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81.5 for me please Roofer
Although I am an optimist, these past few weeks I have a sense of dread each time I lookup the Vodafone share price. The feeling is akin to when I was a youngster and religiously tuned the radio into the classified football results every Saturday afternoon to find out how my team had fared.
Today just under 90 million Vodafone shares were traded which is roughly 0.35% of total Vodafone shares in circulation. During May the share price has gone from 95p to 76p a fall of 20%. During this time roughly 7% of Vodafone shares have been traded, so roughly 93% of Vodafone shares have not changed hands during May.
So what to make of this.
First Point
As the Vodafone share price is the lowest it's been in years, why would institutions and major shareholders sell at such a low price. You could argue that those selling think the share price will go lower. Fair enough, but according to the numbers those selling are in a small minority. Most shareholders are holding. A more compelling reason for the share price drop is that the Vodafone shares are being shorted and these shorts are spread across numerous hedge funds and their subsidiaries where each short in less than 1%. I expect these shorts will need to be closed soon as the shorts are fairly high risk if E% decide to up their stake or heaven forbid someone bids for the company (most unlikely but neither 0% chance).
Second Point
By the way I am seriously underwater with my Vodafone share purchases as my average buying price is 1.21 and I own a shed load of them. However, I am not too concerned. Back in December last year I was down about 30K on my Rolls Royce shares but in just 10 weeks come 8th March that deficit had turned into well over a 100k profit as the share price moved from 69p to 158p. So long term Vodafone shareholders don't get disheartened. Let's hope the turnaround in the share price happens before the sun turns into a lump of coal (A Dilbert quote when asked how long his project would take)
Wind and solar need to be backed up, close to 100 per cent, by some other means of power generation. If that backup is provided by open-cycle gas or worse, coal, net zero will never be achieved: nor anything very close to it.
There is one technology that can provide a cheap and reliable supply of low-emissions electricity: nuclear power. Interest in nuclear power is increasing as more and more people realise that it is safe and reliable. If regulators and the public could be persuaded that modern stations are inherently safe and that low levels of nuclear radiation are not dangerous, nuclear power could provide all the low cost, low emissions electricity the world needs for hundreds or thousands of years.
But if we had 100 per cent nuclear backup for solar and wind, we wouldn't need the wind and solar plants at all.
Wind and solar are, in fact, completely pointless.
Mr Cunningham added: “It takes many years to build, it's very, very expensive, particularly as the cost of renewables has come down so dramatically.”
Boris Johnson, and Tom Samson of Rolls Royce SMR look at a model of a Rolls Royce Nuclear Power plant
Mr Samson had led efforts to secure a place for Rolls-Royce SMR division in the UK's nuclear revolution
Rolls Royce insisted Mr Samson’s departure was by mutual consent. The company’s former civil aviation boss Chris Cholerton will lead the SMR business until a replacement for Mr Samson is found.
The company said: “The Board and Tom have decided that a new CEO would be better placed to take the business forward at this critical junction in the growth of Rolls-Royce SMR.
“Accordingly, it has been mutually agreed with immediate effect that Tom will leave the business to pursue other interests.”
As part of the shake-up Rob Watson, head of the company's electric plane business will be promoted to lead the company’s key civil division, which develops jet engines for passenger airliners.
Adam Riddle will replace former defence boss Tom Bell, and has also been made chairman and chief executive of Rolls’ North America business.
Mr Erginbilgic is battling to return Britain’s biggest engineer to growth and profitability after it was ravaged by the drop in travel caused by the pandemic.
The company made much of its revenue from maintaining engines, offering power by the hour to airline customers. When planes around the world were grounded during lockdown, that money dried up.
His predecessor Warren East raised billions of pounds from investors and sold businesses including Spanish engine parts maker ITP Aero to patch up the company’s finances.
Rolls is particularly dependent on the return to growth of the long-haul travel market, since its commercial jet engines are all designed for the largest planes.
In spite of being only a few months in the job, Mr Erginbilgic has already secured a big order from Air India which could spend as much as $3.5bn with Rolls after buying 470 aircraft last month to renew its fleet.
Announcing the overhaul on Friday, Mr Erginbilgic said: “With the leadership changes announced today we are acting at pace and gaining the momentum we need to transform Rolls-Royce. Together, my leadership team has a winning mindset, strong strategic alignment and a shared ambition to make Rolls-Royce a company that delivers for all stakeholders."
Rolls-Royce’s new chief executive Tufan Erginbilgic has ordered a shake-up of the engineer’s top team after he clashed with executives amid a battle to revive the company’s fortunes.
The FTSE 100-listed jet maker said on Friday that Tom Samson, head of its small modular reactor (SMR) developer, would leave as part of the overhaul, while finance boss Panos Kakoullis would be replaced.
Mr Kakoullis has been replaced with Mr Erginbilgic’s former BP colleague Helen McCabe, who was part of his team when he was a top executive at the oil company. Ms McCabe is Rolls-Royce’s sixth finance chief in two years.
Mr Erginbilgic and Mr Kakoulis are understood to be "different characters" according to someone familiar with the move, and that the new chief executive sought to replace the finance chief with Ms McCabe, who he said could deliver "dramatic improvements". Mr Kakoulis will remain on the board until at least 31 Aug.
It comes after Mr Erginbilgic called Rolls a “burning platform” in a speech to staff when he became chief executive in January.
The former BP executive subsequently launched a strategic review of the business and said shareholders would not receive an annual dividend for 2022.
Mr Samson, who has headed up Rolls’s project to make mini-nukes since its inception in 2020, leaves as the company battles to win contracts for the power plants.
It was dealt a blow last month when ministers said other companies with similar technology could compete for the next round of government funding to make the power plants a reality.
The SMR business froze hiring earlier this month since no government orders were on the horizon.
Mr Erginbilgic told The Telegraph in February that Britain risks squandering its role as a leader in mini-nuclear reactor technology if ministers fail to throw their support behind a key project.
He said at the time: “We need to come to the table and work very seriously and sign an agreement for the deployment of the first project. First mover advantage will be important.”
The project is at the mercy of government caprice and the UK has a chequered history of keeping its promises on large nuclear projects, said Nick Cunningham, an aviation analyst.
Mr Erginbilgic is unlikely to want to exit defence and civil engine building or the company’s power business, which could make the SMR project a target for being sold, he said.
Mr Cunningham added: “It takes many years to build, it's very, very expensive, particularly a
On Thursday Grant Shapps will unveil ways to speed up Britain’s move towards nuclear energy, including the confirmation that the Government wants 25pc of UK electricity to be generated from nuclear by 2050.
He will also kick-start the use of small modular reactors in Britain, and improve the country’s capacity for carbon capture storage.
Pleas to speed up the approval process are likely to fall on deaf ears, said UCL’s Jim Watson, since safety must trump everything else.
Britain is up against a much larger competitor. The US, which is home to NuScale and Last Energy, has “deep pockets” and can “back a lot of horses at once,” Watson says.
“Whereas the UK, being a medium sized economy, we've really got to make some quite strategic choices.”
Rolls Royce SMR
Rolls-Royce’s 470MW SMRs are promised for £1.8bn, or £3.8m per megawatt CREDIT: Rolls-Royce
Last week, Chancellor Jeremy Hunt unveiled a competition for SMR designs, promising to open the Treasury’s coffers to the winners.
While this may sound like good news, there are fears that a competition open to international designs may do damage to the homegrown SMR industry. If the British Government won’t plump for its own companies’ designs, why should any other country?
Watson adds that while the promise of Treasury backing sounds enticing, the Chancellor’s announcement was vague.
“The question is, how long does it take a budget statement to actually turn into something which is real and that's still a question mark because what the budget said was pretty broad and brief.”
With a major update on Britain's green economy expected by the end of the month, dubbed Green Day, SMR developers are hoping for more concrete answers and commitments.
A government spokesman said: “We are launching Great British Nuclear to address constraints in the market and support new nuclear builds as we work towards?energy security.
“We expect the competition to attract the best designs from both domestic and international vendors, and we are aiming to select the leading technologies by the end of this year.”
The arrival of cheap, abundant gas from the North Sea led to investment in methane-driven power stations that came online from the early 1990s, said Paul Norman, professor of nuclear physics and nuclear energy at the University of Birmingham. Cheap, safe and easy-to-burn natural gas made nuclear seem risky and expensive.
Nuclear's image was also tarnished by Chernobyl and Fukushima, and the cost of project overruns.
A fear of eye-watering costs and large upfront spending may well be what is putting the Government off, says Jim Watson, a professor of energy policy and director at UCL Institute for Sustainable Resources.
“We really don't know how much these things are going to cost once they build one, and how long they're going to take to build,” he says, pointing out that demonstrator plants are still some way off.
The next nuclear power plant to come online in the UK, Hinkley Point C, will cost as much as £32.7bn for 3,200 megawatts, or £10.2m a megawatt.
By comparison, Rolls-Royce’s 470MW SMRs are promised for £1.8bn, or £3.8m per megawatt.
However, the company is still offering larger – and more expensive – options than US rivals.
Last Energy’s £100m modular units, which are two-thirds the size of a football pitch, can output 20MW of electricity, enough to power 40,000 homes. They will be deployed in 2026 with no government funding required. NuScale’s reactors will offer 77MW of power apiece.
Last Energy
Last Energy £100m modular units can output 20MW of electricity, enough to power 40,000 homes CREDIT: Last Energy
Rolls is joined by a clutch of other UK-based companies that are at various stages of development, including MoltexFLEX, a Warrington-based developer of so-called advanced modular reactors (AMRs), the next generation of the devices.
The company is developing what it claims is a safer reactor that would use liquid chemicals instead of high pressure gas. In any disaster, chemicals would solidify as they hit cool air, rather than blowing into the atmosphere as happens with gas.
Moltex is aiming to make electricity for about £30 per megawatt hour and heat for about £10/MWh, a fraction of today’s prices and also cheaper than before Russia’s war on Ukraine, by using off-the-shelf parts as much as possible.
Chief executive David Landon has said that he wants to be able to build a demonstrator for his reactor by 2029. Freeing up Britain’s old coal-fuelled power station sites for nuclear generation would help, since they are already attached to the grid.
Yet despite being based in Britain, the company is having more success abroad.
Working with regulators in Canada, the company’s sister operation has been able to move faster towards approval for its designs. Landon said last month that the UK government should consider how to speed up the deployment of AMRs, and requested earlier access to the Office for Nuclear Regulation, and early identification of suitable sites.
With little international fanfare, a landmark decision was made in the US at the start of the year.
A new design for a nuclear reactor won final approval from regulators. The decision unlocked a market worth $10bn (£8.1bn) per year for the reactor’s developers and presented a potential solution for gigawatts of green energy demand.
While the small group of scientists who crafted the design no doubt cheered the decision, rivals in Britain were exasperated.
Eight years ago, then chancellor George Osborne declared an ambition to “position the UK as a global leader in innovative nuclear technologies”.
But since that 2015 speech, no UK design has been greenlit, much to the frustration of the handful of British firms – including top engineer Rolls-Royce – that are desperate to build a new generation of smaller power plants.
Regulatory approval in the US made NuScale, the company behind the new reactor design, the frontrunner in the market.
Policymakers and industrialists alike hope a new generation of factory made, small-scale reactors will turbocharge the decarbonisation of industry and set up an export opportunity with well-paying jobs.
Around the world, dozens of companies are developing Small Modular Reactors (SMR) as a way to rein in the overspending associated with full-sized nuclear power plants and offer carbon-free electricity around the clock.
British developers include Rolls-Royce SMR, a division of the FTSE 100 engineering giant that is also backed by Qatar, billionaire French oil dynasty the Perrodo family, US nuclear giant Exelon Generation and £210m of taxpayer money. It has been in development since 2015.
Rolls-Royce has proposed a design about a seventh the size of a traditional power station, but at a fraction of the cost per megawatt.
It is the most advanced of UK designs, but still going through the approval process.
Yet despite the prowess behind Rolls, the nod from the US’s Nuclear Regulatory Commission has placed NuScale ahead of the competition.
Then prime minister Boris Johnson and Tom Samson, chief executive of Rolls Royce SMR
Rolls-Royce has ambitions to build a fleet of small module reactors in the UK CREDIT: Simon Dawson/No10 Downing Street
Its status as an approved design is seen as a watershed moment and puts pressure on other firms to catch up.
“They have an SMR,” said one well-placed observer, pointedly adding: “Others have a powerpoint presentation.”
Meanwhile, US SMR designer Last Energy this week said it signed a deal to sell 24 of its power plants to UK customers, further highlighting the slow progress of homegrown providers.
Experts say British advances have been held back by lingering fears about the destructive potential of nuclear disasters and a historic overreliance on other sources of energy.
A US-based developer of small nuclear reactors has signed a deal to sell 24 of its power plants to UK customers, putting pressure on rival makers including Rolls-Royce.
Last Energy said the £100m modular units, which are two-thirds the size of a football pitch, can output 20MW of electricity, enough to power 40,000 homes. They will be deployed in 2026 with no government funding required.
Several companies are developing small, factory-made nuclear power plants. It is hoped that making smaller units will lead to lower prices through “economies of scale”, by spreading the cost of development over many units.
For heavy energy users with 24-hour operations like steel mills and data centres, nuclear power is attractive because it consistently provides power, compared to wind and solar generation.
Nuclear plants can also provide heat which can be used in many chemical and industrial processes like cement making. Last Energy’s design can output 60MW of thermal energy.
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The US company still needs to win UK regulatory approval for its designs and secure suitable sites before the deals are finalised and customers pay up.
But it still expects its first plant to be delivering electricity in about three years.
Last Energy said it has sought no government funding and many of the components will be bought from existing suppliers.
Mike Reynolds, the firm’s UK boss, said: “Our private-sector led approach to delivering new nuclear power supports the wider Government efforts to promote growth and investment in the green industries of the future.”
The plants have been sold via power purchase agreements, which lock buyers into long-term energy contracts and mean that Last Energy can seek more funding for clearing the designs and eventually building them.
SMR Model
Rolls-Royce has ambitions to build a fleet of small module reactors in the UK CREDIT: Rolls-Royce
Dozens of other firms are vying to bring a large-scale nuclear plant design to market, including Rolls-Royce, GE-Hitachi and several smaller start-ups.
The UK is seen as a key market because of Britain’s long history with nuclear power and its favourable approach to foreign investment.
Last week, Jeremy Hunt unveiled a new government unit, Great British Nuclear, which aims to get nuclear projects off the ground, focusing on the development of small, modular reactors.
Last week the Government dealt a blow to the ambitions of Rolls, which wants to build a fleet of the reactors in the UK, by opening the process up to competition. The British engineer’s £1.8bn models generate 470MW of power.
While Rolls could press on with foreign or private orders, the move left executives at a loss to explain why the Government would part-fund development to the tune of £210m and then raise the prospect of not buying its models themselves.
Last Energy has shunned this process and gone directly to customers and investors to fund its smaller units.
As the RR share price climbs even those punters who bought in before COVID may soon be in profit assuming they took up the rights issue in 2020. For example, suppose someone bought 10,000 RR shares just before COVID at £7 a share and subsequently took up the 10 for 3 rights issue in October 2020 at 32p per share. After the RI they would have 43,333 shares and their total outlay would be £70,000 + £10,667 = £80,667 (excluding broker fees).
Now with the share price hitting 158p today their RR share holding would be worth £68,466. However, for them to break even the share price needs to rise to 186p. Not so far to go. However, if they had bought in at £12 in 2013 then the current share price would need to double for them to break even.