Investing in Green Infrastructure Funds (ITs)

[richfool]

Any views on the prospects for wind and solar energy investments like JLEN & TRIG, in the light of the slump in oil prices and the C19 crisis?

[thirty06]

In the short term, probably not so good. Low oil price = lower energy costs.

In the long term, it's where we're supposed to be headed. Picking individual companies at the start of a new industrial phase is going to be tricky. I'll hazard a guess that the likes of Shell and BP will be picking up green energy firms if they look promising.

[UncleEbenezer]

In the short term, probably not so good. Low oil price = lower energy costs.

In the long term, it's where we're supposed to be headed. Picking individual companies at the start of a new industrial phase is going to be tricky. I'll hazard a guess that the likes of Shell and BP will be picking up green energy firms if they look promising.

Plausible, but perhaps behind the curve?

Bigcos in the market are surely led by the utilities sector. Hence the likes of SSE (a history of windfarms) or EDF (very recent investment in charging electric vehicles).

[thirty06]

In the short term, probably not so good. Low oil price = lower energy costs.

In the long term, it's where we're supposed to be headed. Picking individual companies at the start of a new industrial phase is going to be tricky. I'll hazard a guess that the likes of Shell and BP will be picking up green energy firms if they look promising.

Plausible, but perhaps behind the curve?

Bigcos in the market are surely led by the utilities sector. Hence the likes of SSE (a history of windfarms) or EDF (very recent investment in charging electric vehicles).

I'm usually behind the curve.

Yes, the utilities sector deliver energy. I think that energy companies are still going to seek a role in production.

I we remind ourselves that Shell began in business by importing seashells, then moved into shipping and later moved into oil as they began to ship it. I think that they will use their size to exploit new technologies.

[richfool]

I was thinking more from the perspective of, if energy costs are falling, won't that reduce the price that solar and wind farms can get for the electricity they produce, and ultimately the returns that we investors then get?

[supremetwo]

I was thinking more from the perspective of, if energy costs are falling, won't that reduce the price that solar and wind farms can get for the electricity they produce, and ultimately the returns that we investors then get?

JLEN have fixed-price contracts for many of their sites (and I expect others have similar), hence the significantly-lower movements in the share prices in this sector.
We have no idea at present how long or how much lower gas prices might affect energy costs, but I reckon the virus will be overcome before infrastructure contracts expire and by then energy costs are likely to be back to at least 2019 prices.

[gbjbaanb]

I we remind ourselves that Shell began in business by importing seashells, then moved into shipping and later moved into oil as they began to ship it. I think that they will use their size to exploit new technologies.

Yes they will, and are already - they lead all the other oil companies in moving to renewables, even fi they're not quite hitting their targets, its not a market they're ignoring in favour of oil.

The biggest concern I have for renewables now is that there's beginning to be a glut of power at some times, I changed energy provider to Octopus recently and when there's a storm, there's so much wind energy produced that Octopus sends me an email to tell me that the price will go negative at time of lowest demand. The rest of the time the price is a couple of p per kWh. I can't see adding more renewables makes financial sense, if they have to pay for their energy production to be taken away and the returns diminish due to excess capacity when weather conditions are favourable (and obviously they don't produce much when they're not), so renewables were a great investment, but the returns on their product will be hit as more of them are built.

[tramrider]

I can't see adding more renewables makes financial sense, if they have to pay for their energy production to be taken away and the returns diminish due to excess capacity when weather conditions are favourable (and obviously they don't produce much when they're not), so renewables were a great investment, but the returns on their product will be hit as more of them are built.

Time to start investing in batteries to spread the load.

[sunnyjoe]

The biggest concern I have for renewables now is that there's beginning to be a glut of power at some times, I changed energy provider to Octopus recently and when there's a storm, there's so much wind energy produced that Octopus sends me an email to tell me that the price will go negative at time of lowest demand. The rest of the time the price is a couple of p per kWh. I can't see adding more renewables makes financial sense, if they have to pay for their energy production to be taken away and the returns diminish due to excess capacity when weather conditions are favourable (and obviously they don't produce much when they're not), so renewables were a great investment, but the returns on their product will be hit as more of them are built.

I love Octopus Agile!

Negative prices happen because subsidised renewables are setting the marginal price. Because they receive energy price plus subsidy price, they can afford for the energy price to go negative, right down to energy price = marginal cost of production - subsidy

[sunnyjoe]

COVID-19: TRIG cuts power price forecasts
https://www.renews.biz/59805/covid-19-t ... forecasts/

https://www.sharesmagazine.co.uk/news/s ... wer-prices

The Liberum analysts add that the latest forecasts received by TRIG are therefore likely to have come from the other major third-party provider, with the other funds in the sector likely to experience a similar adjustment to power price forecasts over the coming quarters.

[richfool]

An interesting article and discussion of oil and energy prices and their possible affects on renewables in the latest Investor's Chronicle: (If you can't access the full article, copy & paste the title into a google search and you should get access to the full article):

Get on the right side of the oil price with good funds

https://www.investorschronicle.co.uk/fu ... ood-funds/

[richfool]

I came across this which may be of interest to holders of TRIG:

Renwables Infrastrucuture Group acquires stake in German wind farm, exits Swedish project

LONDON (Reuters) - London-listed The Renewables Infrastructure Group <TRIG.L> (TRIG) said on Friday it has completed the acquisition of a 36% stake in a 396 megawatt (MW) offshore wind farm in the German North Sea.

Commercial operations commenced in June 2019 at the Merkur wind farm and the project benefits from a feed-in tariff for the next 13 years.

Dutch pension investor APG has acquired the remaining 64% in the project. Financial details were not disclosed.

TRIG also said it has exited from a Swedish onshore wind project being developed by Enercon due to construction delays.

https://uk.finance.yahoo.com/news/renwa ... 36184.html

[richfool]

Hi All, Personally I see GSF as a bit of a minnow of a Trust which didnt start well, failing to raise the desired amount at its IPO. If the Capacity Market takes off it could do well though. Personally I am steering clear for the moment.

Also after developments in the markets these last few days I have cancelled my subscription to the ORIT IPO as I see many other likely more profitable opportunities now for deploying the money.

ATB

Pref

What about GRID Gresham House Energy Storage Fund? Similar to GSF but a slightly larger animal, market cap: £169m targeting a dividend of 7p per share, paid qtly. Current SP: 107.50p NAV: 99.1p

Factsheet accessible through:
https://www.hl.co.uk/shares/shares-sear ... rd-gbp0.01

I am still interested in GSF. It has a much higher yield at 6.95% than GRID at 4.23%. it did get setback in the March falls, but has recovered strongly since. Noted it is a minnow, but battery storage of renewable energy must be in vogue currently.

[ukfire]

Shares Magazine were a bit bearish on the whole sector this week, suggesting that readers who followed their 2019 tip to buy Foresight Solar sell their shares at a slight loss. Much reference to the report earlier this year about lower than expected long term power prices and NAV downgrades.

I'm still in TRIG and ORIT.

[richfool]

Shares Magazine were a bit bearish on the whole sector this week, suggesting that readers who followed their 2019 tip to buy Foresight Solar sell their shares at a slight loss. Much reference to the report earlier this year about lower than expected long term power prices and NAV downgrades.

I'm still in TRIG and ORIT.

Ukfire, do you have any link to that article? I could only find one back in February, which was suggesting that whilst investors were taking a dim view of Foresight Solar, it had a bright long term future:

https://www.sharesmagazine.co.uk/news/s ... ight-solar

I still hold TRIG & JLEN

Ah, I found this, though apparently one has to subscribe to read it (9th July):
https://www.sharesmagazine.co.uk/articl ... ergy-funds

Also, spotted this alternative view from the Guardian (May this year)
https://www.theguardian.com/environment ... ays-report

[dredd0]

Greencoat UK Wind (UKW) are raising more equity with a subscription offer at 131p. Current share price is 134p, NAV 118p. Would you?

[ReallyVeryFoolish]

Greencoat UK Wind (UKW) are raising more equity with a subscription offer at 131p. Current share price is 134p, NAV 118p. Would you?

No. Instead, I would subscribe to the Energy Efficiency Investment Trust I posted about yesterday in share ideas. I won't buy at a premium, especially one as wide as you quoted above.

RVF

[Spet0789]

Greencoat UK Wind (UKW) are raising more equity with a subscription offer at 131p. Current share price is 134p, NAV 118p. Would you?

No. Instead, I would subscribe to the Energy Efficiency Investment Trust I posted about yesterday in share ideas. I won't buy at a premium, especially one as wide as you quoted above.

RVF

The Greencoat UK Wind NAV is calculated based on a fixed set of assumptions, of which the most notable is a 7.5% IRR on the future cashflows. There is no price for the underlying assets. The current share price equates to a discount rate of around 6%.

So in buying this IT at this market price, the question to ask yourself is whether you are happy to buy these cashflows (with their various risks) at a yield of 6%.

[ReallyVeryFoolish]

Greencoat UK Wind (UKW) are raising more equity with a subscription offer at 131p. Current share price is 134p, NAV 118p. Would you?

No. Instead, I would subscribe to the Energy Efficiency Investment Trust I posted about yesterday in share ideas. I won't buy at a premium, especially one as wide as you quoted above.

RVF

The Greencoat UK Wind NAV is calculated based on a fixed set of assumptions, of which the most notable is a 7.5% IRR on the future cashflows. There is no price for the underlying assets. The current share price equates to a discount rate of around 6%.

So in buying this IT at this market price, the question to ask yourself is whether you are happy to buy these cashflows (with their various risks) at a yield of 6%.

Ah, I see. Very misleading then to quote NAV in a conventional manner. I guess the big question is the sustainability of the income generated in a subsidy free market medium to long term?

RVF

[Spet0789]

No. Instead, I would subscribe to the Energy Efficiency Investment Trust I posted about yesterday in share ideas. I won't buy at a premium, especially one as wide as you quoted above.

RVF

The Greencoat UK Wind NAV is calculated based on a fixed set of assumptions, of which the most notable is a 7.5% IRR on the future cashflows. There is no price for the underlying assets. The current share price equates to a discount rate of around 6%.

So in buying this IT at this market price, the question to ask yourself is whether you are happy to buy these cashflows (with their various risks) at a yield of 6%.

Ah, I see. Very misleading then to quote NAV in a conventional manner. I guess the big question is the sustainability of the income generated in a subsidy free market medium to long term?

RVF

Exactly. As I understand it, UKW sells around half of its electricity at the prevailing market price (with the rest being at fixed prices), so as an investor you're exposed to 3 risks: that wholesale electricity prices fall; that less wind blows; that the generators are less reliable / wear out faster than predicted.