Gore Street Energy Storage Fund H2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
July 17, 2025

Key Takeaways

  • Positive Sentiment: The Fund delivered £35.0 m in revenue and £21.0 m in EBITDA in FY25 from a 753 MW operating portfolio, achieving an average of £83 k/MW hr—approximately 30% above peer performance.
  • Positive Sentiment: Full monetization of $84 m U.S. ITC tax credits from Big Rock and Dogfish projects has been agreed, with 50% already received and proceeds used to repay $30 m of debt, bolstering cash flow.
  • Positive Sentiment: After institutional engagement, the management fee was reset to 1% of average NAV and market cap and all performance fees removed, saving over £1.1 m annually.
  • Positive Sentiment: With a 20% CapEx reduction, the company will augment two UK sites (Stoney and Ferry) by adding one hour’s duration for £18–22 m, incurring just ~50 days of downtime to drive material revenue gains.
  • Neutral Sentiment: The FY26 dividend policy targets a minimum 2.25 p per share—fully covered by operational cash flow—with potential upside tied to realized merchant revenue, implying payout variability.
AI Generated. May Contain Errors.
Earnings Conference Call
Gore Street Energy Storage Fund H2 2025
00:00 / 00:00

There are 4 speakers on the call.

Speaker 1

Good morning and welcome to the Gore Street Energy Storage Fund PLC investor presentation. Throughout the recorded presentation, investors will be in listener-only mode. Questions are encouraged and they can be submitted at any time by the Q&A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company can view all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you up to CEO Alex O'Cinneide. Good morning to you, sir.

Speaker 3

Good morning and thank you, and thank you everybody for joining here today for the Gore Street Energy Storage Fund PLC annual results presentation. You're very welcome. Today, four of us presenting: myself, Alex O'Cinneide, CEO, joined by John, Head of our Investment Team, Pala, Head of Corporate Development and IOR, and Alan, who's Head of our Trading Activities. The four of us will take you through our presentation today and then have time for questions at the end. In highlights, we think it's a strong year for the company. Dividend just under £1.03. We think this reflects very well against our peer group and reflects well against the dividends that we paid during the year, as well as the overall growth of our portfolio. Delivered over £35 million in revenue and £21 million in EBITDA. That was achieved off the base of 408 megawatts average megawatts through the year.

Speaker 3

We had megawatts come on stream during the year, but obviously weren't available for the full amount of the recorded period. We do now, as we sit here today, have 753 megawatts in operation, nearly a gigawatt-hour across five different energy systems, a really considerable portfolio, and a portfolio at scale which allows us to focus on really strong improvements to the portfolio which we'll go through in the later slides. Revenue is a very strong performance for us. Alan will take you through how we've achieved this 11% over the benchmark, a really excellent performance, and I'll talk a little bit about how we drive that performance across the entire portfolio. We're now operating in five different energy systems. We have taken the opportunity with the board. The board has gone to a large shareholder consultation. Pala will talk about the outcomes of that in a few slides.

Speaker 3

One of those outcomes is of a significantly reduced management fee. Manager and board are aligned upon making sure that the cost base, including our fees, are appropriate for the position that we are in. We've also made some decisions around capital allocation. It's an interesting point in the market in terms of buying new equipment with really significant CapEx reduction, and I'll talk a little bit about what that means for our portfolio in a few slides. This is the overall portfolio. Large incumbent position in the Irish and British markets, a large position now in the Californian market, a large position in the Texas market, and a significant asset, though a smaller part of our portfolio operating in Germany. 1.25 gigawatts total portfolio. That includes 490 megawatts of ready-to-build assets, and we'll talk a little bit about our strategy with those going forward in a few slides.

Speaker 3

As we think about our conversation to our shareholders of 12 months ago, we laid out five critical goals for the portfolio then. First, we wanted to increase the contracted income of the portfolio. We've achieved this through the ORA contract for our Big Rock asset in California. We also have capacity market contracts in GB and Ireland, and overall this has moved our contracted revenue up to a very significant portion of our overall revenue portfolio. John will talk a little bit more detail about what that looks like in a few slides. We achieved this goal. Big Rock, we needed to bring Big Rock to energization. It's a very large asset. It's a critical part of the Southern Californian energy system, and we're very happy to have that asset become energized and now in operation. Same with Dogfish in the Texas market.

Speaker 3

We needed to bring that asset to energization and into operation, and that has been achieved. Same with Enderby here in the British market. Finally, we needed to monetize the investment tax credits that were received as part of the Big Rock and Dogfish transactions. Obviously, a lot of political noise around the investment tax credits. We're very happy to see them come in and come in above guidance. As we think about then the coming five years, what are we looking to achieve? One of the goals is to expand the asset base through augmentation. We have a really strong opportunity given the reduction in CapEx to augment. This is not to replace, but this is to augment several of our assets in the British market. Drive revenue growth by bringing on board more of our assets to our own system. Optimize cost efficiencies.

Speaker 3

We're of a scale now where we can really make moves within our value chain to lower those costs. Finally, look at our portfolio and understand what's the correct balance of that portfolio and is there opportunities to bring in external partners to help with the build-out of some of our ready-to-build assets. Pala.

Speaker 1

I think it's me next, Alex.

Speaker 3

Yeah.

Speaker 1

Hey everyone, I'm going to take you through operational performance with the assets and then touch on a business area that we started through this reporting period, which is Gore Street Energy Trading. If we look at the revenue drivers, I mean, largely it's pro-environment remains and has been really. It's really energy security and decarbonization that are the key driving forces behind the requirements, and we're seeing that across all of our activities in various forms. If I just pick out a few of the highlights here, in Ireland, the phase-out has now been pushed back to potentially September 2027 or until the new service kicks in, which is good news because it means we won't have a gap in unsettled service in the interim period.

Speaker 1

In GB, we've seen a lot of much higher volatility in the traded markets, and that's come also with increased ancillary service procurement from NISO, so that's led to year-on-year increase in revenue of around 22%. In Germany, we saw significant periods of high solar generation over this period, and that not only leads to low wholesale prices, which is obviously very good for batteries, but also increased ancillary service prices as the grid needs the backup. That has led to pretty significant increases in revenue year-on-year as well. In Texas, the ancillary service markets did saturate with value shifting towards trading towards the end of the period. We also saw very mild summer conditions and combined with much better thermal asset performance over in Texas.

Speaker 1

This has led to very suppressed prices over the period, so we didn't see the particularly high price spikes that we've seen in previous years. May I have a look at what impact that's had on revenue? If I take these in order, in Ireland, we're at £14.50. We have seen a reduction in the temporal scarcity scalers in Ireland, and also the lower wind generation has reduced the non-synchronous scalers, system non-synchronous scalers, and together these impact how much revenue you make for an uncapped DS3 contract. It has resulted in a 33% reduction for two of our assets, but still relatively good performance there. In Great Britain, we're at £7.40, and honestly, there are lots of reasons to be positive here.

Speaker 1

The wholesale market and the BM are offering much more value than they have previously due largely to volatility and to reforms, and as I said before, NISO have continued to increase the procurement of existing ancillary services and add new services such as Quick Reserve in December, and that's helped to alleviate the saturation in markets, and indeed we're starting to see good recovery for batteries in GB. In Germany, as we said, we had high ancillary service prices driven by very good solar generation, and so we've averaged the year for the reporting period at £13.50. In Texas, as we said, much reduced spiky prices over the reporting period has resulted in a revenue of around £5.60. We are expecting this trend to reverse in time.

Speaker 1

It's difficult to say exactly when, but on the positive side, we have outperformed the market benchmark by around 32%, which is good, and overall this leads us to a portfolio weighted average of around £10 per megawatt per hour.

Speaker 3

Yeah, I think this is a very strong number. Overall, £83,000 per megawatt for every hour in operation. If you compare it to our peer group, that's nearly a third above what we see other players achieving, and really given our diversified portfolio, we're hopeful of low volatility in this number and increased revenues coming out of the British portfolio as we see right now increased volatility. We're very happy with these numbers, and we see good upside in them going forward.

Speaker 1

Indeed. If we now look at the market developments, in Ireland, I'll just kind of highlight a few here. In Ireland, the scheduling dispatch program has been pushed back to November 25. This program will allow further participation of batteries in trading, so it gives us another option over in Ireland, which is good news. In GB, zonal pricing is out. We do expect some form of locational benefit. We're not sure who this will apply to, so a bit unknown on that front. In Germany, we expect the capacity market to start in 2028, which is good. We're ready for that. In Texas, we are expecting significant demand increases in the western hub, which is where our assets are located, and Texas being a nodal system, this is really positive for our assets and the prices that they can capture in wholesale trading.

Speaker 1

Finally, in California, we expect to see continued growth in solar, which has been very aggressive. We expect that to continue, and this will in time pass through to favorable threads and significant trading opportunities for batteries. If we move on to Gore Street Energy Trading or GSET, this is a new initiative that we started during this reporting period. What is GSET? It's our in-house optimization platform. We've purpose-built this for battery storage optimization. It's been developed fully in-house by myself and the team, and the underlying ethos is to trust the data and the mathematics. We frequently bring in a lot of market data. We use that data to create very short-term forecasts of key market metrics.

Speaker 1

We then take these forecasts and determine whether we are maximizing asset performance or whether there's opportunities in the market that we're not taking and we can take, and this all flows through directly from the data straight to the assets. We went live with the first assets in October. That was Port of Tilbury and 9 megawatt behind the meter assets, and we currently have 162 megawatts under management, which is around two-thirds of the GB portfolio. In terms of the performance, as we said above, performance has been pretty strong. Over the reporting period here with comparable assets, we've achieved an 11% premium to the market benchmark. I think one thing that we don't capture in this chart is that we're also really looking after the assets now.

Speaker 1

We now have direct control over the assets, and in conjunction with our in-house asset management team, this enables us to make really well-informed decisions on how we use the assets and the weighing up of technical and commercial trade-offs. It's really positive news on that front. Finally, I'll say that the margin of outperformance has only increased post-period, and good success there. That was commercial and GSET, and I think next John is going to talk about the valuations.

Operator

Great, thank you, Alan. If we move on to the NAV Bridge for the period of the 12 months to March 2025, we moved from 107 pence last year to 102.8 pence as reported at margin this year. 5.5 pence was paid in dividends over the period. If we move over to the macro side, we'll go into more detail on some subsequent slides, but just as an overview, lower revenue curves coming in mainly across the GB market led to a 6.1 pence reduction over the 12-month period. Inflation assumptions impacted by circa 1 pence, whilst de-risking of assets coming through the construction phase, coming through to being energized and operational phases through lowering discount rates associated with that de-risking added around 3.2 pence to NAV over the period.

Operator

On the active management side, we had cash generation of 4.3 pence per share, whilst fund operating expenses were 2.7 pence. The pricing achieved for the resource adequacy contract has been separated out here as well compared to the initial assumption to show that this added around 3 pence per share on a NAV basis compared to what we'd assumed we would achieve last year to what we actually achieved, whilst other DCF adjustments added around 0.5 pence overall. In the following slides, we'll go through certain of these assumptions in some more detail. On the revenue curves, as always, these are updated in this quarter, which is an audited quarter to reflect the most recent view from third-party consultants, which we utilize across all the different markets.

Operator

Just to note here that the curves which we show exclude the capacity market and the RA contracts, which we've secured separately through various good auctions or bilateral negotiations with off-takers. Over the period, we saw decreases in revenue curve forecasts. Mainly, this was across the GB market and also in Ireland, where forecasts reduced by short-term decrease in commodity prices mainly. Within the Irish market, as Alan alluded to, we also saw the impact in the reduction of the SNSP scalers, but that was largely offset by the extension of the timing of the DS3 regime, which has been pushed out by a number of quarters. In the U.S., generally, the curves did decline a little bit in line with gas prices.

Operator

Just a note on the GB curve shape going forwards, this reflects not only the recovery in the market, but also kind of a move to 2 hours for certain of our assets, which we're assuming in terms of the augmentations, but also for our Middleton asset as well, which is a pre-construction asset. Moving on to other assumptions. On inflation, this remained largely consistent with those from the interim report for September and the short-term 24-25 figures were viewed from third party, which have been reflected. The long-term inflation rates have been maintained in conjunction with both the kind of valuation and audit partners that we've worked with. Discount rates were reduced in line with the usual approach of de-risking through the construction process through to energization. Just to clarify, those are for those large GB assets which came online, mainly Fermio and Enderby, and also in the U.S.

Operator

through Dogfish and Big Rock projects, which were energized during the course of the last financial year. On a weighted average basis, you'll notice this was larger in change from March 2024, as this kind of offset from the kind of de-risking of assets was largely offset by an increase in discount rates for some pre-construction assets, which effectively, as I said, offset this impact. This has brought these pre-construction assets largely in line with cost and reflects some of the uncertainties on connection dates due to ongoing grid reform. One of the things to flag in terms of the various discount rates, as we mentioned, these have been fully worked through for the period end with the third-party consultants and advisors. On the capital structure and debt side, during the period, we successfully upsized our two debt facilities.

Operator

That is one at the RCF top-tier level and one at Big Rock project level. As you may have seen in previous RNSs, the Santander facility was increased to £100 million from £50 million, and that was during Q3 last year. That was being drawn further to build out some of the GB assets which have been energized during the course of 2024 and 2025. In the U.S., the Big Rock facility was upsized to $90 million shortly after the Santander facility upsize, and that was largely drawn to build out some of the remaining Big Rock CapEx building costs. As we indicated in the R&S we released on Monday this week, we're in the process of reducing now, paying down this debt drawn down to $60 million from the first tranche of the investment tax credit proceeds, which is underway.

Operator

This all leaves us in a position which for the March end period we reported around 17.9% debt to gap ratio when you take into account what was being kind of drawn further since the end of March, but also the repayment of the CIT loan. We're effectively in a position very similar to March end, so it's slightly lower than we were, just around 17% debt to gap ratio. If we just move on to the investment tax credit again, I think we communicated this a few days ago, but just a reminder, these processes were both for Dogfish and Big Rock, which were both completed post-period. The Dogfish funds from investment tax credit were fully received at the time of placed in service, so that was around eight weeks ago.

Operator

The Big Rock proceeds we signed on Friday last week, and they were structured to be received in three tranches. The initial 50% was received a couple of days ago shortly after closing, and the two remaining tranches are due to be received in late Q3 and Q4 this year. That will reflect kind of the fully monetized around $84 million of investment tax credit proceeds from the two projects, which is ahead of the previous guidance of between $60 million and $80 million, which we put out at the corresponding time last year. I think I'll pass on to Pala. Thank you.

Speaker 2

Thanks, John. On the ESG side and matters during this reported period, GSF has maintained a consistent and committed approach to ESG integration across its operations. It has also introduced a new methodology to more accurately quantify the carbon benefits of BAS through energy trading activities as well. It achieved a significant milestone of circa 40,000 megawatt-hours of renewable electricity stored during this year, which is enough to power approximately 14,500 homes in a given year. It continued also with the emphasis on transparency through voluntary disclosures, and this includes TCFD and PRI as well, reinforcing our responsible investment strategy. GSF also acknowledged the broader impact of our portfolio by addressing supply chain concerns with respect to cobalt mostly. We have strengthened our relationship and partnership with Fair Cobalt Alliance for now the third consecutive year.

Speaker 2

Lastly, as part of the FCA sustainability disclosure requirements, the SDR, GSF recently adopted the sustainable focus label as well as of the end of last year, aligning with the end-time greenwashing commitments of FCA. Further details on ESG and sustainability will be fully covered in the reports, the standalone sustainability reports of which we expect to release by end of summer, by September. If we then go to the next slide, I will now be covering a message from the directors and the outcomes of their recent active engagement with institutional investors. Over the past two months, for a period of circa four to six weeks, the board conducted a comprehensive roadshow that resulted in interactions with circa half of the shareholder base of the company.

Speaker 2

The first material point presented by shareholders was the previous structure of the management agreement, the agreement that sets the rules between the company and the manager. Consequently, and on behalf of shareholders' interests, the board and the manager have agreed a substantial review of the terms of this agreement, which include one, the change on the fee base itself, previously being 100% based on NAV and currently now being an average of NAV and market cap. Two, they have also agreed the total removal of any performance fee and takeover fee that was pre-existent on that management agreement. This is really a clear demonstration of managers' full alignment with GSF's investors. One change that we estimate to save the company over £1.1 million per year in expenses if we assume, if we use the figures of this current 2025 fiscal year as a reference.

Speaker 2

A second point on those discussions between the board and the shareholders was the use of the proceeds coming from the tax credits that John just went through there for Big Rock and Dogfish. Directors wanted to understand shareholders' priorities and views on the use of this receivable and then understand how to align those with the company's next steps. The company then has announced that those proceeds will be used in three ways. One, rebalancing the debt facility, really prioritizing the repayment of this $30 million stake immediately. John did cover that as well. Two, distributing it back to shareholders. They have announced a three-piece special dividend to be confirmed following the receipt of the second and the third tranche of the ITC. John went through it as well, and this will be taking place in the next five months.

Speaker 2

The third point, use the proceeds for augmentation of two out of the three GB assets that are selected as strategically eligible. The team will be discussing further details of the augmentation shortly when covering the 2026 steps and strategy. If we go to the next slide then, beyond the roadshow, today the Board of Directors also announced its dividend policy for the year ahead. For context, we start on this slide by reviewing the dividend declared for the 2025 fiscal year. This reported period, obviously, which was 4p per share, including the 1p declared in June as part of the unaudited set of results. This is excluding the three-piece special dividend that will be distributed after the reported period. For completeness, what we're saying here is that this marks a total of 42p per share distributed to shareholders since IPO.

Speaker 2

In total, this company has paid back to shareholders over £120 million. Next slide then, and as for the dividend policy for the year ahead then, the one ending in March 2026, the company maintains its position to align the profile and the quantum of the dividends with operational cash flow rather than NAV like it was done back in 2023 and before. Based on one, a conservative set of assumptions for revenue, two, reflecting the down cycle that we have witnessed in 2025, meaning mirroring the revenues that the portfolio achieved in the last 12 months, and adjusting the portfolio to have an annualized capacity of 600 megawatts, the board has set a minimum dividend of £0.0225 to be distributed during this year. This is a conservative approach, and it's in keeping with the board's focus on sustainable distribution and long-term growth.

Speaker 2

A couple of key clarification points on this dividend policy here. The 600 megawatts adjustment is a reflection of having larger assets such as Big Rock and Enderby, 200 megawatts, 75 megawatts, only generating revenue from July onwards. Obviously, moving forward, those assets will expect to be contributing in revenue for the full 12 months, not nine, but for 2026 year specifically in its dividend policy, the board decided that this was a necessary adjustment. The minimum dividend for the year will be paid at £0.0075 per share starting in Q2 of 2026. This is September end. In Q4, the March end quarter would have any upward adjustments if applicable. If we can now focus on this table on this slide, which is very important, it is an illustrative table that shows four different scenarios when the portfolio captures different levels of revenue throughout the year.

Speaker 2

You can see here that the free cash flow available for distribution goes from £0.0195 on the first scenario to £0.0876 on the last scenario. This is this blue line here. The more conservative revenue figure reflected is £8 per megawatt. Just as a comparison, the current fiscal, and Alan just went through the revenues here, the portfolio secured a £10 per megawatt hour. This will be the second column. While it's the higher revenue figure, the one that you can see here on the right-hand side reflects the revenue secured in 2024 and actually 2023 fiscal year as well, £15 per megawatt per hour. What we're trying to achieve by sharing this table is to make the point that distributions may and will vary materially in accordance with the margin of revenue secured in a given period.

Speaker 2

Those numbers of which you see in the blue line are what the dividends would look like if the board chooses to distribute 100% of available funds when meeting those specific revenues on the very first line. This means that this dividend would then, the dividend cover would then be 1.0x. Another key message on those scenarios is this incremental cash flow from augmentation strategy, the yellow line. In certain scenarios, the augmentation on the two assets of which we expect to complete shortly is expected to increase the free cash flow available to distributions in up to 25%. There's a material increase here as well. Minor note, obviously this table includes a number of assumptions which are all clarified within our materials published today, and the free cash flow illustrated does include the payment to all debt services as well.

Speaker 2

We're talking about cash flow that is fully available for distribution.

Speaker 3

Thank you, Pala. Just a note here, I think this is key. This company, this portfolio has achieved £15 across the portfolio three years ago, £15 two years ago, and then as Pala just went through on the lower end last year between £9 and £10. Here in this table, you can see if the merchant portfolio, which now does have about 30% contracted but still 70% merchant, ranges between these numbers, that will give the board the ability to pay out these numbers. Hopefully this clarifies for the investors how we look at the portfolio both historically and going forward and gives an understanding of how much dividends we'll be able to pay going forward. Thank you.

Speaker 3

A word then on the next 12 months. There are four goals that we've set ourselves that the company will look at and is looking at right now: expand asset base, drive revenue growth, optimize cost efficiencies, and look at mobilizing external capital. First, expand the asset base. There has been a lot of debate in the market for many years about the correct duration an asset should have. If we look across our portfolio, California, we have a four-hour duration, Texas two hours, Germany 90 minutes, and in Ireland we range from 23 minutes to one hour, and in GB we have just over one hour now. For us, the expansion of duration was simple math. It's what's the CapEx going in and what's the incremental revenue in EBITDA that can be made. We have designed all our assets so that they have the ability to be augmented.

Speaker 3

Augmented is not getting rid of cells, it is augmenting, it's putting new cells in place, so preserving the original asset value. The market has shifted dramatically on two areas. One, CapEx. CapEx continues to fall. We've seen a 20% reduction in CapEx over the last year, and we're hopeful it will continue to fall given large supplies coming out of China, those supplies not focused on the U.S. market right now, focused on the European market given the policy environment, and that gives us a very strong opportunity to augment two of our assets initially, so Stony and Ferry, which have land, planning, and grid, putting in place another hour of duration with an estimated CapEx between £18 million and £22 million. The math works for that in terms of incremental revenue, EBITDA, and cash yields.

Speaker 3

It'll be a 12-month process, but in that 12-month process, we're forecasting only 50 days revenue loss from downtime, so a very efficient process, and we'll be using compatible cells with the existing installation. An interesting point in the market that we have been tracking for many years now is to understand when to spend shareholder cash at the most efficient level, and we see that opportunity now initially for Stony and Ferry. The second thing that we're very focused on, you'll hear Alan talk about overall performance in the portfolio, which we're very proud of, £83,000 per megawatt for our operation puts us a good 30% over our peer. Our own trading system puts us 11% over the benchmark, and that system we are pushing to have more and more assets into to enable us to deliver for shareholders that strong overperformance.

Speaker 3

As we look forward, Texas will be coming on stream in the near term and we'll look for other markets over the next 12 months. It is a really interesting time in development of data, of software to drive efficiencies in trading, and we're really able to utilize very good cost numbers, some of the efficiency driven by the large expanse that we see in the technology companies' availability of new solutions for us to use matched with our own human capital and algorithmic knowledge. The third one then, optimizing cost efficiency and availability improvements.

Speaker 3

We are now off scale, so we have one of the largest portfolios globally and one that we can then drive through cost improvements both immediate in terms of working with our suppliers given our scale to be able to get better and better deals, being able to replace components with different components which are immediate cost improvement, as well as look to use our system to be able to drive further and further availability improvements. Every improvement in availability, a 1% improval in availability leads to a 1% improvement in revenue. Critical and key wins for us through the use of this system. Also, the system being integrated with our trading system to be able to increase revenue there. We see immediate cost improvement and we're working on that right now.

Speaker 3

We see availability improvement and we also see improvement in revenue through integration, a very large initiative by us which we'll be talking more and more about quarter on quarter. Finally, it is clear that the listed infrastructure space is under pressure in terms of discounts to share price. That means that equity is not available across the sector, and we do have 494 megawatts of excellent projects which are ready to build. As we look at our portfolio, we're looking at how we rebalance portfolio to be able to recycle capital for, say, one market into another, to continue strong diversification, to have lower volatility in revenue, as well as to bring on strategic partners who can work with us on some of the build-out of these projects. These are conversations which have been ongoing from the manager.

Speaker 3

That is our final area of big focus here for the year as we look at our portfolio to understand the correct situation of that portfolio and the correct partnerships to bring on board for that portfolio. Finally, what would I say? A strong year delivery against the five targets we've set, a strong year in terms of revenue, in terms of revenue per megawatt, sustained growth, and strong returns. The use of technology is becoming more and more important for our portfolio both on trading and asset management. We see enhanced returns as well as cost savings across our portfolio now that we are at scale, giving strong efficiency gains, lowering costs. The continuation of diversification and scaling, augmentation now makes sense and we're engaged in that to build those assets at the cheapest possible CapEx and gaining that incremental revenue. Thank you.

Operator

Thank you. We will now move on to the Q&A section of this presentation with questions that have been submitted through the Q&A function of the chat. Starting off, we have seen the requisition of a general meeting announced this morning, and the board acknowledged this. Would the manager like to comment?

Speaker 3

This is a board matter. The board put out an RNS this morning acknowledging it. There will, I'm sure, be lots of communication around this going forward, so we will leave it to the board to communicate. I would say as a private investor, though, we're always very wary of individual activists and shareholders looking to profit from the long-term value that's been created by the shareholder base, but the board will be engaging around this.

Operator

Thank you. What is the likely total receipt from the sale of the tax credit and when will the final transaction be completed? Yeah, as I mentioned earlier, the two projects, Dogfish secured all of its, it monetized all of the proceeds shortly after we kind of signed the project when the asset was placed in service. We also received the first 50% of the Big Rock proceeds a couple of days ago, having signed on Friday. The remaining two tranches of the Big Rock payments will be in late Q3 and Q4 this year per the agreement, and that will be $84 million in total, which I think per the guidance we previously put out was above the top end of that range. Effectively, the transaction is already completed, as it were. It's just the structuring of the payments, which is to be satisfied in the next five months.

Operator

Thank you. Next question, could you give guidance on what dividend cover would look like over 2026 and 2027?

Speaker 2

We covered that when we were looking at the dividend policy for 2026. Like I mentioned, the Board would like to now keep the dividends fully covered by operational cash flow of the portfolio. It has then set the minimum of £0.0225, thinking that the cover would be at the 1.xx. We have also illustrated that the last quarter of the year will adjust this dividend upwards if applicable, meaning if we see revenue levels going back to what we've seen in 2024, for instance, £15 on the megawatt hour, we could see a dividend going all the way up to £0.097, like that illustration table showed. In terms of dividend cover, the expectation is that this will be 1.0x or higher.

Operator

Thank you. Next, onto revenue, is it not better to bite the bullet on fixed income contracts now rather than trying to beat the market?

Speaker 3

I'll have a go and then Alan and maybe John, but what I would say is through our history, we have achieved far in excess of the fixed contracts that are available. Of course, we're consistently discussing with the market to see what those contracts are, but we have very few periods, and I'm talking months, where we would have achieved below what those fixed contracts can deliver. Again, if we look at £83,000 per megawatt is what we've delivered across the portfolio, a significantly higher number than any fixed contract and in fact, any of our peers. Alan?

Speaker 1

Yeah, I think I'd just add to that. You know, we are, as you say, constantly looking at the market and what's on offer. We are fundamentally absolutely not against signing a fixed revenue contract, and if there was one at the right price, I would absolutely be happy to sign it. Have we seen that price today? No, not yet.

Operator

Thank you. Next, onto augmentation. You mentioned that you want to augment two of the sites in the portfolio. How much will this cost and how will it be financed?

Speaker 3

Yeah, I think we went through this in the presentation. Present guidance is $18 million to $22 million for that augmentation. CapEx is moving pretty heavily. It's absolutely in our favor. We operate, and our colleagues in the procurement team operate, a large supply chain. We're constantly in touch with key suppliers around that pricing. Cell pricing continues to decline very heavily. Augmentation is the addition of new cells, right? We don't have to think about inverters and transformers and the initial civil works. It's all about that cell price, and that cell price is absolutely declining. We aim to capture it now.

Operator

Thank you. Next, what is the current debt level of the company in monetary value, and what is the interest being paid on debt?

Speaker 1

Yeah, as I kind of tried to set out earlier, the current debt level is, if you take into account the kind of CIT repayment down to $60 million, will be more or less in line with what the reported figure was for March end. Around, I think it was around £112 million. On a debt to gap basis, that was around 17.8%. We're there or slightly below there upon repayment of that debt. In terms of the interest paid, there's a kind of on the two different facilities, obviously there's different rates, but we are in around probably between Sonio Plus and SOFR Plus, kind of 300 to 350, and there may be some ratchets involved in terms of the margin on top, but that brings us to currently around 7 to 7.5% all in interest cost.

Operator

Thank you. Next, you said AFIM fee change. You said lots of words like NAV, market cap, and jargon. Could you please talk to what this is in money saved?

Speaker 2

Yeah, sure. As an illustration, what it means is that share price will now affect how that the base that 1% will be applicable. In terms of money saved, if you look at the 2024 figures, the NAV and the market cap for 2025 March end, Gore Street Energy Storage Fund PLC would have saved in expenses $1.1 million on that given year. Obviously, that base is based on the market cap and the NAV moving forward, so it's a reference point. In terms of looking as an illustrative example of the current fiscal year, savings will be over $1 million.

Operator

Thank you. Next question, with private market transactions in the energy storage sector now having occurred close to NAV, do you think the trust is susceptible to a takeover?

Speaker 3

This is an excellent portfolio. It's an excellent portfolio which has been built. Some of the lowest CapEx is achieving the highest revenue. We have an appropriate but not high level of debt, and we're continuing to drive really good efficiencies in both revenue and cost as well as augmentation. We believe that is a strong portfolio. Whether that is susceptible to a takeover or not, I don't know. Our job is to build a sustainable long-term excellent portfolio for shareholders, which is what we have.

Operator

Thank you very much. Next question, are you hedging the investment tax credit payments or taking FX risk, currency risk?

Speaker 1

Yeah, we put in, obviously the first tranche was we're paying down a kind of U.S. dollar denominated facility. I think for the initial Dogfish transaction, we announced that kind of initial kind of hedge at 1.30. We've also kind of hedged the subsequent kind of tranche payment as well, kind of beyond the one that was just received, which was used to pay down the U.S. dollar facility. They were hedged at the same time around two to three months ago.

Operator

Thank you. Next, we have a few questions on, what protection do the assets have to avoid thermal events that have been reported as happening at other BESS locations? Are the Gore Street locations covered by relevant insurance?

Speaker 3

Yeah, it's an interesting question. It goes to what our asset management team are doing, the use of data to understand how individual cells are reacting to individual trading strategies, for instance, or individual environmental conditions. That's part of what we have built and what we are continuing to build. That team have put in place really interesting technologies which manage and monitor, for instance, the changes in air composition in the containers to be able to give us advanced warning of, for instance, difficulties around risk of fire. All of those things have led to a really significant drop in insurance premiums.

Speaker 3

Insurance premiums are a material item of cost in this portfolio, and we believe we have the leading cost on insurance given all the strong work that our asset management team have put in place around the use of technology for monitoring and around the use of technology for data, as well as, I would say, of course, the appropriate safety procedures in terms of the maintenance of these assets.

Operator

Thank you. Next question, what are the near-term actions that will be taken to reduce the share price discount? What are other initiatives above the management fee change which will be taken to reduce costs?

Speaker 3

I think what we went through there in this presentation is we are now off a scale with a well-diversified, off-scale, nearly a gigawatt hour of operation where we will look to push through cost savings in the portfolio in terms of the use of technology, the use of our scale to get better deals from our suppliers, incremental increase in augmentation to bring up to two-hour duration, firstly in GB and firstly in Stony and Ferry. All of these things, I believe, will feed through to an improved share price performance given it is a strongly diversified, high-revenue, low-debt portfolio which is continuing to produce to spec. We would hope that that will feed through to an improved share price performance.

Operator

Thank you. In addition to the debt, are there any preferred shares in issue, and is there any shareholder dilution considered in the next 12 months?

Speaker 2

No, current shares outstanding are all ordinary shares. Therefore, there's no preferred share asset class.

Operator

Thank you. You are saying you will now target two-hour systems in the GB market. Would it not have made more sense just to build two-hour systems from the fund's launch?

Speaker 3

No. Let me qualify that question. It depends on which market you are in. You should build the lowest cost system which generates the maximum revenue for that cost in the market that you are building. For instance, give you an example, our Northern Ireland assets are 23 minutes duration. Therefore, a very, very low CapEx. Why were they 23 minutes duration? That is all the duration you needed to generate the maximum revenue in that marketplace. Up to, I would say, the last six to nine months in the GB market, building more than one-hour duration did not give you an incrementally positive return given the cost of CapEx. What we see now is a really strong driver down in CapEx and therefore the math makes sense. We have four-hour duration in California, two hours in Texas because you get paid for that duration in those markets.

Speaker 3

In GB, we now have an opportunity to build at the lowest cost for our incremental duration, therefore get the best return on invested capital. Alan, do you have anything to add to that?

Speaker 1

No, completely agree with that. We've seen some rule changes this year from NYISO, which do advantage larger durations. As Alex O'Cinneide said, the CapEx being rated is now, now the time to make that decision.

Operator

Okay, thank you. Next, are strategic partnerships planned in all markets? Where do you see the greatest opportunities currently?

Speaker 3

Yeah, I think an interesting one. We're engaged. If we think about, obviously, there's a difference between the markets. There is, of course, when we think we look across the U.S., there's a highly volatile policy environment, I would say. Counterintuitively, we're happy being the incumbent, i.e., we're happy their assets got built at the right time. They're happy we got our ITC. It's unclear to us how much more solar storage and wind will get built over the next few years given this policy uncertainty. That's a complicated market. We see Ireland is a very strong market for us. The extension of the DS3 is really very beneficial to our portfolio. In GB, obviously, we're doing very well and we continue to see upside in that market. Same in Germany. Each of the markets are different.

Speaker 3

In terms of us looking for a strategic partner and us looking to rebalance the portfolio, we are looking to talk to some of the kind of material strategics who could look to us as a good partner to help build out the rest of the portfolio regardless of where it is. We're having those types of conversations.

Operator

Thank you. Coming to sort of the end of the questions now, did I see a note on one of the slides which said the Big Beautiful Bill didn't adversely affect the benefits previously available through the Inflation Reduction Act?

Speaker 3

That is true.

Speaker 1

Yep.

Operator

That's fine.

Speaker 1

Yep, that's right.

Speaker 3

I find it hard to say the name. The Big Rock is forward-looking, not retroactive.

Operator

Thank you very much. Alex, if I can hand over to you for closing remarks.

Speaker 3

Thank you everybody, and thank you for being shareholders. We think it is now a point where we have the right portfolio, the right level of scale, generating a high level of revenue with low cost and low amount of debt. We're looking forward to really drive revenue improvements and cost efficiencies, as well as work with the market to bring the right partners on board to help us complete the rest of the 500 megawatts that we have ready to build. Thank you all.

Operator

That's great. Thank you very much for updating investors today. Could I please ask investors not to close the session as you will now be automatically redirected to provide your feedback so the management team can better understand your views and expectations. On behalf of the management team of Gore Street Energy Storage Fund PLC, we'd like to thank you for attending today's presentation and good afternoon to you all.

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