Gore Street Energy Storage unveils capital allocation strategy

(Sharecast News) - Gore Street Energy Storage Fund unveiled a comprehensive capital allocation strategy aimed at enhancing shareholder value on Wednesday, following the completion of an independent review led by Alexa Capital. The London-listed firm said the plan included the monetisation of its pre-construction portfolio, asset augmentations to boost revenues, internalisation of trading functions, and a broad cost-reduction drive.

It said it would seek to sell or form co-investment partnerships for about 495 MW of pre-construction battery energy storage assets across Great Britain, Ireland and Texas.

The assets represented around 8% of net asset value and included fully permitted sites with secured grid connections.

Active negotiations were already underway, and the board said it expected to realise value at or above carrying value.

Proceeds from the sales, along with existing cash and available debt facilities, would fund a two-phase augmentation programme to increase the duration of key operational assets.

The first phase, planned for 2025-2026, would upgrade the Stony 79.9 MW and Ferrymuir 49.9 MW sites from one-hour to two-hour systems with limited downtime.

A second phase in 2026-2027 would target further upgrades at Enderby, Mullavilly, and Drumkee.

The company said longer-duration assets were expected to deliver materially higher revenues - up to 37% more than one-hour systems in the UK - thanks to evolving market structures and lower battery capex.

It said the review by Alexa Capital confirmed that enhancing duration offered a clear path to improved cashflow and value creation.

"The realisation of the pre-construction assets will feed into the second augmentation phase," said chair Patrick Cox.

"Post-phase one augmentation, 62% of the operational GB portfolio will be two-hour duration systems.

"We are also exploring ways to take advantage of maturing markets for contracted revenues, to provide downside protection for cashflow and dividends while preserving upside opportunities."

The board said the strategy also included a continued rollout of Gore Street's proprietary trading platform, GSET, which now managed much of the GB portfolio.

Assets under GSET management outperformed the GB Modo benchmark by 11% during the 2025 financial year.

The company said greater adoption of the platform was expected to improve trading performance and cash generation further.

Gore Street said it also planned to explore long-term revenue hedging products, including tolling and floor-price arrangements, to reduce earnings volatility and support sustainable dividends.

The board viewed that as an opportunity to increase asset valuations and unlock more favourable financing terms.

Cost reduction was another key priority.

The company said it had already negotiated a lower fee with the investment manager and was now targeting lower borrowing costs, especially as projects matured.

It was also working on refinancing the Big Rock construction loan and upgrading its software platforms to drive operational and maintenance efficiency, with the goal of extending battery life and reducing failure risks.

"Market dynamics now present an opportunity to maximise returns for shareholders through incremental augmentation of the existing portfolio, supported by the realisation of value from the 495 MW of pre-construction assets," said Alex O'Cinneide, CEO of the investment manager.

"As part of our active management approach, we are uniquely positioned to drive operational performance by leveraging asset data across multiple functions."

The board said the combination of asset sales, upgrades, improved trading, and cost reductions would reinforce dividend sustainability and help close the share price discount to NAV.

Gore Street said it was committed to delivering a covered dividend while investing to increase long-term shareholder returns.

At 1349 BST, shares in Gore Street Energy Storage Fund were up 1.94% at 62.9p.

Reporting by Josh White for Sharecast.com.