Member Info for clissold345

The Oak Bloke has had another go at predicting GSF revenue in future years:

https://theoakbloke.substack.com/p/i-offer-nothing-but-blood-tears-and

Krustysmegma, GSF love their NAV calculation. They repeated "target dividend = 7% of NAV" for years, almost as if it was set in stone. I'm glad they gave it up. The stupid thing was adopting it in the first place.

Krustysmegma, yes I hope 4p a year is the minimum GSF will pay. From the last Annual Report Total Fund EBITDA was £20.2M (that's what they have to pay dividends). 4p a year costs about £19.4M. Unfortunately GSF have few contracts, so theyre exposed to variable rates. I believe ERCOT rates have been poor in the current H1 but GB revenue in H1 will be higher than H2 in the last financial year. The H1 Total Fund EBITDA may not cover a 2p dividend.

Chris1979, thanks for the DS3 link. I don't understand the details. It sounds like lower IRE revenue than expected this year, with the possibility of more cuts (big cuts, small cuts?) next year. "... Hence, further consultations are on the horizon, and the threat of further cuts in October 2025 remains."

The October factshheet is now available. If you sign up for notifications you get an email when documents/factsheets/RNSs are published.

I noticed this: "IRE: Revenue from the Irish portfolio with a DS3 uncapped contract, 100 MW/ 47.3 MWh, was affected by the altered Temporal Scarcity Scalars, which affected DS3 prices over the period. Porterstown I was unaffected by the change as it holds a DS3 capped contract." "affected" presumably means lower revenue? And that means lower revenue in October, and in the future, for those IRE assets?

Jrlse, the problem that GSF has is that BESS rates are unpredictable. It's not clear that GSF will be able to pay 7p a year long-term (=at least five years). PS. I'm assuming GSF will get the ITC cash.

I'd expect the Oct factsheet to be published by mid Nov. No sign of it yet though. In the Capital Markets presentation dated 6th Nov 2024 they said Big Rock and Dogfish were both on schedule.

As far as GSF is concerned the video just repeats info that was in the 18th Oct RNS. It's of no importance.

The Capital Markets presentation is now available on the GSF website. They said in the RNS announcement "No new material information will be disclosed" but I think they have given some info that they have't given before. Eg "ERCOT summer revenue was lower than previous years ...", which we already knew, thanks to Modo Energy.

In fact the July ERCOT data is already out. The article is partly subscriber only. I'm not a subscriber. The July rates were poor. It's possible that ERCOT revenue in the current financial year will be much lower than GSF were expecting.

https://modoenergy.com/research/ercot-july-2024-battery-energy-storage-revenues-owners-day-ahead-real-time-arbitrage-dart-optimization

@broomtree. Yes I've learnt a lot from the way the Oak Bloke analyses GSF. He thinks that high temperatures in ERCOT will mean the ERCOT rates hold up this year. He may be right. I think GSF are expecting £200K/MW/year in ERCOT until the end of this calendar year and then they're forecasting falls next year. Let's hope Modo Energy continue to publish the ERCOT data each month (and make it freely available).

The Modo Energy ERCOT info is freely available online (eg see link below). I looked at an article dated 19th Sept 2024. ERCOT rates are clearly volatile. Eg Modo Energy give average rate in June 2024 = $45/kw/year. Average rate in May 2024 = about $155/kw/year. According to Modo Energy June 2023 to Sept 2023 were all good/very good months. Let's hope July 2024 to Sept 2024 (and beyond) were all good/very good months. (I believe this data is not yet publicly available - though GSF must know it.) Modo Energy say that at this point in calendar year 2023 (with data available for Jan to June) cumulative revenues were more than 4x what they are in calendar year 2024. I find this worrying - but a few very good ERCOT months could greatly increase cumulative revenues - as happened last calendar year.

https://modoenergy.com/research/ercot-june-2024-battery-energy-storage-revenues-owners-ancillary-services-arbitrage-bess-index-nowcast-eolian-non-spinning-reserve

A Citywire article "Gore Street jumps as California contract quadruples cashflows" published today says this (see quote below). GSF were forecasting falls in ERCOT rates next year (see Figure 9 in the last annual report) but it would appear the falls have already started. As far as I know GSF have not yet given this info to their investors. Why not?

"Deutsche Numis analyst Andrew Rees said the timing of Gore Street’s new contract was helpful as revenues from Texas, which represents 15% of the portfolio by capacity, were down significantly year-on-year according to the Modo index.

‘This weakness in Texas and the implications for earnings and dividend security represents a key reason why shares have drifted lower over recent months to trade at a 49% discount to the June NAV (13% yield), based on yesterday’s close.’"

I'm no expert in BESS. Presumably the "imminent reduction in DS3 tariffs" is reflected in Figure 9 in the last annual report? However, I think the GSF managers could do a better job in highlighting the main risks to revenue.

After Dec 2026 rates in all regions are forecast to settle at about £80K/MW/year. Current assets + Enderby (57MW) + Dogfish (75MW) + Big Rock (200MW) = 753MW. So after Dec 2026 that will be annual revenue from those assets of £60.2M. As chris1979 said, take operational EBITDA to be 68% of that = £40.9M. A 7p dividend costs about £36M a year. So a 7p dividend will be covered.

@chris1979, could you check your calculations? Look at Figure 9 in the last annual report. ERCOT rates are forecast to drop to £125K/MW/year in Dec 2025. NI rates are forecast to drop to £75K/MW/year in Dec 2026. CAISO rates are about £110K/MW/year until Dec 2026. What will annual revenue for current assets + Enderby + Dogfish + Big Rock be after Dec 2026? If I have energy later in the week I'll work it out.

@Richard08, thanks for prompting me to look at the figures. Dogfish will be 75MW so if we assume £110K/MW/year, that will be revenue of £8.2M during its first full year of operation. It's a pity the rate wont be £200K/MW/year any more!

Look at Figure 9 in the last annual report. They're forecasting ERCOT rates falling to about £125K/MW/year by Dec 2025. Does that apply to existing assets and new assets? They've got CAISO rates at about £110K/MW/year until Dec 2026 but they say that that excludes the Resource Adequacy Contract. Is that some kind of temporary higher rate for new assets? I haven't attempted to research this. Why can't the GSF managers give more detail about revenue estimates?

The September factsheet includes this: "21 containers have arrived on-site at the in-construction 75 MW / 75 MWh Dogfish project in Texas. The asset remains on track for energisation in February 2025. Similarly, the 200 MW / 400 MWh Big Rock project in California, remains on track for energisation in December 2024."

Energisation of Enderby is delayed. Can't they give the month and year instead of saying "FY24/25 Q3"?

Https://theoakbloke.substack.com/p/money-to-be-made-over-at-gore-street