The Renewables Infrastru... Share Discussion Threads

[stewart64] 30/1/2025 13:05

If you make new investments at 120p in the pound and they immediately trade at 77p then it is pointless growing the balance sheet or bringing in new power sources imo. All you can do is sweat existing assets and buy back your own shares until the pendulum swings..very profitably too if the Market is irrational with the pricing of stock.
The short term plan is to get debt to zero by 2030 which will impede new investment I would have thought.

[bareknee] 30/1/2025 12:25

Adam - yea, it'll be worse offshore and maintenance is almost certainly more expensive.

Like any kind of asset, wind turbines will have an expected lifetime and, if there's not a replacement plan involving new generation sources then, all other things being equal ( which they never are, but you have to assume something ) then the NAV of the company will drop.

But there's a pipeline for new generation over the next five to ten years which should help mitigate that. I guess the big question is whether or not the management are likely to get the big calls right on bringing new generation online or are they mainly sweating assets ?

[adam] 30/1/2025 11:27

Thanks for that. That is 10 years old and seems to be about onshore wind farms (refers to 16% over a decade). Whereas offshore in the NS I think is more like 4.5% per annum. I’m enquiring rather than stating.

[bareknee] 30/1/2025 11:11

Degradation is a real thing, but I'm not sure NetZeroWatch are exactly unbiased !



gives a more detailed account

All power sources degrade over time. For various reasons, gas, nuclear, coal and solar have drop offs too. You can mitigate this with good maintenance, bur there's always a time when it becomes economic to replace rather than repair.

[adam] 30/1/2025 11:09

I would expect so. If you’re losing 1% per annum it’s not an issue even over 15 years but I’m not sure what the loss is for the 10MW jobbies. Leading edge erosion is the biggest factor I think then surface roughness, delamination and cracking. The chatbots say anywhere from 1% to 10% which is quite a wide range! North Sea off shore will be a harsh environment.

[stewart64] 30/1/2025 10:56

Thanks for the chart Adam, could falling output by age be a result of maintenance becoming more common in older turbines as opposed to losing efficiency?

[adam] 30/1/2025 10:52

So broadly my understanding is that the larger 10MW turbines have blade tip speeds in excess of 200mph. So the damage done to the blades by wear and tear increases. Thereby the aerodynamic efficiency. Also mechanical maintenance downtime increases due to the increased stress. It doesn’t seem to be a big problem except for the largest of turbines.

[rogen83] 30/1/2025 10:42

its why TRIG utilise these guys
hxxps://www.res-group.com/

[stewart64] 30/1/2025 10:21

Should still factor in the NAV, they must write down the value of each mill each year to what is deemed its lifespan and falling output. The 14p or so write down in NAV over the last two years nevertheless appears to have been more about wholesale electricity prices and Bond yields than depreciation.

[colonel a] 30/1/2025 10:20

I think you need to quote a reputable technical source.

[adam] 30/1/2025 10:15

No I meant the amount of power they produce declines apparently. Much more steeply for the bigger ones. I’m not sure why.

[stewart64] 30/1/2025 10:02

Indeed, they are supposed to have a limited life, about 35 years? One assumes NAV takes all this into account. Whether they have properly reserved for decommissioning/ replacement is another factor.

[adam] 30/1/2025 09:56

What about declining capacity of wind mills as they age? Especially the bigger (off shore?) ones?

[stewart64] 30/1/2025 09:49

On zero earnings, you could amortisise NAV to zero over the next 15 years or so but if you paid out the capital in dividends you would still have about a 5% pa.return over the period so long as you didn't reinvest the dividend because of the huge NAV discount.
It won't be that bad, but shows the NAV discount is possibly irrational.

[stewart64] 30/1/2025 09:28

Pre Covid they always surprised to the upside, because of the increading nav. Once p/e came in at around five. These days they seem to pay out 7p and nav reduces by 7p and the result is zero earnings. I'm hoping at least we get some earnings for 2024...ie. nav is trimmed less than dividends paid out. And NAV certainly will get trimmed and a further downward revision in Q4 no doubt.
I remember some commentators used to be condescending on here about anyone that worried about wind speeds ( like the average is set in stone). Error Coco, Wind Speed and the weakening North Atlantic Conveyor matters hugely and has been a factor in UKW trimming NAV.

[perrygreen] 29/1/2025 13:34

Let's see.....we should have an update sometime in Feb. I don't ever recall TRIG surprising on the upside.

[red ninja] 29/1/2025 13:24

Trig is at 1.1x, but Kepler note (4/12/24) expects a rebound in 2025.

The rebound due to repairs to failing infrastructure and new assets coming on

[perrygreen] 29/1/2025 13:08

Divi cover falls to 1.3x for UKW. I think? TRIG is already at 1.1x

[red ninja] 29/1/2025 12:59

Well I hold UKW as well and results say :-

"Since IPO, the Company has delivered 1.8x dividend cover and, with its revised generating budget, remains on course to generate (on average) dividend cover of 1.9x over the next 5 years. This would deliver over £1 billion in excess cashflow over the next 5 years for allocation to the advantage of its shareholders."

Sounds reasonable for holders wanting a reliable dividend assuming they can deliver.

[perrygreen] 29/1/2025 12:18

UK Wind (UKW) Q4 results don't make great reading or read across. NAV down 4.7% over the quarter. Dividend cover down....TRIG always manages to underperform them so maybe current TRIG rating and share price is the new norm?

[red ninja] 29/1/2025 09:13

A key thing would surely be if we see more rate cuts and gilt yields coming down.

Rachel is trying to boost growth on the fringes of the economy, but unfortunately her anti employment NI tax raid has given the economy a hammering,

[pinemartin9] 29/1/2025 07:54

I think it's just a question of waiting for Renewables to come back into vogue.

[aqc888] 28/1/2025 20:11

Ok, I’m probably a bit weird in my continuing obsession with Russia cutting cables all over the place if things deteriorate. Such action would obviously cause a dangerous reaction for them. However that hasn’t put them off lately.

In any case I’d imagine they’d cut more significantly cables rather than wind farm cables which are close to land. However on reflection such action would undoubtedly raise prices of electricity substantially, so might not be disastrous for trig, also would be fairly temporary.

Meanwhile, even with terrible wind speeds in recent years trig is still getting a tremendous yield.

There is clearly some fear in the market regarding trig. It just seems too good to be true right now

[yump] 28/1/2025 19:23

Careful what you wish for…