Battery fund Gore Street Energy Storage (GSF ) has secured record-level contracts at February’s capacity market auctions, providing secure long-term revenue across nine sites in the UK.

At the T-4 auction, in which the government buys backup capacity required in four years’ time, the Citywire award-winning trust secured contracts across six sites totalling £45m as prices hit record levels.  

At the T-1 auctions, the trust secured three one-year contracts commencing in October at a combined value of £1.8m.

The ‘reliable source of revenue’ will help cover dividend payments alongside revenue from operational assets in future quarters, said Alex O’Cinneide, chief executive of the trust’s fund manager Gore Street Capital.

The 6.8%-yielder has a £370m pipeline of battery assets across the US, UK, Ireland and Germany, which it expects to build before 2026 and £173m scheduled for deployment over the next 12 months.

In terms of funding the pipeline, the Gore Street fund has £144m of cash on its balance sheet and the ability to borrow up to £230m including the 15m undrawn revolving credit facility. The company said it was engaging with the debt markets and reports strong demand from lenders at both project and portfolio levels.

JPMorgan Cazenove analyst Christopher Brown said the T-4 contracts should be help arrange a less expensive debt facility as these are the only long-term contracts available for BESS in the UK.

Liberum analyst Shonil Chande noted that while Gore Street’s dividend remains uncovered, its potential debt financing is a ‘positive change’, having previously said it would have fully deployed its cash balance by 2026.

The £530m trust also announced the acquisition of its first asset in California, as it continues to roll out projects in the country. US  government policies such as the Inflation Reduction Act subsidises costs, making it an attractive country to invest in.

The 200 megawatt Big Rock project in California was acquired for $100m and is eligible for investment tax credit of up to 30% of expenditure. A 75MW project in Texas was also announced last month, lifting the total capacity of the 27-strong portfolio to 1,173.2MW.