Since Dynamic Containment went live in 2020, a number of battery assets have entered the service, including Gore Street Energy Storage Fund's.
Alongside this, the company has also completed work on two 50MW batteries located in Northern Ireland, with these both providing DS3 services from 1 April and taking Gore Street's operational portfolio up to 210MW.
Current± caught up with Alex O'Cinneide, CEO of Gore Street Capital, to talk about the requirements of Dynamic Containment, the value in revenue stacking and the fund's international expansion plans.
What has your experience been like with Dynamic Containment so far?
We work very closely with our customers, whether that's Eirgrid or National Grid, and we monitor the new services they want to put out, so we knew Dynamic Containment was coming down the line. We made sure that our assets had the correct software and technology to access that service, we made sure that they had the correct metering and we have also future proofed our assets in terms of the response time, which is a critical component of being able to be in Dynamic Containment. So during Q4 last year, and continuing into Q1, we moved the vast majority of our GB portfolio into Dynamic Containment.
We're very happy to be able to provide what is a critical service to National Grid. We're also of course being rewarded in that the prices that we're receiving for the service are very good prices, because in essence National Grid can't contract with enough megawatts; it has a requirement more than the megawatts that are available. But we make up a significant portion of what National Grid is contracting for Dynamic Containment right now.
Dynamic Containment adds another string to Gore Street’s bow - how important is it to have access to multiple revenue streams for your assets?
So when we started out in 2016, we were looking at two to three revenue streams, so you had frequency, you had capacity, and you had triads. We now have seven to nine different revenue streams available. What we have built up in Gore Street is a significant skill set in making sure that our assets are both designed and built correctly to give us the maximum amount of optionality against what the market values at a particular time.
We moved our asset base in GB into Dynamic Containment, we're still obviously participating in capacity, we're still participating in triads. At some point other new revenue streams will come to be important to us - reactive power for instance.
The value of us as a manager is to make sure that the portfolio we've created for our investors is best situated to avail of those different revenue streams, sometimes simultaneously, and sometimes making a decision about 'okay, right now, the grid values having capacity available because there might be a time of very high demand, so let's drop out of Dynamic Containment and go in and provide the service as capacity that they need available.'
While prices in Dynamic Containment are currently high, do you anticipate that remaining as more assets move into the service?
Our position is that we will see these good value payments on Dynamic Containment for another two quarters. That's our market viewpoint. But I think you need to put it into the mix, if 'X' amount of megawatts are in Dynamic Containment and 'Y' amounts are in frequency, what we have is an overall increasing of the markets. So we see frequency prices increase in tandem with Dynamic Containment coming online, because assets have moved out of frequency into Dynamic Containment. What will happen, we believe, is the baseline will stabilise, but it'll stabilise higher.
Looking ahead, what are Gore Street's goals over the short-medium term?
Q1 for us was making sure that Northern Ireland came on stream and I think we're incredibly proud that in a terrible, bizarre year of lockdowns those projects come on stream on time on budget.
As we look forward into 2021, I think you should expect to see us making our first moves into mainland Europe - that will be slow and measured. We've been assessing various markets there for about two years. I also think maybe some of our first moves into North America. Again, we've been assessing that market for at least two years.
So nothing's being rushed here, but we will capture the value that we managed to capture in our original moves in GB when we were the first player and our original moves into Ireland where we have now a very significant position in the market. We'll look to capitalise on that, with slow measured progress into mainland Europe and North America.