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Positive momentum for Gore Street Energy Storage Fund as Californian project energised

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Gore Street Energy Storage Fund (GSF) has announced a portfolio update and the energisation of “Big Rock” – the 200 MW / 400 MWh asset in California – bringing the company’s total energised capacity to 621.4 MW / 792.1 MWh across five grids.

Trading and Portfolio Update:

For the calendar year ending 31 December 2024, the company is estimating an operational portfolio revenue of c.£37.7m (weighted portfolio average: c.£10.83/MW/hr) and an operational EBITDA of c.£24.5m representing an EBITDA margin of 65%.

Based on the 2025/26 mid-case NAV revenue forecasts from several third-party providers, the annualised 12-month portfolio revenue run-rate during FY 2025/26 is estimated at c.£72m on 753.4 MW of operational capacity. The operational EBITDA margin for this period is expected to be 69%, a 4% increase compared to the 2024 calendar year largely due to improved economies of scale as the new larger Great Britain assets stabilise. The increase in revenue to £12.32/MW/hr can be attributed to the company’s increased geographic diversification following assets in construction becoming operational, resulting in a greater proportion of assets in higher-yielding markets.

Successful Energisation of US Asset, Big Rock:

The “Big Rock” project in California is now energised, representing a 47% increase in the company’s energised capacity, which now stands at 621.4 MW / 792.1 MWh. Big Rock is the company’s largest asset to date, with a capacity of 200 MW / 400 MWh.

As previously announced, the Big Rock project has secured a 12-year fixed-price resource adequacy (RA) contract, which has a value of over $165m over the contract life. The RA is stackable, enabling the asset to participate in multiple revenue streams concurrently. RA revenue will commence in June 2025, but the asset is expected to start generating merchant revenue in advance of June.

The Big Rock project is expected to receive an investment tax credit (ITC) of up to 30% of qualifying capital expenditures under the Inflation Reduction Act. The investment manager is currently engaging with several counterparties to monetise these credits alongside those available for the Dogfish project. The pricing for these ITCs, based on numerous term sheets received, have remained in line with expectations and previous guidance to-date, signifying market confidence in these tax credits.

Alex O’Cinneide, CEO of Gore Street Capital, the investment manager of the company, commented: 

“I am pleased to announce the energisation of the Big Rock project in California, marking our successful entry into a fifth energy market and a more than doubling of energised capacity across the portfolio on a MWh basis. With the recent 12-year resource adequacy contract secured, the portfolio now benefits from significant contracted income and has surpassed 620 MW / 792 MWh of energised capacity. This achievement reflects our commitment to executing against our mandate, made possible through leveraging our in-house expertise with dedicated teams for construction, asset management and route-to-market/optimisation. Our active approach to optimising an asset’s revenue stack has tangible benefits for the portfolio, as illustrated by the revenue outperformance of the internally managed assets in GB. Overall, we are happy to see recent material uplifts in revenue across the GB market. We are also pleased to see such strong interest in the sale of the ITCs in the US, with multiple counterparties bidding.

“The energised portfolio is expected to soon reach the targeted capacity of 753.4 MW / 924.1 MWh, with the upcoming energisation of Enderby and Dogfish. As such, we expect the portfolio to generate increased revenue and the resulting free cash flow available to support dividend cover.”

 

2 thoughts on “Positive momentum for Gore Street Energy Storage Fund as Californian project energised”

  1. I have a small holding in GSF. The discount to NAV is massive. 52% this represents either the market feels there will be a massive reduction in NAV or that something else is wrong.
    What dividends do the director believe will be paid in 2025?
    Will there be a further 1p in April, July and October or do the directors feel further cuts are required?
    With the Election of the new president are all ITC payments expected to be made as planned and on time?
    As a pensioner the income stream is why I am invested. I would like to increase my exposure here if the NAV is realistic and income forecasts sustainable.

    1. The board announced last July that it would pay three quarterly dividends of 1p each and then a 4p final dividend. That would suggest 1p paid in April (ex in March) and 4p in July (ex in June). We think that the directors skewed it this way because they thought that revenues in Great Britain would gradually recover through the year, and most importantly, that the company would receive $60m-$80m in tax credits in relation to its Big Rock and Dog Fish assets in the US, which ought to arrive over the next few months. There is a fear that Trump will somehow block those credits but recent press stories have suggested that they might come through after all. The news in this story is encouraging on the revenue front. I am also a shareholder and I am optimistic but clearly this is not without risk – James

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