20 October 2021
Balancing and Baseload Prices Reach Record Highs
Compelling Trading Opportunities Created by Present Energy Market Dislocations
Gore Street Energy Storage Fund (GSF), London's first listed and category defining energy storage fund supporting the transition to a low carbon society, is pleased to announce that in September those of the Company's GB storage assets that participated in the actively-traded GB power markets generated revenues nearly two times their September forecasts. This is due to increasing GB prices and price volatility and the ability of the Company's storage assets to respond to the opportunities that the current market presents; which conditions are expected to continue in the short-term.
September was a strong month not only for Great Britain's energy markets and but more widely across Europe, with record power prices recorded in both the UK and Europe. Increasing price levels are expected to continue through October and beyond, driven by rising natural gas prices, limited gas storage capacity, low wind conditions, colder temperatures and increasing demand as winter approaches and economies recover. These conditions are also increasing pricing volatility, creating power trading opportunities. The Company's assets are among the most technologically advanced and responsive on the UK and Irish grids, and as such are well placed and capable of both filling needs in the UK and Irish markets and benefitting from the increased volatility in the energy markets.
Dynamic Containment (DC) and Balancing Mechanism (BM) are two of the main revenue streams that make up the Company's revenue stacking strategy. Whilst DC is one of the National Grid's frequency response services designed to be fast-acting after a significant frequency deviation, BM is the platform used by National Grid to buy and sell electricity from market participants to manage system constraints and the overall energy balance in real time. EirGrid, the electricity system operator in Ireland, offers a similar balancing mechanism for the Irish Grid.
Prices in the UK Balancing Mechanism hit a record high of £4,038/MWh in early September. The last time the market saw similar price levels was in January 2021, shortly after a dramatic jump to £2,750/MWh, which, at that time, was then the highest level in nearly 20 years. Similar trends could be observed in the Irish market, where September imbalance prices reached €4,680/MWh during evening peaks.
With increased pricing and volatility, several of the Company's storage projects began trading in the GB markets, with the result that September revenues for those projects were nearly two times more than they were forecast to earn, had they relied on DC revenues. The Company notes that the industry consensus is continuing volatility and high prices throughout the Winter, driven by the factors described above and tight capacity margins relative to peak demand. National Grid ESO has warned of tight margins due to supply uncertainty, predicting a base case de-rated margin (the amount of supply expected to be available against underlying peak demand) of 4.3GW or 7.3%, the lowest in decades.
Such price volatility, rather than high base prices, is an important driver of trading opportunities in energy markets, which will benefit Gore Street as it is well-positioned to capitalise on the trading opportunities that the market currently presents.
Alex O'Cinneide, CEO of Gore Street Capital, the Company's Investment Manager, commented:
"It is a critical time for the energy infrastructure systems of the GB and Irish grids as they continue to face new challenges to deliver consistent energy supply, and meet our important obligations towards further onboarding intermittent sources of renewable power. We are only at the start of the growth curve in our industry, as energy storage continues to play an increasingly vital role in balancing energy systems.
Gore Street's portfolio of technologically advanced assets uniquely combined with our in-house expertise of engineering and energy markets, means that we are well positioned to capitalise on the highly attractive pricing available for our services, just as we did when we took first mover advantage and moved our GB portfolio into Dynamic Containment contracts during Q3 2020. We will continue to monitor closely the situation in the energy markets going forward over the Winter months and shall optimise revenue stacking strategies to create additional value for our shareholders."
For further information:
Gore Street Capital Limited
Alex O'Cinneide / Maria Vaggione
Tel: +44 (0) 20 3826 0290
Shore Capital (Joint Corporate Broker and Joint Bookrunner)
Anita Ghanekar / Rose Ramsden /Iain Sexton (Corporate Advisory)
Fiona Conroy / Henry Willcocks (Corporate Broking)
Tel: +44 (0) 20 7408 4090
J. P. Morgan Cazenove (Joint Corporate Broker and Joint Bookrunner)
William Simmonds / Jérémie Birnbaum (Corporate Finance)
Tel: +44 (0) 20 7742 4000
Buchanan (Media enquiries)
Charles Ryland / Henry Wilson / George Beale
Tel: +44 (0) 20 7466 5000
Email: [email protected]
|JTC (UK) Limited, Company Secretary
|Tel: +44 (0) 20 7409 0181
Notes to Editors
About Gore Street Energy Storage Fund plc
Gore Street is London's first listed energy storage fund and seeks to provide shareholders with a significant opportunity to invest in a diversified portfolio of utility scale energy storage projects. In addition to growth through exploiting its considerable pipeline, the Company aims to deliver consistent and robust dividend yield as income distributions to its shareholders.
The Company targets an annual dividend of 7.0% of NAV per Ordinary Share in each financial year, subject to a minimum target of 7.0 pence per Ordinary Share. Dividends are paid quarterly.
This announcement has been issued by, and is the sole responsibility of, Gore Street Energy Storage Fund plc (the "Company").
This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for shares in any jurisdiction in which such an offer or solicitation is unlawful.
The information and opinions contained in this announcement are provided as at the date of the announcement and are subject to change without notice and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein.
The information in this announcement may include forward-looking statements, which are based on the current expectations, intentions and projections about future events and trends or other matters that are not historical facts and in certain cases can be identified by the use of terms such as "may", "will", "should", "could", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "believe" (or the negatives thereof) or other variations thereof or comparable terminology. These forward-looking statements, as well as those included in any related materials, are not guarantees of future performance and are subject to known and unknown risks, uncertainties, assumptions about the Company and other factors, including, among other things, the development of its business, trends in its industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur and actual results may differ materially from those expressed or implied by such forward looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements.
 There can be no guarantee that the current pricing and market trends will continue.
 There can be no guarantee that the current pricing trends will continue.
 Based on unaudited figures. No statement in this announcement is intended as a profit forecast or estimate for any period.