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Highlights
- Gore Street Energy Storage Fund's "Big Rock" asset secured a Resource Adequacy contract worth over $14 million annually, commencing in summer 2025.
- The RA contract will provide up to 40% of the total expected revenue from the asset over its duration and supports project-level debt.
- The 200 MW Big Rock asset, acquired in February 2023, is set to be energised by December 2024, contributing to the company's long-term revenue stability and shareholder dividends.
Gore Street Energy Storage Fund plc (LSE:GSF), a globally diversified energy storage fund, has announced a significant milestone with its California asset, known as "Big Rock." The company has successfully secured a Resource Adequacy (RA) contract with J. Aron & Company LLC, a subsidiary of Goldman Sachs. This fixed-price agreement, valued at over $14 million annually, represents a noteworthy achievement for the largest asset in Gore Street’s portfolio. The contract is set to begin in the summer of 2025 and is designed to enable multiple revenue streams through wholesale trading and ancillary services.
The RA programme in California plays a crucial role in ensuring that sufficient generation resources are available to meet the energy system’s supply needs. It mandates that load-serving entities demonstrate their capability to secure adequate generation capacity through RA contracts, which must cover their projected peak demand along with a reserve margin. As part of this framework, physical resources such as energy storage are critical for ensuring flexibility and reliability in power supply. Specifically, the RA contract requires a minimum deliverability duration of four hours, and the Big Rock asset will utilize 100 MW of RA deliverability.
This RA contract is akin to those found in Great Britain’s Capacity Market, characterized as a long-term agreement that allows for the stacking of revenue streams. However, what sets this contract apart is its anticipated contribution to the overall revenue of the asset. It is projected that this contract will account for up to 40% of the total expected revenue over its duration. The long-term fixed-price nature of the contract also positions the company favorably for securing project-level debt.
The financial implications of this long-term, fixed-price contract are significant for Gore Street Energy Storage Fund. It is expected to enhance the company’s overall revenue generation, thereby diversifying its income sources and providing greater stability. This arrangement further strengthens the company’s capability to maintain and potentially increase dividend distributions to shareholders in the long run.
The Big Rock asset, boasting a capacity of 200 MW, was acquired by Gore Street in February 2023 and is on track to become operational by December 2024. The strategic importance of this asset and its associated RA contract underscores the company’s commitment to expanding its presence in the energy storage market, particularly within the rapidly evolving California landscape.
