Gore Street Energy Storage upbeat as battery momentum grows

  • Fast-growing energy storage fund 
  • Demand is driven by fossil fuel decommissioning
  • The aim is to generate a 7% dividend yield for investors

What it does

Gore Street (LON:GSF) provides energy storage for the National Grid and its equivalent in Ireland using nothing more sophisticated than the lithium-ion battery technology that powers your phone or electric cars (but on a much larger scale).

Demand is driven by the decommissioning of fossil fuel and nuclear facilities and the switch to green energy sources, which are now responsible for 40% of UK’s energy requirements.

The unpredictability of the wind and solar means there has to be infrastructure to store electricity in times of plenty that feeds it into the system to balance the grid as well as contributing at times of peak demand. 

“Without assets such as ours, renewables would not work; the grid would fall over,” said adviser Alex O’Cinneide. “Our assets become the stabilisation force.”

Yield target

While undoubtedly providing an important service, Gore Street’s aim in doing so is to deliver a healthy return for its investors in the form of a 7% dividend yield.

How it’s doing

Gore Street Energy saw its net asset value (NAV) increase by 1.7% to 96.2p in the quarter to end June 2020.

The trust said its portfolio of UK battery assets did well helped by recent acquisitions while the construction of its Irish assets is on track.

The dividend for the quarter is 2p, which is in line with the fund’s annual target of 7p.

In the previous fiscal year, to March 30, 2020, Gore Street’s NAV rose to 94.6p per share from 91.9p.

In October, the group added a portfolio of 81MW operating battery assets at five sites in the North-West and Midlands.

The cost was £28.2mln and met through a combination of cash (£21.1mln) and new shares (£7.1mln) to be issued to vendor Anesco, a renewable infrastructure developer.

As a result of the acquisition, the size of Gore Street’s portfolio of operating assets rose to 110Mw from 29Mw and its portfolio overall to 320Mw.

What the manager says; Alex O’Cinneide

“With this major operational portfolio acquisition, the company’s portfolio grows to 320MW – one of the largest available to a financial investor seeking exposure to this sector.

“These cash-generating projects further reinforce the company’s dividend cover and materially enhance company earnings”.

Inflexion points

  • Additional acquisitions of both operational assets and those under development
  • Yield target of 7%
  • Recent investment from Japanese oil group JXTG

Blue Sky

Industry experts see the potential for at least 30,000 MW in additional storage installations if the UK is serious about reaching its long-term climate targets

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