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Gore Street Energy announces results of capacity market bids

230227 gsf grid

Gore Street Energy Storage Fund secured contracts in the 2023 T-4 capacity market auction across six of its battery energy storage sites. The T-4 auction is designed to secure capacity for the power grid for a period of 15 years commencing in four years’ time. Gore Street Energy Storage’s revenue for the first year (between October 2026 and September 2027) will be about £3.76m. Within that, the 200MW (Middleton site) is expected to generate £2.97m. Subsequent payments are then uplifted in line with inflation based on CPI.

The company also secured contracts for three sites in the 2023 T-1 capacity market auction. These contracts are designed to top up any shortfall in capacity forecast for the 12-month period that commences on 1 October 2023. Gore Street Energy Storage’s share of this is about £1.8m.

Portfolio update

In line with its gearing policy (as set out in its prospectus from 29 March 2022), the company may utilise debt up to 30% of gross asset value. Although this permits it (currently) to borrow up to about £230m (inclusive of the £15m revolving credit facility (RCF) already in place), utilisation of this capacity will depend on the cost of debt and the return available on investment. The investment manager (Gore Street Capital Limited) is engaging with the debt markets and reports strong demand from lenders at both project and portfolio levels. Shareholders will be updated on the outcome of these discussions in the near term.

The manager reckons that the total capital expenditure requirement to build out the portfolio will be about £370m (inclusive of contractual commitments already entered) between now and 2026. Out of the £370m, about £173m is expected to be deployed in the next 12 months. Gore Street Energy Storage currently has about £144m in cash or cash equivalents. [Couple that with the unused debt permissions and, providing that it can secure the borrowing, the company should have about £359m to deploy. That suggests a small shortfall which would have to be made up via an equity issue. However, the company will no doubt have a sizeable pipeline of additional projects that it could back if sufficient capital was available.]

GSF : Gore Street Energy announces results of capacity market bids

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