Simec Atlantis Energy Share Discussion Threads

[letmepass] 10/4/2021 02:00

Should be some resistance at 8p unless institutions selling out for a reason

[w1lbur01] 09/4/2021 17:33

Decided to buy in today has potential in several fields also very beaten down. Small buy to start

[water mountain] 09/4/2021 16:32

Yes the concept was discussed last year although caveated with "but not at any cost". The consultation closed in Jan 21 and the auction will occur in Q4 21. question is whether there is sufficient lobbying / will to carve this out and accept it will cost most than other comparable technologies, esp given the current state of government finances. Watch this space....

[jonwig] 09/4/2021 15:07

@ WM - CFD for tidal. Late last year HMG were looking favourably. Has this been updated since?



UK Energy Minister Kwasi Kwarteng is mulling ring-fencing capacity in next year’s Contracts for Difference round for wave and tidal energy projects.

The BEIS minister said he is “very sympathetic” to running a “pot within a pot” to support development of marine energy schemes.

“That means that within pot 2 there would be a reserved quantum for marine projects, particularly tidal projects, to be able to compete for,” Kwarteng said during a debate on the sector earlier this week.

[water mountain] 09/4/2021 13:13

Thanks for the thoughts and comments to which i will try to briefly respond;

Uskmouth / proof of concept - i understand there could be more conversions done or sale of pellets to others, depending on the particular country requirements. However i think there will be competing tech for that land / those grid connections that better fit with net zero. Either way the gateway to all this is the Uskmouth project.

Drax - apologies i was not very clear - the ref to Drax was more around the challenges in getting the conversion done to an existing plant, where others failed. They had a more straight forward and well understood fuel supply agreement, well understood by lenders, being biomass.

Fuel supply - whether the tech allows an easy switch from plastic to wood pellets without major adjustment to dwell times and storage equipment i didn't know, but lenders will need certainty on long term fuel supply agreements and like markets that they are familiar with eg biomass.

CCUS - for me this is all about the economics - incredibly expensive and needs support and collaboration and regardless at least a decade off, if ever at Newport.

Maygen / tidal - sorry if not clear but my understanding is in Q4 this year technologies will compete via a CfD auction by bidding in prices needed to underpin their projects ie it comes down to cost. Due to underinvestment of tidal i simply don't see how this can compete vs floating wind, which is just an evolution of the billions spent on wind or advanced. Offshore grids are already partly in place given the mass development to date. I guess we will find out!

Hydro - agree with points made.

@ Clabburn
Tidal - my concern is if we are not able to carve out a CfD "pot" for tidal it simply can't compete - i can't see a special deal done for tidal as it has been for nuclear and CfD auctions come round every two years and missing this next one puts tidal even further behind, whilst other tech gets the support required. It is purely down to this CfD process that wind and solar are now so cheap / successful!

I think your summary of Hydro and Usk makes sense although by lucrative returns i would expect them to be similar / no more that other infra projects of this nature, where normally the big money is roll out of subsequent projects.

Have a good weekend.

[clabburn] 09/4/2021 10:09

Enjoying this discussion of the fundamentals. @Water Mountain effectively summarises many of the risks and challenges investors need to weigh up when it comes to this stock. The flip side of course is that a £50M market cap will look tiny if the company are able pull off either commercial scale tidal or the energy from waste conversion concept. For tidal, it's absolutely about reducing costs and proving the technology is durable enough that you dont need to be retrieving and fixing turbines every 6 months. I think they can do this (their new turbines, sub-sea hub and variable pitch system are all major sets forward) and if the cost gets below nuclear and in line with (or cheaper than) firmed renewables (e.g. a wind farm + a grid scale battery) then a GW or two of tidal will be massively beneficial to the grid and should be competitive with ACT and floating wind. A fully developed Meygen for instance would go someway towards alleviating the closure of Hunterston B later this year.

I think we all realise that non of this is guaranteed and there is a non-trivial chance of the share price going to zero. That's where a small but profitable hydro business becomes quite useful. If it came to the crunch they could potentially shrink down their ambitions, use the hydro business to pay the bills and go back to being a tidal R&D company living of grant funding and sales to small pilot projects around the world. Uskmouth gave them an opportunity to achieve major scale quickly and diversify their business. If it comes off they will make a lot of money from it (gate fees as has been said are lucrative and economics of the model are extremely strong). They is however a significant chance that this has arrived 5 years too late when the focus of western governments is understanding on zero carbon today rather than bridging solutions or incremental improvements to the status quo. I do worry that if they dont convert the Uskmouth then it quickly becomes an expensive decommissioning liability but there is still value in the grid connection and opportunities to develop the site in different ways.

[jonwig] 09/4/2021 08:36

@ Water Mountain.

I haven't the technical expertise to respond in any systematic way to your analysis of the projects - nor much time! however, I'll make a few points.

Uskmouth. You don't mention that this is a feasibility study with Mitsubishi rather than a standalone project. Call it proof-of-concept engineering?

You mention Drax - they get their wood pellets from mostly the USA and Canada which isn't exactly low-carbon activity. (I know Drax were experimenting with long grass grown in some trial fields in East Yorkshire but that seems to have been abandoned.)
Isn't this much the same as pelletisation of non-recyclable waste originating in the UK with a smaller footprint? It strikes me as a similar endeavour to other biomass and landfill gas projects.
If, as you suggest, we'll run out of this fuel, there's always wood pellets!
Incidentally, I'd treat CCUS as a separate issue.
The risk is there - planning process - of course.

Meygen.
This appears to be a viable project and the undersea generation will be more reliably constant: baseload, even.
You compare it with windfarms, but the north and west of Scotland aren't really suitable geographically. I don't know enough to compare depreciation of Meygen against a wind turbine (floating or fixed) but I'd hazard that the cabling of Meygen is a lot less than that required for a multi-turbine array.
You can add the JV with Normandy which would be geographically unsuitable for turbines but the tides are strong.

Hydroelectricity.
This is a bread-and butter business, and many renewables and infrastructure funds like mini-hydro projects because of reliable performance and low depreciation and running costs. (They love it in Sweden, which has the lowest electricity prices in Europe.)

[shirley83] 08/4/2021 11:51

At some stage this will take off. So many buyers here. Being held back

[kron76] 08/4/2021 10:52

All perspectives welcome if there's a thought process explained and some effort to justify - clearly uskmouth is a big project with many hurdles, which we are mostly all aware of from a risk/reward perspective and I'd be lying if I said I could go through each point and cross check their validity.....

At least they didn't just post the usual '2p next week' esq line you see so often from posters on advfn!

[jonwig] 08/4/2021 10:36

@ Water Mountain.

Well, thanks for that as it makes some statements which are material and can be cross-checked. Obviously since most people posting here (including myself) have long positions, you're sure to get constructive feedback.

ADVFN member since yesterday and just this one post. Some may query your credentials, I wouldn't dream of doing that!

[water mountain] 08/4/2021 10:26

Rather than sentiment, lets review some of the fundamentals.
It seems all management can do in the current situation is regurgitate the previous mantra in a continued attempt to support value. Taking these in turn;

Uskmouth – this is a huge endeavour, arguably underpins most of the current perceived company valuation. I struggle to understand the continued comparison to coal or even gas fired plants in a new world focussed on net-zero. To then throw in CCUS in the way portrayed, as if they will complete some demo work then bolt on a CCUS unit in the next couple of years, hugely underestimates the cost, complexity and collaboration required to complete CCUS project. The reality is they are part of “cluster”;, of which there are several, with the lead projects being in Teeside and the Humber. CCUS will be focused on areas of industrial / carbon intensity and where there are offshore fields to deliver the CO2. These projects, if viable will take decades to be operational.
In terms of the now overdue project development this is presented as if financial close in round the corner and almost a formality once planning is secured. Like all projects of this nature, this process is largely binary – you either jump all the hurdles and have a project or trip up on any and you have an ex-coal plant and some land and significant sunk development costs.
Although there has been some chatter about CfD support I don’t see this ever happening as the EfW sector survives from gate fees alone. So you have to consider this a merchant plant with gate fees on the plastic waste.
For financial close you need planning permission and other permits, a fixed price EPC contract to build it, robust and sustainable “fuel” supply contracts and project finance, plus other more straightforward contracts like a PPA to sell the power and an O&M agreement etc.

Planning permission – the fact the Welsh government has called this in on the same day they introduced a moratorium on EfW > 10 MW is surely no coincidence. A similar situation occurred recently to the existing Kemsley EfW in Kent. Being over 50MW and thus of more national interest, this was called in by the SoS and later refused and one of the key reasons sited was the fact it was not burning “local” waste. This repeated argument that planning is only needed for a “few tanks outside” and the fact the plant used to be a polluting coal plant, such that any lower emissions from the new scheme gives them an automatic green light is non-sense and frankly misaligned with planning fundamentals and the recent shift in the governments net zero agenda.

EPC – trying to secure a fixed price EPC to convert a 50-year old plant and provide performance guarantees in relation to burning a new type of fuel is very challenging. Drax is the only plant I know that just managed to do this. It will also be costly to transfer such risk, if at all possible. We have no news on who this vendor is yet.

Project Finance – announcements were made on 20 Aug 2020 about “100% debt finance being in place” which was actually a “6 month exclusivity period” for due diligence with a South Korean lender. We’ve heard nothing since and I find it interesting that all the “go-to” lenders for such projects who have done much of the FfW or biomass schemes in the UK are not involved. Part of their challenge will be lenders renewed focused on lending to net-zero projects to maintain their profiles in addition to other project risks that I don’t think are yet well mitigated vs other projects that have succeeded.

Fuel supply sustainability – simply put, can you really prove a 20 year supply of these “unrecyclable” plastics ie are society going to find it acceptable to still produce and use these knowing they end up in landfill or later burnt? Even if that’s the case will others not find a better use if the gate fee still applies ie “cracking̶1; then in an improved industrial process for re-use?
PPA – a regular PPA to market should be straightforward. I thought the view to simply private wire to a Data Centre or a local estate more of a headline grabber than a reality. These schemes need careful planning and negotiation and rarely succeed.

Tidal Business – in theory this should form part of the renewables mix and can form part of predictable green generation. This has been supported by government through grant funding to date and I think the current challenge is that other renewables have advanced so much in the last decade that tidal stream will now look expensive. Offshore wind is now progressing to floating offshore wind to make use of stronger wind further offshore. Currently, in the CfD regime tidal will have to compete against floating offshore wind and Advanced conversion technology (eg gasification) and given the focus on the other two technologies with big players already behind them I think it will be challenging for tidal to compete. To justify its own CfD category will require serious lobbying for relatively low levels of capacity that require relatively high levels of financial support.

Hydro – this looks to be where EBITDA can be generated through project and construction management and provision of O&M services, although margins in these sectors are not particularly high and this is relatively small scale.

So in reality the key upcoming determining factors will be the Welsh Gov decision on planning, announcement of an EPC contract and a financial backer for Uskmouth and for the sale of tidal turbines and demonstration of these, the creation by BEIS / government of a dedicated CfD “pot” or alternative support for tidal this summer and ahead of the Q4 auctions.

[jakecat1] 08/4/2021 10:09

I would say that savvy investors... many of whom will have fresh ISA allowances burning a hole in their pockets... are becoming increasingly aware of under the radar and unfashionable green energy stocks...The really savvy ones will also be looking at charts to engage in a spot of bottom fishing. Buying at the low points following the last few months of volatility.SAE ticks both of these boxes for the savvy investor in my view...

[kron76] 08/4/2021 10:01

More like a change in sentiment I'd say - due to the RNS providing a timely reminder of the overall proposition that SAE offers and some perspective on the recent fall due to a stumble in the uskmouth project.

Unless of course there really was a buy high sell low investor out there......

[clabburn] 08/4/2021 09:56

Looks that way. I'm expecting turbulence in the share price most of this year. Not many catalysts on the horizon until Q3 as far as I can see. There could be surprise announcements of international conversions in Asia or fuel supply deals elsewhere but I suspect Uskmouth may have set future deals back a bit. I'm planning to hold the rest of the year at least as things stand and look for progress with tidal.

[letmepass] 08/4/2021 09:25

Seller cleared then

[clabburn] 07/4/2021 13:30

Agree about Uskmouth. Its always been a contentious one as its currently a mothballed power station emitting zero carbon and with no prospects of restarting using coal as the fuel source. Starting it up again using waste instead of coal isn't necessarily going to reduce CO2. If we are being generous, it may displace some of the other coal power stations still running or the most inefficient gas stations from the merit order but the CO2 benefits are not clear cut in a country like the UK. It would be a different story if the conversion was happening with an active coal fired power station. For me its biggest selling point is the fact it is dealing with a significant chunk of our non-recyclable waste and is a better option than landfill or exporting it to poor countries.

For carbon capture Im personally a bit skeptical. I think its a must for heavy industry but so far at least all the attempts to make it work for power stations have been expensive failures. Time will tell though and we should probably keep trying with the technology. Unlike a lot of green minded folk, Im not against it in principle. If we can make the technology work then it will massively increase our chances of getting on top of climate change. Crucial when you look at how many new coal stations China are still building every week.

[kron76] 07/4/2021 13:00

Clabburn, am with you on the pace comment - always seems to have been the case though that this side moves very slowly. I suspect it needs the costs to reduce so its easier to see it as another full blown string to the renewable energy charge bow.

As for Uskmouth, I was also very pleased with the addition of carbon capture (albeit with much work to be done here) - not new news of course but initially didn't like the fact this was missing from the project and while better than burning coal, it still wasn't really environmentally friendly by just changing the fuel type. Carbon negative with CC they said.........

Adding CC for me does provide much more potential and surely the widens the market for future conversion project across the globe. Could present a more longer term solution to the 2 thousand coal plants rather than the more short term 'transition' tech position.

[clabburn] 07/4/2021 12:14

Agree with Kron76. The hydro business is a bit of a dark horse. It's actually well established and profitable but often overlooked (including by me). I had hoped for more progress on tidal if Im honest. The successful deployment of the sub-sea hub is definitely a notable success but Raz Blanchard is still at the early design phase and Meygen will sink or swim depending on what government support comes through. After years of disappointment Im categorising that as 'believe it when I see it'. Three out of four turbines being out of service is not ideal either. That said, there's hopefully enough here for them to keep going for the rest of the year and hopefully post continued revenue growth when we next see financials. All it would take is for one of their three big projects to come off (Meygen, Raz Blanchard or Uskmouth) for this to completely turn around. Clearly no guarantees though.

[kron76] 07/4/2021 11:24

So in essence nothing much has changed much from when this was 24p...the timetable has probably slipped a bit and the market is/has been punishing as you expect I'd guess.

Moving forward on hydro projects as well so see this as decent update and thought it would recover more of the recent losses but not so far.......

[skinny] 07/4/2021 10:13

.




SAE is pleased to provide the following operational update across its business.

Uskmouth Power Station Conversion Project

Following the decision by the Welsh Government to 'call in' the planning application at Uskmouth, and their announced moratorium on all new energy from waste projects, SAE remains fully committed to the project and is confident the project complies with all relevant Government policies and legislation.

Built in 1959, the Uskmouth power station operated using coal until 2017, when it stopped operation, in preparation for a fuel conversion to move away from coal and return to operation using a new, more sustainable fuel, made from non-recyclable material, originally destined for landfill. The converted power station could be an important asset to Newport and Wales and the global fight against climate change. There are over 2000 coal fired power stations operating around the world today, and this number is set to increase. The ability to accelerate the global transition away from coal has significant implications and SAE is proud to be a leader in this field. Uskmouth power station will halve the carbon emissions from when it operated using coal. In comparison to other thermal technologies operating today, the project will be one of the lowest emitters, on par with the most efficient combined cycle gas plants.

SAE was pleased to announce (17 March 2021) that it is a delivery partner in the South Wales Industrial Cluster, which has successfully secured grant funding from Innovate UK. The funding enables SAE to carry out feasibility work on carbon capture usage and storage (CCUS) which would result in the converted Uskmouth power station becoming carbon negative. This would make Uskmouth a leader in both coal replacement technology and carbon capture and utilisation technology.

The conversion of the Uskmouth project will deliver critical power to Newport and the National Grid. Newport continues to attract new industrial companies, with many requiring dependable, sustainable and dispatchable power, which currently is unable to be met by renewables. A converted Uskmouth would be the lowest carbon solution and avoid the need to build new fossil fuel powered stations to meet these requirements. With the opportunity for CCUS on site, Newport could lead the world in attracting and powering green industries.

The planning application is for external infrastructure required to transport, store, and convey the fuel pellets, which the planning officer for Newport City Council had recommended approval of planning permission. On 24 March 2021, the application was "called in", which means the application will now be determined by the Welsh Minister and not the local Council. SAE will continue to engage with Welsh Government to understand the timeline for a decision and will update the market when details of the expected timeline are provided.

On environmental permitting, SAE made its final submission to Natural Resources Wales (NRW) on 19 March 2021 and is confident it demonstrated the project's compliance with all relevant legislation. SAE will continue to work with NRW to address any issues if raised. A decision from NRW is expected in Q3 this year.

Tidal

SAE continues to work with UK Government to secure the necessary support mechanisms to allow the further rollout of tidal stream technology, especially the next phase of the MeyGen project. Once operational, this project will be the largest tidal array ever built and continues to be both a pioneer and a flagship for both the industry and the technology globally. We expect the buildout of MeyGen will unlock significant international opportunity for further projects and continue the reduction in the levelized cost of energy from tidal generation towards that of more established forms of renewable generation. The UK Government has indicated that it will announce the details of the support mechanisms this summer, with the auction round taking place towards the end of the year. Operationally, MeyGen continues to provide vital learning to help the design and development for our future projects. Currently, three of the turbines have been moved to our workshop in Nigg to allow the team to complete onshore service works. We expect one of the turbines to be returned to service very shortly with the other two scheduled to be returned to service later in the year, once their service works are completed.

Project development for SAE's Raz Blanchard demonstration array, located between Alderney and France, is making good progress as it looks to vary the existing site consents and permits to enable deployment of the next generation of SAE's tidal turbine which is designed to enable a step change reduction in the levelized cost of energy from tidal generation. The project will include four turbines, connected through a subsea hub, with a single export cable back to shore. The subsea hub has now been proven through its successful installation at MeyGen in 2020 and the design of the array will implement lessons learned from this deployment. Additional offshore site surveys are planned for Q2 2021, which will allow for more the detailed resource modelling required for the site-specific detailed design.

SAE welcomes the recently announced French legislation, which will help provide the necessary revenue support through a competitive power purchase contract for the project. SAE and its project partner, Agence de Développement pour la Normandie, will continue to work closely to progress this important project.

Hydro

SAE is currently managing the construction of three interlinked hydro projects, with a combined total installed capacity of 5.8MW. The first project was commissioned in March 2021, with the second and third projects due to be commissioned in the next few months.

A separate fourth project commenced construction in January with commissioning and first generation due in November 2021.

Following commissioning of these projects, SAE's Operations and Maintenance team will take over the day-to-day management of each of these schemes. The SAE team continues to manage a broad portfolio of hydro assets and is working on several innovative and challenging refurbishment and optimisation projects to maximise the performance and economics across the portfolio.

Recent Press

SAE notes recent media reports involving its largest shareholder, SIMEC UK Energy Holdings ("SUEH"), a GFG Alliance member.

SAE does not comment on press speculation relating to the operations of its shareholders, but, given some misstatements, the Board wish to make clear that SAE is an independent company whose shares are admitted to trading on AIM. SAE understands SUEH currently owns approximately 43% of the issued share capital of SAE.

SAE is not a member of the GFG Alliance and has no connection with any of the funding mechanisms used in that organisation. SAE is the sole owner of the Uskmouth Power station.

We look forward to continuing to update the market on our exciting portfolio of projects in the coming months.

[letmepass] 01/4/2021 03:04

Volume from the 8th march has been massive. Just a matter of time before seller clears

[presidenttrump] 31/3/2021 21:22

Massive upside coming here in the near term. Hope you all topped up down here. We won't be here for long.

[gbjbaanb] 31/3/2021 16:39

Yes, it's been a good little roller coaster over the last year, but remember when it was 5p? Yes, only as far back as June 2020.

A buy yesterday could be as profitable as it would have been back then. Of course, knowing when to stop 5 is just as important but that's another story 😀

[clabburn] 31/3/2021 10:04

For what it's worth, I've been in this stock since 2017 and have had some luck from averaging down when it's hit low teens and single digits before so its not impossible to make returns. Obviously not a safe bet though and it's going to be a rocky few months ahead. Desperately need progress on tidal to prove that there is a business here that isnt reliant on the coal station conversions. Not impossible we will see that in 2021 but Im staying cautious.

[oldbronze] 31/3/2021 10:02

Looking very promising !