viewGore Street Energy Storage Fund PLC

Gore Street Energy Storage Fund aims to generate solid returns for investors

  • Fast-growing energy storage fund 
  • Demand is driven by fossil fuel decommissioning
  • Aim is to generate a 7% dividend yield for investors
  • Shares trade at a modest premium to NAV
National Grid -

It’s always good when you have people trying to give you money and pretty rare too

Chief executive Alex O'Cinneide

The recent £3.5mln fundraiser by the Gore Street Energy Storage Fund PLC (LON:GSF) was notable in that it was the result of “inbound institutional interest”.

In other words, the firm received an unsolicited offer of cash from the investment community that also had the effect of offering third-party validation of the business model.

“It’s always good when you have people trying to give you money and pretty rare too,” said the company’s founder and chief executive Alex O'Cinneide.

Gore Street provides energy storage for the National Grid and its equivalent in Ireland using nothing more sophisticated than the lithium-ion battery technology that powers your phone or electric cars (but on a much larger scale).

Demand is driven by fossil fuel decommissioning

Demand is driven by the decommissioning of fossil fuel and nuclear facilities and the switch to green energy sources, which are now responsible for 40% of UK’s energy requirements.

The unpredictability of the wind and solar means there has to be infrastructure to store electricity in times of plenty that feeds it into the system to balance the grid as well as contributing at times of peak demand. 

“Without assets such as ours, renewables would not work; the grid would fall over,” said O'Cinneide. “Our assets become the stabilisation force.”

Gore Street, which has operations in the UK and Ireland, has seen its asset portfolio grow from 10 megawatts (MW) on its London Stock Exchange listing in spring 2018 to 189MW today.

Here’s the scale of the opportunity. The total cumulative capacity of battery storage planning applications has soared from nearly 6,900MW a year ago to more than 10,500MW today – enough to fully charge more than a million electric vehicles (EVs).

Industry experts see the potential for at least 30,000 MW in additional installations if the UK is serious about reaching its long-term climate targets.

O'Cinneide and his team are bringing on storage facilities as quickly as they can. Having completed projects in Tilbury, Essex, and London, it has a series of larger operations due for completion in 2021.

“The Grid wants to see people with bigger assets being able to provide a service. It wants massive growth,” said O'Cinneide.

Happy to increase its footprint 

Outside its core geographies of the UK and Ireland, the company is happy to increase its footprint in any one of the 37 free, developed and democratic economies of the OECD.

While undoubtedly providing an important service, Gore Street’s aim in doing so is to deliver a healthy return for its investors in the form of a 7% dividend yield. The interim payout of 4p a share puts it on track to hit its target for the year to March 31.

The shares – currently changing hands for £1 each – trade at just under a 5% premium to Gore Street’s net asset value.

That’s not bad. However, you’d expect wind infrastructure funds, which admittedly have a longer track record than storage companies, to trade at a 20% premium to NAV.

Upward revaluation?

So, there may be some upward revaluation of the shares once the investment merits of energy storage are fully understood.

“If an investor has a holding in a wind yield-co or a solar yield-co they should also have an investment in us,” said O'Cinneide.

“We are own long-dated assets and we are managing them to meet a critical need. This allows us to generate strong cash flow allowing us to pay a sustainable, attractive dividend.”

Quick facts: Gore Street Energy Storage Fund PLC

Price: 99 GBX

Market: LSE
Market Cap: £48.44 m

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