
diversified energy storage fund, is pleased to share an update for
FY Q2 ending 30 September 2023. This quarter again highlights the
benefits of the Company's early diversification strategy, with the
consolidated portfolio outperforming the Company's GB fleet by
c.3x, based on average revenue per MW during the period. The
portfolio build-out continues to progress following September's
energisation of 79.9 MW of additional capacity.
The Board continues to monitor the current GSF share price
volatility. The Board and the Investment Manager confirm that they
are not aware of any portfolio-specific factors that have led to
the recent sharp decline in the share price. The Board believes
that the discount to Net Asset Value at which the Company's share
price currently trades materially undervalues the Company and its
portfolio. The Board maintains confidence in the quality of the
assets across the five international energy markets, which continue
to perform strongly, underpinning the dividend.
Key FYQ2 Highlights:
-- International Diversification: The Company's non-GB portfolio
spans four uncorrelated international energy markets, including the
integrated Irish grid, Germany, Texas, and California. The
operational international fleet now accounts for over 62% of the
Company's operational capacity. This diversification insulates the
Company from the current GB market saturation, which at some stage
will ameliorate as is typical of capital-intensive industries, and
enables the pursuit of diverse revenue streams.
-- Market-Specific Strategies: Tailored system durations,
ranging from 26 minutes in Northern Ireland to two hours in Texas;
optimised revenue streams based on weather patterns, renewables
penetration, and flexibility needs. This adaptability minimises
revenue variability, ensuring stability.
-- Market Success: In August, the Company's assets in the ERCOT
market in Texas generated record revenue of approximately
GBP150/MW/hr, marking the highest monthly revenue per MW ever
achieved by the Company in a single grid. This was achieved through
strategic prequalification of new revenue streams and collaboration
with a new route-to-market partner. This achievement highlights the
advantages of having complete, in-house technical resources, from
construction to asset management and commercialisation.
Operational & Portfolio Update:
The operational fleet demonstrated strong performance,
generating an estimated weighted average revenue of GBP18.9/MW/hr
during the September-end quarter. Performance is broken down by
grid below:
-- Ireland: Unseasonably high wind penetration led to estimated
revenues of over GBP20.2/MW/hr during the three months. This is
especially pleasing for the Company given that these months have
historically been "off-season", yielding lower revenues.
-- Texas: Record-breaking monthly revenue was generated in
August following the Company's prequalification for the new ECRS
ancillary service, aligning with historical trends of high summer
revenue due to heatwaves and grid scarcity. The Portfolio generated
an estimated average of GBP65.2/MW/hr during the three months in
this market.
-- Great Britain (GB): Revenue in GB remains subdued and remains
the Company's lowest revenue market, which we believe will
continue. The estimated average revenue for the GB portfolio was
GBP6.6/MW/hr for the three months.
-- Germany: Stable revenue was maintained despite declining
ancillary service prices due to sufficient spreads that allow
energy storage to profit from energy arbitrage. The estimated
average revenue for the three-month period was GBP10.4/MW/hr.
Capital Structure:
-- The Company remains well-capitalised, with c.GBP75m in cash
or cash equivalents as of 30 September 2023 without any outstanding
debt. Of the 187 MW scheduled to come online in GB over the next 9
months, c.85% of the required capex has already been paid. The
Company currently remains undrawn on its existing GBP50m RCF. In
addition, the Company continues to progress towards securing USD
denominated project-level debt for its Big Rock asset in
California.
Construction Progress:
The Company remains on track to bring its operational portfolio
to 813.4MW by the end of 2024. A breakdown of progress is detailed
below:
-- GB: Significant strides have been made in completing assets,
with Stony (79.9 MW) energised in September 2023 and Ferrymuir
(49.9 MW) awaiting confirmation from the grid operator to bring it
to energisation with all energy storage package work complete and
ready to be energised. Enderby is still on track for and targeting
energisation in June 2024.
-- California: The Big Rock asset (200.0 MW) construction is
proceeding well, with key equipment procured and on-site works
scheduled to commence this year. The project remains within budget
and on track to meet its energisation date in 2024.
-- Texas: Contracts for advanced engineering and procurement of
HV equipment for Dogfish (75.0 MW) have been signed, with further
agreements in progress. The project remains on track for its
energisation in 2024.
-- Ireland: Engineering and procurement for Porterstown Phase II
(60.0 MW) are underway and are on track for energisation in October
2024.
Alex O'Cinneide, CEO of Gore Street Capital, the Investment
Manager of the Company, commented :
"I wish to address fellow shareholders directly regarding the
recent performance of the Company's share price, which has been
disappointing, particularly considering the Company's continued
impressive operating performance. In light of this, the Investment
Manager, Gore Street Capital has purchased shares, as announced on
3 October.
Energy storage faces the same challenges as the rest of
renewable infrastructure in a high-interest environment. It is
important to recognise, however, that despite these difficulties,
our commitment to the Company's objectives remains unchanged. We
are successfully executing against the strategy laid out to
investors and delivering on the commitments made, including those
regarding dividend distributions to our Shareholders. Our dividend
coverage is the highest amongst peers and will continue to increase
and be underpinned as significant new capacity comes on stream over
the next 12 months.
In terms of operational progress, we have achieved significant
milestones. Stony has been energised, and we remain confident of
reaching our goal of 813.4 MW operational capacity by the close of
2024.
In our sector, there have been higher assumptions over future
revenue opportunities than we foresaw, and those assumptions have
had to be unwound. This has given the impression that volatility
over energy storage revenues is higher, and therefore, investors
are placing a higher risk premium on funds like ours. What that
view fails to consider is the difference in strategy enacted by
those funds.
The Company's unique diversification strategy, which has seen
the deployment of operational assets across four uncorrelated
markets, has reduced revenue volatility by c.50%. The Company's
balance sheet reflects prudent management, with the lowest debt
levels amongst our peers.
While markets remain turbulent, our team is more determined than
ever to navigate these challenges successfully. We remain focused
on our objectives and are fully committed to delivering value for
shareholders."
Pat Cox, Chair of the Company, commented:
"The Board notes the recent weakness in share price, which, in
our view, significantly underrates the best-in-class performance of
our portfolio.
Our operational assets have consistently met and often exceeded
expectations, especially in our international markets, where recent
revenue generation has surpassed projections.
It is important to emphasise that our operating portfolio
demonstrates strong performance on the international stage and
reinforces our confidence in the strategic choices we have
made.
We would like to reassure shareholders that despite the recent
market conditions, the Company's balance sheet remains strong, it
continues to perform particularly well operationally, and we remain
committed to delivering value for our Shareholders."
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) Tel: +44 203 493
8000
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
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END
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October 12, 2023 02:00 ET (06:00 GMT)
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