Gore Street's Drumkee BESS, in the Republic of Ireland. Image: Gore Street.
Gore Street Energy Storage Fund has acquired a 200MW battery storage project in development by Kona Energy.
It marks the stock exchange-listed energy storage investment fund's single largest project acquisition to date, bringing its total portfolio of contracted or operational battery energy storage system (BESS) assets to 898MW.
The project is in Heysham, Lancashire, and will be connected directly to National Grid’s transmission network. Kona Energy got planning approval in May this year and at the time said the BESS will help increase utilisation of energy from six offshore wind farms, which connect to the grid nearby.
The developer said the asset will also perform reactive power services and provide inertia to support the stability of the local grid.
Kona Energy founder Andy Willis said battery storage assets could help reduce curtailing of renewable energy across the country – highlighting that nearly a billion pounds was spent in 2021 curtailing wind and other energy sources that not only could have been used but was ultimately replaced on the grid with fossil fuels.
The Heysham project is part of a 1GW pipeline that Kona Energy is aiming to develop.
Gore Street pointed out today that being connected to the transmission grid and not to the distribution network opens up additional revenue opportunities and this is the company’s second transmission-connected asset after Enderby, a 50MW project acquired in mid-2021.
“We are encouraged that an asset of this scale will benefit from being connected to the main transmission network, providing attractive running cost savings and potential additional revenue streams,” Alex O’Cinneide, CEO of Gore Street Capital, which manages the fund, said.
“We remain very selective on new acquisition opportunities focusing on those, such as this project, with significant cost and revenue advantages.”
Grid connection and land rights have also been secured and it is expected to be connected to the grid no later than the fourth quarter of 2026. However, Gore Street Capital wants to accelerate that start date, provided that doesn’t bring up the EPC costs of the Heysham BESS.
Portfolio diversification across high-growth UK, Ireland, Europe and North America markets
Gore Street Capital reported surging revenues for its 2021 financial year, as reported by Solar Power Portal in late July. Gore Street Energy Storage fund’s EBITDA went up to £23.3 million as of 31 March 2022, from £2.9 million in the previous year.
It said revenues for battery storage had been more than 68% higher on average in the 2022 fiscal year than in 2021 and O’Cinneide said Gore Street Capital’s strategy of optimising Capex of its portfolio was working to increase “both performance and profitability”.
Nevertheless, while Britain’s market continues to be attractive for battery storage, and Gore Street has fixed price EPC contracts in place for all projects under construction in Britain, the fund’s reach has been extended beyond the market it started off in, adding to its portfolio in Ireland, Germany and the US.
The CEO, who spoke with Energy-Storage.news about Gore Street’s international expansion in April, said the portfolio benefits from diversification across the four key high-growth markets, adding that the “strategy of avoiding country single risk is clearly of benefit to our shareholders given recent events.”
Gore Street said it is pricing potential acquisitions with IRRs that are at the upper end of the fund’s targeted 10% to 12% range and is targeting 7% NAV yield annually. The fund's market cap stands at £541.57 million as of the time of writing.