Gore Street Energy Storage Share Discussion Threads

[masurenguy] 15/4/2024 18:44

"I decided to put more of my money where my mouth is and added two more names – Gore Street Energy Storage (GSF) and NextEnergy Solar (NESF) – to my existing exposure in Bluefield Solar (BSIF), Greencoat UK Wind (UKW) and SDCL Energy Efficiency Income (SEIT). The two new holdings came with dividend yields of about 11.5%, reflecting their sizeable discounts. GSF, as I have explained previously, is much less exposed to the problematic UK energy storage market than other listed peers and should see plenty of upside as its new plants in Ireland, Texas and California come onstream over the course of the next year or two." James Carthew, Citywire Columnist, 15/04/24

Annual dividend of 7.5p produces a yield of 11.8% at todays ASK of 63.6p !

[scruff1] 15/4/2024 16:09

Big Rock is fully funded with a £50m credit option undrawn. I dont think the funding there is an issue

[waterloo01] 15/4/2024 16:05

Fair enough, it is a long way from getting back to the heady heights of a premium to NAV, and will take a lot to go right, to get back closer to NAV

[loglorry1] 15/4/2024 16:01

He did say that which is a huge red flag when they have sunk costs into so many expensive batteries which currently produce miniscule revenues. Anyway I have no massive beef with GSF but "batteries are the future" -> "GSF to the moon" mentality is really missing so so much. On the more positive side the share price already reflects a lot of the prior mistakes.

[waterloo01] 15/4/2024 15:55

He also said that battery replacement costs had significantly reduced.

[loglorry1] 15/4/2024 15:45

"Considering that most of the portfolio has either been built recently, and much of the expansion already funded either from cash or at project level, and making the most of lower costs, the above comment is a bit daft"

Really? From what I could see it's only:

"£66m in cash or cash equivalents as of 31 December 2023."

and they have a lot of spend to do in the US to build out their capacity which from memory is way lower than they need.

I find it quite amusing that investors can wave away costs by calling the funding "Project level debt".

Then you have the depreciation problem that looks horrendous if we believe the lifetime of the batteries given by the CEO in a recent webcast linked to above.

Good luck though.

[brucie5] 15/4/2024 15:38

Well I had just a last last top up with some spare pennies I found round the back of my ISA, so...

I'll let wiser heads than mine decide the level of the sustainable dividend, but in the meantime it looks like a base to me.

[scruff1] 15/4/2024 15:09

and thats one thing they do tell us - they have the funds

[waterloo01] 15/4/2024 14:04

Considering that most of the portfolio has either been built recently, and much of the expansion already funded either from cash or at project level, and making the most of lower costs, the above comment is a bit daft

[loglorry1] 15/4/2024 13:51

The problem is that GSF have spent a fortune on batteries which they'll probably never see much of a return on since battery prices have dropped up to 90%. Yes they have other projects to bring online but very little cash to achieve that. Going forwards I can't see why their sunk costs can be recovered and why new entrants can't drive down the cost of storage with much lower capex costs.

Good luck tho.

[alan pt] 15/4/2024 12:13

The information expectations here do seem to be out of line with other investments and it does seem to cause people unnecessary stress and annoyance

If I am investing in Shell or BP, do I expect to know how much oil they pumped each month, what their monthly average selling price for the crude was, how their rig maintenance and upgrade programme has progressed that month?

Personally I take a sector view - whether on oil, on UK Small cap, or on batteries in this case and then if I like the sector prospects I pick the investment(s) that I prefer in that sector

So, the question is - do you feel positive about batteries?
If no, then divest - plenty of other opportunities
If yes then ask yourself if this the best pick in the sector (I'd say yes, though many commentators seem to prefer GRID, for reasons I can't fathom)

Just my world view, may not work for others

[alibaba42] 15/4/2024 10:30

they will to some extent, but they wont build enough gas plants to cover all eventualities (and they probably dont want to). because UK has legally agreed to some emission reductions. i dont know if they will take these agreeents as seriously as the human rights laws but i guess UK is trying to keep some kind of reputation so they will try to.

we dont know how sensitive climate is to CO2 so there is an 80% chance we can continue and reduce slowly and be fine, but there is a very non 0 chance that we will have major warming if we dont reduce CO2 quickly. its a bit like russian roulette and you will be willing to go out of your way not to play it if you can.

[loglorry1] 15/4/2024 10:11

...or just fire up a gas turbine? I don't get it.

[alibaba42] 15/4/2024 10:08

the good thing about gore street (especially when combined with say a solar generator) is that in extreme/volatile events and grid instability, they actually benefit. as a result i would say its best not to own just a solar producer or bess, but to own both. the future there will be storms, scenarios where power from continent is not available, data center demand increases etc - these tend to create volatility which is good for BESS. in the mean time, combining with a solar producer is good as solar seems to be a good bet for zonal pricing (which the uk seems intent on introducing). zonal pricing would mean electricity prices are higher in the south (where the solar is also located) thus this benefits solar a lot in the south. additionaly, zonal pricing should benefit battery storage as it gives more variability in the prices of electricity.

in short - both gore street and say solar producers probably give you some 'optionality' in their revenues - meaning they have positive skew to volatility i.e. any grid problems or demand increases plus zonal pricing changes can only increase their revenues

[nickgrant2] 15/4/2024 00:42

CC2014, the crucial basis of an investment, or divestment decision is, or should be, information. (which is they assessed based on pesonal investment strategy, risk appetite and other data sources beyond pure corporate information)

Ergo its reasonable to focus on the lack of, or poor quality of, corporate information.

Add into that, opinion and insight (enter stage left... this board to share opinion) and you get....discussion. Ta daaaaaa. Everyone's opinion can vary on the same corporate information as it needs to be placed within the context of broader economic information as well as personal strategy and risk appetite.

For what its worth, once I research Alibaba's view and confirm its accurate then

1. GSF doesnt meet my risk appetite, in particular my risk reward ratio (I dont care its on ~50% of its NAV, chances are that means the NAV is wrong, the company is opaque, wilfully so when examples of good, crisp, honest report are still around)

2. It doesn't meet my personal strategy (an inflation proofed investment that can grow over 3-ish years to provide a 10% return over the long-term)

Once I have made the decision to get out the next step is execution. Do I sell immediately, get the pain over and go down the pub to console myself? Do I wait for some temporary rally?

[scruff1] 14/4/2024 18:05

Tomorrow may see a few new bottoms - so to speak!

[brucie5] 14/4/2024 15:54

I think 8/9% yield would be very acceptable. 12% is generally a sign that it's not sustainable. Chart suggests to me that the share price has bottomed. But we are all trying to second guess, to some extent. Lots of value out there at the moment.

[riverman77] 14/4/2024 15:49

I actually find Alibaba's comments very useful - as a potential investor I like to hear the bull and bear case. Still not convinced with GSF - too many question marks and plenty of similarly cheap alternatives without all the uncertainty (eg NESF paying a fully covered 11% yield)

[alibaba42] 14/4/2024 15:13

in the absence of facts and numbers from the company directors etc. thats where i fill the gap. all im saying is that medium term the revenue is around 50- 60 million GBP per anum (after 850MW built out) so i believe an 8-9% yield at prices of around 60 pence is sustainable long term. this allows people to genuienly make an informed investment decision

[cc2014] 14/4/2024 12:13

You guys are doing my head in. If you think so little of GSF, both from a fundamentals point of view and that of the expertise of the management why are you still holding?

If I was as pessimistic as you guys, I'd be selling out, clearly my mind and buying something I believed in. There is arguably plenty of other "cheap" stuff to stick your money on instead.

[waterloo01] 13/4/2024 17:59

Some sobering posts. Hopefully it's already in the share price given we're close to 45% discount to NAV

[alibaba42] 13/4/2024 15:31

oh sorry i also said califronia revenues are not known, that is untrue - as per report:

hxxps://www.caiso.com/documents/2022-special-report-on-battery-storage-jul-7-2023.pdf

we see that battery revenue in usa is fluctuating between $70 -100 k per MW so at 200 Mw which is gore street capacity in cali it would be around 14- 20 million per year revenue from cali.

Cali grid is moving away from BESS and towards co located storage with solar as that is better able to smooth out profiles (makes sense doesnt it). they dont especially want lots of random battery sites trying to take advantage of opportunities at random as it doesnt lead to a stable reliable grid (they want to turn solar energy into a profile similar to a power plant)

so cali should make some revenues but its not huge. texas new battery may be more interesting but none of this defies my long term average of £7.50/Mw/Hr steady state storage revenue - which would put gore streets 850 MW (due this year) at a revenue of 56 million.

given 20 million in costs (operating and debt service) that means they can JUST about pay the dividend long term but would need to go into joint development agreements with pension funds or similar to finish the remaining assets after 850MW.

given that they have been late on every project and seem to have made some so so strategic decisions i would doubt they can continue to scale up woithout cutting the dividend and costs, especially as ireland also comes off of DS3.

the savior for gore street may be ai - with huge datacenter power demand, especially in ireland and potential improvements to the UK market.

none of this negates my long run average for bess revenues of £7.5/MW since all revenues will be canibalised by cheaper lithium/gas etc (unless the price dynamics of lithium and gas change)

[nickgrant2] 13/4/2024 14:57

Thats a gruesome bear summary Alibaba, all the more so because its credible and backed up by independent observations

[alibaba42] 13/4/2024 12:08

yes i am seriously wondering why they keep omitting any numbers, although its fairly simple to find them yourself from interpolation, still it seems to suggest they are always intent on hiding things which is basically the way UK companies operate anyway (this is the main reason for LSE being trash - and no one wanting to list there).

someone mentioned a point about uk BESS (that gore street noted on). Gore street basically dont want to admit their mistakes which are:

- investing in short duration batteries (1 hour or less, and small capoacity). this has backfired since NG/ESO dont want to dispatch small volumes for balancing mechanism thus making these small cowboys (gore street included) suffer lower revenues. This is in spite of gore street saying that they believed that 30 min duration cells were more efficient (because at the time ancilliary services were still in play). anyone with basic knowledge of markets and electricty markets would have told you these would be saturated at some point.

with their UK revenues now in tatters (and wont be coming back unless they upgrade their batteries, which they dont have money for) they are now wholly reliant on USA and ireland. Ireland is moving away from uncapped ancilliary services (oh look, another electricity market that doesnt want to pay uncapped payments for storage) so that revenue will decrease also probably to half or less. it may not decrease to the levvels of UK but even their latest update has mentioned that irelands ancilliary payments are reducing. Goore street is unlikely to invest in good quality assets there either since they wont be buying 2hr duration cells or anything longer (since they have no more cash)

USA is basically their big hope - Calkifornia is the only good system they have actually developed or will develop and this may provide some decent revenue but no one knows what they will be.

Texas is a good market but its heydays are behind it and sure there will be extreme weather events but the storage market has expanded a lot so the payments there are reducing (still good but very volatile recently). still, they will get rebates and refunds from us govt so it makes it overall worthwhile.


their strategic mistakes, lateness in bringing things online and just the small size of their assets (although they raised a lot of money they wasted it at peak lithium and ancilliary) means they will struggle and have to play small scale cat and mouse games.

finally, they reiterated their dividend recently but they added "for this year" meaning they are only confident of the dividend this year (likely cut next year as usa delays slightly)