Gore Street Energy Storage (GSF) has agreed to acquire a 75 MW / 150 MWh Texas Asset, which is its largest acquisition in the US to date. The purchase brings GSF’s portfolio to 26 projects with a total capacity of 973.2 MW in operation and construction across the UK, Ireland, Germany and the US and brings GSF’s US portfolio to 144.7 MW. All land rights, grid connections and planning consents have been secured to the project, which is expected to be of two-hour duration. The grid connection is scheduled for the first half of 2024, with commercial operations to commence shortly thereafter. GSF’s investment manager, Gore Street Capital Limited, estimates the project will have an unlevered IRR in the range of 10-12%, in line with GSF’s target. Total expenditure on the project to commission is expected to be a minimum of £50m.
GSF says that North America remains a key target for it and that the current regulatory landscape there is becoming more favourable, with the Inflation Reduction Act introducing policies supporting energy storage deployment. The Electric Reliability Council of Texas (ERCOT) is the grid operator for most of Texas; GSF’s operational portfolio in ERCOT balances the grid by providing ancillary services and derives further revenue through participation in the wholesale market. GSF says that ERCOT continues to be a lucrative market due to the high penetration of renewables, creating a unique opportunity for battery storage. ERCOT has seen ancillary prices clear to almost US$3,000 per MW per hour in 2022.
Comments from Alex O’Cinneide, CEO of Gore Street Capital Limited, GSF’s investment manager
“We are pleased to announce this acquisition in the high-growth market of ERCOT, US, adding to the Company’s existing international portfolio of energy storage assets. This is a continuation of our diversification strategy of reducing single-point risk while gaining exposure to high-growth markets that demonstrate favourable characteristics similar to the GB and Irish markets. We see this unique geographical diversification in energy storage as increasingly beneficial to shareholders during the current political and economic climate.
“I look forward to sharing our progress over the next 12 months as 187 MW of additional operational capacity is scheduled to become operational in GB. The assets will provide critical services to the National Grid and form a necessary part of the infrastructure required for the continued deployment of renewable energy generation whilst further increasing the diversification of the Company’s revenue streams.”
Stony project construction milestone achieved
GSF says that non-contestable works, including grid transformers dedicated to the Stony project, were energised on the 23rd of January. This is on schedule for the project’s expected operational start next quarter.