Nextenergy Solar Share Discussion Threads

[apollocreed1] 09/6/2022 14:31

I note that the companies running wind farms (or a mix of wind and solar) as opposed to solar are always trading on higher premiums. Is there some reason for this? Maybe windfarms generate in summer and winter, whereas solar only does well in the summer

[marktime1231] 09/6/2022 12:34

Imbecilic the centre half for Dinamo Zagreb?

Good questions CC, may well be down to the high gearing and fears over the cost of future expansion, and the choke on the upside from wholesale energy still running at 3-4 x normal. As NESF say themselves solar is relatively cheap and easy to install so maybe there is less prospective NAV growth in their development programme compared to others in the renewables sector. On the other hand the retrofit of battery storage is a positive initiative.

Despite the celebration of 100 installations today it demonstrates NESF are invested in lots of little schemes, scaling up overdue. The business model is more conservative, less exciting, less well funded than alternatives. That said, I am very happy to be here in the foothills of what I expect will be good total returns led by top drawer yield, ideal for my income portfolio.

[cc2014] 09/6/2022 10:28

I'm trying to work out why there's a discount to NAV here and why it seems larger than I think it should be.

My thoughts are:

The discount rate of 6.3% is a bit lower compared to the peer group which is around 6.5%. However, that only comes to 0.7p per share.

The 4.75% prefs look like expensive funding to me, compared with traditional debt. However, with rising interest rates they could in the end look ok. If the base rate goes to 2.5% or 3.0% that would be the case. At least the dividend on them is fixed.

I can see they have locked in most of the income for the next year or so there is little opportunity to take further advantage of rising generation prices until around 2024. However, they've got long term inflation in at 3% and that seems low to me at least for the next few years.


Any thoughts? Do they have too much gearing?

[jonwig] 08/6/2022 10:20

Woodhawk - indeed, I can't produce an argument against that! I wasn't arguing in favour of a windfall tax, only that it wouldn't deter new investment in wind/solar.

Re your general point, an example is facing me right now. We've booked some expensive advance rail tickets for the week 20 June. It's quite unclear what wwe can do. Other EU countries have a guaranteed minimum service obligation, we do not, even though it was promised at the last election, I believe. They should have forseen rail disruption before it happened - the signs were there.

[nimbo1] 08/6/2022 10:16

I sold my BSIF from the placing to buy more here - as doesn't make a lot of sense that bsif at a 4% premium and nesf at a 3% discount... even though of course in the investment trust world this can continue for a long time.

[woodhawk] 08/6/2022 10:07

jonwig,

Most of this imbecilic and floundering Government's 'policies' are poorly conceived panic measures thrown together with zero real thought in order to distract from Johnson's latest failings.

[jonwig] 08/6/2022 09:43

I think there's a misunderstanding here about "excess profits" made by companies such as NSEF. The old subsidy scheme (ROCs) really has led to high profits (see the chart on their investor relations page), but this was discontinued in 2017, and new investments are made under the FIT scheme, where profits are capped and collared. In other words, this tax wouldn't inhibit new investment.

The ROCs scheme ends in 2037 for existing operations started before 2017. Basically, an "excess profit" is one which could not have been forseen and which is not earned by good management.

I think O&G producers have a strong argument against the tax, in that they were subjected to pressure to diversify out of fossil fuels and embrace renewables. The government is now complaining that we are short of gas because of under-investment.

[panshanger1] 08/6/2022 09:15

Regaining its mojo here after the F/T article

[cc2014] 27/5/2022 12:09

Someone really doesn't like NESF. I can't see the point in selling here unless you are switching into say DRX or SSE and that's going to be a whole different risk/reward profile.

I think in time the energy industry (renewable,oil and generators) is going to campaign hard and long around Sunak's tax grab.

How is any industry supposed to make long term investments plans when they don't know what tax is coming and they can't pass it on to consumers. I think Sunak will suffer for this in due course. Long term would you invest in the UK given this policy?

[woodhawk] 26/5/2022 13:43

Yep, reckon that's pretty much it, GBCol.

[woodhawk] 26/5/2022 12:32

Well it's not happening - certainly not at the moment. Under review for 'SOME suppliers'.

[woodhawk] 26/5/2022 12:05

It's not all coming from Windfall tax at all.

[marktime1231] 26/5/2022 11:53

So is that the plan, raid energy companies for £8B (20 million homes x £400) now to help pay the fuel bills this coming Winter, and balance the books / incentivise green shifting by increasing the tax relief available on future renewables investment? Sounds like a neat compromise.

It remains to be seen how he plans to raise £8B from energy companies in the first place, I don't see how it can be limited to raiding profits made in the UK by UK domiciled oil and gas companies.

Deep breath.

[woodhawk] 26/5/2022 08:26

CC2014, that sounds like an extremely plausible outcome.

ammons, I believe the chancellor has a nice little pot already courtesy of additional recent tax receipts.The 'Windfall Tax' won't come anywhere near the funds required for the bailout. Companies will be able to negate it by investment 'commitments' it seems. IMO the 'Windfall Tax' is just a sop to the masses.

Sunak is addressing the Commons at 11.30am, so we'll soon know. CORRECTION - it's at midday.

[ammons] 26/5/2022 08:26

I dont agree cc2014. I am against windfall taxes but taxing the oil and gas companies is very easy money at this time. The cash to help reduce energy bills has to come from somewhere and O&G is a very easy target at the moment to get part of it. That said, I hope I am wrong and you are right.

[cc2014] 26/5/2022 08:15

imho it will be a fudge.

No taxes on renewables as impossible to sell to world in light of global warming

Taxes on oil and gas industry will be taxes but so little additional investment will be required to mitigate them it won't really be a tax. It will look like a tax so they can keep public happy but it won't really be a tax.

The cash will instead come from more borrowing or Sunak will sort some tax in next budget

[tuftymatt] 26/5/2022 08:00

It's a story being updated by the looks of it as the paragraph below isn't as positive now as it was over an hour ago.

"But proposals to tax income from other electricity producers, such as some older windfarms and nuclear plants which have also seen windfall gains, have been shelved. And companies that increase investment in the UK could earn a discount on the additional tax."

Maybe common sense won’t prevail 😩

[woodhawk] 26/5/2022 07:51

I do hope that you're right, tuftymatt.... but I don't see any news that the 'windfall tax being aimed now JUST at oil and gas companies". Any links to confirmation of that?

[tuftymatt] 26/5/2022 06:58

Looks like this should bounce today based on the news of the windfall tax being aimed now at just oil and gas companies. Common sense prevails as expected.

[norry2] 25/5/2022 17:19

Maybe more undervalued to start with

[cc2014] 25/5/2022 16:48

#an informed and not well researched guess.

The FT article from yesterday IIRC mentioned wind specifically, so I guess somewhere along the line some think the Chancellor will tax wind but perhaps not solar. Ridiculous I know but that's the best I can come up with.

FSFL and NESF have come back better than the rest

[chucko1] 25/5/2022 16:10

NESF basically off just 1% from its pre-FT-article price. About right. Not the same recovery from UKW and I am not sure why at this stage.

[marktime1231] 25/5/2022 12:05

Amused by the "tilting at windfalls" headline until I saw this



The FT plagiarising ???? or just recycling a clever phrase.

Pleased to see the sector bouncing back strongly as fears subside, a bit early to be having a party though. Oh dear, don't mention party.