Greencoat Uk Wind Share Discussion Threads

[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."

[marktime1231] 31/8/2022 12:13

I wonder if UKW has eyes on a stake in Hornsea Two now it is fully operational, to go with its recent acquisition of 12.5% of Hornsea One? The more modern installations are more efficient with higher load factors eg they still contribute in lighter wind speed conditions.

The share price here going well no doubt thanks to inflation forecasts, extreme wholesale prices this winter, and thankfully a forecast for stronger wind speeds after a mostly calm August.

[nerja] 24/8/2022 21:32

This was pretty much the same price two years ago slightly lower divi, Bsif was higher two years ago same divi so where is the great profit been I can’t see it on any of these solar wind trusts for shareholders anyway.

[c3479z] 24/8/2022 21:22

are the Rocs safe as they were contractual commitments?

[ammons] 24/8/2022 20:57

When is a windfall tax not a windfall tax? When it is given a different name or it is a permanent change of tax arrangements. I dont see how the renewables can escape unscathed.

[ammons] 24/8/2022 20:55

hxxps://www.telegraph.co.uk/news/2022/08/20/kwasi-kwarteng-rein-green-profits-energy-price-cap-set-soar/

==============

Kwasi Kwarteng to rein in green profits as energy price cap set to soar to £6,000

Business Secretary wants firms to stop selling cheap renewables at high wholesale prices, as inflation squeezes household budgets.....................

The Telegraph can reveal Mr Kwarteng, the Business Secretary, is also preparing to intervene in the energy market in an attempt to stabilise the “crazy” profits of renewables firms.

[petewy] 24/8/2022 20:00

And the rest of them....YCL er

[smidge21] 24/8/2022 16:51

Methinks that it is premature to judge that Truss can be trusted

[marktime1231] 24/8/2022 16:38

Truss is on record as against windfall taxes.

Reducing the size of the state, squeezing public sector pay while there are record private sector vacancies, promoting business, capital investment and capitalism over nannyism, lower taxes, tough welfare is on the cards.

[cc2014] 24/8/2022 15:17

The problem is that the government can't keep borrowing to fund every problem.

And people can't afford any more tax

So, the only solution is a transfer of wealth from the invidividuals/companies to the government

[ammons] 24/8/2022 13:15

Seems distinctly possible that the renewables will face some sort of windfall tax (maybe by another name) once Truss takes over and Kwarteng becomes the chancellor as seems likely.

hXXps://unherd.com/thepost/wind-farms-are-profiteering-during-britains-energy-crisis/

Unherd is a right wing thinking publication. Other similar publications are saying pretty much the same thing.

[growthpotential] 12/8/2022 15:46

China guzzling too much oil and burning too much coal

[11_percent] 08/8/2022 08:14

Off to a nice start this morning......"buys" rolling in.