Gore Street Energy Storage Fund (LSE:GSF) has signed a two-year tolling agreement with MAG Energy Solutions, a North American energy solutions provider, covering three of its operational Texas battery storage assets.
The deal applies to 80% of the capacity at Snyder, Sweetwater and Westover, which together total 29.85 MW/59.7 MWh, with 23.9 MW/47.8 MWh falling under the toll.
MAG will pay a fixed toll of approximately £57,700 per MW per year, adjusted for asset performance, and will take over bidding, scheduling and dispatch of all three assets from current optimiser GSET starting 19 October. The remaining 20% of capacity keeps merchant exposure, with MAG trading that portion and sharing the resulting revenue with the company.
Texas has been a highly cyclical market for Gore Street, as revenues hit record highs in 2022-23 on summer scarcity pricing and volatility, but rapid growth in installed storage capacity has since compressed spreads, pulling the company's Texas assets down to an annualised average of around £14,980/MW/year in the quarter to 30 June.
Contracted revenues already underpin the company's assets in Ireland, Great Britain and California, and this agreement extends that diversification strategy to Texas.
"We have consistently explored commercial strategies to mitigate downside risk, which can be seen in the Resource Adequacy contract in the US and the DS3 contract in Ireland," said Alex O'Cinneide, chief executive of the investment manager, adding that the deal "allows us to bridge the gap between higher expected returns in Texas in future years and current market conditions."
Gore Street expects contracted revenue to account for approximately 40% of total revenue over the 2026/27 financial year based on present contracts.
The company said it continues to explore similar structures elsewhere in the portfolio where they add value alongside its in-house trading operations.