Member Info for jerry004

They've said what they are going to do and now they just have to do it. Anything else at this point would just be BS.

However the BSIF sale process does keep the whole sector "in the minds eye", knowing news of a bid (or not) could possibly cause substantial movement.

Divi announced as expected.

If one compares the prior yield on NAV to the c.8% internal discount rate one can estimate that they were previously over distributing approx 10M p.a.. I think that this can legitimately be compared to the future plan to accumulate 8.5M a year.

FWIW if one tries to rationalise this in Gemini or Google Finance it keeps contradicting itself, and making basic errors (which it recognises when you point them out to it).

Perhaps ignore me here. I might havw got some of this wrong. Will think about it again later.

75% of earning is not the same as 1.3x under the old terminology, as in the old terminology the denominator was net cash generation (which had become higher than earnings).

And these trusts should be valued off discount rates and not dividends. I suspect the people who bought it for dividends have indeed sold it down to the new yield level though.

I suspect we won't get any total return I vestors moving in until the total return value has been demonstrated within this fund or a proxy.

2025 Divi announcement dates were 28 Jan and 15 May.

Anderson, we have a recent commentator implying something is wrong because we've not had a dividend announcement yet, when last year it wasn't announced until 15th May.

Make of that what you will..

You know it's wrong.

Both UKW and TRIG have stated that they have been encouraging the govt. to implement wCFDs.

The EGL levy is a red herring for wind and solar.

The UK CTS scheme change is to enable carbon pricing to now fall in line with EU ETS (which is higher than the combined UK carbon costs at present).

The RPI to CPI switch on ROCs was annoying but on the plus side these are mostly now paid through taxes not electric bills,,which makes them much less a political football.

Not a holder a here, but I do have TRIG in quantity.

Worth looking at today's RNS from TRIG to see their view on the changes.

Source of sparhawks info.

https://www.gov.uk/government/news/decisive-action-to-break-influence-of-gas-on-electricity-prices

Today's comments on here are along the lines of what I had concluded (FWIW).

CFD replaces the wholesale market pricing part.

ROCs/FITs left alone (though they might need tweaking later to fixed pricing) as the market for them gets smaller and more volatile).

EGL tweak is a nudge; basically says to generators don't think that if you remain on wholesale market pricing you are going to be able to benefit from future energy crises, because the country sees that as profiteering from it's requirement to always provide energy to its citizens.

CFDs and EGL don't apply to batteries; Gemini gave me an explanation of how that would work for a solar/battery supplier that seemed sensible.

Negative pricing exclusions for CFDs encourages batteries or similar storage to developed.

Aim is certainty for generators and customers. Certainty has a price, but comes with benefits that have value for both sides. I guess from the PPAs that NESF already has that we have a good idea of what they see as reasonable fixed price contracts (price depends on the nature of the contract presumably).

I'm already overweight here so not buying more.

BSIF down, which I am assuming is due to an assumption that these changes will delay a sale process whilst the numbers get crunched.

I did top up my TRIG position today even though it's only 50% UK).

Jimothy,

Good points. May I add a couple of others to consider.

I am pretty certain batteries are not included under the energy generators levy. These forms is dispatchable stored energy are system balancers not generators.

Regarding the UK carbon price support (18 GBP) that is being removed in 2028. The plan is to align the UK emissions trading scheme with the EU one prior to that. This is likely to add back more than the 18gbp that is a lost.

Also the EGL is a already in place but due to end (45% tax on annual profits made when average prices gained for the year are over 82GBP/MWh and these profits are over a certain amount (? 10M)). But there is the suggestion in the guardian that this might be increased. However (IMO) they might want to do this if the carbon pricing scheme is likely to go up as per point above, and they want to nudge supplier towards CFDs).

I can only imagine the proposed CFDs replacing the market pricing component, personally. With PPAs, NESF effectively does that anyway.

OK. right so in that article the EGL is mentioned as one possible method being thought about. This is not the same as the carbon pricing scheme which is the thing that was actually removed.

EGL applies to renewable energy generations who sell based on wholesale market pricing. It only applies to pre 2017 assets because after that they were on CFDs.

To me this looks like the guardians view on how what RRs comments will be implemented. No one else seems to have come to that conclusion as yet.

My understanding it that NESFs market pricing is extensively hedged in the short term though power agreements, so I don't think they were going to be making the big war profits that would be subject to levy anyway. This hedging makes sense as the EGL already limits the upside, so it's best to protect the downside.

I agree though, there remains uncertainty as to how the pricing will be uncoupled. However to me it looks like the aim is to flatten out the pricing so as to avoid these government bailouts of bill payers during crises such as these, rather than necessarily reduce the overall returns of renewable generators.

I am speculating on the last bit though.

I might be wrong but dartrons list seems to be relating to the EGL (electricity generator levy).

Whilst it does apply to pre-2017 assets, this has been the case since it was introduced several years ago, and AFAIK, has not been the subject of this past week's pronouncements.

Dartron, I'm thinking that this news does need o be considered alongside the possible/planned alignment with the EU ETS, that may occur prior to the UK-specfic tax being removed. I'm not sure if this is in the price already.

The absolute priority of investing in the early 2020s was to ensure your money didn't get repriced downwards at the end of QE. Long duration bond-like assets were an absolute no no, unless you wanted the security of locking in annuity-like returns when interest rates were manipulated to be at historic lows. This fund is still returning more or less what it set out to do (though has now shifted to capital growth as opposed to divis). It's just that the market now expects higher returns as interest rates are higher, so the purchase price is lower.

Personally I think the SP drop is overdone due to the downwards momentum, as well as people starting to look under the hood and realising that it's more complex than they thought.

Many people whose pensions got lifestyled are in similar boats. INXG (17 year index linked bonds- the lowest 'risk' asset you can get) is down over 40% from early 2020, and it paid a negligible yield for most of that period).

Personally I held other assets during that period and now see assets like this as remarkably good value. There are risks compared to the likes of INXG, but in my view the risk premium being applied is now too high.

If this transitions to a more growth orientated fund with a 9-11% expected growth rate, and they do this without destroying capital,,then the implied discount rate at this share price is 17-18% I reckon.

That's a 12% equity risk premium over index linked gilts, wher normal would be maybe 4.5% I think.

I think you have to be very very sceptical of the company's numbers to think that is correctly priced (and if you are, then fine, I'm not commenting on that).

Thanks for clarifying the basis of your conclusion, Senator. It’s clear we’re looking at different metrics—you’re focused on the statutory P&L and accounting depreciation, whereas my thesis is built on the cash flow waterfall and the discounted cash flow valuation of the grid-connected infrastructure. I’m comfortable with my position, but I appreciate the debate

Senator,

1( That 56M Is actually after amortisation of the fixed debt not before it.

2) In any case amortisation is not a net negative to the balance sheet.

3) The 56M is also after OPEX, which will have made a dent in depreciation costs.

4) Depreciation is an accounting number, not a true indication of the rate of depriciation of the assets as a) the panels can outlive their accounted depreciation, b) there is now some real value to be recycled out of those silver heavy old panels and 3) most importantly, replacement cost is now only 30% of initial purchase cost, so that rate of accounting depreciation is far higher than what is needed to replace the panels.

It strikes me as being fairly obvious that NESF has reconfigured itself to fit the kind of long term total return asset that private funds such as LTAFs are buying at or near NAV.(these being potentially IHT exempt and will be holdable is an ISA as I understand it).