To invest mostly in operating UK wind farms with the aim to provide investors with an annual dividend that increases in line with RPI inflation while preserving the capital value of its investment portfolio.
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It should also be noted that corporation tax changes this year knocked 5p off the NAV - there is only so much tax you can keep adding before it impacts the ability of companies to raise finance.
Also in the Times today-
'While Sunak and Johnson now agree on the principles of a windfall this is unlikely to be extended to electricity generators, which have also made larger than expected profits as the result of high energy prices.
A source said the policy had been examined by Treasury officials but was “complex” to implement and unlikely to form part of the announcement.'
As I suggested yesterday may be it was just being used as warning and leverage for those not initiating their cfd's to gain benefit of spot prices. They must also have noticed the stock market response which highlighted that extra taxes are not going to help them increase the funds flowing into renewables.....
Added at 150p this afternoon so delighted to see below to close an article from Robert Peston in Spectator at 6.45pm today
https://www.spectator.co.uk/article/a-treasury-cost-of-living-help-package-could-be-imminent
"I understand the Treasury has ruled out broadening the windfall tax to the surplus profits of those generating electricity from wind farms or nuclear plants."
dun48 wrote:
"the best is most renewable companies are set up as investment trusts. As shareholders we get inflation proofed dividends"
Unfortunately, anything that hurts post-tax profits hurts shareholders in the long run. Less money in the kitty (or reinvested) reduces the probability of the RPI-linked dividends being maintained indefinitely (or of future increases above RPI if things go particularly well). The RPI-linking is the company's current policy. It's not a guarantee.
As far as I know, UKW is the only renewables company that still has such a policy. Foresight Solar stopped its RPI-linked dividend policy a couple of years ago. It has a higher dividend yield and lower dividend cover than UKW , so the policy was less sustainable. I'm optimistic that UKW can sustain its RPI linking out to the medium term at least. That's why I like it so much.
Worth a read, particularly the comments:-
https://www.zerohedge.com/commodities/its-going-get-truly-horrific-gas-electricity-bills-europe-could-jump-45-disposable
So in the midst of the worst energy crisis for 50 years, these geniuses think it's a good idea to dis-incentivise energy production, and in particular the type of energy production we are told we must (can only) have? They're either stupid, or they're deliberately trying to make a bad situation worse. Having seen what's gone on in the world over the last couple of years, I'm betting on the latter.
Hi. My first post here. I came looking to find out why my UKW and TRIG shares fell off a cliff today. Talk about a WIND FALL tax!
Personally, I doubt it will happen. It's not long since Bozo was talking about encouraging wind farms (as long as they're nowhere near nimby Tory voters in the shires who don't want their views spoiled). Then again, this government is making up energy policy on the hoof, when what we really need is a carefully-considered, joined-up, long-term energy policy. (Rant over. Sorry.)
Also, I don't think we've benefitted from higher energy prices nearly as much as the oil/gas companies, as the renewables subsidy regime limits the upside as well as the downside effect of price changes (or so l believe).
And I don't know why solar shares haven't fallen as far as wind, as they've benefitted just as much from higher electricity prices.
Actually, I'm patting myself on the back a little bit as I sold half my UKW shares yesterday near the peak. I was heavily overweight UKW and thought I might diversify into other renewable companies if prices come down a bit. Now I'm wondering whether to jump straight back into UKW at the lower price. Or maybe put some more into TRIG, as I think that was already underpriced relative to other renewables, because its NAV hasn't been updated as recently.
BTW I think this is the FT article Monkshood was referring to:
https://www.ft.com/content/ddbde592-a4e0-465a-9dd2-d6566790403f
btw thanks to Monkshood for the original post, I hadn't picked up on this story & was wondering why all my green energy shares were down this morning.
Only in this country could we risk killing off the fledgling renewables industries by threatening a windfall tax to choke new investment. FWIW I can't see it happening but there will be a price to pay somewhere along the line for sure.
the best is most renewable companies are set up as investment trusts. As shareholders we get inflation proofed dividends. The people who gain most now are the advisers, those either finding the farms to buy or maintaining them. Their charges are costs pre-tax. My guess is there won't be big profits to tax, and adviser fees will simply increase.
The Government would be better forcing them to become plcs, or capping adviser fees in line with dividend increases. Which won't happen.
Goodbye extra windfarms.
Nuclear will always be much more expensive. Will they have an annual windfall tax on wind and solar energy if gas is replaced by nuclear? Perhaps nuclear companies will suggest this when they see they see how much cheaper green energy is in comparison.
remember the candle makers asking for a tax on sunlight, to reduce the price advantage. This was used in class as a ridiculous example. looks like the Treasury et al haven't learned it
It emphasises how broken our system is. Wind Farm operators shouldn't even be selling electricity at gas-generation prices, but the 'powers that be' haven't worked out how to separate the two yet, despite having certificates of supply for 100% renewable energy.
As if Boris's conservative party could not get any more stupid.
I can't quite believe they would do that but then we do have posh idiots like Sunak and Dorres in his close circle.
The FT has said that the government is considering extending a windfall tax to include wind farms.
Although making increased profit I did think UKW (and other renewables) would avoid such a tax as It would seem that all this will achieve is reducing investment in the one area the government want to expand! They are only paying their inflation linked divi as normal, are not doing buybacks and are reinvesting further profits in new projects.
There have been suggestions that some companies are not fully commissioning turbines on CFD's so they can benefit from higher spot prices, so hopefully it may be a lever to put pressure on this area. rather than something which will be enacted.