Gore Street En. Share Chat (GSF)

It will be 8784 this year, because 2024 is a leap year.😂😂😂

LOL! Ali, I let you off its 8760 not 8770!

jr

Indeed, although at £16/ MW /hr (which is the latest earnings rate) the dividend is actually more or less covered.

given the uk revenues have recovered recently i would say an average of £7.5 per MW per Hr seems like the more reasonableaverage (lower estimate) revenue for BESS for next few years.

given gore street intends to have 850Mw by EOY:

7.5*850*8770 = around 55 million minus 20 million in costs (10 for admin and 10 for debt)

so they should be ok but they would need rates to drop in order ot invest more for future growth

Thanks for that. Interesting to see Stiffel add their voice to those calling for a change in dividend policy. The current model - where dividends are determined as a % of “NAV” (quotation marks are deliberate…) - makes very little sense for shareholders. I would like the GSF board to feel pressure from investors over this. And subsequent pressure to deliver operational cashflow such that dividends are properly covered. At the moment they are too focussed on the “NAV”, I believe principally because that is the managers eye view as it drives the managers compensation. It’s time for a change to a methodology that is more focussed on returns for shareholders.

Citywire snippet including brief broker comment

https://citywire.com/investment-trust-insider/news/11-yielding-gore-street-sees-global-revenues-rise-amid-uk-downturn/a2438665

Before somebody gets hot under the collar because of further price falls today ;-)

The share price might be expected to fall as much as 2p today because of going ex-div. Hopefully not but we'll have to wait and see.

Https://www.current-news.co.uk/battery-storage-unit-dispatch-rate-rises-by-47/

"Energy consultant Modo Energy has released data confirming a 47% increase in weekly battery storage dispatched volume compared to eight weeks prior.

In January 2024, National Grid ESO (ESO) relaunched bulk dispatch for battery energy storage units in the Balancing Mechanism (BM) following its closure in December 2023 due to technical issues.

The bulk dispatch functionality allows for more battery instructions to be issued simultaneously.

According to ESO data, approximately half of the battery unit dispatch volume is now being instructed through the Open Balancing Platform (OBP).

The impact of this re-introduction was felt across the battery storage marketplace, both in the increase of weekly dispatches and a newfound lack of correlation between unit size and dispatch rate."

Hope you're right wishihadnt, I'm invested in NESF & SUPR too although not to the extent I'm in here. This has been one of my core holdings for some years now. My average is currently just over 81 so would definitely like to see some upward movement in the sp, I'm confident it will come and in the meantime enjoying the dividends.

I am always heartened to read all the negative posts,when they seem at their most prevelant then invariably the share price is about to recover with better times ahead. That is why I bought a decent chunk here last week and intend to hold it for the long term whilst enjoying the dividends. Did the same with NESF and SUPR for the reasons mentioned,the worst is behind us,onwards and upwards,roll on 2024,25 and 26!

Maybe take a peak at the sector ….. before lambasting individual stocks.

I was tempted this time last year to dip my toes in the water with a small investment, particularly given the yield and relative safety of the propositions put forward by various analysts. I'm glad I didn't. With a reinvested dividend of about 11%, I would still be down 37%. These type of investments remind me ethical funds, most of which are failures. They're hopeless. Unless you see Gore as a charity and the right thing 'for the sake of saving the world' to invest in, I would avoid. Even over 5 years it's down 32%. There's more rewarding ways to invest.

Companies are fleeing LSE because it has low liquidity and investor appetite. but then again LSE also has a terrible level of management who seem to think that investor money is free somehow - or they have 0 growth prospects - one or the other. this is after looking at aroun 400 compnaies on AIM.

Its actually not even the price (although that sounds ridiculous). the board simply refuse to publish the right information (i guess they either feel that we dont deserve it or they would rather not publish this information for whatever reason). this lack of information just makes the stock hard to value, the info is:

-what is the true expected revenue curve for GB post 2025/2026 and why - is there any real justification thought etc for this, if there is no good estimate fo rhtis (and Gore st are using revenue curves to cover themselves) then i would apply a margin of safety and derate UK revenues

- what is the total amount of debt and cash position of gore street after the end of 2024 assuming the projects are delivered on time (remaining ireland, uk, usa projects).

- what is the rate that was agreed with california grid for the cali projects, what is the expected revenue from this fixed component per year

- is it realistic to assume the existing texas and cali curves for future revenues? do they need to be revisited in light of uk market and expected grid saturation in texas imminently.

-how much would it cost to upgrade all uk batteries to 2 hr duration, how much extra revenue might it bring

-what other opportunities exist outside of current regions, especially regarding smaller batteries that can take advantage of algo trading (e.g. germany)

taking all this together i did a rough calculation that if all grids saturate like the UK and all their cells produce a revenue of £5/MW/Hr (which i consider to be the minimum and it is where UK is now)

so if Gore st has 300MW UK, 150MW ERCOT, 200MW cali and 190MW ire by EOY 2024:

£5/MW/Hr * 840 MW * 8770 HR/Yr = £37 mil

debt service 10 mil (120 mil @ 8.5%)

admin costs 10 mil

17 mil a year profits in the worst case - say that the cells last 15 yrs - 255 million with no discount rate

thats the absolute floor with no trading, all grids saturated but also no discount rate. not expecting it to go there but that would probably be 'cheap' and a good margin of safety. this margin of safety is REQUIRED in the absence of the above information from mgmt

Ali,

You, obviously, are not invested in this.

what price would tempt you (after the mea culpa from the board) 10P?

jr

Its really not rocket science. Ancilliary services (balancing grid frequency) is a small but high yield part of the energy balancing market that BESS can store. other mechanisms (which are lower yield or less profitable) are energy arbitrage and or Balancing Mechanism. energy arbitrage is generally quite low profit at the moment and degrades batteries but some of the revenue is from this. the other eevenue is from balancing supply and demand (Balancing Mechanism, henceforth BM).

lets sum up:

-Ancilliary services - saturated and wont come back unless major grid issues occur or massive demand spikes

- energy arbitrage - not very profitable but can generate some profits for BESS - it uses up a single cycle for the cells

- Balancing Mechanistm - henceforth the likely driver for BESS profits in UK - balancing supply and demand between times and regions

- Capacity market - all storage and electricity generators get paid to be available in case of grid failures etc. the latest auction was very favourable in terms of prices but BESS is not the best system for guaranteeing supply since they are only available for short times (especially Gore's cells which are 1 hr or less). this means any capacity which is provided by BESS is 'handicapped' (term is derated). meaning that they only get a fraction of the effective power they can supply since its only for 1 hour or less. - Gore street have just told us that their cells in the UK got around £1 million revenue in the recent auctions and some of this is over more than 1 year, so its pretty insignificant.

so BM plus some arbitrage and CM - how is the grid balanced? NG makes auction slots for supply and demand every 30 mins or 15 mins, their system does not automatically allocate or accept bids/offers hence they find it diffcult to accept many small bids from BESS - its likely this wont be partially fixed until end of the year and fully fixed by end of 2025. this is expected to only increase revenues by maybe 20% once fixed though!!!!

so there really isnt that much additional revenue coming from the UK in the future. you can see the revenue from operators here: https://www.bessanalytics.com/performance

for example in the last month the most profitable operators achieved about £55 k /Mw/Yr this is including a capacity market payment. Gore street will achieve a lower revenue because their cells are lower duration.

for example lets take 55k /MW/Yr and lets say gore st has 300MW in uk which it will be EOY 2024:

55k *300MW = 16.5 million

you can verify by using the other units of

£6.24/MW/Hr * 300MW * 8770 (Hr/Yr) = 16.4 million £/Yr

thats the base case for the UK revenues for Gore street per year - it is likely to be lower (i see £40k/MW/yr on bess stats) becqause gore st batteries are less than 2 hr - something that they chose to do because they said it would allow them to be more flexible in their approach (actually if you think about it this is correct)

Agreed!

Perhaps the other area where some clarity would be helpful is on the usage of BESS facilities by the UK Grid. I haven’t been able to get a very clear answer on exactly what has stopped, why it has stopped and when/whether it will be resumed. GSF is content to make a positive about revenue diversification, but the truth is that this is making the best of a difficult situation that has been forced upon them (& other UK storage providers). I’d be happy to see UK sourced revenues recovering! If anyone has clearer insight into the what/why/when questions, I’d be really interested to hear it.

Below 70p I continue to view this as a highly attractive proposition in a diversified yield portfolio. Rathbones selling is usually the best of buy indicators btw..!

I’ve thought this had bottomed a few times so afraid it’s the wider picture (in particular the UK) that’s affecting the SP. But I’m happy with the diversity GSF has and will be watching to see the difference the packets due to come on make. There are times when you just enjoy the divi and wait…

Well cash generation is more interesting than the NAV, but unfortunately the company uses the NAV to set dividends. From the RNS 22/3/22: "if the average Net Asset Value per Ordinary Share during a financial year is 107 pence per Ordinary Share or greater (but less than 114 pence) the target dividend for that financial year will be 7.5 pence per Ordinary Share".

So, given the NAV has now dropped to 111p from 112.9p, it looks like we'll be staying on 7.5p for the foreseeable. That's still well over 11% yield though and, as you say, plenty more assets coming on stream in the current year.

All looks good to me, with the dividend confirmed at 2p as expected. Also good news that there is stronger commitment in language on additional energisation this calendar year, for both UK and California. If/when these projects are delivered, cash generation (which I find MUCH more interesting than the NAV) will be increased materially.

Update more or less as expected, and as provided early Feb. A great 12% yield atm

There we go.

Time to add a few more ... as this low valuation will not continue for long surely?

jr

Electricity prices easing but it won’t last. Much oversold

I'm guessing that this negative price action is because the march update is a bit later than recent years. However, we only had reassurance a month ago, and a healthy picture was painted.

So decided that this was a good place for a small top up.

Expect dividend announcement this week and a strong correction. We shall see.

GLA

Nala,

No, we don't know. It was 9th of March last year, so I assumed 8th or 11th being closest.

Could well be Thursday!

jr

Do we know its Monday? Wasnt it a Thursday last year?