Gore Street Energy Storage secures 12-year contract for Big Rock

18th Oct 2024 11:02

(Sharecast News) - Gore Street Energy Storage Fund announced on Friday that it has secured a 12-year fixed-price resource adequacy (RA) contract for its California-based asset, Big Rock, with Goldman Sachs subsidiary J Aron & Company.

The London-listed firm said the contract, valued at over $14m annually, was a significant milestone for the 200 MW energy storage asset - the largest in its portfolio.

It said the agreement was set to start in summer 2025, and was fully stackable, enabling simultaneous revenue generation from wholesale trading and ancillary services.

The RA programme in California ensures sufficient generation resources are available to meet the energy system's peak demand, with energy storage playing a critical role in ensuring flexibility and reliability.

GSF said the Big Rock asset would provide 100 MW of RA deliverability under the contract, which requires a minimum duration of four hours of deliverability.

The contract was expected to account for up to 40% of the asset's total revenue over its duration, and was comparable to the long-term capacity market contracts in Great Britain, but with a higher revenue share.

It said the deal would enhance the firm's overall revenue generation, diversify its income streams, and support project-level debt, adding financial stability.

The Big Rock asset, acquired in February last year, was on track to be operational by December.

"This RA contract marks the next exciting step for the company as a new revenue stream is secured for the portfolio," said Alex O'Cinneide, chief executive officer of the company's investment manager Gore Street Capital.

"Securing this contract is a significant milestone for the company's cash flow.

"Based on contracts now in place, the company's contracted cash flows will increase fourfold compared to the 2024 financial year."

O'Cinneide said the closest equivalent of long-term contracted revenue held within the portfolio would be from GB Capacity Market contracts, which offer a fraction of the contracted revenue secured for Big Rock in California.

"The RA agreement ensures the company's largest asset to date will deliver long-term, stable value to investors, demonstrating the significance of our decision to enter the CAISO market.

"California represents a particularly attractive location for investment as the state is rapidly decarbonising its energy supply to reach carbon neutrality by 2045."

At 1044 BST, shares in Gore Street Energy Storage Fund were up 6.2% at 56.93p.

Reporting by Josh White for Sharecast.com.