Member Info for PaulCurtis

I’m going blind! I can see the IRR of 11% but struggling to find the DCF % that is assumed for the NAV calculation? Can anyone please help me? I thought it was c. 8%

Thanks

Re debt remember that subsidies expire mid 2035 and most Renewables are targeting this date to have eliminated fixed debt. Clearly income will fall thereafter

My concern re shorter length wind licences is being more at the mercy of the leaseholder re extensions, especially if a good location.

I’ll double check discount rates for UKW but read a recent analysts note which preferred Trig, saying UKW discount rate too low.

But the biggest concern is slowing wind speeds thanks to global warming? I think this is the principle reason why TRIG and UKW so bombed out

Thanks

1. My point was comparing like with like. UKW dividend cover is flattered by no amortising debt. Clearly a Renewable that gets rid of its fixed debt ahead of another renewable with similar dividend cover is clearly preferable

2. Both ROCs and FITs are exposed to Reform but my understanding is that Reform are back tracking re pre AR7. I’m betting zero chance of Option 2 which would kill future investment. The Renewables need to sell assets/farm out as can’t raise equity. Option 2 kills off this route to growth.

3. Solar has longer leases so easier to upgrade with new, cheaper and more effective panels. And easier than offshore wind to co hybrid with batteries. I think improving battery technology will greatly enhance solar efficiency and all the Solar Renewables are already going this way.

4. Battery technology is improving and costs falling, clearly hybrids give Solar a value add in terms of optimising revenues. And Grid connections should be significantly improved within 5-10 years.

5. I’m not down on UKW but discount rates are quite aggressive compared to others and remaining asset life is lower but I must double check this tomorrow.

And strongest cash cover is not a simple analysis when not repaying the debt.

Bottom line is which renewables are best placed to increase NAV whilst maintaining decent dividend cover. Increasing NAV is the big kicker!

I hold all of them as the sector is so bombed out but UKW near the bottom of my list.

Why? Because all wind and not amortising debt. Hence that dividend cover is a bit misleading, most Renewables are amortising long term debt so that paid of when Govt ends subsidies. Hence I prefer TRIG.

On balance I prefer solar to wind as longer economic life (and therefore life of licences) and lower replacement costs. Plus I think more room for value add by going hybrid with battery storage which could be game changer in 5-10 years.

Solar has suffered more than wind re the CPI/RPI Consultation sell off, I think Option 2 very unlikely so Solar better placed to bounce.

There is zero chance they restructure the Prefs? It’s cheap, unsecured debt with no cash repayment obligation in 2036. Worst case can convert into equity at NAV in 2036.

Because they are insiders, discussing mergers or sales? All have promised to reduce NAV discount so must be up to something…

Articles like this scream that we are at the bottom! NESF has next three years prices (a rolling hedge) locked in, they will be raking in the cash. The bombed out share price is not because financially distressed as is usually the case.

The Govt have clearly screwed up this Consult period and Renewable investors will walk with their feet unless they make amends. Imo this will end with a climb down and positive messages re no further changes.

The Prefs are a positive since add to dividend cover/cash available for reinvestment. 2036 a long way away and worst case convert at NAV. Not a disaster at 52p!

But how likely is Option 1 versus Option 2?

This is meant to be a Consultation. It’s like me starting a Consultation with you, Option 1 is a slap on the wrist, Option 2 is a pile driving kick in the gonads.

Which do you go for? I can’t then force Option 2 on you? Option 2 is dead in the water unless massively sugar coated, perhaps legally upgraded to be Reform proof.

Finally found it in the Annuals. Appears amortising to c.2034 aside from Australian assets which are term loans

Finally found it in the Annuals. Appears amortising to c.2034 aside from Australian assets which are term loans

Been comparing the two but struggling re dividend cover. Bluefield say dividend cover about 1.15 post amortisation of debt whereas FSFL claim dividend cover of 1.3 but I can’t see any reference to amortisation. AI says that they are amortising the long term debt buy I’m going cross eyed reading the Accounts!

FSFL NAV was 108.5p versus Bluefield at 118.5p. Dividends 8.1p versus 9p for BSIF.

Brokers say that FSFL has the better development pipeline.

I’m wondering if part of the valuation problem is the difference between new build developments (utilising more advanced technology at lower prices) versus existing operational assets that are being valued on NPV of cash flows. ie replacement is cheaper/longer lasting and therefore preferable?

Been comparing the two but struggling re dividend cover. Bluefield say dividend cover about 1.15 post amortisation of debt whereas FSFL claim dividend cover of 1.3 but I can’t see any reference to amortisation. AI says that they are amortising the long term debt buy I’m going cross eyed reading the Accounts!

FSFL NAV was 108.5p versus Bluefield at 118.5p. Dividends 8.1p versus 9p for BSIF.

Brokers say that FSFL has the better development pipeline.

I’m wondering if part of the valuation problem is the difference between new build developments (utilising more advanced technology at lower prices) versus existing operational assets that are being valued on NPV of cash flows. ie replacement is cheaper/longer lasting and therefore preferable?

Thanks for the update, did they say anything about the threat of Reform withdrawing financial support for Renewables? This seems to be spooking most investors

I’d be grateful to hear their thoughts on

Realistic impact of a future Reform Govt

Extending asset life, how do they continue growing the NAV as current licences expire?

Do they have an inverter replacement liability re frequency stabilisation?

The Prefs are not a concern until 2036. In the meantime £200m of unsecured debt at 4.75% is attractive. As long as NESF can get a better return than 4.75% the excess is +ve cashflow.

Current lousy sentiment towards Renewables is becoming irrational. Bottom line is NESF is a cash cow and this gives the company great optionality to ride out say an AI crash. Worst case they can slash the dividend and really go for growth if bargains abound. I’d be very happy with 7% if this offered significant capital upside.

And Reform? If they kill off Renewables, then how do they fill the shortfall? And improving infrastructure should enhance Renewable viability by 2028/9.

Thanks, I missed that

‘ Amortised is mentioned 13 times in the annual report.’

I can’t see it! None of the debt is amortising?

They have the RCF of about £99m and project level debt of c. £180m. Clearly the RCF is not amortising and I can’t see anything about the project level debt?

I think this is an important point since the 30% dividend cover is not so headline attractive if debt is not self amortising. eg TRIG dividend cover is marginal but the debt is amortising.

Does anyone know whether the debt is self amortising?

Thanks

Is the problem that most have licences with time limitations and no right to extend? Hence will need to negotiate extensions in order to upgrade.

I’ve bt more FGEN, today at 67.2p. Dividend cover and discount to NAV offer a decent safety net.

Think result of Rathbones taking over Investec, too large a combined holding and started offloading in October 2024. Down from 13% to 10%.

When will they stop? Clearly not today!

So hopefully nothing sinister and just a great buying opportunity