The fund will invest in facilities of lithium ion batteries, created by firms such as Tesla and NEC, which will help to capture the energy generated by renewable sources and even out National Grid power supply.
Targeting a yield of seven per cent of the fund’s net asset value after one year, and a steady dividend cover of 2.95 times, Gore Street claims one strength of the fund is its limited correlation to equity markets.
“We’re not selling energy – our facilities sell access to the battery for people to carry out the services that the battery is good at doing,” said Gore Street’s founder Alex O’Cinneide, who formerly ran a cyber security-focused fund at Paladin Europe.
“We don’t take electricity price risk. The services that we provide in general are critical to solve some of the big challenges that the grid has, and therefore the services we provide are critical regardless of what’s going on in the equity markets.”
The facilities which Gore Street will help to fund allow energy from sources such as wind and solar, which are produced intermittently, to be stored by the National Grid and used as desired.
“The investment sits at the intersection of two big macro themes: the challenges faced by the grid in terms of decommissioning fossil fuels and nuclear and the rise of renewable power which is intermittent; and the rise of electric vehicles,” explained O’Cinneide.
“We’re not directly concerned with electric vehicles, but the rise of lithium iron battery producers has driven the price down. Now lithium ion technology is an economically viable solution to those problems.”
Gore Street already has three seed assets, which will be transferred into the fund at cost. These are the Boulby project in Yorkshire, with batteries provided by NEC, the Welsh Cenin plant with batteries provided by Tesla, and the Lower Road Essex facility.
Patrick Cox, who sits on the European Investment Bank’s advisory committee, is chairman of the fund’s board, which also contains 3i non-executive director Caroline Banszky, financier Max King and renewables investor Thomas Murley.