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Don't agree with your thread given HMGs record.
Tidal energy had a recent airing in Parliament, though mostly about tidal range rather than tidal stream.
https://hansard.parliament.uk/Commons/2024-01-10/debates/25B36A79-F234-4E02-9F62-5E79682C7AB9/TidalRangeEnergyGeneration
General mood seems to be disappointment that projects move slowly, if at all.
Some times it can be better to fly under the radar. Once this BB is flooded with rampers what usually follows are derampers then the conversation gets messy. The true nature of investors come to the foreground when they set themselves varying agendas.
We should see some growth here this year and maybe more than expected if a labour environmentally friendly government gets in.
Look at where nations are going with centralised crypto. BESS is an absolute necessity if this is ever too be centralised by governments. If you don't have guaranteed power you can't get a sale or a purchase which imho puts an end to the cbdc argument if which the powers that be seen to be insisting is the future.
Guaranteed power will be funded by HMG and other governments if they are too travel down this path.
BESS it seems it's the only way we can guarantee power. I forsee big business going big once they realise.
I'm regretting it, because it's so depressing and shattering seeing this seen by only us and ignored by anyone else. :(
Am I wrong in saying that we are still in the research and development stage. The business is capturing the data and making its plans on said data.
I presume that the natural route for Proteus would be too eventually own it's own ship and team to provide the service at source of installing removing turbines. That would require some heavy investment and debt of which would not be SAE. It is if course scope to gain a bigger share and go in to cahoots on this project. I sometimes think though that some of these turbines have been turning for a long time without the need to replace, remove etc. It is a very distinct possibility that these turbines do not need to be bobbed in and out like a Chocolate biscuit in a brew it's just because of the data gathering. I'm a man of little knowledge in the sector and only assuming the possibility.
Ditto.
Given the portfolio of Mr Black this may actually be positive as the financial support for Meygen could come from that area that Mr Black works in via investments in renewable energy market.
The issue still relates to turbines.
This is ownership and agreements.
If Proteus become the big turbine builder then it will help.
Can a plan be deployed where the company (via Proteus ) have an effective method od removing and deploying turbines?
The cost is reflective for this and also that they can state and keep to their targets for remove and install.
Time out of the water now will be twice as costly from 3mw turbines.
The company on this front really do need to have better Comms given the fact that they have just given themselves bonuses.
Still leaves a sour taste in my mouth to be fair.
I wish I could disagree Strangy, but it's hard to do so. Yes, it appears that the company was able to make a turn, but it's still a ton of open questions which simply haven't been answered for too long now.
Maybe this fades if the company value goes up over time but until then I'll remain nervous.
One thing has to be said though: even though all the uncertainty I do believe that the company is currently undervalued. SAE could cover almost their entire debt with Uskmouth and they are generating money with MeyGen. On paper the company appears in debt with £50m in debt, but Uskmouth is an asset that is currently not considered by the market if you ask me.
That being said, given two CfDs, MeyGen and the fact that they probably are only £10m in debt, if Usk was accounted for, SAE might be in a better position than what's currently reflected in share price.
I give SAE a solid 2.5p as a gut feeling 🤪
With the question remaining: How will SAE finance the next MeyGen phase because they WILL need money.
Horror scenario: bankruptcy in the end or somebody buying the company off the market for £20m leaving us stranded.
Read all you have put and to be fair it has already been discussed before.
The playing field is going to be very difficult with regards to cash runway and being able not only to finance circa 10 turbines for phase 2 but also the next phase. That will be about 30 on top of the 10 already mentioned.
Do not really care at the moment what Mr Black is saying, stating or spouting.
Fact.
Full reverse done by SAER ref Usk.
Meygen 6 MW although working in a way doing well the delays for turbines being back in the water is a major concern.
Yes we could say in an emerging technology R&S is pivotal.
I would argue that if we are struggling with 4 turbines and getting these back in the water then how will we fair when we have newer turbines that have many different components and different blades.
This is an issue already so given that the Toyota Lean Manufacture principal must come into play then how will this fit with servicing and repairs etc as the Nigg area will be non stop forever given what is required going forward.
What is the funnel problem....oh yes it is when turbines are taken out and not immediately replace as this then effectively reduces energy and cash generation for the company.
There are many queries and questions.
To be fair I was hoping that the BESS at Meygen would be bigger in order to really create a double boost but at the moment it is only 200mw.
Also back at Usk.
Imo we need to have our own part of the system so we generate cash whenever we store energy via battery storage otherwise we do not get the best revenue for the systems that are being developed and built to over 1gw.
Are there any other things in the pipeline at Usk?
Where are we with regards to Meygen and the 2025 financial scenario in order to build and fit the turbines.
Also don't forget that SAER have now changed their objectives and role as a company.
Which is now....
Tidal energy system design, development and operation.
Time will tell. At the moment I am not aware of what turbines Proteus have in use at the moment.
Thought welcome.
Thanks for your thoughts Timaeus Duncan is certainly having an illustrious career along with being chairman of SAE and putting his hard earned into the company.
Worth a read.
https://www.thomas-lloyd.com/en/news-and-insight/thomaslloyd-hires-head-of-portfolio-asset-management-under-recently-appointed-cio
Why don't you just start one thread instead of flooding the board???????
Large turbine orders. Very interesting phrase indeed. Maybe not Model-T Ford mass production, but how large is Mr Black talking? Back of the old envelope again but MeyGen Phase 2 is 28MW which could mean 8 x 3MW turbines (in addition to the existing 4 smaller ones). Going to the 86MW already consented would require at least 20 more 3MW turbines. Full capacity at the MeyGen site is 398MW which would mean more than 100 additional 3MW turbines – about 128 in total. Then you’d need some spares to drop in while a few are out for service. Call it a round 130. Is that a large order for 3MW turbines? It would mean assembling on average rather more than one a month for the next 10 years. It’s the kind of scaling up that could help reduce the LCOE enough to make TSE affordable and the whole sector viable – especially when combined with the increased CfD strike price. But that’s just MeyGen. Then there’s all the other TSE projects that could develop around Britain and the world in the wake of MeyGen. If there were to be just 8 x 398MW arrays over the next 20 years, you’d be looking at orders for more than 1,000 x 3MW turbines. Now, that’s a large order - which implies producing about one a week on average over 20 years.
Anyone wondering about who’s gonna supply a large turbine order? There used to be talk of developing a production line at Nigg – now it’s a “pathway”. The Proteus Marine Renewables website quotes CEO Drew Blaxland as saying, “The formation of Proteus and the injection of private equity capital will give us the capability, the focus and means to build a pathway to affordable tidal stream power." All due respect to Proteus who have developed the AR3000, but how long did it take to service the last turbine that went back in the water? Seems unlikely anyone is about to start assembling 1 turbine a month in a shed on a quayside at Nigg, let alone 1 a week and never mind 8 or 20 at a time.
Warranties. Yet another interesting word. Who requires warranties? Remember the answer given by the astronaut who was asked what goes through his mind when the countdown reaches “lift-off”? He said he is thinking that the vehicle is made of more than a million different parts, each one supplied by the lowest bidder. If there are going to be failures, there had better be warranties. You might not think your life depends on it, but the world absolutely needs the combination of TSE and BESS capacity for slack tide periods and when the wind don’t blow or the sun don’t shine.
Given the group’s financial position. Mr Black is being completely realistic. Let no-one underestimate him. He’s a seriously sophisticated leader and communicator. And a buy.
“If the tidal power sector is to be viable, it needs well capitalised tidal turbine suppliers that can provide large turbine orders backed by the required warranties, which the Group is not able to provide given its financial position.” Unpick that sentence and see where you get.
The tidal sector could be viable but isn’t yet? Interesting word, sector. Everyone knows now that tidal could provide 11% of UK energy needs. Mr Black is talking about how to help get there.
Suppliers. Another interesting word. Suppliers, plural - so not just the one then. And he don’t just mean manufacturers. He envisages a sector underpinned by reliable, competitive procurement processes, lean production supply chains, and industrial-scale assembly lines.
Anyone here lease a BMW mini? Know who supplied the crank shaft? There was a great pre-Brexit story some years ago about your crankshaft crossing the Channel several times in a 2,000-mile journey before the finished car rolled off the production line. The cast of the raw crankshaft was made by a supplier based in France. It was then taken to be drilled and milled at a plant in Warwickshire. Your crankshaft was then sent to Munich, where it was inserted into an engine. Then it went to Oxford, where the engine was “married” with the car. Some car parts got sent back and forth across the Channel far more times than a crankshaft before reaching the final assembly line. So, who exactly supplied your car? Who supplied the 4 turbines that have been in the water at MeyGen so far?
In Austria one can request insights into the annual financial statement of every company. Im sure that's the same in the UK?
It's not telling the whole story, but it could provide at least some insight
Thank you for posting their response.
What I don't get.. according to my math they are now somewhere near 15% in total. So what does 10% mean? Last year it has been ~7% and this year around ~8% or were my calculations just wrong?
Idk how I feel about this.
Yes, I certainly want management to get a share.. 10% would certainly suffice.. and what about the other employees? I sure hope that they allocated some options for the small guy as well and not just upper management.
Anyways.. I'd have felt much more of okay about this with a higher strike price or e.g. making conditions such as "build x% of MeyGen, get x% of your shares vested"...or better.. a higher strike price in order to consider us bag holders who are down -70, -90 or maybe even up to -99% ..
Thanks Tim, I follow much of your argument though it’s not clear to me how much private equity there is behind Proteus. Have you seen evidence of this?
PLEASE SEE SAER REPLY FROM SEAN PARSONS.
I HAVE REPLIED AS IMO I STILL THINK IT WAS UNJUSTIFIED AFTER GOING THROUGH ALL THE RNSs AND HISTORICAL DATA.
-----------------------------------------------------
Hi xxxxxxxxxxxxxx,
Thank you for your email, for taking the time to write, and for your appreciation of the work we are doing. The continued support of our shareholders has been critical in delivering our world-leading projects. We have been working hard to ensure that we are able to continue delivering these projects and build on our recent successes.
The new management team have had to navigate considerable challenges and make some difficult decisions. The team are focused on a strategy to deliver an exciting future for stakeholders, by maximising the opportunities at our sites in Scotland and Wales. The team's dedication and hard work, alongside their expertise and experience, are critical to our future success, and it is important that we retain the right people over the long-term.
The LTIP/CSOP schemes in place are designed to ensure that management, and indeed all employees, are incentivised to increase shareholders’ value over the mid and longer term, and to be rewarded accordingly. The schemes are designed to reward if the share value increases, to align with the interests of shareholders. If options do vest and are exercised, dilution would be expected to be substantially offset through the share value accretion.
We would note that, as we recently announced, the total option pool is limited to a maximum of 10% of the company’s issued share capital, with just under 9% currently granted.
We believe these schemes will allow us to reward and benefit all stakeholders who are on the journey with us.
Thank you again for your ongoing support.
Sean Parsons”
It was me and I have just received a reply that I will be posting on this BB in the next hour.
Evening Timaeus as always an interesting post .
Regarding
“ The plan should be for “well capitalised tidal turbine suppliers” to provide turbines (backed by warranties) that MeyGen can either lease or, if and when MeyGen can afford them, buy”
Which turbine supplier do you think would fit the bill? SAE have put in a request to change the size of the turbine blades along with the MW upped to 3mw to the best of my knowledge the only supplier currently capable is Proteus are they well capitalised enough? Or do you know of another supplier?
There are reasons why the SAE SP has been pretty flat. In addition to the sale of the turbine technology IP:
1. NAV is down to about 6% of what it was a couple of years or so ago;
2. As at 31.12.22 loans and borrowings totalled almost £58m including secured long-term loans to Meygen from Scottish Enterprise and the Crown Estate Commissioners which are repayable by 2027 and are secured by way of fixed and floating charges over the assets of
subsidiaries as well as SAE’s shares in MeyGen;
3. Net gearing increased to more than 1000% (excluding intangibles);
4. Finance costs (mainly interest on debt) probably still exceed group revenue from power sales as they did in the year to 31.12.22;
5. In that period EPS were down by 0.01p (the loss per share) to 0.01p.
There is little scope or need here for a significant capital raise by SAE. The financing of MeyGen might indeed be ultra pivotal but there could be an ultra-long wait for an RNS about it given that financial close for Meygen 2 is targeted for Q2 2025.
It is clear that private equity got behind the management buyout of Proteus. The key task for the next 18 months is probably getting private equity behind MeyGen. The plan should be for “well capitalised tidal turbine suppliers” to provide turbines (backed by warranties) that MeyGen can either lease or, if and when MeyGen can afford them, buy.
If you want to operate an airline you don’t need to begin by buying a plane when you can just lease one. Half the world’s passenger carrying aircraft are leased by their operators and often, their engines are leased separately. There’s even a second-hand market in previously-loved aircraft engines! Nearly all the trains in the UK are leased to their operators by 3 ROSCO’s (rolling stock companies) called Angel, Eversholt and Porterbrook who apparently receive about 13% of the price of all ticket sales. If you want to run a solar farm on your land (while you are still allowed to) you can lease the panels. Some people even lease the car they drive. It’s the way to go, and it’s a long haul.
IIRC correctly Meygen financial close is H1 2025... so still a way off most likely.
Also ( hope not naively) I think we should consider financing as a regular business process rather than SAE needing to pull a rabbit out of a hat. SAE after all made financial close on a 4-turbine array when there was nothing in the water. The prospect of getting investors in line to enlarge the array from that start point, with something being operational , should be easier, and to be looked at as a process of hard work rather than a magic trick.
SAE appears to be pursuing an asset light business model, not building the empire some still seem to wish for. Chairman Duncan Black’s statement (dated 25 July 2023) in the 2022 Annual Report makes pretty clear that SAE is not going to be building or buying turbines: “If the tidal power sector is to be viable, it needs well capitalised tidal turbine suppliers that can provide large turbine orders backed by the required warranties, which the Group is not able to provide given its financial position.”
Black says restructuring the Group “has significantly reduced the Group’s operating costs and created a pure play sustainable energy and battery storage project developer…. We are not seeking to compete with large utilities and oil companies in delivering “commoditised” renewable energy projects such as wind and solar, but rather seek to identify innovative solutions to help aid the energy transition.”
Graham Reid’s four strategic priorities are: 1. Create a streamlined business, which can identify, respond, and deliver opportunities for the company. 2. Significantly reduce costs and improve efficiency, aligned around 2 business areas: tidal stream and battery energy storage systems (BESS). 3. Maximise the return on our assets at Uskmouth and MeyGen. 4. Dispose of non-core businesses.
@strangy I meant tidal_lover (I guess it was him who wrote sae a letter) Wondered if he got a reply
It does now thanks.
Pretty sure the last Abundance webinar referenced planning for Meygen BESS is hoped to come in H1, so that may happen sooner than we think.
Also investors in current macro climate reluctant to put forward cash in advance of assets being operational, which makes sense but is unfortunate. SAE seemed to have the measure of the situation however, even if undesirable, but does mean we can hope for the financials to pick up pace as construction gets underway (and if we start to see some rate cuts in 2024)
It's the beginning of something 😃