TIDMGSF
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 GBP15.1/MW/hr,
consistent with the GBP15.1/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 GBP15.1/MW/hr, consistent with the
GBP15.1/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 GBP31.4/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 GBP15.1/MW/hr (excluding Stony [1] ),
with the non-GB fleet averaging an estimated GBP20.5/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
GBP25.8/MW/hr during the quarter, continuing the strong performance
experienced in the summer months. This was further boosted by high
estimated December revenue of GBP37.2/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 GBP10.9/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 GBP4.5/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
GBP6.1/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
GBP66m in cash or cash equivalents. Available credit facilities
include the Santander RCF of GBP50m 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
[1] Stony commenced commercial operations as of 18(th)
December
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