Member Info for mister_tidal

Apparently there will be CfD rounds on an annual basis:

"""
A draft indicative timeline for Allocation Round 5 (AR5) has been published on the Contracts for Difference (CfD) microsite. As announced in February 2022, CfD rounds will now run annually, instead of every two years. It is planned for AR5 to get underway in March 2023.

This is an indicative timeline that sets out the key milestones for AR5. Timings may be subject to change and a final timeline will be published in due course.
"""

Given that SAE was able to secure a contract in AR4, I'd suspect they might be able to to so in AR5 as well.

However, I am not sure if they can already lower their strike-price given there is no financial close on the additional 28MW supported by AR4.

Link: https://www.cfdallocationround.uk/news/allocation-round-5-draft-timeline-published

That's what happens when I type on my phone..

@Alnew now I feel slightly bad now tbh but I hope you were able to chuckle at least a tiny bit in the end ??

Simec Atlantis Energy has finally released a video which outlines their future strategy in detail and how they are going to transform not only the UK but only the global sector of tidal stream energy in the years to come: https://www.youtube.com/watch?v=dQw4w9WgXcQ

This looks interesting but can we get more details on this? What are these 22 projects?

My "educated" guess would be somewhere around the £10m mark.

See also the discussion here: https://www.lse.co.uk/ShareChat.asp?ShareTicker=SAE&share=Simec-Atlantis&thread=6ED112AC-0DBA-4900-8C3C-6BBACFBC97E5

Sure that this was the reason? Shouldn't be hard to build a facility which produces these pellets in the UK. I'm quite sure N+P would be delighted seeing an interest in their tech. The way I see it, Usk could have been a first proof of concept.. And well.. for that I guess it's alright to import those pellets until they can be produced using native waste that would have ended up on landfills otherwise.

And then we get this https://www.bbc.com/news/science-environment-63163824

@munin yes, I am quoting this in my second post.

I'm going to give this post a bump because I'd really like to hear some opinions on this topic. In Dec, 2021 they "awarded 10.3m options to a group of senior directors" [1]. The exercise price is a t 2.21p so right now it's probably not a good idea to execute them (not sure if the exercise price falls if the share price drops but at that point they could just buy the stock as is).

I think it's just disgusting to give senior directors stock options and give none to senior engineers for example (or anybody who has been working for some time at the company).

No thoughts on this? As a "shareholder" I demand that SAE incentivises (and values) their employees a bit more by offering them stock options as well! Big words, I know..

[1]: https://simecatlantis.com/grant-of-options-executive-directors/

@keltickilla can you share your readings? iirc Newport would've given SAE green lights for the conversion but the application was then called in by the Welsh government in order to examine whether or not a waste-burning facility complies with the national net-zero strategy and so on. I assume that SAE "pulled the plug" only because they knew the outcome will be negative (?). I think they didn't have the political support back then. One question I keep asking myself is whether or not the current energy crisis might have changed this a bit. Since SAE does such a good job in communicating what they are up-to (sarcasm ofc), we have no idea whether or not this is still an option. They say that they are "working with a number of world-leading organisations to identify significant coal conversion opportunities in Europe" [1], but I mean.. that's one hell of a generic sentence right there. They could've just not put it there and it would've had the same effect on me.

[1]: https://simecatlantis.com/sae-releases-interim-results/

@littlegrandma Well, right now I'd not say that we can even say whether or not we can be optimistic. My intention was to start a discussion about where we're actually heading. Yes, we got the CfD but, as we can see, there are a lot of questions. It's probably safe to say that the additional 28 MW for MeyGen are going to cost something in the range of £ 100m to £ 200m. To me it's still not obvious in what sense SAE is going to make any profit from this contract. It possible that it's barely a zero-sum game and that it won't allow SAE to build additional turbines from AR4.

In one scenario we could just see SAE being able to lower their strike price in AR5 s.t. we see Phase 2 (80MW) completed.

The main reason why this is important is because SAE is going to need money for this. Not only makes it any investment into this company increasingly risky, it's probably going to dilute shareholders as well.

In other words: Just because the company has a light at the end of the tunnel means that we'll see the returns we hope for given the risk, uncertainty and time horizon we are talking about here.

Btw.. if Phase 1 clocked in at £ 69m for 6 MW the price tag is £69m/6MW = £11.5m/MW which would mean £322m for 28MW ...

In another thread [1] (link below) I posted the following:

------
"... In 2018, the four turbines produced 8 GWh and in 2019 it was 13.8 GWh. Now, I assume that 2019 was the year which saw all of them running without outage.

If I don't make an error here we have a capacity factor of 13800 [MWh/y] / (6 MW * 24h * 365d) = 26.25%. That's not bad, but it's also not outstanding. Not being an expert here, but wind and solar can achieve the same efficiency (yes, yes, I know, they are not as reliable as tidal stream).

Anyway, with a strike price of £ 178.54 / MWh, a year like 2019 would bring 13800 * 178.54 = £ 2.46m. Divided by 6 MW, that would be £ 410.6k / MW deployed.

So, theoretically, we should see £ 410.6k * 28 MW = £11.5m in revenue per year for the upcoming 28 MW plus the £ 2.46m bringing us to a total of £ 13.96m / year for the 28 MW (Phase 2) + 6 MW (Phase 1) = 34 MW deployed ..."
----

[1]: https://www.lse.co.uk/ShareChat.asp?ShareTicker=SAE&share=Simec-Atlantis&thread=6ED112AC-0DBA-4900-8C3C-6BBACFBC97E5

@Renewable_Expert I think CfDs are contracts for 15 years. I am, however, not sure if a cost of £3m/MW will be realistic. Phase 1a, as stated, saw a cost of £8.55m/MW. If we are generous we can probably shrug off 10 to 15% of that cost. I'd argue that the wet mate connection, the sea-hub and other things that have already been done may reduce the cost here. We're still not talking about mass production but 19 (or 14) turbines should give us some discount. So let's just say cost can be reduced by 10% to £7.7m/MW which would be £215.6m for 28MW aka 35% of Phase 2.

@noisyboy9 I'm not sure but your previous post would mean £51.3 / 4 = £ 12.8m per turbine. We can probably assume that a lot of the initial cost is probably going to be lower or not present at all in the future so the question is what the next 19 turbines (14 if they have 2MW capacity) are going to cost each. We'll see once SAE provides further details on this but I can't imagine a turbine going far below £ 10m each.

@Tidal_Lover You don't need a PhD to do some basic calculations. This is also not a scientific paper, it's a (very) rough estimate for some even rougher numbers so we can do some reasoning and get a feel for what we're actually dealing with here. It's a discussion. That being said, there are indeed people, presumably with a PhD, that talk about exactly this topic [1] in an article from Nov, 2021:

> "Based on the performance data that are available, UK projects have demonstrated relatively low levels of inclusive capacity factor (<0.2), which we define here as the ratio of the energy yield achieved since the beginning of operation to the energy yield that would be achieved if the turbine(s) operate at rated power continuously over the same time period. The inclusive capacity factor does not neglect periods of turbine downtime, as is often done in conventional capacity factor estimation ... Verdant Power has reported energy yield figures of 0.3?GWh over a nine-month period, equivalent to a capacity factor of 0.42 ..."

I recommend reading the entire article even though it's a bit dated already. In Nov, 2021 there was still no ring-fenced budget implemented in the CfD schema. I assume that this analysis could've played a role in finally making the needed fenced budget a reality.

[1]: https://royalsocietypublishing.org/doi/10.1098/rspa.2021.0469

Just general question regarding insider trading and transactions (the legal kind of course):

Does anybody know when the last insider transaction (BUY) happened? To me it looks like there hasn't been a single share being bought by an insider since at least four or more years.

I've been tracking other AIM stocks as well and noticed that in some companies (which I do not want to name here for obvious reasons) insiders do actually buy their own stock more or less regularly. Of course, that's by far not the only thing that matters and it can be misleading, but the fact that there's simply nothing happening at all annoys me on many levels.

First and foremost it's not a good signal to the outside world. If nobody in the company wants to own a piece of the company, who else would buy?

Second, but that's probably a personal thing, I hate companies preaching us employees we can "grow with the company" and then not offer a slice of the pie (e.g. via virtual shares or stock options). Now.. it does not look like as if SAE is offering their own employees such benefits and I really wish they would. They could at least offer them X £/y as a potential bonus in form of stock options and raise their total compensation and let them in fact grow with the company.

What do you guys think..?

If Strangy86's estimate of "Circa £160-180 M for phase2" my estimate would change to ~13 years until CfD AR4 turns cash positive for SAE.

@Renewable_Expert

> We know that the workings of a 2MW tidal turbine are essentially the same as a 2MW wind turbine, and it is also common knowledge that wind installation costs are around 1M€/MW.

If this estimate is realistic, then my estimate for £10m/MW is probably very much outdated to say the least.

But let's continue and look at the effectiveness of those turbines. in 2018, the four turbines produced 8 GWh and in 2019 it was 13.8 GWh. Now, I assume that 2019 was the year which saw all of them running without outage.

If I don't make an error here we have a capacity factor of 13800 [MWh/y] / (6 MW * 24h * 365d) = 26.25%. That's not bad, but it's also not outstanding. Not being an expert here, but wind and solar can achieve the same efficiency (yes, yes, I know, they are not as reliable as tidal stream).

Anyway, with a strike price of £ 178.54 / MWh, a year like 2019 would bring 13800 * 178.54 = £ 2.46m. Divided by 6 MW, that would be £ 410.6k / MW deployed.

So, theoretically, we should see £ 410.6k * 28 MW = £11.5m in revenue per year for the upcoming 28 MW plus the £ 2.46m bringing us to a total of £ 13.96m / year for the 28 MW (Phase 2) + 6 MW (Phase 1) = 34 MW deployed.

However, and that would be the interesting answer here, it would mean that if the cost is truly £1m/MW, we'd have covered the cost of those turbines in 28 [£/MW] / £ 13.96 = 2 years.

If this quick computation is anywhere near the truth of what we're facing, then this should mean that the new CfD AR4 round actually be a cash positive. Even if my computations are somewhat correct, those numbers are probably wrong because they are 1) a little dated and 2) variable.

In theory, this should allow SAE to finance new turbines on their own. At least one or two per year - without external funding - that's the point where I have to question everything I wrote so far..

but let's assume all this is somewhat true: How could this affect SAEs strike price in the upcoming CfD AR5? This is one of the main things I see going for SAE.. the rather good chance that they can secure rounds in the future which could (!) lead to a snowball effect.

I'd like to add something like "Yeah, but let's not forget that tidal stream turbines amortize in 10 to 20 years compared to solar energy which, afaik, amortizes in 1 to 2 years." but the truth is that I don't know exactly how long it takes for such a turbine to amortize.

So I ask What's our estimate on
- how expensive one turbine currently is?
- what the running & maintenance costs are?
- best and worst cases for energy cost (= revenue for SAE but of course, that makes turbines more expensive)?
- what all that means for the amortization of a turbine and how SAE plans to improve this metric?

I'd love to hear from SAE themselves but you know.. comms..