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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 😃
@deutscher.
Have you sent a message or email?
I have not had a reply but I am sure that if enough of us do then they must respond.
Otherwise the only other course of any action would be to involve a major investor with over 5% shareholding to call a Special General Meeting
Not trying to take the Micheal but that is minimal demolition in the grans scheme of things.
Straight forward.
Has there been a reply yet?
Thanks Strangy. Really good news. As I say, for me it’ll be a good day when all 1GW is operational and monetised.
Plus I was pleased to hear they’re planning a 200MW BESS at the MeyGen site.
Don’t suppose there’s been any figures yet which relate to the forecasted/estimated economics these BESS will generate from selling back to the grid?
I’m in it for the long haul and appreciate this may be too early of a stage to have these exact numbers available. But would happily read through if anyone has them handy.
Thanks all, enjoying the discussion here 👍
For info..a reply from Sae Renewables.
Just to clarify the RNS says the 349 is additional. So brings it to 1067 (over 1GW!):
120MW cooling towers site
249 plus additional grid secured for 349
Plus expansion from 230 to 349
Hope that makes sense and thanks for your continued interest in our projects.
Keltickilla
The most probable route for expansion would be storage duration currently a 2hour cycle ie the batteries can provide 2 hours of supply before needing to recharge.
However 3 hour storage batteries are now available so 120mw/240mw would then become 120mw/360mw hope that makes sense .
I'm unsure as to the complexity of upgrading to a 2GW BESS project nearing the time we meet our limit other than planning consent of course. Would this be at all feasible with site conditions, space etc do people here know what possibilities are?
Morning chaps good to get an RNS although more details on the contract with ENSO would have been appreciated.
Regarding the capacity of BESS at Uskmouth I agree with Stangys calculation it is also possible that similar to the 1st BESS project the 2nd one could be expanded to make up to the 1GW ?