Strong trading at Gore Street Energy Storage – Gore Street Energy Storage Fund says that over the final quarter of 2021, three of its sites -Lower Road (10MW), Larport Farm (19.5MW) and Breach Farm (10MW) – ranked as one the highest revenue generating energy storage assets in per MWh, according to Modo Energy, a specialist independent data provider for the energy markets.
Additionally, on a £ per MW basis, Larport Farm ranked second.
In January 2022, the company’s assets were again listed as the best performing assets for the month, when Breach Farm and Lower Road ranked as the top 2 highest revenue assets on both a MW and MWh basis.
All of these assets benefit from frequency contracts, for which prices have recently reached record levels sustained at approximately £25 per MW per hour. These returns are significantly above the base case for Gore Street’s 110MW GB operational portfolio.
The Modo Energy publication confirms that shorter duration battery systems are achieving the same (or higher) levels of ancillary revenue when compared to sites with longer duration. The statement says that, as shorter duration battery systems require less capital expenditure, the company is able to commit less capital whilst capturing the same (or higher) level of revenues, maximising profitability.
Currently, the majority of the GB portfolio has a duration of circa 1-hour and the company expects to increase sites’ duration when required to meet its investment goals. The company continuously assesses portfolio capacity and is able to expand sites’ duration when revenue justifies capex expenditure.
[We think this statement is a response to competitors promoting the attractions of longer duration (up to two hour) batteries. Gore Street is saying that its one hour batteries are more profitable, especially on a return on capital employed basis, in the current market. A shift to a market where trading intra-day volatility in energy prices was more profitable than providing firm frequency response (moderating the effect of fluctuations in energy supply/demand on the grid) might change this. This is a market that is still evolving.]
Trading opportunities captured
During Q4 2021, energy markets in GB experienced historic highs in energy prices as well as volatility. This was driven by historical low wind generation, planned and unplanned generation plant outages, unforeseen interconnector failure and high gas prices. Gore Street says that it has demonstrated that its assets are flexible and capable of capturing trading revenue when, and if, such revenue stream offers higher gross margins when compared to other available revenue-generating services.
It believes that the continuous scale up of renewable energy generation, and the consequential need for grid flexibility to support such growth, suggests that the market fundamentals will remain supportive, thus sustaining high levels of volatility throughout 2022.
GSF : Strong trading at Gore Street Energy Storage