TIDMGSF
RNS Number : 4839L
Gore Street Energy Storage Fund PLC
06 September 2023
6 September 2023
Gore Street Energy Storage Fund plc
(the "Company" or "GSF")
Unaudited NAV
International portfolio outperforms GB assets. NAV continues an
upward trajectory.
Gore Street Energy Storage Fund plc, the internationally
diversified energy storage fund, is pleased to announce its
unaudited Net Asset Value ("NAV") as at 30 June 2023. The unaudited
NAV increased to 116.0 pence per Ordinary Share from 115.6 pence
per Ordinary Share at 31 March 2023. Allowing for the 2.0 pence
dividend paid during the period, the quarterly NAV total return was
2.1%. The continued steady NAV progression highlights the
resilience of the Manager's international diversification strategy.
The total NAV return, including dividends paid, amounting to 50.5%
since the IPO in May 2018.
Financial Highlights:
-- NAV increased by 0.4% to GBP558.4m (GBP556.3m as of 31 March
2023), or 116.0 pence per share (115.6 pence per share as of 31
March 2023), with an annualised NAV Total Return of 8.7% for the
June end quarter.
GBP millions Pence per Ordinary
Share
NAV as at 31 March 2023 556.3 115.6
Fund and Subsid. Holding Companies
Operating Expenses (2.7) (0.6)
Dividends (9.6) (2.0)
Cash Generation 4.8 1.0
Asset depreciation and other DCF changes 3.7 0.8
Opex Savings 5.9 1.2
NAV as at 30 June 2023 558.4 116.0
-- The Company's Board of Directors has approved a dividend of
2.0 pence per share for the June-end quarter, in line with the
Company's progressive dividend target.
-- Key long-term assumptions such as inflation, revenue and
estimated build-out capex remain unchanged.
-- NAV assumptions updated during the period reflect opex
savings from optimisation and internalisation of maintenance and
asset management engagements.
-- The weighted average discount rate applied to the portfolio remains at 10.1%.
Operational & Portfolio Update:
-- The operational fleet demonstrated strong performance,
generating a weighted average revenue of GBP10.67/MW/hr during the
June-end quarter.
-- The Company's international assets (Texas, Ireland &
Germany) performed exceptionally well during the three-month
period, generating GBP12.76/MW/hr, over 75% higher than the
Company's GB assets.
-- The GB portfolio generated an average revenue of
GBP7.19/MW/hr, accounting for 25% of total revenue for the period,
and 15% above the 1-hour quarterly benchmark based on data from
Modo Energy (April to June leaderboards).
-- Post period updates:
-- Operational performance: the international assets,
specifically in ERCOT and NI, exceeded expectations with revenue
generation estimated at GBP81.1/MW/hr and GBP24.0/MW/hr,
respectively, over the months of July and August.
-- Construction progress: (i) the Stony asset, located near
Milton Keynes, will have energisation completion by September-end;
and (ii) Ferrymuir is expected to have energisation completion by
November-end. Once complete, the operational capacity in GB will
amount to 239.5 MW, giving a total operational capacity across four
grids of 421.4 MW.
Strong Balance sheet:
-- The Company remains well-capitalised, with GBP99.0m in cash
or cash equivalents as of 30 June 2023.
-- During the period, the Company successfully upsized its
Revolving Credit Facility to GBP50.0m. As at 30 June, the Company
had not drawn down on the facility.
-- The Company continues to progress well towards securing a
bridge loan in the US. This debt, denominated in USD, will be
secured at the project level of the 200 MW / 400 MWh Big Rock asset
in California, US.
-- As at July-end 2023, the contractually committed outstanding
capex amount was GBP77.4m, significantly lower than the current
availability of cash on balance sheet and credit facility.
Portfolio Update & Market Commentary
Grid Average revenue Average revenue 6-month Average revenue
01.01.23 - 31.03.23 01.01.23 - 30.06.23
(GBP/MW/hr) 01.04.23 - 30.06.23 (GBP/MW/hr)
(GBP/MW/hr)
GSF Fleet 13.40 10.67 12.03
--------------------- ---------------------- -------------------------
GSF Irish Portfolio 20.29 13.84 17.05
--------------------- ---------------------- -------------------------
GSF Texas Portfolio 3.65 12.29 8.00
--------------------- ---------------------- -------------------------
GSF German Portfolio 10.39 6.99 8.68
--------------------- ---------------------- -------------------------
GSF Great Britain
Portfolio 8.49 7.19 7.84
--------------------- ---------------------- -------------------------
Great Britain Market
Average (1-hour
duration)* 7.64 6.26 6.95
--------------------- ---------------------- -------------------------
Great Britain Market
Average (2-hour
duration)* 8.64 8.86 8.75
--------------------- ---------------------- -------------------------
* Note: based on Modo Energy data on leaderboards for January to
June, including CM revenue. Inclusion in the leaderboard is subject
to minimum requirements, including >7 MW capacity and monthly
availability of greater than 50%.
The Company's diversified portfolio performed well during the
reporting period, outperforming both the 1-hour and 2-hour GB
markets on an average revenue per MW basis by 70% and 20%
respectively, highlighting the benefits of its international
focus.
Ireland (EirGrid & Soni):
The Company's best-performing assets during the quarter were its
100 MW Northern Irish assets. Under the DS3 uncapped contract, high
wind penetration is directly linked to the level of revenue
received, which resulted in a high average revenue during the
period.
Texas (ERCOT):
A heatwave in early June provided a tailwind for pricing in this
market. The Texas assets outperformed forecasts for the quarter, as
these months are a transitional period that historically has
offered lower revenue levels than the highs seen in the summer and
winter months.
Great Britain (National Grid):
Revenue in this market remained broadly in line with the
forecasted downward trajectory, a function of service procurement
levels by the grid operator and increased operational capacity. The
Company successfully secured longer-term (monthly) FFR contracts
for most of its assets in favour of shorter (daily) contracts, as
these shorter contracts experienced higher levels of volatility and
ultimately lower average revenue. The remaining portion of the
fleet pursued a blended strategy of DCMR, trading, and BM
activities.
Germany (50 Hertz):
The Company recently changed its route to market provider for
its German asset, Cremzow. This new provider facilitates access to
supplementary revenue streams, including energy arbitrage. These
additional revenue streams proved profitable during the quarter,
with trading contributing materially to overall revenue. As gas
prices subdued due to warmer temperatures across the continent,
leading to a decline in FCR prices, energy arbitrage emerged as a
lucrative alternative to ancillary services.
Post Period: July and August
Seasonal market conditions in ERCOT allowed revenues in that
grid to surge, whilst Ireland provided high returns following
persistent windy weather. This had a positive impact on overall
portfolio revenue and highlights the importance of geographic
diversity. The estimated revenue for the GSF fleet for July and
August is GBP14.3/MW/hr and GBP26.3/MW/hr, respectively.
-- Ireland benefited from unseasonably high wind penetration,
with levels regularly reaching the system maximum of 70% throughout
July and August and resulted in estimated revenues of over
GBP20.8/MW/hr and GBP18.9/MW/hr, respectively, a notable increase
when compared to the reported figures of the previous year for July
and August 2022 of GBP7.3/MW/hr and GBP7.8/MW/hr, respectively.
-- Texas portfolio generated its highest ever monthly revenue in
August. This is in line with historical trends as the highest
revenues tend to occur during the summer due to heatwaves and
scarcity on the grid. More frequent occurrences of price spikes
compared to the same period in 2022 have resulted in an estimated
average revenue of GBP12.7/MW/hr and GBP149.4/MW/hr in July and
August.
-- GB revenue picked up during the start of July as grid
oscillations in Scotland meant higher procurement volumes sought by
National Grid, however as these issues were resolved revenue
plateaued towards the end of July and into August. Requirements in
ancillary services markets subsequently flattened, with subdued
wholesale opportunities following seasonally low demand for
electricity and little impact from continental Europe compared with
the events in 2022. The estimated average revenue for the GB
portfolio is GBP7.8/MW/hr and GBP5.1/MW/hr in July and August.
-- German asset has continued to generate a stable revenue
stream, amidst the ancillary service prices' decline driven by low
seasonal demand satisfied with a stable influx of wind and solar
generation coupled with a constant supply of energy from gas, which
has seen a decrease in prices and high levels of storage. Cremzow's
ability however to participate in energy arbitrage has supplemented
the bulk of the revenue stream, generating an estimate of
GBP9.8/MW/hr & GBP9.3/MW/hr in July and August
respectively.
Dividend Declaration
The Company's Board of Directors has approved a dividend of 2.0
pence per share for the June end quarter. The ex-dividend date will
be 28 September 2023, and the record date of 29 September 2023. The
dividend will be paid on or around 20 October 2023.
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 2.0 pence per
share, 1.43 pence is treated as qualifying interest income.
The Board notes the recent volatility in the share price, in the
context of further weakness in bond markets, especially in the UK,
with 2-year gilt yields now significantly higher than following the
mini-budget last September. This is especially disappointing given
the positive response to the full year results and Annual Report in
July 2023 and the subsequent strong share price performance. Since
then, the company's assets have continued to perform strongly.
CEO of Gore Street Capital, the investment manager of the
Company, Alex O'Cinneide , commented:
"I am pleased to present the unaudited NAV and portfolio update
for the three months, which once again reflect our continued
delivery against our targets, firmly supported by our
diversification strategy - a cornerstone for sustainable growth. We
remain committed to providing market-leading transparency on
financial and operational metrics, alongside clear and appropriate
valuations.
The performance of our international assets, which on average
generated 1.8 times revenue per MW per hour compared to the GB
average during this reported period, and in July and August,
generated 4.4 times revenue per MW per hour compared to the GB
average; reinforcing our position as the leader amongst our peers
and the broader sector. With tight control over our projects from
our asset management, commercial and investment teams we have been
able to secure market leading revenues and operational
performance.
In addition to superior revenue generation, our US assets also
benefit from Investment Tax Credits, providing a substantial tax
credit of between 30% and 40% of capex. We also expect to be able
to secure project-level debt at more favourable pricing levels
compared to the current levels seen in the UK due to the unique
revenue profile of our California-based asset, primarily driven by
a secure, long-term contract called the Resource Adequacy contract,
which can account for up to 40% of its revenue.
With the imminent energisation of Stony and Ferry we continue to
bring projects to operation; which is a testament to having
internal teams in procurement and construction, focused on
delivery.
The Company has set ambitious goals for revenue and EBITDA
margin. Anticipating increased EBITDA of the underlying investment
portfolio in 2023 as more projects are commissioned, and
operational capacity grows, we expect growth in NAV per share and
earnings per share.
We are exceptionally well-positioned to capitalise on the
opportunities ahead and are committed to delivering continued value
for all our stakeholders."
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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