Member Info for Temple_of_Doom

My capital has appreciated here … March was an excellent month … waiting for another drop .. clear bar a few shares.

Fixed price protects downside … all depends upon the fix price.

"The cost of capital 'trap' point is garbage. ITs have historically used share issues to get some scale but you do not ordinarily need them to run your business. How many FTSE 100 companies are using rights issues to fund ORGANIC growth? None. How many FTSE 100 companies are constantly retiring equity to boost EPS? Loads."

ITs sit in an unusual place .... the "rights issue" effectively occurs when trading price is above NAV while sharebuybacks occur with the reverse scenario .... both are obviously accretive for existing shareholders as a given.

The issue in the sector lies with NAV and power price forecasts ... the UK added to EU Carbon Taxes in 2013 if I read correctly and now removed. The motivation from Labour's viewpoint would appear to be convincing the sceptical voter that renewables are cost effective long term and so looking to cut consumer prices where possible. This has consequences as in my previous comment - and loss in trust from private markets not to be ignored.

What the government is, however, doing is undermining confidence in the sector whilst preserving its own revenues ... taking VAT off consumer energy bills was a Brexit related argument for leaving the EU and an example - it's still there.

In leaving the EU the UK is paying the price in relying on the EU for energy storage (in effect if I read correctly) whilst having limited storage itself, transmission capacity that has not kept up to date with the shift towards remewables, and limited fossil fuel storage capabilities meaning reliance on market price and being unable to smooth out highs and lows - so this oversight has been beneficial for some renewable energy producers .. but energy storage companies have suffered these past few years owing to energy switching mechanisms being dysfunctional in the UK.

This leaves NAV calculations that ITs in the sector rely upon for revenues ... many IT's have already revised their fees on the basis of a compromise between NAV and shareprice ... that implictly suggests NAVs are for want of a better phrase ... indicative or pie in the sunny uplands sky.

Fundamentally, the question is one of cash generated versus costs. Some ITs in the sector are at risk of breaching their own Articles because debt to shareprice ratio is too high meaning that borrowing is no longer feasible to grow and assets need to be sold to reduce borrowing ....

... with 40% NAV to trading price discounts it makes sense to cut dividends and buy back shares, but this assumes that IT assets equate with NAV and not shareprice and is in effect the capital trap.

Many ITs in the sector needs to reduce to dividends to get back on to a growth path. The question is whether such drastic change lies in the best interests of shareholders .. with the caveat that the last out of the door will likely demand the lowest wind down price.

A great deal of uncertainty has been introduced .. much unnecessary in my view ... but we are where we are.

"barely any of these investment trusts will be building new energy infrastructure" ... is a path the Labour government need to tread carefully as we saw in 2023 with Conservatives:

"No bids for offshore wind in government auction"

with the caveat that if the government is going to change the rules, the market will reprice risk and demand more up front to develop, so here I agree.

"It is odd the renewable electricity price was tied to gas in the first place" ... all OECD countries I believe tie pricings to the cost of the highest generator at any single instance .... in the UK that pricing happens to be Natural Gas much of the time .... not helped by Carbon tax ... that is the outlier here since it effectively elevates returns for renewables.

"I prefer TRIG due to its European assets and less exposure to Labour and then Reform." ... Decoupling is also on the cards in other European nations. The UK's problems ... are structural ..... wind farms built in Scotland with not enough thought paid to how that generation would feed through to England as a major consumer and keeping up with predicted transmission changes needed - meaning that reliance is on Natural Gas - were again UK falls foul because it lacks storage capacity were it used to rely upon the EU ...

... the sad irony is that in 2022 UK imports and exports were at record highs because it imported Nat Gas from non EU countries to include Norway, then exported to the EU effectively as a hub or middleman but because it could not store gas was then obliged to buy back Natural Gas at higher prices still.

Another lacking in planning Brexiter fail ... the UK disease ... poor planning .... how to solve it? Vote for Reform Party ... who seem to think "plan" is a four letter word.

The UK:

Closed coal faster

Reduced firm capacity faster

Scaled renewables quickly

But:

Didn’t build enough storage / flexibility / grid capacity

So:

It hit the “renewables + gas fallback” phase harder than others

Published a few days ago: "The war has triggered a global surge in demand for electric vehicles (EVs), solar panels, heat pumps and other fossil-free technologies. Inquiries about buying EVs have risen 23% in the UK since the attack on Iran began, by 50% in Germany and by 160% in France. There’s similar interest in India, south-east Asia and South Korea. Even in the US, where Trump has done everything possible to stymie the technology, there’s 20% more interest than before the war."

Agreed … this is the Epstein model in my view … get close to politicians for insider information with a honey trap for security.

One of the reasons I’ve moved over to FGEN and GCP … the latter being an old favourite … FGEN looks as though it is following on the downside as it always does by association in the sector but its hit frim government intervention is small.

“At the moment, when gas prices are high, we end up paying more for our electricity, even though the cost of producing it doesn’t change. " ... and is true for both natural gas and renewables energy production .... seems the Reeves doesn't quite grasp the idea of supply versus demand controlling prices.

From today:

"CPS was expected to become less meaningful to electricity prices in the longer run as UK renewable generating capacity expands and carbon emitting generators set the marginal price less frequently. Yesterday's announcement brings this forward."

..... government needs to be careful .... tehre comes a point where companies start looking to sell abroad instead of UK markets. Business always finds a way.

De linking gas from electricity has been on the cards for some time .... at the end of the day ... shifting over to renewables ... would reduce dependency upon gas in any case.

Comfort for the markets ... will the market buy in?

Read like a thinly veiled profit warning to me.

Nice squeeze at the end of the day.

"others thoughts on this" - sent the same points broadly to NESF investor relations this weekend.

39.5p was the low a week or so ago.

BSIF is currently ahead of the sector on its winding down. I bailed the last here at 43p before the spike to 45p yesterday ... what I lost was made on others yesterday so overall slightly ahead ... the question is how realistic are NAV calculations and asset demand - difficult.

Delay trade of 10.6 million shares traded yesterday posted today.