Gore Street Energy Storage NAV Slides 12%, Declares Dividend Amid Sector Headwinds

NAV drops to 90.1p as revenue curves reset – what changed

Gore Street Energy Storage Fund’s interim results show NAV per share down to 90.1p (from 102.8p at 31 March 2025) and a NAV total return of -10.6% for the half year. The big driver was valuation, not operations: third-party forward revenue curves for Great Britain and the US were cut, taking £51.3 million (-10.2p per share) off NAV. Discount rate and opex tweaks shaved another £7.1 million (-1.4p per share).

Against that, the underlying portfolio actually delivered a positive return (+£7.6 million, +1.5p), with assets largely running as expected. In plain English: the assets worked, but the market’s expected future prices fell, and that hit the valuation.

Dividend declared and special distribution update

The Board has declared a 0.69 pence per share dividend for the quarter ended 30 September 2025. Key dates: ex-dividend on 29 December 2025, record date 30 December, and payment on or around 23 January 2026. The dividend is fully covered by operational cash flow and will be treated as qualifying interest income for UK tax.

On top of that, special dividends linked to US Investment Tax Credits (ITCs) are in motion. One tranche of 1.5 pence per share was paid on 31 October 2025. A second 1.5 pence per share tranche will be declared once lender conditions are met – the cash has been received but remains in a lender-controlled account until project finance milestones are signed off.

Importantly, management notes that liquidated damages being pursued for delayed assets are not included in reported revenue. If all were accrued, fund earnings would have supported c.1.32 pence per share for the period, versus the 0.69 pence declared.

Operations: 643 MW online, but Enderby and Texas weigh

Operational capacity jumped to 643.1 MW (from 417.1 MW), with Dogfish (75 MW, Texas) and Big Rock (200 MW, California) becoming fully operational and Enderby (57 MW, GB) energised. Enderby is not yet fully operational due to a complex grid connection issue; the EPC and NESO are working on a solution, with full capability now expected in FY2026/27 Q4.

Total portfolio revenue was £16.7 million (H1 2024: £15.2 million), averaging £67.9k per MW/year (H1 2024: £82.7k). Operational EBITDA held steady at £8.6 million with a 51% margin and fleet availability averaged 94.3%.

The geographical split matters. Germany and Ireland remained strong; California contributed initial revenues helped by Resource Adequacy contracts. Great Britain improved from last year’s lows. But Texas badly underperformed, with the ERCOT market c.90% below expectations during the period, which pulled down the averages.

Capital allocation: asset sales, 2-hour upgrades and in-house optimisation

Gore Street set out a four-point plan:

• Selective sale or co-investment of pre-construction assets – a sell-side adviser is appointed; process starts with the 22 MW Cremzow sale in Germany. The pre-construction pipeline totals c.495 MW.
• Augmentation of select GB and Irish assets – Stony (79.9 MW) and Ferrymuir (49.9 MW) will be upgraded from 1-hour to 2-hour duration, with EPCs signed post-period. Completion is scheduled for FY2026 Q3 at the lower end of the £18-22 million guidance. Based on disclosed curves, 2-hour GB assets are expected to earn c.30% more than 1-hour units.
• Revenue optimisation via GSET – c.192 MW onboarded to the in-house trading platform by 30 September 2025. From April to September, GSET delivered a 23% revenue premium over the Modo 1-hour benchmark (£6.61/MW/h vs £5.39/MW/h).
• Cost reduction – investment management fees were rebased from 1 October 2025 to 1% of the average of market cap and NAV (with performance and exit fees removed). Operational savings include c.£600k per year on insurance, with further reductions targeted.

Strategically, the Company is recycling capital where private appetite is strongest and leaning into augmentation where paybacks improve. It also notes that over a quarter of 2026 revenue is expected to be fully contracted, tempering merchant volatility.

Balance sheet, fees and the stubborn 42.5% discount

Group cash stood at £50.5 million at period end, with undrawn debt capacity of £41.7 million. Total debt drawn was £101.95 million, putting debt to GAV at 18.3%, within the 15-20% target range. The weighted average discount rate remained 10.2%.

Shares closed the period at 51.8p, implying a 42.5% discount to the 90.1p NAV. The Board says it evaluated all options to address the discount (including buybacks) and has opted to prioritise asset sales, cost cuts and upgrades to drive intrinsic value. Engagement with shareholders – including activists – has been extensive, with Board refresh underway.

My take: the discount reflects sector-wide scepticism on merchant curves and delivery. Practical catalysts – declaring the second ITC special dividend, completing disposals, resolving Enderby, and visible uplift from 2-hour augmentations – are likely more powerful for narrowing the discount than buybacks at this stage of the cycle.

Why this matters for retail investors

BESS is a merchant-heavy asset class, so revenue curves move and NAVs follow. Here, cuts to GB and US curves did the damage, not operational underperformance. The cash engine is still turning: operational EBITDA of £8.6 million, ordinary dividend fully covered, and more than a quarter of next year’s revenue set to be contracted.

Risks remain – Enderby delays and weak Texas prices are obvious. But cost base improvements, trading outperformance, and 2-hour upgrades add resilience. The potential LDES cap-and-floor for the Middleton project would be a long-term positive if awarded, giving up to 20 years of revenue certainty for an 8-hour asset.

Key numbers from the interim results

NAV per share	90.1p (31 March 2025: 102.8p)
NAV total return (period)	-10.6%
Dividends declared (period)	2.19p, including a 1.5p special
Quarterly dividend	0.69p (ex-date 29 Dec 2025; pay \~23 Jan 2026)
Annualised dividend yield	8.5% (incl. special, based on 30 Sept price)
Operational capacity	643.1 MW (417.1 MW at March)
Total portfolio revenue	£16.7 million
Operational EBITDA	£8.6 million (margin 51%)
Group cash	£50.5 million
Debt drawn / gearing	£101.95 million / 18.3% of GAV
Share price / discount	51.8p / 42.5% discount to NAV
Weighted avg discount rate	10.2%

Catalysts and risks into 2026

Potential positives

• Declaration of the second 1.5p ITC special dividend once lender conditions are met.
• Progress on pre-construction monetisations, starting with Cremzow (22 MW).
• Enderby achieving full operational capability and accessing all revenue streams.
• Execution of 2-hour upgrades at Stony and Ferrymuir – completion targeted FY2026 Q3.
• Further onboarding to GSET and continued outperformance versus benchmarks.
• LDES outcome for Middleton – potential 8-hour, long-duration asset with cap-and-floor.

Key watch-outs

• Texas market conditions in ERCOT remain weak versus expectations.
• Merchant curve volatility in GB and US can continue to drive NAV movement.
• Any slippage on Enderby or augmentation timelines would defer revenue uplift.

Bottom line: this was a valuation-driven wobble in an otherwise operationally steady half. If management delivers on disposals, upgrades, Enderby and the second special dividend, the case for a narrower discount strengthens. For income investors, the ordinary dividend being fully covered is the anchor while we wait.