Winner of the Outstanding Contribution at the Energy Storage Awards 2023, Alex O’Cinneide, founder and CEO of Gore Street Capital takes part in our end of year Q&A series.
Held in late September at the prestigious Park Plaza London Riverbank hotel, the first-ever Energy Storage Awards hosted by our publisher Solar Media recognised excellence throughout the European industry.
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It was an extremely tough selection process for our judges with so many deserving nominees. Inaugural recipient of the Outstanding Contribution award Alex O’Cinneide has been a trailblazer in the industry who has undoubtedly played a part in putting energy storage on the map where it is today.
Gore Street Energy Storage Fund, founded in 2018, was one of the first listed funds dedicated to investing in storage, and is one of the UK’s leading battery energy storage system (BESS) asset owner and operators. The fund also has assets internationally, making recent acquisitions in Germany and the US, which O’Cinneide
In the interview that follows, we learn what motivates O’Cinneide and makes him tick, which strategies are key to Gore Street’s growth and how the industry can tackle the challenges ahead as energy storage plays its vital role in the energy transition.
Energy-Storage.news: Congratulations on the Outstanding Contribution Award. What does being part of this industry mean to you, personally and professionally?
It has always been and remains a privilege to work with one of the most important asset classes there is within the transition to a low carbon society. I’ve been a renewable energy investor for many years and energy storage is the most complex and rewarding technology I’ve come across in what it can achieve to move us towards a sustainable future.
It’s also incredibly gratifying to be working alongside my colleagues at Gore Street Capital. We’ve grown from a small band of investors to a diverse group of around 45 energy professionals spread across Great Britain (GB), Ireland and the US to deliver financial, construction, engineering, legal services and more in-house to support our activities as a leading investment manager in the energy storage space.
It gives me a huge amount of satisfaction in my daily working life to be surrounded by dedicated, knowledgeable and passionate colleagues using their talents to drive energy storage forward on a global scale.
What are some of major highlights for Gore Street Energy Storage Fund over the past year or so, as well as some key milestones and achievements since the fund’s launch in 2018?
Diversification has always been a key differentiator for GSF and, since March 2022, we have truly leaned into this role as a first mover in listed energy storage funds. We have entered Germany, Texas and, most recently, California all within a short space of time to extend the fund’s portfolio beyond the UK and Ireland.
I’m immensely proud of the team at Gore Street Capital for taking this rapid expansion in stride. The continued ownership of the critical parts of the value chain we hold in-house – from origination and procurement through construction to asset management and optimisation – is a huge benefit to our operations and ensures all the expertise we’ve gathered from across five different energy systems to date can be applied to each new project.
With this geographic growth has come scale, with two 200MW projects taken into the GSF portfolio since October 2022, as well as a 75MW project. When compared to our first system acquired in 2016, which we still operate and back then was the largest system of its kind delivering grid services, you can see how far we’ve come.
May 2023 marked the fifth anniversary of GSF’s IPO and, as well as watching our own growth, it’s been amazing to see how far the sector has come since we first established the technology as a viable public asset class five years ago. Our energy storage assets under management have delivered crucial services around the world over the last year, whether it’s integrating wind generation on the Irish grid; balancing volatility caused by gas shortages in Germany; or helping residents in Texas get through some of the most extreme temperatures they’ve ever experienced.
Not only is this global presence helping bring the benefits of energy storage to as many people as possible, as a business strategy it is ensuring we lower the volatility in revenues compared to those available in a single market like Great Britain. This allows us to continue to achieve market-leading revenues and ultimately work to deliver sustainable returns to investors.
Gore Street’s expansion into new territories, marked with projects such as Big Rock in California has been interesting to see. What sort of things does the company look for when it comes to establishing a presence in a new market?
To be a good investor in renewables you need to understand technology, finance and policy and so we consider all these elements when approaching a new market. We look for increasing penetration of renewable energy as a fundamental driver for energy storage, followed by the appropriate conditions to support deployment, particularly in the early stages of a market’s development so that we can reap the benefits of being a first mover. It’s then up to us to handle the finance.
When thinking about deployment of capital, one of the barriers we have today when it comes to the UK, in particular, is policy. We saw what happened in September 2022 when poor policy resulted in a run on the pound and the worsening of what was already a high-inflation, low-growth economy. With the Prime Minister that followed backtracking on green policies for the sake of turning climate into a wedge issue for the next election cycle, it’s no surprise that investors like us would look abroad for stability.
In the last year we’ve seen the impact of the Inflation Reduction Act in the US, undoubtedly the most important piece of climate change legislation the world has ever seen. Not only has this provided tax incentives for standalone energy storage for the first time, it ensures more renewables continue to get built, keeping demand for our technology rising.
The knock-on effect has been increased recognition of the crucial role energy storage can play in the European energy system, with policies now being decided at the highest level to embed the technology in Europe’s low carbon transition. The UK is a long way off providing this level of support and, with a General Election looming, we will continue to focus on the opportunities that are tangible while preparing for those that may yet emerge.
Energy storage deployments continue to grow in the more mature markets, while new markets continue to emerge, but what are some of the challenges the industry faces?
We can’t ignore the fact that high inflation and interest rates have had a negative impact on the availability of finance. Equity markets have been the biggest provider of capital to renewables in the UK over the past decade, but they are effectively closed to renewable infrastructure trusts as a result of the market conditions we currently face, which are affecting the entire economy. Despite its leading global dividend yields, the UK is trading at a historic discount compared to other regions and sadly we don’t expect a quick resolution to these challenging times. I’m comforted by the fact that even within these tough market conditions we continue to deliver exceptional operational performance and are even growing our presence further.
There has been a lot of concern over planning issues and the grid connection queue, which have certainly become barriers to new entrants. As we only look to acquire projects with land rights, planning permission and a grid connection, we’re finding challenges with the grid operators themselves. These companies are under intense pressure to bring colossal levels of infrastructure forward to meet the demands of the energy transition. We certainly understand the challenges they are facing, but a lack of resources and digital capabilities creates big challenges for companies like us too. There is a wide awareness of these issues across the sector, and we are working closely with grid operators and industry partners to overcome them.
What do you think 2024 will mean for energy storage? What are some things that Gore Street Energy Storage Fund and the wider industry can look forward to?
The upcoming year is all about deployment for GSF. We recently took the energised portfolio to 371.5MW with the 80MW Stony project and expect to add a further 442MW before the end of 2024. The 50MW Ferrymuir project is ready and awaiting final works by the network operator, while the fund’s biggest project to date – the 200MW/400MWh Big Rock asset in California – has been advancing at speed, along with several other prioritised assets. Increasing energised capacity from just over 30% of the entire portfolio to 70% in the next 12 months will have considerable impact on cash generation and dividend cover. We’ll also be increasing our optimisation capabilities to have greater control over our assets and what they are delivering.
As for the rest of the industry, this really depends on the market you’re looking at. In GB, there’s lots to be excited about following the recent flurry of announcements regarding the grid connections queue and disposal of speculative projects holding up progress. The prospect of a change in government does create some uncertainty over these recent policy statements, but these are common sense measures that should be implemented regardless of the government in charge. I also hope to see wider access to the Balancing Mechanism and a long-awaited end to high skip rates for energy storage projects.
Elsewhere I’m excited to see further development in new and existing markets! 2023 showed that new opportunities are still appearing around the world. The ECRS service in Texas delivered the highest monthly revenues we’ve ever seen, while wholesale trading activity in Germany has reached a level unmatched across our portfolio.
These continually evolving market conditions are what make energy storage the most exciting asset class, and I can’t wait to help drive it even further along with the rest of the team at Gore Street Capital.