Member Info for mister_tidal

Greetings M66,

always nice to read your opinion on SAE.

Just have to disagree slightly regarding the marketing/social media aspect. Tidal isn't something that people really seem to have on the radar. There's not really a lot of talk about that technology, or at least not enough. Political decisions are the name of the game here. If politics keep focusing on solar and/or wind, maybe even nuclear, then what's going to happen with tidal?

Imo, these companies should beat the drum a little louder and sell the point a lot more, that tidal has the potential to become cheaper than nuclear energy, given larger deployments. This will never happen without political support and there is no political without support and/or pressure by the people. Who else is going to push the idea of tidal steam energy, if not the companies who work on this?

Well, I'd argue that it's unlcear what this actually means for SAE. If they spend as much as they make, it's a zero-sum game for the company. That means they cannot even repay debt which, in turn, means that the valuation of the company would rather go down than up.

If the company was able to make a profit and make more than they spend, they should be able to repay debt etc and, in the long run, increase the value of the company. In the end, this is pretty simple.

Do you get more than 2-3% return from the company? Buy bonds, and you get that return without risk. So.. if nothing that concerns the company points to positive returns, there's nothing to move the share price up.

Agree.

Someone needs to explain to me how, though. I mean, they need money. It's either dilution or debt.

Idk if there is any way for SAE to get to cheap money. Selling stock won't bring them far at this point.

Unfortunately, there is no analyst coverage for SAE. Is SAEs fair market valuation still "almost zero" after two contracts & BESS?

Imo any neutral to positive news about SAE is welcome. More attention doesn't hurt. Anything that sheds a positive light on the company is welcome. Even an article from proactive

You're welcome. As stated in the follow-up comment: These numbers are rough estimates and are likely not entirely accurate. But I hope, they are at least somewhere in the area of the actual numbers.

Note: The previous computations are armchair estimates and are probably wrong. A lot of assumptions have been made, but I hope, that these numbers are somewhere in the right ballpark.

Actually, quite a lot, but it's also a question about whether or not SAE makes some profit, or if it's a zero-sum play for them.

Anyway, if we assume a capacity factor of around 26%, that is,

6MW * 26% * 24h * 265 days ~ 13.7 GWh per year

The above is a computation based on some data that was available for a year, where SAE had all turbines (6MW) running for (almost) a whole year.

MeyGen

Phase 1: 6MW * 26% * 24h * 265 days ~ 13.7 GWh per year

Phase 2: 22MW * 26% * 24h * 265 days ~ 50.1 GWh per year

Phase 3: 34MW * 26% * 24h * 265 days ~ 77.4 GWh per year

In AR4 (the 22MW), SAE had a strike price around £175/MWh. So..

50,100 MWh/y * £175/MWh ~ £8.8m/y

77,400 MWh/y * £198/MWh ~£15.3m/y

In total, that is £24.1m per year from the CfD contracts, plus whatever they get for the original 6MW which is probably some £2.6m/y.

We look at a (theoretical) revenue of £26.7m per year for SAE.

How much these contracts are "worth", depends on different things. A CfD pays you the difference of what the market is willing to pay. So, if the market pays you £50/MWh, then the UK pays the missing £125/MWh to SAE. Hence the name "Contracts for Difference".

The important question is, imo, whether or not SAE is able to produce turbines even cheaper and lower operating costs. Because every £1/MWh they can safe, gets into their own pockets which is, in the end, profit for the company. It's subsidiesed, but it's a profit nonetheless, and it may (or may not) help SAE to produce additional turbines.

Perhaps even more important is the question of whether or not the UK decides to change the CfD schema slightly. They already see problems with the schema as other forms of energy struggle to compete (wind, solar). Inflation makes it hard for them to guarantee low prices. I assume it is the reason why this year's bid made by SAE is actually higher than last year's. We need tidal to become cheaper. Way below £100/MWh if it is ought to have a future.

But let's see. SAE needs more investments. Ideally from an institution or so. Their share price is completely destroyed which means they'll have a hard time getting their hands on cheap money and we all now, SAE does not need more debt.

Here we go.

Got another contract.

Let's hope this brings back some higher market cap for SAE.

MM's?

Hi!

I think getting the next CfD is what we should hope for. AFAIK any remaining budget is basically up for grabs to anybody who can deliver. I think I red something like this somewhere some time ago, but, first, I could be mistaken and, second, SAE probably won't be able go compete at those strike prices.

I'd expect SAE to get something in AR5 like last year. AR4 didn't help the company's valuation last year so AR5 isn't going to change that probably. At least not in the short term.

"However, in offshore wind, experts predict the auction will be undersubscribed as developers say they cannot deliver projects at the £44 per megawatt-hour strike price cap amidst at least 40% capex cost increases in the last year."

Imagine somebody came up with the idea to funnel the remaining budget towards tidal...

.. is something people in r/wallstreetbets would say but they can't because the stock has to have a market cap above $400m.

Anyways, I am bored. Waiting for a car repair.

In two weeks SAE should announce another secured CfD contract. Let's hope and not jinx it.

To recap.. SAE already got a contract in AR4 and is likely going go secure another in AR5.

What we don't know is how they'll fund this and, correct me if I'm wrong, we do not even know when SAE is going to reveal plans on how they'll fund the next phase etc.

What can we expect in Q3 and Q4 from the company and what would another contract in AR5 mean for the company?

Can we expect that it would drive up the share price? SAE requires money and, as we know, they can't practically get £100m by issuing new shares, can they?

And we're back at financial insetives for those in charge. Their salaries are too high, and their stake in the company is non-existent.

They have zero skin in the game and you said it well: it's comfortable good paying jobs as far as those receiving a salary goes.

I'd also throw in my "agree" on the GHR sale. Never understood how they can actually sell the single cash-positive part of the company... but alright. They were young and they needed the money.

I'll admit that I went in on the algea thing for CO2 capture but (not so) deep down I was aware that it's a joke and desperate attempt to sell the conversion idea to politicians.

SAE needs a cheap loan or an investment. I'd prefer the cheap loan because we were diluted plenty already. There have to be governmental 0% loans for renewable energy, right...?

Whoever gives them £100m is basically buying the company 10-times..

Agree.

Anybody following Nikola? They have this pattern of pumping out tons of positive news before earnings calls. Think of them what you want but imo they play well the hand they've been dealt.

I wish SAE would at least try to do something similar. They need people to be willing to pay a lot for their shares. Otherwise they can't raise money except by either heavily diluting existing shareholders or get expensive loans..

But there's simply no attempts to do so..

Agree.

Public perception is currently non existent at the moment.

Without "belief" or "hype" around the companies/technology there's no investors ready to provide money.

Don't forget: it is YOU who currently keep the SP where it is. It is YOU why they still get at least 1 GBX per share.

However, this means in order to get money they'd have to dilute heavily or to take on more debt.

That being said, this company needs more people to believe in it for the share price to rise in order for the company to have access to capital. Herein lies the problem.. they have no cash so they have very few options.

I am convinced we're going to see even more dilution. One way or another. The only question is "how much"? How would they get people to pay 10 GBX or 100 GBX for a share without at least some hype around this technology?

This is where their comms are part of the problem. If they don't manage to convince people, retailers, private investors, institutions etc to hand them money.. then we'll get diluted or swallowed by debt further.

I know, I know,.. I'm this pessimistic guy who dampens the mood but somebody explain to me how all this is going to play out without significant attention? Without publicity? Without thousands of people saying "I am willing go pay X > 1 GBX amount of money for the stock because this investment is going to deliver returns!".

I'm just not feeling it.

I hate it when it turns out my father was 100% right all along. He warned me regarding governmental dependencies, he warned me of a non-charismatic, low-energy CEO (no offense though).. it's not Grahams fault alone of course. I'm just talking how I feel about this at the moment.

Evening. Or night rather..

I'm happy to provide data if I can. Anything in particular you are seeking?

I'm sure you know the CATAPULT report(s) [1]? They show how 1GW capacity would promise a MWh of around £100. Please don't quote me on that but solar and wind are in the £30 to £40 per MWh area. Nuclear energy, interestingly, is currently more expensive than the two. Don't have exact numbers at hand but a quick Google search should suffice here.

[1]: https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://ore.catapult.org.uk/wp-content/uploads/2018/11/Tidal-Stream-and-Wave-Energy-Cost-Reduction-and-Industrial-Benefit.pdf&ved=2ahUKEwityIv8uryAAxWLcfEDHb3tDzIQFnoECBUQAQ&usg=AOvVaw2owW10dt66_u8HpHONDpj1

I'm sorry, but I have to disagree with the point that the technology has been developed.

I think there's still a lot to do on this end. Not just when it comes to increasing the overall capacity and efficiency of turbines, but also regarding mass production and cost reduction.

TSE is, by far, not competitive. If all that was left to do is mass produce and deploy turbines, we wouldn't have to talk about this topic.

Companies like Vestas or Enphase.. that's what I call manufacturers. SAE, or Proteus for that matter, are companies working on an experimental technology with no clear route to market.

They still rely a 100% on governmental funding. There are no tidal stream turbine factories. There used to be 80 people at SAE. Now 20. Not sure how many went to Proteus.. the fact is just: from my point of view, and until turbines are produced in a competitive scale, SAE and/or Proteus remain limited by the governmental willingness to fund this experiment.

And let me remind you of this: even after 1,000 MW (1 GW) capacity deployed, we would not drop below £100/MWh which is still 4 to 5 times more expensive than other technologies.

But that's not really positive or good news in any way either.

For me it's casually mentioning how they sold ATES at a loss.

Whatever they may have achieved this year, it won't materialize for some time I guess.

Whatever SAE may tell us, I am not convinced by their tidal business anymore. I can't, until this technology finally gets real traction but laying off 70% of your work force, or selling them at a loss for that matter, is simply telling me enough.

I know, they got the CfD... and they might even get another one this year but too many signs say "no" imo.

I hope I'm in for a surprise someday but let's be honest: they claim they've transcendet tidal turbine technology development as a natural succession and that they are now in the energy park business. Really? I know MeyGen was a major accomplishment but let's be real here, tidal turbines are years behind other forms of energy in term of cost and it's not unlikely that they will never be competitive. This just sounds a lot like BS to me. I'm sorry.

But then again.. I am almost literally at zero with my investment bc selling now would be pointless. It can only go up and perhaps my pessimism has to step aside in the light of BESS and a turn around after receiving another CfD in September.

One thing we're still missing though is how SAE is going to get their hands on £100m to £150m for the next MeyGen phase..