Gore Street Energy Storage Fund (GSF) , London's first publicly listed energy storage fund, announced that its California-based asset Big Rock has secured a Resource Adequacy contract with J. Aron & Co, a subsidiary of Goldman Sachs. GSF invests in a diversified range of utility-scale energy storage projects in Europe and the US.
The 12-year fixed-price RA contract is worth over US$14m annually and is scheduled to commence in the summer of 2025. GSF said the contract is 'fully stackable', allowing for concurrent revenue streams across wholesale trading and ancillary services.
California's RA programme aims to secure sufficient generation capacity to meet the state's future energy requirements. Notably, this includes energy storage solutions to ensure flexibility and reliability of supply. California is aiming for net zero by 2045, and is a leader in solar generation with 20GW of installed capacity, necessitating grid-scale energy storage.
The programme requires load-serving entities to demonstrate they have enough capacity through RA contracts to cover forecast peak demand, plus a reserve margin. GSF's RA contract requires a minimum duration of 4 hours, hence Big Rock will allocate 100 MW of its 200 MW total capacity.
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Gore Street Energy Storage Fund scores a major contract in California for its 200 MW Big Rock asset. The 12-year fixed-price contract will add US$14m of annual revenue in addition to being 'fully stackable' simultaneously with other revenue streams, similar to contracts in the UK Capacity Market. The RA contract should materially boost GSF's cashflow while further diversifying and derisking its portfolio, as well as supporting long-term dividends.
The contract is an inflection point for GSF's revenues, and should together with other contracted cashflow, boost the company's turnover 4x over FY24. It marks GSF's entry into California's CAISO market, and is by far the largest long-term revenue generator for GSF to date, utilising its largest asset to deliver significant annual revenue with excellent visibility over 12 years.
Gore Street's 200 MW Big Rock asset was acquired in February 2023, and is on track to come online by December 2024. The RA contract should cover up to 40% of Big Rock's total expected revenue over its 12-year duration. Additionally, the long-term fixed-price structure of the contract should facilitate securing project-level debt.
In its most recent full-year results, GSF reported a 5.5% annual increase in revenues to £41.4m, and an operational EBITDA of £28.4m, up from £27.8m LY. Dividends declared amounted to 7.5p/share, reflecting a yield of 11.6%, up from 6.9% LY. Operationally, GSF's energised capacity rose 45% to 421.4 MW, driven by the successful activation of the Stony and Ferrymuir projects.
GSF's financial position remained strong with £60.7m in cash eq and £58.6m in available debt headroom, sufficient to meet all contractual obligations and support further portfolio expansion to over 750 MW.
GSF shares rose 6% on today's announcement.
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