Greencoat Uk Wind Share Discussion Threads

[marktime1231] 08/9/2022 11:52

Interesting, and a little disappointing how slowly intermittent renewable power generators are working out how important it is to be able to store energy for delivery during peak demand periods.

It has always been obvious for solar, gathering it through the day for release during the 5-9pm evening peak. NESF, my choice in the solar sector, is beginning to retrofit battery storage to some of its solar farms. GRID is realising the value of longer storage duration, upping from 1 to 2 to maybe 4 hours in future.

To a lesser extent wind coupled with battery storage would allow a reserve to be accumulated for the 7-10am morning peak.

The market will transform again, when someone with huge vision and capital works out how to turn the millions of grid-connected workplaces homes and EVs in to a distributed multi-gigawatt battery. Virtual energy storage systems will be the new buzz. Obliging those of us who sign up to import during a windy night and obliging us to export back say 10% of capacity at peak times.

[yump] 08/9/2022 11:17

Tartshagger

You’ve done what the ignorant do: assume that someone who criticises one party or view must be in the “other” camp.

[igoe104] 08/9/2022 08:23

Interesting to see trig investing into more battery storage facilities.

[tartshagger] 07/9/2022 10:41

I would not disagree with any of that. Since Gordon Brown lost the 2010 election and the Conservatives abandoned his fiscal rules (no borrowing except for investment) the national debt has risen from GBP1.6trillion to GBP2.7trillion today. Sunak printed more fiat money than any chancellor in history.We all know that printing money is a recipe for hyper-inflation. Remember Zimbabwe? Venezuela? Weimar Germany? That is what is going to befall the UK as Truss tries to spend her way out off the energy crisis by printing at least another GBP120billion - which will be the biggest subsidy the fossil fuel industry has ever had

[apollocreed1] 07/9/2022 10:04

The above debate about reasons for the energy shortage seems to overlook the fact that price rises are caused by an inflating money supply. The entire world has printed trillions of all forms of currency. None of this newly created currency creates more supply of energy, it just creates demand as more money chases the same or less supply than was previously available.

Do you realise that in Switzerland, where money printing was on a much smaller scale due to the fact that they have real cash saved for a rainy day, CPI is only about 2.9% and they have raised domestic energy prices by no more than 27% this entire year? Their currency has strengthened and therefore cushioned the rising costs.

Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” So the blame must be directed primarily to the Central Banks and the governments that control them (there is no such thing as central bank independence).

[tartshagger] 07/9/2022 09:33

Just because you dislike criticism of your favourite political party, it is undeniable that we have sleepwalked into the worst energy crisis since the Germans were sinking our oil tankers during WW2. Truss has just appointed the extreme far right MP Rees-Mogg as energy minister. Some of his i ll informed statements are "onshore wind farms represent a medieval technology and they should be pulled down and replaced with fracking rigs" and "intermittent renewable energy is the cause of the current high prices for gas and once we get rid of the wind farms and replace them with more gas electricity generation energy prices will go back down" and lastly " there is no scientific basis for alleging we are experiencing a climate emergency and if it was not gor a deranged Swedish teenager nobody would be worried about it

[bothdavis] 06/9/2022 15:58

If you look at the news, I agree we do not import from Russia, but.....the wholesale price of oil and gas ACROSS THE WORLD, is based on a spot price.

This has risen dramatically due to the conflict, the price would have gone up regardless of who was in power.

You cannot make a rant about a worldwide problem specific to one political party.

[tartshagger] 06/9/2022 15:45

Look, we do not import oil or gas from Russia. 50% of our gas still comes from the N Sea, the rest comes from Norway and Qatar. There is NO SHORTAGE of energy here, the lights have stayed on throughout this crisis. It is the FOSSIL FUEL CARTEL who have forced the huge price rise on usThe real failure is 12 years of Tory misrule and Kwateng's abject failure to secure reasonably priced energy for the winter

[bothdavis] 06/9/2022 14:23

Hmmmm......so the war in Ukraine with the subsequent sanctions against Russia, the 'closing ' of the pipelines into Europe, thus causing a oil and gas shortage across Europe. Have nothing to do with rising prices!! Where have you been!

If you want to blame anyone, blame Putin.......

[tartshagger] 06/9/2022 12:54

WRONG - what has got us into this mess us the fossil fuel industry ramping up the price of energy 5 fold. And Kwarteng's refusal to impose a stonking windfall profits tax and use the money to stop the pensioners from freezing to death this winter

[marktime1231] 06/9/2022 12:06

Yes, thanks rik shaw and 77, that was my point about simply handing out cash rebates. It stokes inflation rather than dampens it, with consequence on the cost of government debt. (And please can we stick to the topic here which is really interesting, fast moving and highly relevant to UKW fortunes)

The press now describing an energy crisis response based on the government guaranteeing loans to allow suppliers to freeze retail prices at the current cap, in exchange for higher average prices in future. Does that cover business as well as households? Will OFGEM be interfering in the interest rates which can be charged on the gearing, previously obstructing investment by reducing the rate of return allowable from 6% to 4.5%; or could we just do away with them before they do any more damage.

Assuming this is low credit-risk eg unlikely for any more suppliers to go bust, well not the big ones like Centrica, almost no direct cost to the taxpayer. But it requires commercial lenders to stump up the loans which will have to be tens of billions. Who and how ... perhaps the government doing co-lateral deals with banks and insurers to ease the bank levy and solvency requirements, step forward LLOY and LGEN etc.

It solves the part of the price problem which is not solved by tieing up renewables on 15-year AR4 deals. Or at least it buys time for a solution to the global gas supply problems. Or it could ... let's hear the details.

[a0002577] 06/9/2022 10:26

it's s probably worth reading this paper from the Commons Library as it is the one that most MPs that can read will use

[11_percent] 06/9/2022 10:12

Its the Green Looonies that have got us into this mess.

[ammons] 06/9/2022 08:32

Absolute rubbish from you as usual, Tartshagger.

[tartshagger] 06/9/2022 08:14

Correction - fossil fuel

[tartshagger] 06/9/2022 08:13

Absolute rubbish from you as usual. Kwarteng would do well to leave the current pricing regime alone - it has served the renewable industry well - and put a stonking windfall tax where it belongs, on the fissile fuel cartel which is responsible for the predicament we are in

[marktime1231] 05/9/2022 11:07

Thanks mjw that commentary makes a bunch of sense out of the situation and the options available.

The opportunity for UKW to move more of its generation into 15-year or longer fixed deals at good base rates would be attractive, but no cliff-edge please! How much higher would the base price have to be to exceed the opportunity of wholesale prices over the next two winters running at 10-12 x the normal £50-60/MWh. Nuclear programmes were I think struck at £92.50 in 2012 prices, but nuclear has the added utility of being reliable rather than intermittent. The most recent CfD auction prices were a snip ... in 2012 prices just £37.35 for offshore wind, £42.47 for onshore wind and £45.99 for solar.

What price would you now sell your unsubsidised forward generation if you were UKW? The UK govt may not have the leeway to negotiate prices different to the AR4 formula. Is seeing off the threat of wider windfall taxes enough reward for the sector to be content with AR4? My feeling is generators would feel compelled to sign up at those prices.

Capping the price of renewable generation makes sense then, rather than windfall taxes to fund cash rebates, it would help businesses and households equally. But more than half of our energy bill is still driven by open market gas imports, how do you cap those prices?

[mwj1959] 04/9/2022 15:24

Citywire comments...UKW clearly been a beneficiary this year of higher prices given its high exposure to merchant prices...

The energy crisis engulfing the UK has prompted the government to rethink renewable energy, and despite a potential clampdown on profits, there is one investment trust which analysts agree could still be quids in.

The Conservative party is reportedly planning to curb the profits made by wind and solar energy firms as the energy price cap heads for £6,000 next April, putting further pressure on UK households that are facing bumper bills this winter.

Current business and energy secretary Kwasi Kwarteng is supposedly unhappy with the profits renewable energy groups are making from their long-term, inflexible contracts, often backed by government subsidies – the very thing that has made them popular with investors looking for reliable returns.

Instead, he wants to offer companies fixed-term rates to sell energy for 15 years, as long as they stop selling cheaper renewable energy at high prices.

Meanwhile, the potential for an extension of the energy windfall tax has not quite gone away, with Treasury officials reportedly putting together a dossier showing UK gas producers and electricity generators could make £170bn of excess profits over the next two years, ready to deliver to the new prime minister next week.


On the first set of proposals, Stifel analyst Iain Scouller said the government wants to ‘decouple the price of renewable-generated electricity from the gas price and broader power price’ with fixed prices, which he assumed would be inflation-linked.

He said this new way of operating would ‘have some merits for the listed funds’ investing in renewable energy, a sector which has grown rapidly since the first funds were launched in 2013.

It now comprises 22 investment companies, nine of which were launched since the start of the pandemic in 2020, according to the Association of Investment Companies (AIC). The AIC said the average dividend yield of the sector is just over 5%, which has been a draw for income seekers.

These yields have been driven by the long and profitable contracts the funds have already signed, but Scouller said 15-year fixed-term contracts would also be beneficial.

He said funds would have ‘more certainty on their revenues, and dividend cover for the next 15 years’, as price volatility would be removed.

Wind turbines at sunset

Wind winner
While the UK is currently in the midst of an energy crisis, Scouller noted that just 18 months ago power prices were weak and fund net asset values (NAVs) were subsequently falling.

However, he said NAVs would be ‘flatter’; and investors may pine for the high power prices that delivered NAV gains of 10% to 15% over the first half of this year.

He highlighted Greencoat UK Wind (UKW) as a potential winner due to its ‘high exposure to merchant prices – 50% of future revenues’.

‘It is probably the fund which would have the largest opportunity to “fix” its revenues, if it so desired,’ he said.

Cazenove analyst Christopher Brown said renewable trusts may find it difficult to agree fixed price contracts when prices are so elevated.

The UK forward electricity curve for the next three year shows prices nearly doubling. The winter 2022/23 price is set at £630 per megawatt, up 83% on the price at the end of June, while the price will be up 101% by summer 2023.

Brown said Greencoat UK Wind and The Renewables Infrastructure Group (TRIG) have both ‘increased the discounts they apply to prices from the forward curve due to uncertainty’.

‘We think companies are unlikely to be able to agree fixes at these levels,’ he said.

If fixed contracts are off the table, the funds will continue to benefit from increasing power prices, which are ‘extreme’; versus recent history. The average price between 2017 and 2019 was £50 per megawatt but over the next five seasons the average price is set to be £409 per megawatt.

Brown said Greencoat UK Wind is a ‘top pick’ as it ‘does not typically fix its merchant power price revenues and is the most immediate beneficiary of higher prices’.

The £4.4bn fund has seen its share price rise by almost a third over the past year, above the 19% average enjoyed by the AIC Renewable Energy Infrastructure sector as a whole.

Greencoat UK Wind was the first renewable infrastructure fund in its peer group to increase its discount rate, effectively lowering its forecast of future cash flows, as it started to take a more conservative approach to inflation increases and interest rate hikes.

Jefferies analyst Matthew Hose said while Greencoat UK Wind was a first mover, an even higher inflation and interest rate environment could see other funds leave their current ‘sweet spot’ by ‘hastening discount rate increases’.

[marktime1231] 02/9/2022 14:53

Hang on. Most of the UK's wind and solar programme is "subsidised" already by way of long term price agreements based on renewable obligation certificates or CfD auctions. And nuclear too.

I think in the form of cap-and-floor price formula + inflation.

Isn't it?

My understanding is that the government and some generators/network operators are looking at revising older agreements, so that new caps are put on tighter in exchange for higher base prices in the longer term. It would ease the current crisis. The threat of otherwise having windfall taxes will encourage generators to participate. To some extent it will help decouple other sources of energy from the gas market.

As an investor the security of higher income in the long term, versus short term super surplus profits, will provide the outlook confidence to hold?

[mwj1959] 02/9/2022 10:13

And also from the FT...the EU thinking of doing something similar

"Brussels is recommending member states levy a share of the inflated profit generated by power companies not reliant on gas to help lower consumers’ energy bills, part of a plan to cushion households from soaring wholesale electricity prices.

In a draft paper seen by the Financial Times, the European Commission advises member states to set a maximum price non-gas electricity producers can book and redeploy any excess profit they generate above that level — a system akin to a windfall tax."

[mwj1959] 02/9/2022 10:01

From the FT this morning...if takes place would clearly have implications for renewables...

"Limiting the profits that low-carbon electricity companies make from high wholesale power prices is one of a range of options being drawn up by the government to help the new prime minister tackle the energy crisis.

The plan to offer electricity generators long-term contracts for their output at fixed prices well below current wholesale rates could knock hundreds of pounds off household bills, officials said.

It is one of several proposals being drafted by business secretary Kwasi Kwarteng, who is expected to become the next chancellor, that will be presented to the winner of the Conservative party leadership contest, they added."