Gore Street Energy Storage Fund H1 2026 Earnings Call Transcript

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Provided by Quartr
December 15, 2025

Key Takeaways

  • Negative Sentiment: NAV per share fell to 90.1p (an ~11.7p decline, the largest single‑period drop since IPO), driven mainly by downward revisions to mid‑case revenue curves in California, Texas and Great Britain as rapid storage build‑out compresses merchant revenues.
  • Positive Sentiment: Operational progress: the fleet delivered ~94% availability, Big Rock (CA) and Dogfish (TX) were commissioned during the period, and the portfolio now totals ~1.16 GW with ~25–30% of revenues contracted (including CA resource adequacy), supporting cash generation.
  • Positive Sentiment: Management is taking active mitigations: targeted GB augmentations (Stony, Ferrymuir to 2‑hour, COD ~Q3 2026), submission of Middleton to the UK LDES 25‑year cap/floor tender, and successful monetization of U.S. ITCs above guidance — all potential upside catalysts.
  • Positive Sentiment: Balance sheet and payouts: low gearing (~18%), cash of £50.5m (plus £41.7m undrawn capacity), $30m US facility reduction, an interim dividend of 0.69p declared and a further ITC‑related special dividend pending once lender conditions are met.
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Earnings Conference Call
Gore Street Energy Storage Fund H1 2026
00:00 / 00:00

Transcript Sections

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Operator

Good morning and welcome to the Gore Street Energy Storage Fund PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself; however, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and I would now like to hand you over to CEO Alex O'Cinneide. Good morning to you.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Good morning, and thank you all for joining here on this cold winter's morning. We're happy to present the interim results for the last six months ending 30th of September. There are five of us here from the manager and from the board, so very pleased to welcome Angus, who will be our new chair of GSF from the 19th of January, but has already joined the board. He has some words at the end of this presentation. I'm also joined by our colleagues John, Alicia, and Alan in this presentation, and Paolo will help moderate as well. A full team here from Gore Street to take you through the interims. First, let's start with some key metrics. We'll go into some detail on these, especially in John's section, but a few of the metrics to call out. NAV per share, just over GBP 0.90.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

This is a decline. We'll go through the drivers of that decline, but in essence, they come down to the energy research houses curves for California, Texas, and GB being lower than previously. Gore Street, through our eight years of being a listed vehicle, works with multiple energy research houses, takes their mid-case curves, takes the average of those, and uses them to update the valuation, and so here we see what is, in essence, driven by a victim of the success of energy storage, so a large buildout of storage in Texas, California, and GB, leading to a declining revenue over the medium term, and that's reflected here in this NAV of 90.1p. Annualized dividend yield, 8.5%, and so then on top of that, then we have our gearing at 18%. We're on target for the gearing level.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

We operate a very low-geared environment, which we believe is in keeping with a merchant asset class, and that's delivered just under GBP 17 million of revenue for the period and just under GBP 9 million of EBITDA. Operational capacity, as we leave this period, 643 MW. That is done so on the basis of a 94% availability, so a market-leading availability for our fleet, and during this period, all of the construction assets were energized or made operational, so we're very pleased with that performance to bring up what is a complex worldwide portfolio. We've also started augmentation of the key GB assets. Alicia will go through in some detail how we've approached that. We have picked a period to undertake that augmentation, which is very advantageous to us given what we've seen in very significant CapEx declines.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

With monetization of the ITCs, we received our second payment of the ITC, and we monetize them above the guidance, so we're very happy with that result, and we will look forward to that ITC being released in the early new year. We also have a really quite differential thing in terms of the Middleton asset in working with the UK government on their long-duration tender. Alicia, again, will talk about that, but that is a potential game changer for our GB portfolio and the Middleton asset in particular. Next slide, please. A word then, just to remind you on the portfolio, a very diversified portfolio, 500 MW in GB, 300 MW on the island of Ireland, 200 MW California, 145 in Texas, and then a small asset in Germany of 20 MW. Total capacity is 1.16 GW, so a very large portfolio, well-diversified.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Diversified not only in location, and so we benefit from a low level of correlation between these individual markets. What revenues we receive in California is uncorrelated to our revenue in GB. A high level of diversification in terms of suppliers, so we have a fleet of assets which have been utilizing different flavors of lithium-ion technology from different suppliers, and so well-diversified there. Also well-diversified in terms of duration, so we have built these assets for the available revenue opportunity in each of these markets. And then finally, this portfolio is delivering, I think, best-in-class revenue, so we are trending above our peer group across these markets, and our internal function is also trending above the baseline for what revenues are available in the markets that we are trading these assets.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

I think a very strong portfolio, one that absolutely operates in a market where if there is more storage built out, available revenues will decline against the correlation of solar and wind, and we can see that in big buildouts of storage in the Texas and California market. But it is a portfolio that also benefits from a high level of contracted revenue, especially from our Californian asset with the ORA contract. Just in terms of the structure of both the entity, but also this presentation, we're very pleased to have Angus join us for this presentation representing the board. GSAM, the investment manager, John will go through the report on that. Commercial manager in terms of the actual portfolio assets, Alicia will take you through that report, and then Alan in terms of the optimization and how we are maximizing the revenue from this portfolio. John.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Thank you, Alex. So moving on to slide seven, what we've illustrated here is a time series of revenue per MW by grid, which you'll see shows the inherent volatility within the asset class through the quarterly revenue trends per MW across the different grids in which we operate. So the dotted line represents the weighted average revenue across the portfolio. And as you can see on the far right-hand side of the chart, the overall revenue level remains low this quarter at around £17,000 per MW per quarter. This itself represents the second lowest level on a quarterly basis we've seen since September 2020, which is a period you may recall was followed by a strong recovery, which you can see in the graph as well.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

So out of the 575 MW average capacity in this quarter, in terms of contribution, Great Britain accounts for approximately 40% of our capacity. And while GB revenue was low this quarter, the impact was, of course, mitigated by our diversification strategy. We did see strong contributions from Germany at around GBP 40,000 per MW for the quarter and Ireland at around GBP 30,000 per MW for the quarter. And those are shown by the light blue and dark blue bars in the graphs. Conversely, Texas at kind of below GBP 10,000 per MW for the quarter, represented in yellow, remained lower than the GB market in this period. I think it's worth noting the benefits of the non-correlated portfolio. So for example, back in September 2023, when Texas delivered record highs of any given grid at around GBP 140,000 per MW per quarter, Germany was performing at roughly half its current level.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

So just to reiterate that point in terms of it being a cyclical market as we were. While we can't diversify away all market volatility, the chart does demonstrate the resilience of the geographically split portfolio. From a macro perspective, just to touch on, the grid continues to require support from storage. We're seeing, for example, growing demand from data centers and AI, which are causing large or huge load fluctuations and grid stress. And then we've also got initiatives such as Ofgem's LDES scheme, which Alicia will touch on later, which also confirms long-term macro requirement for the storage as an asset class. But I guess, broadly speaking, volatility and new project entries continue to impact the short-term supply and demand balance, which may continue. We're also cognizant that falling CapEx costs can lower revenue levels for incumbent storage assets as cheaper competition does enter the market.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

However, we're actively mitigating this impact, and we're also leveraging this lower CapEx environment to augment our existing assets at a lower cost, which has always been kind of our viewpoint as to kind of where we saw the option to actually augment systems when the time was right, that is, when the most appropriate CapEx intersects with the business case for longer duration. We'll also, again, as I mentioned, talk about the advancement of Middleton towards the second phase of LDES, which stands to significantly transform the GSF portfolio's profile if successful, and that would also increase the duration and percentage of contracted revenue across our fleet, so moving on to slide eight, I'd like to just summarize our strategy to navigate some of these conditions, so our first pillar is diversification.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

So we're successfully mitigating downward revenue trends in GB by entering in such a market as just covered. In California, our Big Rock asset became operational at the end of August, and we expect full quarter contributions going forward. Importantly, this entry also increases our share of contracted revenue through the resource adequacy contract, which is in place in our CAISO project, which we secured last year and has been kind of in place since the summer. And again, just to touch on the Elders option for Middleton, it would provide significant revenue stability and potentially allow for more efficient project-level debt structures in place if we secure the Elders scheme at Middleton. Alan will also touch on this later, but our focus remains on outperforming the market average. So our GSAM trading team has consistently demonstrated against the Modo benchmarking GB.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

On the second pillar, which is capital structuring, we look at our current liquidity position on a kind of practical standpoint, so we don't have sufficient cash to fund every potential augmentation or pre-construction project immediately, but we are actively looking to recycle capital, so we intend to sell or co-invest in some of the pre-construction assets, which you've already announced to the market. We've also successfully monetized our U.S. ITC above guidance, so these proceeds have now all been received, and the final tranche is being currently held in a lender-controlled account, and it will be released once kind of standard project financing conditions have been met. The monetization of the ITC was above the guidance from last year, despite some unhelpful headwinds from the Trump administration throughout the past 12 months, and as mentioned, it's all now being received across the two projects, Dogfish and Big Rock.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Finally, consistent with the merchant nature of our asset class, we've also shifted our dividend policy to be supported by underlying cash generation of the portfolio. So it's also aligned with strategic use of leverage to, for example, increase duration in the existing assets in order to improve cash generation profile going forwards. The board has declared a dividend of 0.69 pence per share as announced today, and that is calculated based on the total fund earnings for this period. So moving on to the next slide, I think we've already talked through a lot of these points in the previous slides, but just this details the execution of the strategy. So I won't repeat a lot of the aspects again, but just highlight a few of the operational achievements. So within GSAM, we successfully entered the ERCOT market this period onboarding three assets.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

When it got introduced, a new battery-specific bidding mechanism just a few weeks ago, this is the big change in bidding mechanism, and our team implemented this successfully from day one. We're also looking and working on OpEx reductions by using a data-driven approach, and Alicia will go through that in more detail later on. On the development side, we brought the Big Rock and Dogfish projects online this year. We do continue to face some challenges with Enderby in terms of kind of full operation, but our construction team is working hard, obviously, to resolve this. Then more recently, we also signed augmentation contracts for Stony and Ferrymuir at the lower end of our CapEx guidance. So that's a target COD of Q3 2026. Just mentioned the 0.69 pence dividend based on this year's kind of interim profits.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Then additionally, the revised investment manager fees are now 50% linked to market cap, which came into effect from October the 1st this year. Lastly, on capital structure, just to point out, we've also, as part of the initial ITC proceeds, received at Big Rock for the first tranche, which was half of the proceeds on signing. We reduced our US debt facility by $30 million, and we're now also looking to replace that current facility with a longer-term project finance facility, which is linked to the underlying more contracted revenue profile. Moving on to financial highlights on the NAV bridge. Over the past six-month period, there was an 11.7 pence decrease in NAV, which was largely driven, as you've heard, by decreases in revenue curves across the GB and US markets.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

On average, it has decreased from GBP 1.028 to GBP 0.901 in March to September. And this does represent the most significant movement in a single period since IPO in 2018. So if we look across the bridge regarding underlying portfolio returns, as discussed, revenue levels were subdued, which resulted in a return of GBP 0.015 for the period. The primary driver of the NAV reduction is GBP 0.102 negative from revised revenue assumptions, which I'll go into further detail on the next slide.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Regarding discount rates at OpEx, we saw a GBP 0.014 reduction here, and this reflects a combination of high discount rates in the US, which was kind of largely offset by our ERCOT and CAISO assets becoming operational, which the kind of corresponding increase in discount rate to account for the market volatility was offset by the relevant and relative project progression through to energization and operation. Then we've also in the updated OpEx forecasts based on actuals as well. Fund expenses, this is negative GBP 0.012. This includes PLC expenses and PLC level debt interest. Finally, GBP 0.02 was paid during the period, which covers the quarters ending December 2024 and March 2025. Moving on to some of the specifics on the revenue forecasts. Obviously, this is the key NAV driver as discussed.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Consistent with our methodology, we've continued to utilize third-party forecasters and use the mid-case revenue curves for the long-term forecasting of each of the assets in each of the markets. And in many cases, we actually use more than one, sometimes two different third parties and take the average of those when coming to our view for long-term forecasts. However, for the near term, where we've got better visibility through our kind of trading teams, we do adjust some of those, and we have made those changes. In GB market, the curves have actually moved down compared to the March period in general. While LDES scheme can support the Middleton project, we anticipate it will also drive the general increase in storage capacity in the GB market.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

So that can place pressure on merchant revenues for some of the shorter duration assets, which has led to a suppression in the longer-term viewpoint. In the US, we've also got a downward revision, which is primarily driven by near-term factors. In California, we're seeing saturation in ancillary service markets and lower wholesale spreads due to the reduced volatility and milder weather. And again, in ERCOT, similarly, mild weather has led to lower spreads, and also increased solar capacity has also reduced some of the scarcity pricing events, which we saw kind of in the initial years we entered the Texas market. And resultingly, unfortunately, for both CAISO and ERCOT, the revenue level is lower than how we'd originally anticipated. However, we've made, compared to the third-party curves, we've also reflected that.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

So for the first two years from 2026 and 2027, we've taken a cut to those revenue curves manually in order to reflect kind of where we see the market from the point of view of kind of the current market conditions and then revert to the longer-term trends received by the third-party forecasters going forwards. If we look at the NAV assumptions, the slide outlines the other key assumptions. So they're relatively minor points on the NAV bridge, which are summarized. So on inflation, we made only very minor adjustments on inflation assumptions, again, using third-party data and forecasts. And that was a negligible impact on the NAV for the period. On discount rates, the rate of average discount rate is now 10.2%.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

And then, as I mentioned before, while we reduced discount rates, when assets like Big Rock and Dogfish reached operational status, we did increase the overall U.S. discount rates by 25 basis points to reflect market volatility, which effectively netted off the COD downwards adjustments. On sensitivities, if you can look at the chart, you'll see around a 1% change in inflation of discount rates has a symmetrical impact of approximately kind of 12-13 pence per NAV. And then other sensitivities, obviously, with FX, roughly 40% of the portfolio is in GB. And then Northern Irish assets are also earning GB revenues, but this is linked to euro-denominated pricing. So a 3% FX move impacts NAV by roughly 2 pence, just over 2% of NAV, which is in line with the 60% international composition of the portfolio itself.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

On EPC, the sensitivity plus or minus GBP 0.024 captures the impact of the pre-construction assets and also augmentation CapEx and some of the remaining milestone payments which we are making on some of the assets which have recently been commissioned. Moving on to the next slide 14. Just want to reiterate on this slide our consistent valuation methodology. As I said before, we use a blended mid-case average. We've maintained limited leverage, our NAV valuation swing is significantly lower than within the kind of the wider storage investment trust sector. We've also added kind of a peer comparison on this graph to just show how that NAV has been generally consistent across the piece and not been subject to kind of upwards and then downwards adjustments over time. We've consistently applied a DCF approach to valuing projects.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

So for the pre-construction portfolio, this has generally resulted in projects being held in line with costs. The graph here compares our NAV history, which is in orange against a peer in dark blue. And even with the NAV drop of 10 pence in this period, the variance in our NAV from peak to trough is, as I said, relatively lower. And then we've also added here the light blue dotted line, which illustrates our theoretical NAV had we stopped paying dividends in late 2023, like some of the others in the sector. And this, I think, just reiterates even more kind of stability across the NAV process. And this demonstrates further the resilience of our valuation approach. So moving on to diversification of revenue sources. So this breaks down our revenue by market.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

The total revenue for the period was around 16.7 million or just around £8 per MW per hour. GB generated 6.7 million, which was around 40% of the total. And please note that ancillary services here includes trading revenue as well as our GSAM platform trades these seamlessly. And it's not possible to distinguish between which energy charge or discharge is due to pure trading or due to ancillary service dispatch. In Ireland, we contributed 3.9 million. And this was mostly ancillary service market revenue, but there was also an element of wholesale trading revenue as well. And then the remainder of 30% comes from our international assets in Texas, California, and Germany. This includes the initial contribution from California, which started in August, and also Dogfish in Texas, which started at the end of May. So not full contributions for the half year in terms of full run rate.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

We did expect, as mentioned, the larger merchant revenue and earlier RA contribution from the Big Rock assets, but as we'll run through later, due to lower peak demand and lower day-ahead spreads, this has been kind of captured in the current results, but yeah, and it's fair to say the US contribution from assets has been lower than we had anticipated. While the US contribution was lower, our contracted revenue is increasing, so this includes capacity markets in GB and Ireland, the RA contract in California, which are shown in yellow on the graph. The DS3 capped contract is also a fixed price contract in our Irish portfolio, and this is captured in the ancillary service blue bar as well, so currently, the contracted revenue is in the mid-20% range for the portfolio.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

So while the uncontracted revenue in California is currently low, the high percentage of our contracted RA provides a strong floor against further downside. I think what I'd also kind of point out in terms of the contracted nature of capacity market and RA, these are not floors and tolling where you effectively hand the keys over to another optimizer. This is fully stackable with other kind of merchants. So you get the benefit of the merchant upside alongside these contracted revenues as well. So we do continue to monitor tolling and floor agreements. But what we've seen to date is that tolling revenue offers we've had are lower than what we're achieving in the merchant model to date.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

And then regarding floors, you've got a route to market commission with the floor, which is significantly higher than a commission without a floor, or the floor level itself is too low to be meaningful. So at the moment, we've not taken any tolling contracts or floor contracts, but we do kind of appreciate investors' preferences on stability of revenues. So we always continue to monitor these opportunities. And as we mentioned earlier, LDES or Middleton is one option where there's a significant kind of cap and floor contract potential for that asset. And then on to slide 16, this provides a consolidated view of the bridge from revenue to total fund earnings for the period. So having taken investors' feedback, one of the most important was transparency for consolidated P&L rather than PLC standalone accounts.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

This has been disclosed or included in previous disclosures, but we've tried to make the consolidated P&L more accessible or visible in the graph or bridge like this. So on the revenue, we start with the GBP 16.74 million, which is top-line revenue. This revenue, to be clear, does not include any delay liquidated damages or capacity market revenue from assets which have not yet hit COD. Revenue-related cost of GBP 1.7 million is route to market optimizer fees and energy costs. They are generally variable costs except for some minor items. Operating costs of GBP 4.7 million includes O&M fees payable from SPVs to EPC, and they're also mostly fixed except for ad hoc ones such as spare parts or repairs. Admin costs of GBP 1.1 million include SPV admin costs and insurance costs.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Just to point out, we've achieved roughly GBP 600,000 in insurance savings thanks to our data-driven site monitoring, which we can explain again later on. The dark blue bar of GBP 1.67 million adds back the liquidated damages and pre-operational capacity market earnings. Just to point out, to be prudent, we've not included all LDs receivable, which we expect to receive in this number. We're entitled to a significantly more amount than this. Also just to point out, the CM revenue from the pre-COD assets are included in this bucket as well. Moving across, the GBP 3.6 million cost is an expense at the PLC level, including AFIM fees. Then finally, the GBP 3.01 million in debt costs, that includes as well as the PLC costs from the RCF at the top co. It also includes interest on the U.S. facility following the COD of Big Rock in August as well.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

This results in total fund earnings of GBP 3.5 million, which effectively covers the dividend declared of GBP 0.0069 per share. And just finally on my side, closing on this slide 18, this is regarding our second strategic pillar on capital recycling. Just on the kind of left-hand side, we look at the key metrics. We maintain a cash balance of GBP 50.5 million as of September end. And we also have GBP 41.7 million in undrawn debt capacity, which is to fund our strategic growth. Just to clarify that, that GBP 50.5 million includes the benefit of the second tranche of ITC receipts, which we received during September. And then we've subsequently received a third tranche in November, which is not included in this number because that was post-period end.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

And also post-period end, we also did pay out the GBP 0.015 special dividend in relation to the second tranche received. So shortly to make that clarification. So to fund our strategic growth, obviously, we have appointed sell-side advisors for the sale of the German asset Cremzow and some of the other pre-construction projects. As I mentioned, during the period, we monetized ITC proceeds for both U.S. projects. Dogfish proceeds were received upfront when the agreement was signed. And Big Rock, as I mentioned, received in tranches 50% upon signing, which went to pay down some of the project-level debt at Big Rock down to $60 million. And then two further tranches of 25% each. And as also referenced, the ITC proceeds, the final proceeds have been received and currently sitting in the restricted account at the U.S. level.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

That is pending the satisfaction of certain project financing conditions, which we're looking to satisfy as soon as possible. And once done, that will trigger the payment of the final GBP 0.015 special dividend.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Thank you, John.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Thank you.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Alicia.

Operator

Sorry, Alicia, we've just lost your audio there. Let me just.

Operator

Thank you, Alex.

Operator

There you go.

Operator

So let's.

Operator

Sorry, Alicia, go ahead. Yeah, we can hear you. Sorry. Go ahead.

Operator

Let's kick off with just a look at the developments in our operational markets, please. So looking at starting with Texas. So Texas has been behaving in a way that effectively has rolled out revenues below expectations, especially definitely below the performance that we have seen in 2023, underlying the nature of the market being very driven by scarcity and specific patterns that correlate and bind weather, as well as available generation margins on the Texas network.

Operator

Generally, Texas over the past couple of years has seen quite high availability of generation. ERCOT has procured additional level of resource margins. We also have seen generally milder summer weather that not only increase the availability of generation, as gas peakers tend to shut down in hotter weather, but also has seen lower load growth and load levels. That just creates less availability of scarcity events that is also combined with generally lower gas prices. Moving on to GB. GB, we have seen year-on-year growth in terms of revenue. If we were to compare the same period of six months of 63%, that specifically has demonstrated itself in utilized revenues and generally just alignment of ancillary services prices with available opportunity in wholesale markets, as well as general policy implementation.

Operator

We have seen alignment of non-BM assets with BM assets through ABSVD inclusion, but also inclusion of non-BM assets into quick reserve, which generally highlights the trend that batteries are needed and are becoming more and more fairly remunerated by the policymakers and NESO. Moving on to Germany. In Germany, we have seen similar trends as in previous years. Summer generally has got strong revenue performance where operational gas peakers generally tend to be moved out of the value stack during those solar hours. They recoup their losses in the evenings through increased prices in ancillary services. That is something that drives the levels of revenue in Germany. In Ireland, generally, the levels of renewable generation satisfying the load on the network, which is the SNSP metric, has seen consistent level even during summer, hence a strong performance in that market.

Operator

We are also looking and observing policy changes in Ireland that should further sustain revenue levels for batteries. One of them is the scheduling dispatch program, which will support batteries in more efficient trading in wholesale markets and also prepare the market for slow phase-out of the DS3 program, which is now expected towards the end of 2027. In California, generally similar signals as in Texas, so particularly, California is subject to the same low levels of gas prices that drive the revenue opportunity, the merchant revenue opportunity. However, the market is also very driven by solar penetration, and we see that effectively during summer peak hours during the day, there are zero prices in the wholesale market, followed by strong ramping levels in the afternoon supported by gas. However, low gas prices just drive those revenue delta during the day to lower levels, decreasing the overall opportunity for batteries.

Operator

Next slide, please. In terms of operational portfolio, we're very pleased to report bringing online Big Rock asset and also Dogfish assets, so flagship asset in California, Big Rock, the huge effort from the team to bring that asset on time. It began operating late April and accessed resource adequacy contract from 1st of August, complex asset in a complex market. However, it has been brought online on time and now successfully generating, and similarly, Dogfish as well, an asset that has been brought without any delays to energization or COD and now operating also from spring this year. NRB is an asset that we're still working towards bringing all of the revenues to operational stack, so NRB is sitting behind tertiary connection. It has a more complex network in which it has to comply with grid codes.

Operator

And that requires more fine-tuning from the control systems to be able to access all the fast-acting ancillary services. Hence, we're still working towards enabling the full stack for NRB. In terms of operational portfolio and asset management, the team has been focusing the past six months on rolling out our data platform. So our analytics tools that allow us to increase our availability of the portfolio, but also be able to respond faster to any sort of downtime, any sort of faults that the assets display, but also be able to escalate more efficiently to our O&M partners. And that all leads to our ability to increase availability and decrease costs on the assets. This follows from an overall program that we have already implemented on the portfolio in the past, where we have rolled out algorithmic prediction of potential thermal runaway on the assets.

Operator

That has been recognized by our insurance providers as an enhancement to fire safety and allowed us to reduce our insurance costs by more than GBP 600,000 across the portfolio per year. Next slide, please. Finally, moving to an important development in GB. We have now started our augmentation program. We have selected two assets that have been effectively put into this program as the first ones. Stony, 80 MW asset, and Ferrymuir, 50 MW assets. Those assets have been from inception designed to be able to allow a very fast augmentation program, which is only based on adding DC capacity, so only cells, and does not interfere with any of the inverters' capability or controls' capability, which means that we are not interfacing with DNOs and grid.

Operator

So that reduces the risk of overall augmentation complexity and allows us to, in six months, effectively from commencement to rollout, allows us to increase duration of those assets to two hours. And we expect them to come online towards autumn 2026. And the time is right because the CapEx numbers have been steadily declining to very low level, below 2022 levels that we have seen. And also we can see a consistent trend of overperformance of two-hour assets against one-hour. So the timing is really correct, we believe, to do that augmentation now. Just touching quickly on the LDES program. So the team has mentioned we have now submitted our Middleton project, the largest GB project we have in our portfolio, to LDES. This asset will be, if successful, a 100-MW, eight-hour system. And if successful, we'll secure a 25-year cap and floor program.

Operator

We believe that it has a very strong rationale to be awarded that contract that sits at the critical boundary between Scotland and England. It also is just next to a Heysham nuclear plant that is being decommissioned next year. We believe that there is a strong rationale to build out this asset, but also for it to be recognized by NESO and Ofgem as the right candidate for LDES program. Thank you. I'll pass on to the trading team. Thanks.

Operator

Thanks, Alicia. Okay, good morning, everyone. It's been a very good period for GSET's internal trading and optimization team. We onboarded a further five assets this period with two important milestones hit there. In GB, we onboarded Cenin and Stony, Stony being the biggest asset in our portfolio now at 80 MW. In ERCOT, we onboarded Snyder, Sweetwater, and Westover.

Operator

These were our first assets under management for optimization outside of GB, so that takes us to a total of 192 MW under management in total. So we continue to deliver really good performance with these assets. We have a 23% premium to the benchmark, the Modo benchmark in GB, and we're consistently delivering market-leading results for one-hour assets in this market. Now, we did see a slight dip in performance in September. This is mostly due to asset unavailability. We had some forced outages and also very subdued market conditions. Happy to say that post-period, we are back on track, so October and November, we are seeing a return to kind of 25% performance over the benchmark, which is positive. In Texas, performance has been very good since we took over. I'm very happy with how the system is running those assets.

Operator

Although, as Alicia touched on there, we have seen market conditions have remained poor. And so revenue hasn't been exceptional. Now, there are a couple of changes. One's just happened. One is coming in ERCOT, which I'm excited about. So the first is a rollout to a new system, RTC+B, which is real-time co-optimization plus batteries. And the key thing with this change to the market is the introduction of real-time ancillary service procurement. So we now can win contracts for five minutes, which are awarded pretty much in real time. So previously, these contracts were awarded at their ahead time and were for one-hour contracts. This is very good for our system, which is highly algorithmic, as we're naturally very dynamic in our approach.

Operator

And so we can use everything in the battery for just a five-minute period, and we don't have to hold ourselves out of the trading markets for that full period. So since the 5th of December, when this went live, we have been taking a lot more ancillary service contracts than we had previously and filling the gaps where previously we'd be sat waiting for the prices to emerge. We also have an upcoming third party in ERCOT who are bringing an intraday market. So this is the first time it's happened in ERCOT. And then similar to kind of how we do it in GB, which we obviously have a lot of skill and a lot of experience with. So I think this is quite a big potential opportunity for us out in Texas. And we'll be making the most of that when it comes.

Operator

I'm expecting it early next year, so just a final note then on the optimization software that we've developed in-house. It has been very reliable, very little downtime so far since we put it in place. We always designed it with the idea that we'd be moving to new markets, so actually, moving into the ERCOT market was relatively pain-free for us. It is a very different market structure, specifically with SCED and also a very different set of ancillary services, so the engine or the brain of the system is very different to what we do in GB, but it does use a lot of the same background systems that we built previously, which has been great. We are continually improving and updating the system, and so far, I'm very happy with how it's performing.

Operator

This is actually really important to me because it means it gives me and the team the time and space to develop the system, to investigate new ideas, and to test and to push new improvements to the systems, which all in all enables us to maintain and increase the edge that we currently have in the market. With that, I'll pass over to Angus to discuss the board of directors. Good morning to you all. The current board has been in position since the beginning of this company when the company was only about GBP 30 million. It's obviously significantly bigger than that now. It was time for a refreshment of the board. We are in the middle of that process, although probably slightly over halfway in that Simon Merriweather there in the middle joined just at the end of this reporting period.

Operator

Norman and I joined just in the middle of October. So we've all been on a pretty steep learning curve, but we are excited to be on this board and think we bring complementary skills and skills that will be good for you, the shareholders, and also the company itself. There was a formal strategy review earlier in the year that didn't involve any of the three of us. And so we are going to continue to look at the strategy of this company. And I think that the main thing is to make sure that the key areas for shareholders and for the company as a whole, led by the board, is to make sure that, A, the market understands what we're trying to do, what the manager is trying to do, but also to make sure that there is robust governance and governance that people can buy into.

Operator

There is transparency and you would have seen this morning that there's been a lot more transparency in the NAV bridge and things like that this morning, which is a good thing, but the main thing is just to make sure that this company has got a sustainable future with a proper investment case backing it up so that you, the shareholders, can support it and benefit from what is going on. I'm conscious of the time, so I won't go on more than that, but other than to say that we are available, we are keen to help and keen to support the future and the upwards future of this company. Thank you, Angus, so a few words just in closing before we hand over to questions. As the company sits today, we have strong liquidity.

Operator

You will have heard John going through our balance sheet, also paying down debt while also continuing to pay dividends, and that is built on building these assets at the cheapest possible cost, building at the right time and not over-levering. Long-term upside, so though we have witnessed for the first time, actually, in the eight years of being public, a decline in NAV of this level driven by, in essence, energy storage being very, very successful, so lots of storage getting built out in California and Texas putting pressure on revenues, but with a large percentage of contractual revenue, nearly 30% of the portfolio contracted, and a very strong perspective on optimizing revenue being driven by our own internal function, we see good upside in terms of rebuilding of that NAV.

Operator

We also, of course, engage in understanding how best this portfolio is situated, a huge amount of work going into a diversification strategy, and we have here a portfolio which, against our peer group, is delivering much higher revenues in uncorrelated markets built on best cost of MW installed and built on a low level of leverage, but for instance, we have announced looking at disposing of our German asset, a 20-MW asset, as well as our pre-construction assets, and so whether that is full disposal or partnering with other players, we are open to in conversations with the board and shareholders. Very focused on the unlocking of value, so very big focus now for the next year in terms of decreasing cost, increasing revenue, optimizing this portfolio over the medium to long term, and with that, we'll hand over to take questions. Thanks, Alex.

Operator

I'll ask the team to be efficient responding because there are a lot of questions. And we will start with the ones that were submitted during this live presentation. Jean-Marc, he mentioned validation of NAV assumptions with real transactions. And Clark B also asked that with some renewables investment trust failing continuation votes, could we expect some sort of fire sale? So Alex, can you comment on transactions within the sector, please? Yeah. I think there's two things there in terms of the fire sale. What I would say is where we have seen across sector trusts get into trouble, and it's where companies get into trouble, it is too much leverage. Right? I'm very proud that we've built this portfolio while utilizing a best-in-class level of leverage. So we have invested in a portfolio. It is well diversified. It is built at a good price.

Operator

We do not have too much leverage. So we do not have that type of kind of cliff in front of us. What we have is a portfolio which we need to optimize through cost and revenue. In terms of transactions getting done, it's a little bit of old news, of course, now at this point. But, of course, we saw the Harmony transaction. It's actually this year, though. So it's not that old, but it took place at the start of this year where transactions took place at NAV. We also see continuing flows into the sector. So we see kind of the large-cap investors like Copenhagen Infrastructure Partners, GIP, BlackRock, all making investments into this sector. So there's a lot of things taking place in the private markets, which is not reflective of the public market transactions.

Operator

And that continued build-out really goes to the robustness of the sector. So for sure, lots and lots of transactions taking place in the private sector, continued flows of capital into it. But from our perspective, looking at this portfolio, it's about running it at the lowest cost, do not over-leverage, and to give us optionality in terms of disposals, not necessarily to pay down debt, though we did pay down debt this year, but to look at where we can recycle capital for best return for shareholders. Sandy has asked, "The large reason for the value movement announced today is the power curves. Does the GSF business not rely on volatility in prices rather than the absolute level of prices? So the actual level of the curve should not impact NAV at this level." One for Alan or John, please. Yeah. I'm happy to start with that one.

Operator

So there's definitely a correlation between high prices and volatility. So when you see high prices, you tend to get volatility with it. Low prices tend to be set at the cost of turning down wind, which is zero or negative. And so obviously, it's then the gap between that price and the high price that gives you the volatility. So the higher the prices tend to go, the higher the volatility is. I think there's also the curves that we have aren't necessarily just power price curves. They are revenue curves for batteries. So obviously, that's just a direct result of the volatility. So that's probably the more important point. Yep. Just to reiterate that, the curves we've shown are specific, best kind of forward-looking revenue curves. They're not power curves.

Operator

Thanks, both.

Operator

Robin Y and Nick E have both demonstrated frustration with share price, and they have asked directors and managers what will be done to mitigate or to decrease that gap between NAV and share price.

Operator

So I will give some answer. Maybe Angus would like to jump in. But from a manager perspective, what we outlined in the end of the summer in terms of adding value to the portfolio, so point augmentations now at a time of very low CapEx. So increasing our one-hour portfolio in GB to two hours, and we believe adds significant value to the portfolio. Working to increase revenue above the benchmark, which we're very pleased to see that progress and success on. And, of course, looking to lower costs in the overall portfolio. All of those things we're engaged very heavily, and all of those things we can point to real successes in.

Operator

And we would hope that that flows through into share price. I think if we look across to our peers, it seems to us that the benefit of the diversification, the higher revenue, the less debt have not come through into the share price, and we need to keep pushing on those messages. In terms of actual mechanics around share price, I don't know if Angus from the board have a comment.

Operator

Yes. Thank you, Alex. I mean, we should just say that we're not alone in this and that the other similar companies also have the frustrations of large discounts at the moment. So there will be, to a certain extent, where the market takes us. But also, we just need, as I said earlier, we need to be making sure that we are building a proper investment case.

Operator

Part of that is how the assets are managed, and part of that is messaging. And so it's very important, as far as I can see, that we get both of those right. And Alex and the team are doing one of those. And I think that with a new board and that sort of thing, we can perhaps help get the messaging right. There are, of course, some mechanics that we could do, and that will be part of our ongoing strategic thoughts, whether one buys back shares or not, which we haven't done to date, etc., etc. So one needs to see that, but one also needs to make sure that we're not going against the tide that can't be stopped. So don't worry.

Operator

We are fully aware of the frustrations, fully aware of the issues involved, and we will be doing our best to close that discount over time. It's not going to happen immediately, but let's hope that it follows the good performance of the company.

Operator

Thanks, Angus. Steve Y is asking, and this is one for Alicia, if Enderby will be fully operating just next year, why then not include it for that upgrading from one hour to two hours on this priority portfolio?

Operator

So one of the reasons that we have not included yet Enderby is because it only has effectively started its operation. As I said, it's not fully onboarded to all the revenue streams, and that's a very important focus point for us over the next couple of months. And also, Enderby generates a new asset.

Operator

We would like to see a certain amount of time in operation and cash generation before we include it in the augmentation program. Also, the augmentation program will be slightly different than the one for Stony and Ferrymuir. Stony and Ferrymuir have been built by Nidec, while Enderby has been built by Fluence. So the different technology augmentation. So it will be just included in a different augmentation program.

Operator

Thanks, Alicia. Bob M and Mark B have both asked about the dividend policy and what does that mean for future dividend expectation. Alex, Angus?

Operator

I can go first if that's okay, Angus. The board set a dividend policy to pay dividends out of operational cash flow. It is, I think, worth noting that Gore Street throughout its history has continuously paid dividends while maintaining a low level of debt and building out this portfolio.

Operator

So I think we should acknowledge that. We generated 0.69p-1.4p of dividends, cash available for dividends depending on how we count liquidated damages. And the board looked at the pure operational point of that to pay out this dividend. So that is the policy that is in situation. That is the policy that's been implemented this quarter. That's outside, of course, of the 1.5p from ITC, which the second tranche has been received.

Operator

I don't think I can add very much to that. But clearly, the revenue streams are a lot more than the actual dividend paid. And therefore, Alex talked about cost-cutting and that sort of thing as well. So if we can squeeze it at both ends, then one hopes that we are now at a position whereby it can't get any worse.

Operator

Thanks, both.

Operator

There was a question that back in 2023, the company expected to triple its installed capacity. What went wrong for not achieving that? And I'll cover that one. In 2023, this company had 290 MW, 643 MW-hours in operation. And sorry, 290 MW-hours in operation. Today, it has 643 MW, 863 MW-hours in operation, which is factually tripling what was announced in December 2023. The next question from Pietro N. It's regarding a footnote for the NI assets and the JV distribution of those assets, considering there's a minority shareholder holding 49% of that, asking if that cash flow would have to be adjusted based on this equity stake. John?

Operator

No, that's already adjusted for the 49% stake. So that was applied from the 1st of April this year. So for year end, September 25 is already kind of 51% contribution to GSF.

Operator

The GBP 4.9 million, just to clarify, I think you're referencing is Ireland in total. So that's both NI and also PBSL, which PBSL is the Republic of Ireland asset, which is 30 MW, which we 100% own. So that needs to be kind of that to be taken into account. But I would say because NI is the kind of uncapped contract, which is far more lucrative than the PBSL contract, the majority of that GBP 4.9 million is attributable to NI anyway.

Operator

Thanks, John. David M has asked, "You talk about peers, but who exactly are those parties?" Those are pure-play energy storage and investment trusts, obviously, with Harmony no longer trading. So this will be GRID. Angus F had asked, "The upper end of revenue curve's assumptions seems to have increased quite considerably for Northern Ireland, ROI, Republic of Ireland, and GB.

Operator

Could you please highlight what has led to these optimistic expectations and what was the overall impact on NAV?" John, I think this is for you as well.

Operator

Yep. I think what we kind of set out in terms of the curves for Ireland, Germany, in particular, that the kind of net impact overall across the kind of NAV piece for this period is a relatively minor impact uptick. Again, in terms of where we derived the forecast from third parties, so those curves reflect those, and we didn't adjust those curves specifically. In Ireland, I'd say some of the kind of the changes are due to DS3 kind of policy being changed, whereby initially, there was an expectation that DS3 revenues would only be up until 2024 when we initially invested, and those have been pushed out, I guess, to our benefit over time.

Operator

So again, there's an expectation that those DS3 revenues, I think, have been pushed out again. So I guess that's one of the points on the Irish side. And in Germany, obviously, there's a kind of burgeoning market. There are some questions around kind of grid connections and difficulty in assessing new grid connections in the German market. And that's, I think, being reflected in some of the kind of curves as well. But as I said, in terms of NAV impact for those two markets, it isn't very material in terms of kind of how that's moved the needle. It's far more kind of related to the GB and US kind of downward curves.

Operator

Thanks, John. Bob M have asked, "Are PLC costs increasing or decreasing, and what is anticipated?" We also had a pre-submitted question about the GSC fees, the AIFM and the CMA.

Operator

Alex, could you cover those both, please?

Operator

Yeah. So both are decreasing. So renegotiation of the AIFM fee this year taking effect from the 1st of October, where we move to a split between market cap and NAV. And so that will be a significant saving for shareholders over the coming years. In terms of then kind of what we would consider pure operational costs in the SPV, that has also been decreasing quarter on quarter, and we're looking to have a significant decrease through the course of 2026 on that as well.

Operator

Thank you. I'm conscious of time here, and there are still a lot of questions. We'll read a couple more, but do submit your questions to the IR email if they're not covered today. Neil G asked, and we have asked, there was a pre-submitted one as well.

Operator

You expect to pay the second ITC dividend before the end of 2025. That was before this announcement today. When are we to expect this second tranche?

Operator

So we're glad to have received the second tranche. So it is in our U.S. bank. It is being held until two outstanding items, to be honest, with our lender, which are administrative rather than anything else. And I think it's fair to say that we are hopeful to complete those items in the very early new year.

Operator

Thank you. I will now head back to Alex and Angus for any final remarks and do submit your questions if they were not answered today to the IR email and team.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Yeah. Thank you, Paula. And yes, I reiterate that. Please do send any other questions. We will do our best to answer them by email.

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

Hopefully, in this presentation, which has been a long presentation and a detailed one as we try and produce more and more information for the benefit of our shareholders around this portfolio. But thank you all for your time. And Angus, any closing remarks?

Alex O'Cinneide
Alex O'Cinneide
CEO and Founder at Gore Street Energy Storage Fund PLC

No, I think just to say thank you. Extremely comprehensive from the team. And thank you for taking the time to listen to them. Brilliant. Thank you. That's great. Onwards and upwards.

Operator

Thank you very much all for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure it will be greatly valued by the company.

Operator

On behalf of the management team of Gore Street Energy Storage Fund PLC, we would like to thank you for attending today's presentation. And good morning to.

Executives
    • Company Representative
    • Alex O'Cinneide
      Alex O'Cinneide
      CEO and Founder
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