Gore Street Energy Storage Share Discussion Threads

[dodger777] 21/8/2024 19:01

The oak bloke has a new sub stack out on GSF, he seems pretty positive on it. Maybe someone wants to check he has his numbers right 😏

[scruff1] 19/8/2024 13:19

All my stocks bar one are rockin. Guess which?

[keyno] 08/8/2024 15:45

Oh goody. More Gore gore over the old p/f ......... :(

[rogerrail] 08/8/2024 13:55

BigRock is and should be the main focus for the company and investors over the next few months so its no coincidence it takes centre stage in the update. Nice to see the progress and the latest confirmation that it is still on schedule.

[mirandaj] 08/8/2024 13:47

Posted on wrong thread:

Latest factsheet is available:


Agreed, no comment to explain what is happening.

[fordtin] 08/8/2024 10:50

Stemis

Unfortunately I don’t have a record as I typed them directly onto the investor meet web page, but I’m absolutely sure I didn’t ask any of the questions copied to post #1795.

[cc2014] 08/8/2024 10:39

New factsheet out and it has not a jot to say about the current performance of the portfolio

[cc2014] 08/8/2024 10:36

Can we stick to the other thread please

[stemis] 08/8/2024 10:30

Fordtin,

what questions did you ask?

[cocopah] 08/8/2024 09:40

If Shell has had to sign a tolling agreement it can’t be long before #GSF has to copy them and Gresham House. ⬇️
hxxp://dlvr.it/TBf3N2

In other news no mention on the monthly factsheet about spikes in income or what the batteries for Big Rock cost us (given battery prices have declined significantly over the last 18 months). 🤔

[scruff1] 07/8/2024 17:02

Thats a lot of questions

[fordtin] 07/8/2024 16:19

Not sure how long these Q&A answers have been available. Investor meet said they'd send an email but seem to have forgotten.
None of my questions were answered, so presumably Gore Street filtered out any questions they didn't like.




Question 1:

What is the reasoning behind the weighted dividend payments to the final quarter?
The Company is targeting a dividend of 7.0p per Ordinary Share for this Financial Year. This is consistent with investors’ expectations based on the current NAV; however, from this financial year, the profile and quantum of dividend distributions are more closely aligned with cash flow rather than NAV. Moving from roughly equal payments across all quarters, the Board has determined to target a dividend of 1.0 pence per Ordinary Share for each of the first three quarters of the financial year. Under the policy, the Q4 dividend target would be 4.0 pence per Ordinary Share. The quarterly dividend payments are weighted toward the final quarter, reflecting the portfolio's construction schedule. As the Company is a real asset investor, cash generation is linked to its underlying portfolio of assets. The portfolio is on track to reach over 750 MW of energised capacity by February 2025.

Question 2:

Is there a risk to receipt of the ITCs should Trump be re-elected as it currently looks likely?
The Investment Manager has published a blog looking at the potential effects of the Trump administration, which is available to view here. hxxps://gorestreetcap.com/blog/how-could-a-second-trump-presidency-impact-the-us-energy-transition In summary, reversing the widespread impact of Biden's main policy platform would be extremely challenging and is not expected. It would require full control of the House, the Presidency and Senate. The US legislative process is historically slow, making it difficult and unlikely for an incoming president to repeal the Act, and given the relatively short timeline until the ITC is expected to be received, and therefore is seen as extremely unlikely for GSF’s assets in particular. Another possibility would be to take direct action through executive orders that affect federal budgets and guidance. This could potentially limit access to investment tax credits for future standalone storage and other clean technologies for new investments. This, although disappointing in the context of decarbonisation, could potentially enhance the long-term profitability of GSF’s US assets, by reducing future competition.

Question 3:

What fire risk mitigation measures do you take at your facilities?
The Company’s safety measures for the existing fleet are robust and significant, not only to ensure continued uptime for its assets but also to protect those working on site. As more capacity is added to the Company’s portfolio and its global BESS fleet, it is key that correct health and safety standards are maintained and supported by appropriate regulations and widely available guidance. Newer projects are being retrofitted with electrolyte vapour detection (additional mitigation through hardware to avoid thermal runaway). This measure, in conjunction with a robust health and safety strategy, mitigates fire risk. The 2024 ESG & Sustainability report, to be released in the first week of September, will have more detailed information regarding health and safety.

Question 4:

How do lower battery costs affect the portfolio?
Lower battery prices affect the portfolio in numerous ways. For both operational and construction assets, a reduction in battery prices would result in lower repowering costs. Increasing the duration of some of the Company’s assets also contributes to the economic case of retrofitting, as lithium-ion cells and battery packs represent the largest equipment cost required to add additional duration to existing sites. The Investment Manager remains cognisant of market conditions, particularly with the lack of availability of equity capital and the high cost of debt. The Company will build out its operational capacity of over 750 MW; anything beyond this is dependent on a series of variables, including debt costs, equity availability, capex costs, falling lithium costs, market opportunities, and revenue levels.

Question 5:

How do you plan to deal with the batteries at the end of their life cycle?
Under existing waste regulations in Europe, the producer or commercial entity that brings batteries into the market is responsible for their collection and sustainable disposal. The Company has owned assets since 2018 and has, therefore, had few instances where recycling of end-of-life battery cells is needed. Systems were removed from the Port of Tilbury asset in GB in February 2023 following a recall by LG Energy Solutions (LG-ES) after it was found that thousands of cells manufactured at two of the Company’s sites between April 2017 and September 2018 may carry defects. The Company facilitated this process by connecting LG-ES with the battery recycling firm Battri, which uses hydrometallurgical to extract black mass material from cells for use in future battery systems. As assets approach their end of life, the Investment Manager will explore available options to ensure that batteries are disposed of sustainably. The Company is conscious of the overall supply chain of batteries, not just the end of their life cycle. As such, it is a member of the Fair Cobalt Alliance, which aims to improve working conditions for cobalt mining. The 2024 ESG & Sustainability report, to be released in the first week of September, will have more detailed information regarding the Fair Cobalt Alliance.

Question 6:

What will the Company’s cash and debt position be following the receipt of the ITC payment?
As of 31 March 2024, the Company had £60.7 million in cash or cash equivalents, as well as £58.6 million in debt headroom on its existing debt facilities, sufficient to cover all contractual obligations and build out the Company’s portfolio to over 750MW. The Company has two debt facilities; a $60m facility secured at the asset level and a £50m revolving credit facility at the fund level. The Investment Manager has advised that the Company is expected to draw both facilities fully to complete the assets currently under construction. Once both facilities are fully drawn, the Company is expected to run a gearing ratio of c.15% of GAV. The cash inflow following the transfer of the investment tax credits (c. $60-80 m) is not included in the above 15% of GAV figure. The Company maintains optionality over the use of the cash associated with the ITC.

Question 7:

Would you ever consider a tolling agreement to offset revenue risk in the future?
The Company regularly tests the market for tolling agreements and are yet to be convinced they offer an attractive alternative or addition to our diversified approach to revenues. The recently and widely reported large tolling agreement in GB appears to fall in line with the price levels seen when testing the tolling market and, while it may serve to improve confidence among lenders, locking in an agreement at a low point in the market has considerable disadvantages. Any upside from market recovery is eliminated for the tolling agreement period which, for investors, means they are forced to settle for a certain but potentially low return. Remaining merchant allows the Company to retain any potential upsides across a portfolio that is already derisked by its geographical spread across five uncorrelated markets. More importantly, the Investment Manager has the control over each asset to optimise the Company’s revenue strategy to ensure these upsides are accessible while ensuring they maintain best-in class operational performance. Tolls often come with increased cycle rates, which can degrade the battery, while putting in place stringent availability requirements and penalties if they dip below that level. The Investment Manager has an in-house commercial and asset management team working in unison to maintain availability while engaging in a wide range of optimal revenue streams.

Question 8:

Is the RA (resource adequacy) contract in California, the same as the capacity market contract we see in GB?
There are a couple of differences between capacity market contracts in GB and the Resource Adequacy contract in California. For resource adequacy contracts, 4-hour duration is required, but in GB, there is the opportunity to bid as a one-hour asset. Also, the contract is not obtained through public auctions, but through bilateral negotiations with the suppliers, so there is no clear market price available, it’s all negotiated bilaterally and not necessarily disclosed to third parties. Thirdly, there are more stringent and technical requirements for the CAISO RA contract. For GB, the Company is only expecting roughly 10% of revenue coming from capacity markets, for CAISO projects, the Company expects 40% from this long-term RA contract. For the overall portfolio, this adds a significant portion of contract revenue. Big Rock is a large asset and will contract a large portion of its capacity under RA. Under the RA, the Company will have a higher percentage of contracted revenue.

[nickelmer] 07/8/2024 15:15

If they sell the GB asset at anywhere close to book value it would be a huge boost to ongoing valuations and suggest the fund is way undervalued by the market currently...

[mirandaj] 07/8/2024 13:42

Latest factsheet is available:

[george stobbart] 06/8/2024 06:24

RBC Capital Markets Exclusive
6 August 2024

Gore Street readies 200MW GB BESS sale
Gore Street Energy (GSF) is targeting the sale of its largest GB-based battery storage (BESS) asset, Middleton (200MW/400MW). The asset, which remains at the shovel ready stage, was acquired in 2022 with an estimated grid connection date in 2026. (Inframation)

So what? GSF has previously referenced its willingness to pursue asset sales and the sale of Middleton would further accelerate its degearing process and / or provide additional capital to fund the construction of other acquired but unfunded construction assets in more attractive markets such as the US.

[scruff1] 02/8/2024 14:54

On our way to the next trap door. Same here Keyno except make that years not months. I am hoping that when the divi -whatever it is ! - is higher than the share price someone may buy a few - if batteries are still in vogue

[george stobbart] 02/8/2024 11:23

For every £1 drop in lithium prices, the project return for GSF increases by 23%

[keyno] 02/8/2024 11:02

Gore Street ES is aptly named. Been spreading red gore all over my p/f for months.........

[cc2014] 01/8/2024 07:25

Not sure scruff. Lithium is down another 2.3% this morning to 83,500

[scruff1] 01/8/2024 06:55

I see Shell is going gang busters since dumping biofuels and concentrating on its core o+g business. Now then how's battery storage doin ?

[alan pt] 31/7/2024 12:16

Some mentions in the final results of managing the battery pricing:

"The construction schedule for Porterstown II has been revised to accommodate several important factors. Notably, there was a significant 14% reduction in battery prices10 between 2022 and 2023, with this trend extending into 2024. The Investment Manager
has, therefore, made an adjustment to the construction schedule to capitalise on the declining prices and policy and liquidity considerations in order to maximise returns"

"Battery prices have continued to fall through 2023 and 2024, reinforcing the Investment Manager’s decision not to overbuild assets, ensuring optimal capacity to serve the market opportunities present and configuring projects for future modification. Rapid growth of battery manufacturing has outpaced demand, which is leading to significant downward pricing pressure on battery makers. Looking
ahead to 2025, US manufacturers benefiting from IRA subsidies are expected to further intensify competition, potentially driving prices further down. For projects currently in procurement, the Investment Manager has secured price reductions of between 8% to
34% from Q3 2023 to Q2 2024, for combined battery module and container offers"

[cc2014] 31/7/2024 10:03

So, the question really is when did GSF purchase the batteries for Big Rock and Dogfish as that's a significant part of the fleet?

One would imagine these were firmed up perhaps six months ago in which case the price of Lithium was around 100k and whilst higher than it is now at 85k would broadly make them as competitive as anyone else building BESS right now where energisation takes place in the next 6 months or so.

If they left the procurement to around April Lithium was 115k so not great.

However, the real problem comes in they procured the batteries before Dec 23, in which case the price of Lithium was way way higher. As high as 300k in June 23.


(it looks to me like HEIT were procuring when Lithium was around 350k. I could be wrong. I can't understand HEIT's share price at all)

[cc2014] 31/7/2024 09:51

Are construction costs rising? I'm doubtful. The land footprint required for batteries has shrunk significantly as the density of batteries has changed materially.

Anyways, the batteries were historically about half the total cost but somewhat higher now. The price of Lithium has fallen 50% or whatever depending on what timeframe is chosen (85% drop peak to now), the rest of the costs really don't affect the analysis.

[cruelladeville] 31/7/2024 09:02

While the price of lithium falls, the cost of the balance of plant hardware is higher than ever. Construction and design costs likewise. And you might have the problem of waiting a decade for a grid connection. Apart from that, building BESS facilities has never been cheaper......