Investing in Green Infrastructure Funds (ITs)

[PrefInvestor]

I've been doing a bit of intermittent reading on these this evening. Thoughts that arise:

Is it not the case that the subsidies already in place are guaranteed for 15 - 20 years?

Do we really think that energy prices will fall further, bearing in mind that Governments will want to suppress demand/consumption in order to minimise environmental emissions.

Wind seems to be the preferred renewable energy source.

JLEN has a wide spread of activities, including: Solar: 23%. Wind: 33%. Waste water: 15%. Waste digestion: 28%. Hydro: 15%
TRIG: Solar: 11%. Wind (onshore & offshore): 89%. Battery: 1%

Yes richfool thats true, but if the trusts want to expand their estate (which they all do, hence the new share issues every so often to fund the expansion) then there only options are

a) Buy some plant already covered by a subsidy scheme - not many of those on the market
b) Go subsidy free and face the full perils of whatever the energy market might do in future years with no protection (unless they negotiate their own PPAs).

Some trusts are better situation in terms of this than others, but the share price (and premium) of FSFL and NESF have already been hit. IMV its only a matter of time till the same happens to all the others.

[richfool]

A couple of the sources I looked at include these. There were a number of articles in the Telegraph, they were however behind a paywall.

Note the dates, some date back to late 2019.

https://www.ii.co.uk/analysis-commentar ... s-ii511054

https://www.thisismoney.co.uk/money/inv ... stors.html

https://www.investopedia.com/articles/s ... stries.asp

I hold: JLEN and TRIG only in that sector. I have been looking at ETF INRG

[UncleEbenezer]

JLEN has a wide spread of activities, including: Solar: 23%. Wind: 33%. Waste water: 15%. Waste digestion: 28%. Hydro: 15%

"Including" ? You mean there's even more than 114% ... ?

That's inflation for you.

[richfool]

JLEN has a wide spread of activities, including: Solar: 23%. Wind: 33%. Waste water: 15%. Waste digestion: 28%. Hydro: 15%

"Including" ? You mean there's even more than 114% ... ?

That's inflation for you.

No wonder the large premium!!
Sorry, the "Hydro" should have read: 1%
I copied the info from some scribbled notes I had gathered late last night

The source was JLEN's factsheet via HL:
https://www.hl.co.uk/shares/shares-sear ... -group-npv

[PrefInvestor]

A relevant article FYI albeit dated April...

https://citywire.co.uk/investment-trust ... s/a1349562

ATB

Pref

[funduffer]

Yes richfool thats true, but if the trusts want to expand their estate (which they all do, hence the new share issues every so often to fund the expansion) then there only options are

a) Buy some plant already covered by a subsidy scheme - not many of those on the market
b) Go subsidy free and face the full perils of whatever the energy market might do in future years with no protection (unless they negotiate their own PPAs).

Some trusts are better situation in terms of this than others, but the share price (and premium) of FSFL and NESF have already been hit. IMV its only a matter of time till the same happens to all the others.

Well made points.

The UK government has recently indicated that it will encourage investment mainly into Off-shore, but also on-shore wind, and solar, so that every home can be powered by renewable energy. St the moment this is just a small investment in UK ports to support wing turbine production and delivery.

However this is a political commitment to meet climate change targets, so I feel that the government will be obliged to ensure that future renewable energy capacity is economically viable. If electricity prices drop too far due to recession / lower demand, it seems likely that they will be forced to re-introduce subsidy to meet their own target.

FD

[UncleEbenezer]

The renewable infrastructure funds play a role one step removed from government policies.

Their main role is to buy and hold assets, providing a market for the developers of those assets. A bit like government schemes to push up house prices for housebuilders by financing buyers at ever-higher prices. In the case of housing each new wave of money fails[1] pretty rapidly 'cos it just feeds straight through to the price of the land, but I don't think we've seen that with renewable energy. Not yet, anyway.

[1] at least for the stated purpose of increasing supply.

[richfool]

A relevant article FYI albeit dated April...

https://citywire.co.uk/investment-trust ... s/a1349562

ATB

Pref

Thanks for that. I had read it earlier in the year. Though since the hiccoughs earlier in the year, I note SP's of JLEN and TRIG have risen and continued to rise.

I have to say that I thought the comments after the article were equally if not more pertinent.

[richfool]

I see SSE is selling some "energy for waste" projects partly in order to increase its investment in renewable energy, in particular UK offshore wind.

So some still believe in renewable energy and offshore wind.

SSE sells stake in energy-from-waste projects for £995m

Energy giant SSE has agreed a near-£1 billion deal to sell its stake in three energy-from-waste facilities under plans to raise at least £2 billion by next autumn.

Shares in the group rose 4% as it announced the sale of its 50% holding in the West Yorkshire multifuel sites for £995 million.

SSE was part of a joint venture on two sites in Ferrybridge and one in Skelton Grange.

The sale – to an infrastructure fund managed by First Sentier Investors – comes as part of an aim to raise at least £2 billion by selling off unwanted assets.

Mark Nelson, an analyst at Killik & Co, said: “The divestments will help to strengthen the balance sheet and support the company’s plans to invest £7.5 billion in low-carbon energy infrastructure over the next five years.”

He added the latest sale will boost SSE’s increased focus on electricity networks and renewable energy, in particular UK offshore wind.

https://uk.finance.yahoo.com/news/sse-s ... 12485.html

[UncleEbenezer]

I see SSE is selling some "energy for waste" projects [...]
The sale – to an infrastructure fund managed by First Sentier Investors – comes as part of an aim to raise at least £2 billion by selling off unwanted assets.

Hmmm. I hold both SSE and First Sentier Infrastructure. Am I buyer or seller here? Perhaps I should report my related party transaction?

[PrefInvestor]

So some still believe in renewable energy and offshore wind.

I am still a strong believer in renewable energy of all forms, but I no longer believe that the big renewable energy trusts are the best way to invest in this sector. Well unless you are an income seeker who doesn’t care too much about the capital losses that I think are likely when the share prices fall to reduce the excessive premias.

I personally think that SSE is a good renewable energy company and if you are happy holding individual stocks then it could be a good way to invest in the sector, pays good dividends too, DYOR etc.. But personally I prefer diversified investments and so I much prefer an Investment which in turn holds a whole range of renewable energy stocks.

ATB

Pref

[richfool]

So some still believe in renewable energy and offshore wind.

I am still a strong believer in renewable energy of all forms, but I no longer believe that the big renewable energy trusts are the best way to invest in this sector. Well unless you are an income seeker who doesn’t care too much about the capital losses that I think are likely when the share prices fall to reduce the excessive premias.

I personally think that SSE is a good renewable energy company and if you are happy holding individual stocks then it could be a good way to invest in the sector, pays good dividends too, DYOR etc.. But personally I prefer diversified investments and so I much prefer an Investment which in turn holds a whole range of renewable energy stocks.

ATB

Pref

Interestingly, I have been looking at Impax Environmental Markets (IEM), over the last week or so. I like what it invests in and its capital performance to date, though I think I might be a bit too late to the party if I bought at the current SP, and there isn't much of a dividend to help compensate. It would however be an alternative to holding renewable energy companies (on very high premiums -TRIG & JLEN) directly.

[UncleEbenezer]

Interestingly, I have been looking at Impax Environmental Markets (IEM), over the last week or so. I like what it invests in and its capital performance to date, though I think I might be a bit too late to the party if I bought at the current SP, and there isn't much of a dividend to help compensate. It would however be an alternative to holding renewable energy companies (on very high premiums -TRIG & JLEN) directly.

Already featured in this thread: here's something I posted. It's a very different beast to the renewable infrastructure funds: a much broader investment mandate, and negligible dividend. I've held it many years,during which it's had good and bad spells.

The political signals nowadays look more favourable than a few years back, for whatever that's worth.

[richfool]

I am still a strong believer in renewable energy of all forms, but I no longer believe that the big renewable energy trusts are the best way to invest in this sector. Well unless you are an income seeker who doesn’t care too much about the capital losses that I think are likely when the share prices fall to reduce the excessive premias.

I personally think that SSE is a good renewable energy company and if you are happy holding individual stocks then it could be a good way to invest in the sector, pays good dividends too, DYOR etc.. But personally I prefer diversified investments and so I much prefer an Investment which in turn holds a whole range of renewable energy stocks.

Interestingly, I have been looking at Impax Environmental Markets (IEM), over the last week or so. I like what it invests in and its capital performance to date, though I think I might be a bit too late to the party if I bought at the current SP, and there isn't much of a dividend to help compensate. It would however be an alternative to holding renewable energy companies (on very high premiums -TRIG & JLEN) directly.

Already featured in this thread: here's something I posted. It's a very different beast to the renewable infrastructure funds: a much broader investment mandate, and negligible dividend. I've held it many years,during which it's had good and bad spells.

The political signals nowadays look more favourable than a few years back, for whatever that's worth.

Thanks for the link.

Well in the event I sold 2/3rds of my TRIG holding and 1/3rd of my JLEN holding and split the proceeds between: IEM and INRG. Noted that will reduce my dividend income, but should increase capital growth as well as diversification.

Beside retaining smaller holdings of both JLEN and TRIG, I also still hold EGL and INPP, which have involvement with energy, renewables, waste and water amongst other infrastructure.

[PrefInvestor]

Well in the event I sold 2/3rds of my TRIG holding and 1/3rd of my JLEN holding and split the proceeds between: IEM and INRG. Noted that will reduce my dividend income, but should increase capital growth as well as diversification.

Well I hope that your new holdings are doing well, been a volatile few days this week. I was sitting on a 30% gain on INRG and had a stop loss set at 905 to guarantee that I kept at least a 25% gain if it dropped back sharply for any reason. I was taken by surprise by the big dip on Thursday morning - I was out having my morning walk and my phone pinged to tell me that my limit order had activated. Was very surprised because it was at 93x when I last looked and I thought I was safe leaving the limit order there, but I didnt REALLY want to sell. Of course it has recovered to 930 again now and I will have to wait for a dip to try to get back in, doh !.

I must say that IEM and EGL also look interesting and that JLEN & TRIG have both dipped a bit.

I think that the US election result might prove as BIG driver for the renewable components sector, especially if Biden gets in as seems to be expected. Dont see it helping the big 6 renewable trusts here though myself.

ATB

Pref

[richfool]

Well in the event I sold 2/3rds of my TRIG holding and 1/3rd of my JLEN holding and split the proceeds between: IEM and INRG. Noted that will reduce my dividend income, but should increase capital growth as well as diversification.

Well I hope that your new holdings are doing well, been a volatile few days this week. I was sitting on a 30% gain on INRG and had a stop loss set at 905 to guarantee that I kept at least a 25% gain if it dropped back sharply for any reason. I was taken by surprise by the big dip on Thursday morning - I was out having my morning walk and my phone pinged to tell me that my limit order had activated. Was very surprised because it was at 93x when I last looked and I thought I was safe leaving the limit order there, but I didnt REALLY want to sell. Of course it has recovered to 930 again now and I will have to wait for a dip to try to get back in, doh !.

I must say that IEM and EGL also look interesting and that JLEN & TRIG have both dipped a bit.

I think that the US election result might prove as BIG driver for the renewable components sector, especially if Biden gets in as seems to be expected. Dont see it helping the big 6 renewable trusts here though myself.

ATB

Pref

Thanks for your thoughts Pref. Whoops, regarding you getting stopped out. You will have to watch for the next dip.

Yes, I bought my holdings the day before Thursday's dip, but the recovery on Friday got me back to somewhere close to where I started. I do realise there will be more volatility with growthier stocks, so am fairly philosophical about those sorts of ups and downs.

My nature tends to be that once I have decided to do something, I want to get on and do it and tidy up my administration/spreadsheets. Whereas sometimes there is merit in sitting on one's hands and waiting for a "quick sale" situation to arise. Ideally, I should have sat on my hands until Thursday's special offers!

That said, there have been other situations, - e.g. USA and more recently IBT (International Biotechnology Trust), - where I bought in and the SP carried on upwards and onwards from that very day.

EGL is quite utility focused, (well, 24% utilities and 23% renewables). In the Infrastructure sector there is also INPP (22% energy transmission), the growth of the latter has been less dynamic.

Regards

[richfool]

For anyone interested in Next Energy Solar Fund (NESF),- Operating Update:

NESF is pleased to announce that generation for the first half of this financial year has significantly exceeded budget. For the period ending 30 September 2020, generation from NESF's portfolio was 11.1% above budget (2019: 5.0%), while irradiation has exceeded expectations by 10.8% (2019: 4.8%). The Company has reaffirmed its full-year dividend target of 7.05p for financial year ending 31 March 2021 (2019: 6.87p).

https://www.investegate.co.uk/nextenerg ... 00033959D/

[richfool]

An article from the AIC on the Renewable Energy Infrastructure sector. A short extract with some key points below:

However, the appeal of renewable energy investment trusts extends well beyond anxious environmentalists. With reliable dividend-paying assets highly prized in these days of rock-bottom interest rates, income investors have homed in on the generous yields on offer. These currently average 5.2% and in many cases are linked to inflation (with any capital growth as a bonus).

As a consequence, all the companies in the sector are currently trading on hefty premiums to NAV, averaging 17.5%. That’s marginally above the 52-week average of +11.3% for the sector.

Walls suggests that current premium levels mean “it may be worth waiting for the secondary share issues that happen from time to time”.

It’s important to note also that these trusts are specialist investments and should only form a small part of any balanced portfolio - particularly as their performance will be influenced by external factors such as the wider price of fuel globally and the UK government’s policy on supporting renewable energy generation through subsidies and other initiatives.

If you’d rather look for a broader-brush investment response to environmental concerns, the leading option of the three trusts in the Environmental sector is Impax Environmental Markets, which invests in companies active in the growing resource efficiency and environmental arena, from sustainable forestry to pollution control. It trades on a modest 2% premium and has seen a share price rise of 21% over the past year.

https://www.theaic.co.uk/aic/news/comme ... onscious-0

[sunnyjoe]

https://renews.biz/64139/downing-plans- ... ables-ipo/

https://quoteddata.com/2020/11/ipo-down ... structure/

It sounds like a little TRIG i.e. diversified across several renewable technologies and several northern European countries

[funduffer]

For anyone interested in Next Energy Solar Fund (NESF),- Operating Update:

NESF is pleased to announce that generation for the first half of this financial year has significantly exceeded budget. For the period ending 30 September 2020, generation from NESF's portfolio was 11.1% above budget (2019: 5.0%), while irradiation has exceeded expectations by 10.8% (2019: 4.8%). The Company has reaffirmed its full-year dividend target of 7.05p for financial year ending 31 March 2021 (2019: 6.87p).

https://www.investegate.co.uk/nextenerg ... 00033959D/

Thanks for this, I recently took a small holding in NESF.

I interpret "irradiation has exceeded expectations" as meaning we had a sunny spring!