NAV uplift, dividend and operational progress

15 June 2023

Gore Street Energy Storage Fund plc

(the "Company" or "GSF")

NAV uplift and operational progress with dividend in line with expectations

Gore Street Energy Storage Fund plc, the internationally diversified energy storage fund, is pleased to announce its 5.9% increase in unaudited Net Asset Value ("NAV") for the year ended 31 March 2023.

The Company's NAV continues to deliver strong and steady growth despite recent pricing volatility in GB. Dividends announced for the period have increased, and the Investment Manager secured record prices in the T-4 2023 Capacity Market auction.

Net Asset Value

The unaudited NAV as at 31 March 2023, increased to 115.6 pence per Ordinary Share from 109.1 pence per Ordinary Share at 31 March 2022, an increase of 5.9%. NAV Total Return, including dividends, was 12.3% during the period. This is a particularly pleasing performance and illustrative of the Company's differentiated approach to this asset class, highlighted by its geographic diversification and the Company's valuation policy as appropriately set to reflect the resilient nature of our asset class.

The final quarter of the fiscal year (January - March 2023) was also strong for the Company, seeing NAV increase by 1.8% from 113.5p at December-end 2022 and providing a NAV Total Return of 3.6% inclusive of dividends paid during the quarter, despite challenging market conditions in GB.

Financial and Operational highlights for the year ended 31 March 2023

·      NAV increased by 47.8% to £556.3m (31 March 2022: £376.5m).

·    NAV per share increased 5.9% to 115.6 pence (31 March 2022: 109.1 pence per share), with a NAV Total Return of 12.3%.

·    The Company has continued to achieve its dividend target from IPO, with a total dividend for the reporting period of 7.5p (2022: 7.0p).

·    Portfolio capacity increased through acquisitions by 86.7% or 544.6 MW during the financial year.

·    Operational capacity increased by 59.9 MW or 25.8% during the year.

·    Portfolio revenue of £39.3m or £134,790 per MW/yr[2]. This was generated by 19 revenue streams across four different grids.

·    EBITDA of the operational portfolio increased by 19.1% to £27.8m (31 March 2022: £23.3m). This represents an EBITDA of 5.77 pence per share.

·    During the reporting period, 63.5% of the portfolio's EBITDA was secured outside Great Britain.

·    The Company raised £150m in an oversubscribed issuance in April 2022.

Key NAV drivers over the twelve-month period:

·    Capacity Market Contracts - Capacity Market (CM) contracts were secured for both Great Britain ("GB") and Irish assets in the February 2023 auctions. Six sites were awarded contracts worth £63/kW/year for delivery from October 2026 under the T-4 auction and are anticipated to deliver a combined value of c.£45m, representing record-level T-4 auction pricing. This includes a 15-year contract awarded to the Middleton asset, expected to generate £2.97m annually in CM revenues (subject to CPI adjustments). The Company has 15-year CM contracts for its entire GB construction portfolio. The two 50 MW assets in Northern Ireland ("NI"), meanwhile, secured CM contracts from 2022 until 2027, while Porterstown in the Republic of Ireland ("ROI") secured a CM contract for 2026-2027.

·      Discount rate - The weighted average discount rate across the portfolio increased to 10.1% (FY 2022: 8.3%), in response to the current macroeconomic environment. The Investment Manager has updated discount rates based on their respective grid and stage of development.   

·      CPI assumptions - CPI has been revised per third-party forecasts, with an updated long-term target of 2.5% from 2025 onwards. Changes to inflation rates, have impacted forecasted revenues and operational expenses.

·      Asset stage - The Company's operational capacity grew by 26% during the reporting period, reaching 291.6 MW, following the successful commissioning of the Porterstown asset in January 2023 and the acquisition of operational assets on the ERCOT grid (Texas).

·      Operating performance - £39.3m in revenue was generated during the reporting period, averaging £134,790 per MW/yr. Over the 2022 calendar year, the Company achieved a consistently high average revenue of £157,414 per MW/yr[3].

·      Portfolio expansion - The Company made acquisitions totalling 544.6 MW during the period. This comprised of 144.65 MW of projects on the ERCOT grid in Texas, 200 MW in GB, and 200 MW on the Californian grid (CAISO). The Company's geographical split is now: 42% in GB, 27% in Ireland, 12% in Texas, 17% in California and 2% in Germany.

·      Portfolio revenue curves - Portfolio revenue curves across geographies have been revised based on updated third-party inputs.

Portfolio Update

Operational capacity increased by 59.85 MW, or 25.8%, reaching 291.6 MW during the fiscal year. A significant proportion of assets under-construction/pre-construction (521.8 MW) are scheduled to become operational within the following 18 months.

An overview of the portfolio's assets and their status as at 31 March 2023 is provided below:

Dividend Declaration

The Board has approved a fourth interim dividend of 1.5 pence per share, bringing the total dividend for the period ending 31 March 2023 to 7.5 pence per share (compared to 7 pence per share for the full year ended 31 March 2022), in line with the Company's progressive Dividend Policy. The ex-dividend date will be 29 June 2023 and the record date 30 June 2023. The dividend will be paid on or around 17 July 2023.

Any such dividend payment to Shareholders may take the form of either dividend income or "qualifying interest income", which may be designated as an interest distribution for UK tax purposes and, therefore, subject to the interest streaming regime applicable to investment trusts. Of this dividend declared of 1.5 pence per share, 1.5 pence is treated as qualifying interest income.

Notice of Results

The Company will announce its results for the twelve months ended 31 March 2023 on Monday 17 July 2023. 

Alex O'Cinneide, CEO of Gore Street Capital, the investment manager to the Company, commented:

"I am pleased to report the continued growth of the Company, driven by our successful diversification strategy. Our commitment to expanding the portfolio across international markets has proven out, resulting in strong financial performance and further positioning us as the global leader in the energy storage sector.

Our unique diversification strategy has allowed us to navigate market challenges and capture new revenue opportunities across different grid networks in uncorrelated markets. This approach has not only mitigated the impact of lower revenue in the GB market in 2023 but also provided stability and consistent growth.

The Company's Irish assets have been particularly impressive, generating outstanding revenues and bolstering our overall portfolio performance, a trend that continued to the end of the reporting period. Our entire operational portfolio has been well-placed to capitalise on the seasonal variations in revenues seen across all the markets in which we operate, showcasing the resilience and effectiveness of our diversification strategy.

Over the period, we have strategically acquired assets in key markets, further enhancing our operational capacity and expanding our geographic presence. We are now operating assets in four non-correlated energy systems, with construction taking place in five grids. These acquisitions have delivered cash-generating assets and positioned the Company for long-term growth as we tap into the increasing demand for energy storage solutions worldwide.

Appropriate valuation of the Company's assets has also enabled continued growth, minimised fees for shareholders, and insulated the Company from any potential revaluing of assets due to short-term volatility in one grid. Our assets have been sized for the market opportunity available in each grid and not built on unfounded assumptions of new revenue streams suddenly materialising.

Our strong performance is a testament to the expertise and dedication of my colleagues in the Investment Manager, a committed board of directors, as well as the continued support of shareholders. Over the next twelve months, we are focused on our portfolio along the following areas 1) bringing projects to operation at the lowest cost per MW/MWh fully installed 2) generating the highest revenue per MW/MWh in each of the markets we are competing in 3) utilise our economics of scale to materially increase EBITDA margin 4) creating increased capacity in our existing projects over the original project size.  We remain fully committed to delivering value and maintaining our position at the forefront of the energy storage sector."

For further information:

Notes to Editors

About Gore Street Energy Storage Fund plc

Gore Street is London's first listed energy storage fund and seeks to provide Shareholders with an opportunity to invest in a diversified portfolio of utility-scale energy storage projects. In addition to growth through exploiting its considerable pipeline, the Company aims to deliver consistent and robust dividend yield as income distributions to its Shareholders.