Decent volume going through!
See Musk has just secured favourable tax settlement in Texas to build battery storage, not dissimilar to our scheme. Can't see it being cancelled, as the company have stated |
 GRID's update this AM suggest a recovery in UK revenues through BESS, with more room to improve
"The revenue environment in 2024 evolved during the year. 2024 started with BESS assets being severely under-utilised (being skipped up to 95% of the time in January 2024 according to Modo Energy[1]) in the Balancing Mechanism resulting in unexpectedly low revenues in Q1 2024, whereas revenues had been expected to increase following the launch of the new Open Balancing Platform by The National Energy System Operator (NESO). From Q2, utilisation in the Balancing Mechanism started to improve, ending the year on a high, and in Q4 2024, the revenue performance of the portfolio had recovered to an annualised revenue rate of £75,000 per MW per year. Nonetheless there is still a lot of room for improvement as NESO is still skipping batteries over 80% of the time according to data published by Modo Energy1. Even NESO has now admitted that skip rates in the first seven months of 2024 were around 83%[2]. |
Report in CityWire but nothing we dont already know |
The interim results say gearing is circa 11%. Hoping that's not a Bernie Madoff, assume also it's based on NAV not share price |
I don’t think any of us know until the next set of financials just how much borrowing is in play. Obviously, it’s only the borrowing that has been taken out, not the facility.
Re: dividing up the income and costs and whether one wants to attribute them on an asset by asset basis, the simple truth is that income earned needs to be able to cover any borrowing that remains following receipt and sale of the ITC plus the ‘planned’; dividend.
Some of the income is locked-in and GSF appear confident of beating the market as far as the rest is concerned … I remain sceptical on the latter point.
On a separate matter, there is obviously a time-lag between energisation, optimisation and earning income. I don’t think we’ve ever been given any specifics around this but does anybody know any detail? |
There isn't substantial debt at Big Rock yet. (the announced facility sizes don't automatically mean drawn down amounts) And to the extent that Big Rock is project financed later, that simply becomes net cash at the corporate level.
But the point isn't to divide GSF's Enterprise Value into little chunks, it's to show how much value comes from a single asset with a substantial amount of fixed revenue. (if necessary it gets sold to "prove NAV" and pay a huge dividend)
The focus on debt in this thread is overdone. Net debt was roughly £30-40m at 30 September. Sure it's better to pay down the RCF than waste the money. But it would be complete madness to repay a tax-deductible project finance loan costing 7-8% instead of paying more cash to shareholders who have return expectations in the mid-teens - rational amounts of leverage are very beneficial to us. |
We will only know whether the share is undervalued when the value of the ITC is realised, hopefully the BOD will not be so stupid as to do anything else other than pay it all off the debt. Income will then need to support the remaining debt servicing and reduction plus - if the divi is to be maintained - a 7p annual divi. A baseline income that doesn’t fluctuate wildly is also a prerequisite for any rerate of the share price. You can’t do the math on all of the above yet. |
@SteMis. EV = (EBITDA*8) - debt + cash? Aggregate group debt in the Interims was £66.02M - but not all of it relates to Big Rock. They had cash = £24M in the Interims. Perhaps attribute half the debt and half the cash to Big Rock? So EV of Big Rock might be $160M + $40M - £33M + £12M = £158M - £33M + £12M = £137M. |
Sorry, deleted this post. Was inadvertently looking at Red Rock in SDCL rather than Big Rock in GSF.
My mistake. |
Craigso, yes that’s about right for Big Rock valuation. In short you can almost get mkt cap with that asset alone. |
I am betting on HGEN as one they may start on £30m market cap with a 22p share price and 90p nav ,should be an easy sell to continental funds as most of it investments are European.Worth a small nibble anyway . |
ITCs are a beggar belief
Elon will smash those dodgy payments with both fists |
Hoping Achilles will cast its eye on this one |
If the ITC does land, and the above suggests it will, we are seriously undervalued. No construction risks. All the negatives more than played out here. |
US: Gore Street and Morningstar investment updates point to robustness of ITC for BESS
Meanwhile, financial services Morningstar has reported that renewables operator EDP Renewables’ (EDPR) shares have fallen by approximately 30% following the election of Donald Trump. Morningstar says the sector is undervalued, and that tax credits including ITCs will be very hard to repeal.
“Existing tax credits cannot be repealed before their expiration, and pulling forward the expiration of the IRA tax credits for new projects before 2032 will require approval from congress, which might prove challenging since most renewables’ projects are installed in red states,” the firm said in a note.
Continuing, “Our base case scenario is that the expiration will be pulled forward to 2027, but due to safe harboring, projects commissioned up to 2031 would still be entitled to tax credits as long as 5% of the projects’ investments have been spent in 2027.” |
Fundamentals still very positive for storage. Always the slight cloud on the horizon of competing storage technologies, but nothing that close (not mentioned here, but hydrogen generation seems most interesting, more a complement than a replacement for batteries though)
I do think the manager does a good job, but for more of a steady state portfolio they really are out of step with the fees now, hopefully the pressure of others changing to at least partial market cap will give the board some leverage |
Shareholders should set in to kick out the manager - as recently happened to SOHO The first thing the new manager at SOHO did was change the man fee to market cap |
I've been doing some digging to make sure that the "value" is still here.
Looking at Big Rock (California) only, GSF valued it at £175m in the September NAV update. (way down in the notes). Nobody trusts NAVs obviously, but if you ask AI to do some digging, it will estimate ~$20m per year of EBITDA from Big Rock - $14m comes from the fixed contract with Goldman Sachs and $6m from wholesale trading / ancillaries less operating and maintenance costs. That doesn't sound crazy to me - in fact, GSF said that only 40% of revenues would come from the GS contract. Apply an undemanding 8x multiple to that and you get $160m. Add another ~$40m from ITC credits and you can get to $200m / £160m for Big Rock itself.
Compare this to the current market cap of £235m and you're getting the remaining 550MW of BESS for a song. (plus some development assets that have value)
Now obviously GSF is layering on a unnecessary and stupid cost base and isn't saying the right things about the proceeds of ITC credits (not to mention the eventual proceeds of project financing Big Rock). But if they don't change course, this is eventually going to attract the attention of a corporate raider. |
I dont think they have applied for the ITCs yet |
There are no tax credits. They are dead.
DOGE killed those dodgy green scams |
Just thinking about the tax credit.
I'm assuming this is a federal tax credit not a state tax credit.
Even though the contractual legality of the offset seems good,,, csn this get wrapped up in the budget debt ceiling issue which seems to be continuous part of government activity and dealing? |
Most UK infra is in the same boat dont think its a reflection on the assets just the lack of buyers in the UK market .We have a decent dividend reasonably well covered even without the promised 3p extra while the market improves .
I cannot fault the company it has done what it said it would what more can you ask of them ,Do believe the ITC cash should be used for investing in the assets maybe sell off a few UK sites if they can be sold for a premium and invest more outside the UK. |
Wow. What a response to the stellar news. Blimey we are nearly at the price we were at the beginning of February. Amazing but no where near the heights we were at at the end of last year - before Big Rock and Dog - so what have they brought to the party? We can talk about it til the cows come home but this has gone nowhere no matter what the news. Its got beyond rigor mortis |
cocopah, agree. I don't expect it to recover to the heady days of a premium to NAV, but at a 53% discount....I think everything is in the current SP, so as they deliver on some of your points, the share price should head back and close the discount IMO. |
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