Gore Street Energy Storage Fund H1 Earnings Call Highlights

Gore Street Energy Storage Fund (LON:GSF) used its interim results presentation for the six months ended September 30 to highlight a sharp net asset value (NAV) decline driven primarily by weaker third-party revenue forecasts in key markets, while pointing to high fleet availability, growing contracted revenues, and plans to augment select UK assets as offsets to a tougher merchant pricing environment.

Interim snapshot: NAV down, dividend aligned to cash generation

Management reported NAV per share of just over 90 pence, describing the decline as largely the result of lower forward revenue curves in Great Britain, California, and Texas. CEO Alex O’Cinneide said Gore Street uses multiple energy research houses, relies on their mid-case forecasts (often averaged), and updates portfolio valuation accordingly. He characterized the revised outlook as “in essence, driven by a victim of the success of energy storage,” pointing to rapid battery buildouts in several markets that are pressuring medium-term revenues.

The fund reported £16.7 million of revenue for the period and just under £9 million of EBITDA. Operational capacity exiting the period was 643 MW, with 94% availability, which management described as market-leading. Gearing was cited at 18%, with management reiterating a preference for low leverage given the merchant nature of the asset class.

As announced alongside the results, the board declared an interim dividend of 0.69 pence per share, with management emphasizing a revised dividend policy tied to underlying portfolio cash generation rather than a fixed payout level.

Revenue volatility remains, but diversification and contract mix are central themes

Investment manager representatives emphasized the volatility inherent in battery storage revenue. On a portfolio basis, quarterly revenue was described as low at about £17,000 per MW per quarter, which management said was the second-lowest quarterly level since September 2020 (a period it noted was followed by a recovery).

Great Britain represented about 40% of average capacity in the quarter and delivered low revenues, but management highlighted diversification benefits, with stronger contributions from Germany (around £40,000 per MW per quarter) and Ireland (around £30,000 per MW per quarter). Texas was described as remaining below £10,000 per MW per quarter during the period.

On a geographic revenue split for the half year, management said total revenue was about £16.74 million, with Great Britain generating £6.7 million (around 40%), Ireland contributing £3.9 million, and the balance coming from Texas, California, and Germany. The company noted that U.S. contributions were below expectations, citing lower peak demand and weaker spreads than originally anticipated.

Contracted revenue was described as in the mid-20% range for the portfolio, including capacity market revenues in Great Britain and Ireland and the resource adequacy (RA) contract in California. Management argued these contracted components are “stackable” with merchant revenues rather than tolling arrangements that hand control to a third-party optimizer. The company said it continues to monitor tolling and floor agreements but has not entered them to date, citing unattractive economics compared with current merchant performance.

NAV bridge: revenue assumptions drove the biggest move since IPO

In a detailed NAV bridge, management said NAV fell 11.7 pence over the six months, from 102.8 pence to 90.1 pence, calling it the most significant single-period movement since the 2018 IPO.

• Portfolio returns: subdued revenues contributed about +1.5 pence to NAV.
• Revised revenue assumptions: a -10.2 pence impact, identified as the primary driver.
• Discount rates and OpEx: about -1.4 pence, reflecting U.S. discount rate adjustments and updated operating cost forecasts.
• Fund expenses: about -1.2 pence, including PLC expenses and interest.
• Dividends paid: -2.0 pence during the period (covering the quarters ending December 2024 and March 2025, as described).

Management said the valuation process continues to rely on third-party mid-case revenue forecasts for long-term projections, with some near-term adjustments where the trading team believes it has better visibility. In the U.S., management cited mild weather, ancillary services saturation in California, reduced volatility, and increased solar in Texas as factors behind weaker near-term pricing and fewer scarcity events. The fund said it applied manual reductions to revenue curves for 2026 and 2027 for CAISO and ERCOT before reverting to longer-term third-party trends.

The average discount rate was stated as 10.2%. Management also discussed sensitivity ranges, including that a 1% change in inflation or discount rates had a symmetrical impact of roughly 12–13 pence per share on NAV, and that a 3% FX move affected NAV by roughly 2 pence.

Operations: U.S. projects online; Enderby still progressing; GB augmentation underway

On the operating portfolio, management said Big Rock in California and Dogfish in Texas were brought online during the period. Big Rock began operating in late April and started accessing its RA contract from August 1, while Dogfish was energized and achieved COD in spring. The company said Enderby (referred to as “NRB” in parts of the presentation) still requires further work to enable access to the full revenue stack, describing it as a complex grid-code compliance process behind a tertiary connection.

The fund also highlighted a focus on analytics and monitoring tools to improve response to faults and drive down costs. Management said enhanced fire-safety monitoring contributed to more than £600,000 per year of insurance savings across the portfolio.

In Great Britain, management said it has begun augmenting two assets:

• Stony (80 MW)
• Ferrymuir (50 MW)

The company said these projects were designed for “fast augmentation” by adding DC capacity without changing inverter or control capability, which it believes reduces complexity and avoids new DNO/grid interface requirements. The company expects the two assets to move to two-hour duration and target going live around autumn 2026, citing declining CapEx and performance outperformance of two-hour assets compared with one-hour assets as key drivers of the timing.

Capital allocation and strategy: recycling, ITC monetization, and LDES option at Middleton

Management said it ended September with £50.5 million of cash and £41.7 million of undrawn debt capacity. It also reiterated plans to recycle capital by selling or co-investing in pre-construction assets and disclosed it has appointed sell-side advisers for the sale of the 20 MW German asset, Cremzow, and some pre-construction projects.

The company discussed monetization of U.S. investment tax credits (ITCs) for both Dogfish and Big Rock, saying proceeds were received above prior guidance. It said the final tranche is held in a lender-controlled account pending standard project financing conditions, and that release of those funds would trigger payment of a further 1.5 pence special dividend.

Management also positioned the Middleton project as a significant opportunity, stating it has submitted the site to Ofgem’s long-duration energy storage (LDES) process. If successful, management said Middleton would be a 100 MW, eight-hour system eligible for a 25-year cap-and-floor framework, which it said could transform the contracted revenue profile of the Great Britain portfolio.

In Q&A, executives also addressed discount-to-NAV concerns, with incoming chair Angus emphasizing improved transparency and governance and noting that share buybacks were among “mechanics” the board could consider as part of ongoing strategic work, while cautioning that sector-wide sentiment has affected multiple trusts.

About Gore Street Energy Storage Fund (LON:GSF)

About Us: Gore Street Energy Storage Fund plc is London’s first listed energy storage fund, launched in 2018. The Company is the only UK-listed energy storage fund with a diversified portfolio across five grid networks. The Company is one of the principal owners and operators of battery storage facilities in Great Britain and Ireland and owns and operates facilities in Western Mainland Europe and the US. It is listed on the Premium Segment of the London Stock Exchange and included in the FTSE All-Share Index.
Energy storage technologies enhance power system stability and flexibility and are key tools for balancing out variability in renewable energy generation, facilitating the integration of more renewable energy supply into power grids.