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As an enthusiast for tidal energy I'm disappointed, but as an investor I'm happy with SAE concentrating on the money making option.

The Proteus turbine is now due to be redeployed in Q3 2024, a delay from the previously announced Q2. By then it will have been out of the water for more than a year, forgoing well over £1 million in revenue. I suspect the new Proteus yaw mechanism is destined for this turbine - if so that suggests where the problem was. 

The upgraded turbine will need to perform exceptionally well for Meygen to have any chance of delivering phases 2 and 3, but even that is a stretch.  I can't see anyone investing £100 million in a tidal array of 3MW turbines based on 6 months of operating data from a single 1.5MW turbine, particularly given the mixed track record of the Proteus device. SAE has reduced its stake in Proteus from 21% to 11% which is hardly a vote of confidence. I wonder whether Andritz will come back on the scene.

The battery side of the business looks in really good shape and SAE now have a proven track record of delivering on their promises in this field. The tidal side looks much more challenging. 

Great report - lots of detail to get into but I'll wait until the chat quietens down.

Just one question for now: SAE disposed of 10% of their Proteus shareholding, moving from a 21% to an 11% stake. Is anyone able to glean from the report how much cash they got for this?

Thanks timaeus, a very thorough analysis as always.

just one correction: i believe the ar1500 turbine is still sitting in nigg waiting to be redeployed, so if anything has failed it relates to an andritz turbine. the ar1500 was indeed deployed in march 2022 but then recovered in june 2023 for "preventative maintenance" - see the rns dated 5th July 2023. i seem to recall one andritz turbine has operated for over 5 years without any maintenance so that would have to be a candidate, though there are plenty of other plausible explanations (eg a ten day outage of the site grid connection).

Meygen generated almost 40% more energy in 2023 than 2022 so i hope revenue will be up even though wholesale prices are down. i think just one major offshore operation in 2023 compared to two in 2022 so costs hopefully also down. revenue from the BESS project and the rescheduling of abundance bonds should also improve the outlook.

I’d like to see the issue relating to repayment of a historic grant sorted out and the going concern question finally put to bed.

a £2.5 million loan was due for repayment on 31 may 2024 (post year end) - has that happened?

I’d also like to see a plan in place to repay the meygen senior creditors. repayments are currently on hold until November this year. the share price is unlikely to recover until there is a clear path to repaying or restructuring this debt.

SAE received money recently for uskmouth and meygen has been generating revenue for the last year so i would hope they have a war chest for contingencies like this. chartering a vessel is expensive so it makes sense to do two operations at the same time if they can.

Drop in output from 975 MWh in April to 664 MWh in May. consistent with one turbine or cable going out of commission. if so we might see remedial work or a turbine recovery alongside the proteus turbine deployment in the next few weeks (Q2 2024 according to the RNS from 5.12.23).

I have not seen any announcements but I think all of the recent rounds have followed the longest timeline so I do not expect we’ll find out until september or october

Figures just out for April, performance over the last year below.

Output from the three Andritz turbines hit 37MWh/day in September last year and appears to have levelled off at 31MWh/day. Great to see such consistent performance and hopefully they can start repaying some debt. It will be interesting to see if they remove any of the Andritz turbines when they redeploy the Proteus one.

May 23 - 1021 MWh - Two Andritz and one Proteus turbine deployed

Jun 23 - 1102 MWh - Proteus turbine removed, Andritz turbine redeployed

Jul 23 - 946 MWh - Three Andritz turbines deployed

Aug 23 - 1018 MWh

Sep 23 - 1146 MWh

Oct 23 - 987 MWh

Nov 23 - 957 MWh

Dec 23 - 899 MWh

Jan 24 - 973 MWh

Feb 24 - 873 MWh

Mar 24 - 972 MWh

Apr 24 - 975 MWh

"Anyone still worried that MeyGen can’t generate the revenue to pay for the turbines?"

I think "won't" rather than "can't" better reflects my concern here. I'm worried about the operating losses at Meygen. Happy to be corrected, but I think Meygen plc has made a net operating loss nearly every year since the array started operation.

The main reason being that all four turbines have not been in the water generating £150k/month as per the happy scenario painted below. At almost every point one or more turbines have been sitting under water awaiting recovery (not generating £150k/month revenue); being recovered by expensive vessels (costing £X00k); sitting onshore for months being repaired (not generating £150k/month and costing £X00k); or being redeployed (costing £X00k).

As a result, in most years the company hasn't covered it's operating costs. Debt has increased and investors have not been repaid. We've all seen what's happened to the share price.

Like many on this board I want tidal power to work - I want to believe! Can you explain to me why you think the issues affecting the Phase 1 array will not affect Phase 2? Why will this time be different?

You're right I think - I've not seen an update from the company about this. however according to the CFD website they have achieved this milestone.

https://dp.lowcarboncontracts.uk/dataset/cfd-contract-portfolio-status

Thanks oldtramp, that's an interesting find and might be related to the recent activity above the cables in gills bay.

Same vessel as a couple of weeks ago I think, in gills bay near the cables.

What’s going on?

Well spotted! looks like a workboat positioned above the meygen cables. was also on site yesterday. probably just routine maintenance but i'm surprised i can't find a notice to mariners.

Found it: Friday morning on the today show. Three mentions of tidal energy in a ten minute interview - very encouraging.

https://www.bbc.co.uk/sounds/play/m001w19n

@mcco do you recall which radio 4 show that was and on which day?

The MDD is mandatory for all CFD projects. it looks like meygen phase 2 has cleared this hurdle.

@strangy I'm not 100% sure but from what i've read I think each cfd project has a milestone delivery date (MDD) when the developer needs to provide evidence that they have either (a) spent lots of money on the project or (b) signed key supply contracts. The situation for allocation round 4 is described at the link below . The MDD is 18 months after CFD contract signature. All round 4 CFD contracts were signed by early August 2022 so the MDD is imminent.

https://www.cfdallocationround.uk/sites/default/files/2021-10/Allocation%20Round%204%20online%20launch%20event.pdf

If I'm right then SAE won't have the money to spend to take route (a) so they will follow route (b) and we could see an announcement very soon on contracts for phase 2. i suppose they only need to tell LCCC and not the rest of us but this seems like important information that should be made public.

if a developer fails to meet this milestone then (from the link above) LCCC has the right to cancel the project, though they don't have to. It's possible LCCC would show leniency to an emerging technology. Offshore wind projects are struggling so there might be news about this in the next few days if developers walk away from their CFDs.

Did it get to 1.8? I don't think we've been at 1.8 since December 2022. Highest I saw last week was 1.65. Look at the technical chart.

But I agree, this share does appear to drift down quickly following good news. Hopefully we'll see a step change in the next week or so following the milestone delivery date for round 4 of the CFD.

Mehmet, the Proteus turbine (AR1500) wasn't in constant operation for 4 years before it was removed. It was deployed in March 2022 after a pitch system upgrade and removed in June 2023, 16 months later. Before that, it was out of the water from August 2020 for the pitch upgrade. So in total it's been deployed for about two of the last 4 years.

This RNS mentions the AR1500 deployment in March 2022

https://www.lse.co.uk/rns/SAE/tidal-turbine-re-deployment-at-meygen-site-ylu0myeg6ooy10g.html

This RNS from July 2023 confirms that the AR1500 (turbine 4) was removed in June.

https://www.lse.co.uk/rns/SAE/sae-successfully-deploys-upgraded-turbine-fqapqcjj9v5zy86.html

This RNS from Dec 2020 says that the AR1500 was recovered August 2020.

https://www.lse.co.uk/rns/SAE/operational-update-dmysp8grt1a0fd5.html