Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
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Welsh assembly will sign off Usk , you heard it here first :)
Uskmouth
The Welsh Government 'called in' the planning application at Uskmouth in March 2021. The planning application related to fuel storage, material handling and other ancillary infrastructure to be constructed external to the existing power station building. As a result, the application will now be determined by the Welsh Minister and not the local Council.
Tidal
Atlantis 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.
UK government changes to the UK CfD renewable energy support scheme announced in December of last year creates an opportunity for tidal energy to compete against floating offshore wind. The next auction (Allocation Round 4), which is due in the second half of 2021, will see a separate auction “pot” for tidal energy and floating offshore wind. Tidal previously competed with better developed normal offshore wind, where costs have dropped substantially, making it hard for newer tidal technology to realistically compete.
The new CfD arrangements could give Atlantis a chance to add capacity at its existing MeyGen tidal project which has already exported 35GWh to the grid.
MeyGen has a seabed lease allowing for up to 398MW of tidal capacity with currently 73.5MW fully consented and with grid capacity.
Atlantis’ second generation turbine, with an increased rotor diameter and lower weight foundations has already lowered costs. A proposed subsea hub could also reduce connection costs and on-vessel servicing will also to reduce operating costs further.
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. 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 future projects. Currently, three of the MeyGen turbines have been moved to Atlantis’ workshop in Nigg to allow the team to complete onshore service works. One of the turbines is expected 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 the group’s Raz Blanchard demonstration array, located between Alderney and France, is also making good progress.
Hydro
Atlantis 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 this year
2020 results:
£12m revenue
- £6m Employee Costs
- £6m Depreciation of Uskmouth
- £3m of other depreciation
- £8m subcontractors
- £4m finance costs
-£4m Other Costs
= £19m loss for 2020.
So what changes in 2021? (I'm assuming the things SAE have told us are in place)
1. 330MW by 2021 @ £300/MW x 365 = £27m Revenue
I'm basing 330MW on this link: https://simecatlantis.com/investors/our-business-in-numbers/
I'm basing £300 per mwh on there being a CFD this year from HM Govt for Tidal Power.
And also found Nova Scotia tidal generation is around that - see this link:
https://www.marineenergywales.co.uk/wp-content/uploads/2018/05/ORE-Catapult-Tidal-Stream-and-Wave-Energy-Cost-Reduction-and-Ind-Benefit-FINAL-v03.02.pdf
2. Consulting Revenue grows +10% = £7.1m
3. OPM Revenue grows + 10% = £2.8m. Total Revenue £37m
4. Uskmouth gets approved and would add 220MW but let's say that's not ready until 2022.
5. 100MW New capacity is added in 2021 ready for 2022
6. Subcontractors (presumably brought in because of Covid travel restrictions although I don't know this) reduce 75%
7. Other Costs +15% and Employees + 10%
2021 estimated £37m revenue
- £7m Employee Costs
- £6m Depreciation of Uskmouth
- £3m of other depreciation
- £2m subcontractors
- £4m finance costs
-£4.6m Other Costs gets us to a
£10m Operating Profit for 2021.
Obviously the picture gets brighter still in 2022:
- Highly profitable CFD generation contracts (which could be sold on rather than being income bearing) (this isn't yet confirmed but seems likely in my opinion)
- Subcoal 50% JV - mix of waste plastic and biofuel
- Potentially development of Carbon Capture IP (10 football pitches of Algae under the river Usk)
- Grants from the UK, Scottish governments
- JV with a large player (as we've seen with Ceres, ITM etc)
- Contract Wins to convert the 10,000 coal power stations worldwide rapidly closing using Uskmouth as the poster child.
- Contract wins for tidal turbine builds
- Tidal turbine asset sales to utilities to fund growth.
- Potential for a takeover bid from an energy player, private equity
I don't believe the market appreciates the highly profitable and transformative potential and therefore why I own this share.