Gore Street Energy Storage Fund PLC (GSF)

[clissold345]

...

I was looking for information relevant to revenue, cash generation and dividend cover. I picked out the following points:-

Page 30 cash on hand £123.7m enough to fund all remaining capex for the planned portfolio expansion. So no extra debt or funding is required to complete the planned expansion programme it would seem.

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Pages 29-34 the management look to have performed extensive modelling of various scenarios with their effect on NAV and revenues. On the face of it these look encouraging.

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Thanks for giving the page numbers in the 2023 Annual Report. It makes it easy to check what you say.

This quote from page 14 of the 2023 Interims caught my eye:

"We would expect to see this cycle of tightening market
saturation restricting new entrants, followed by more
opportunities for existing market players, in every market."

Let's hope all GSF's other markets (I mean other than GB) don't saturate at the same time!

[idpickering]

Increased capacity in a growth market with balance sheet efficiency.

The Company has increased its Irish asset base to 385MW, of which 130MW is operational. This incremental capacity secured in a high-value market further adds to the portfolio's diversification.

Gore Street Energy Storage Fund plc, the internationally diversified energy storage fund, is pleased to announce that it has increased its Irish asset base through the acquisition of the remaining 49% in two of its existing Irish projects alongside the addition of Project Mucklagh, a 75MW asset in the Republic of Ireland. The total consideration for these transactions was settled via the issuance of 9,700,000 new Ordinary Shares in the capital of the Company (the "Ordinary Shares") issued at 111.0 pence per Ordinary Share[1], plus cash consideration.

Acquisition of Remaining 49% stake in existing Irish Assets and 75MW Irish Asset Project Rights Secured

The Company has acquired the remaining 49% stake from Low Carbon in two of its existing Irish projects: Porterstown, a 90MW[2] asset, and Kilmannock, a 120MW[3] construction asset. Additionally, the Company has exercised its option with Low Carbon to acquire a 51% stake in Project Mucklagh, a 75MW pre-construction energy storage project located in the Republic of Ireland. The Project has a target energisation date of 2028.

https://www.investegate.co.uk/announcem ... ty/8103617

Ian (No holding).

[clissold345]

Increased capacity in a growth market with balance sheet efficiency.
...
https://www.investegate.co.uk/announcem ... ty/8103617

Ian (No holding).

GSF don't say how much cash they paid. If Low Carbon were willing to take most of the payment in shares (valued at NAV) then they believe in the NAV?

[PrefInvestor]

BESS trust share prices continue to suffer, GSF 62.5, GRID 44.2 and HEIT 40.5 at the close on 25/3/24. Renewables not doing great either TRIG 97, JLEN 93, NESF 71.5 and ORIT 71.6. Many trusts in these sectors trading at discounts of anything between 30 and 60 percent.

Some will likely see all this as a buying opportunity and long term it probably is, assuming any trust that you pick survives !. Personally I am not inclined to jump in all the while further dividend cuts and capital losses are a possibility, I shall wait for some signs of a concerted recovery – which probably means waiting for UK interest rates to start falling. I’ll probably miss out on the best deals by doing this, but I’d rather get involved when these trusts start doing better rather than when they are doing badly. I’ve been burned that way before.

I’m still holding UKW and JLEN where I am still total return positive right now plus BSIF which is starting to look poorly. There was a time a couple of years ago when I had about 35% of my portfolio in these trusts and held BSIF, FSFL, JLEN, NESF, ORIT, TRIG and UKW as well as GSF and GRID – but I have steadily reduced and eventually completely exited a lot of these and invested elsewhere. Much of the money has gone into Preference shares which are all yielding ~7% and nicely total return positive – provided interest rates fall they should do better still.

ATB

Pref

[Coobster]

Yes I'm watching GSF too. Perhaps a bit more to fall. Not sure I'll buy again.

Re other renewables, also accounted for 20+% of my portfolio. Reduced UKW and TRIG, sold JLEN. Focussing on growth now.

[idpickering]

Yes I'm watching GSF too. Perhaps a bit more to fall. Not sure I'll buy again.

Re other renewables, also accounted for 20+% of my portfolio. Reduced UKW and TRIG, sold JLEN. Focussing on growth now.

For what it's worth, I've done the opposite, and have bought more UKW and TRIG, and three solar funds, (BSIF, FSFL and NESF) too. I've never held GSF though.

Ian.

[daveh]

Yes I'm watching GSF too. Perhaps a bit more to fall. Not sure I'll buy again.

Re other renewables, also accounted for 20+% of my portfolio. Reduced UKW and TRIG, sold JLEN. Focussing on growth now.

For what it's worth, I've done the opposite, and have bought more UKW and TRIG, and three solar funds, (BSIF, FSFL and NESF) too. I've never held GSF though.

Ian.

Same here. I have TRIG and GSF and have just started to take a position in UKW. The share prices and discounts for UKW and TRIG have not crashed to the same extent as the battery storage companies and they are both paying a very good dividend covered by earnings Plus UKW are buying back shares. This should be a good time to do that as the shares are cheap compared to NAV and hopefully it will help control the discount. I also hold GSF. I think they are the best of the energy storage trusts as they are more geographically diverse. They are still paying a dividend and their discount has only slipped to 40% (Its 60% for the other storage trusts). If you believe the NAVs then they are all good buys. I think GSF in particular is very good value as they have a lot of capacity coming on stream this year and next and I'm hoping that once this happens the dividend will be very well covered.

I may well buy more GSF once I've filled my UKW slot, but I'm waiting to see the share price start to rise and the discount close. it sits at ~3 in my HYPTUSS

[idpickering]

Same here. I have TRIG and GSF and have just started to take a position in UKW. The share prices and discounts for UKW and TRIG have not crashed to the same extent as the battery storage companies and they are both paying a very good dividend covered by earnings Plus UKW are buying back shares. This should be a good time to do that as the shares are cheap compared to NAV and hopefully it will help control the discount. I also hold GSF. I think they are the best of the energy storage trusts as they are more geographically diverse. They are still paying a dividend and their discount has only slipped to 40% (Its 60% for the other storage trusts). If you believe the NAVs then they are all good buys. I think GSF in particular is very good value as they have a lot of capacity coming on stream this year and next and I'm hoping that once this happens the dividend will be very well covered.

I may well buy more GSF once I've filled my UKW slot, but I'm waiting to see the share price start to rise and the discount close. it sits at ~3 in my HYPTUSS

Thanks for your input. To be honest I've not had a good look at GSF, and shall certainly investigate them further as a potential buy for me.

Cheers,

Ian.

[DrFfybes]

Same here. I have TRIG and GSF and have just started to take a position in UKW. The share prices and discounts for UKW and TRIG have not crashed to the same extent as the battery storage companies and they are both paying a very good dividend covered by earnings

I bought a bit of GSF last year, circa 1% of my portfolio. Sadly it is ISAd so I can't use the capital loss elsewhere.

Since then my view on battery storage has changed. Large scale battery storage solves many things, and still looks like the best option, but this year's hot thing is next year's obsolete tech. Localised storage makes better use of the infrastructure, and where more local than your own home.

3 years ago domestic batteries were the future, now they're a fraction of the price and to make the most you need a 'smart' battery. 3 years ago 240V supplies from a vehicle were a possibility, now vehicle to grid is the standard.

The current need is for ever faster chargers, and more distribution pylons and routes. However installing slow chargers (7kW or less) in car parks everywhere would reduce the peak demand, leave the fast chargers for motorway services etc and fit millions of 20 Amp supplies in public spaces. Right now the model is to charge your car overnight on cheap energy ready for the next day, in another 5 years a large number of homes will have a battery parked outside with enough capacity to run it for days. Change the model so they charge up at a steady rate during the morning and afternoon lulls or when renewables are outputting more then power the homes in the evening, then recharge overnight.

Last year 300,000 BEVs were sold, at 50kWh usable storage that's roughly 15 GWh of potential battery storage every year and it will only get larger.

Paul (I hold, mainly out of denial).

[PrefInvestor]

.....Since then my view on battery storage has changed. Large scale battery storage solves many things, and still looks like the best option, but this year's hot thing is next year's obsolete tech. Localised storage makes better use of the infrastructure, and where more local than your own home.......

Well I’ll agree with you that EV battery’s are tomorrows home storage battery but parked on the drive, for some people anyway.

But:-
1. Todays BESS systems aren’t about that, they are about load balancing the national power grid – their problem is that what with the NGs procurement mechanism for load balancing contracts and the amount of competition in the BESS space, their revenues have crashed. Will that situation change anytime soon, I really don’t know.

2. Renewable energy producers still need storage batteries for use in conjunction with their solar/wind generation facilities such that they can provide power 24x7. Especially in situations where they have PPA to supply power to a given company to run their factories/systems.

These two use cases will not be met by EV battery systems, at least I don't think so.

ATB

Pref

[clissold345]

Does anyone try to understand the data on bessanalytics.com? I thought this info was interesting (info from alibaba42 on lse.co.uk). When the rate per MW/hr is quoted it means for the hours in the period in question (day/week/month/quarter/year). Here's an example.

Breach Farm is 10MW. Revenue on 26th March 2024 was £1,262. The rate for that day is calculated by the number of hours in the day. There are 24*10 MWhrs in a Breach Farm day so the rate on that day was 1262/240 = 5.26.

Working backwards, if one knows the rate for a given period and the capacity, one can work out the revenue.

[PrefInvestor]

Does anyone try to understand the data on bessanalytics.com? I thought this info was interesting (info from alibaba42 on lse.co.uk). When the rate per MW/hr is quoted it means for the hours in the period in question (day/week/month/quarter/year). Here's an example.

Breach Farm is 10MW. Revenue on 26th March 2024 was £1,262. The rate for that day is calculated by the number of hours in the day. There are 24*10 MWhrs in a Breach Farm day so the rate on that day was 1262/240 = 5.26.

Working backwards, if one knows the rate for a given period and the capacity, one can work out the revenue.

£5.x per MWh seems like a very low figure to me. The average UK wholesale electricity price for 2024 that I’ve seen is predicted to be ~£113 per MWh. This figure is massively higher than what you’ve just quoted.

ATB

Pref

[clissold345]

£5.x per MWh seems like a very low figure to me. The average UK wholesale electricity price for 2024 that I’ve seen is predicted to be ~£113 per MWh. This figure is massively higher than what you’ve just quoted.

ATB

Pref

The £1,262 must be the profit that Breach Farm made that day, and hence the rate is £5.26 per MWh.

https://www.bessanalytics.com/operation ... 2024-03-26

[PrefInvestor]

The £1,262 must be the profit that Breach Farm made that day, and hence the rate is £5.26 per MWh.

https://www.bessanalytics.com/operation ... 2024-03-26

So:-
1. The UK wholesale price is ~£113 per MWh (11.3p per KWh)
2. Tracker tariffs are charging consumers 15-20p per KWh (I checked the Octopus tracker tariff)
3. Renewables are selling their generation for ~£80 per MWh (~8p per KWh), I checked the results for one renewable energy company
4. But BESS trusts are only getting £5.26 per MWh (0.526p per MWh) for what they produce.

Points 1, 2 & 3 kind of stack up. You’d expect Joe Public to be paying a bit more than the wholesale price and renewables to be producing it for a bit less than that. But the BESS number seems ludicrously low to me, their output is going to the grid and being sold by energy suppliers for hugely more. Find it a bit hard to believe ?

Hmmmmm

ATB

Pref

[clissold345]

So:-
...
Find it a bit hard to believe ?

Hmmmmm

ATB

Pref

The GB rates have been low for many months. Did you not know? The data for GSF's balancing mechanism registered assets is available on bessanalytics.com. In their last half year report the rate was "GB revenue: £7.54/MW/hr", and I think the GB rate has fallen further since then (though I don't have full data).

[PrefInvestor]

The GB rates have been low for many months. Did you not know? The data for GSF's balancing mechanism registered assets is available on bessanalytics.com. In their last half year report the rate was "GB revenue: £7.54/MW/hr", and I think the GB rate has fallen further since then (though I don't have full data).

Well TBH I really dont look at whats going on with GSF as I dont hold it anymore and am not likely to. But at one point back in 21/22 the revenues being earned by GRID were very large, clearly things have changed a lot - for the worse.

ATB

Pref

[clissold345]

GB BESS rates have partially recovered (as GSF and the other BESS funds expected). Here's a quote from a Citywire article published today. (To read the article you have to register.)

"... data from Modo Energy showed revenues from battery energy storage systems (Bess) in England, Scotland and Wales leapt from £23,000 per megawatt per year in February to £32,000 per MW per year in March.

This is back to the level of last December before a New Year slump but still only around half of the revenues achieved last summer ..."

https://citywire.com/investment-trust-i ... h/a2439893

[PrefInvestor]

Just found this citywire article in my inbox which doesn’t sound very positive for BESS funds:-

https://citywire.com/investment-trust-i ... ea=1146034

ATB

Pref