Gore Street Energy Storage Fund PLC (LSE:GSF), the energy storage fund, said prices for its services are hitting record levels.
In a trading update, the company noted that in the final quarter of 2021 three of the company's sites were ranked among the highest revenue-generating assets per megawatt-hour (MWh), according to Modo Energy, a specialist independent data provider for the energy markets.
In January 2022, the company's assets were again listed as the best-performing assets for the month, when Breach Farm and Lower Road ranked as the top two highest revenue assets on both a MW and MWh basis.
All of these assets benefit from frequency contracts, for which prices have recently reached record levels sustained at about £25 per MW per hour, delivering returns that are significantly above the company's base case across Gore Street's Great Britain (GB) operational portfolio (110MW) for the relevant months, the company told investors.
The Modo Energy publication confirms that shorter duration battery systems are achieving the same (or higher) levels of ancillary revenue when compared to sites with longer duration. As shorter duration battery systems require lower capital expenditure, the company is able to commit less capital while capturing the same (or higher) level of revenues, maximising profitability. Currently, the majority of the GB portfolio has a duration of circa 1-hour and the company expects to increase sites' duration when required to meet its investment goals.
During the final quarter of 2021, energy markets in Britain experienced historic highs in energy prices as well as volatility. The continuous scale-up of renewable energy generation and the consequent need for grid flexibility to support such growth suggests that the market fundamentals will remain supportive, thus sustaining high levels of volatility throughout 2022, Gore Street said.
"Time and again, the company has proven its ability to acquire attractive assets at favourable terms. We believe Gore Street's acquisition price discipline, together with our leading operational and development expertise are the keys to unlocking long term outperformance from this asset class,” said Alex O’Cinneide, the chief executive officer of Gore Street Capital.
“Across GB, the company is seeing pricing for its services reach all-time highs from frequency revenue stream opportunities which independent commentator Modo Energy has shown resulted in leading asset performance during past months. Meanwhile, we continue to see extremely attractive significant acquisition opportunities for the company not just in GB and Ireland but also internationally, particularly in European and North American markets and look forward to providing an update in due course," he added.