DirectorsTalk brings you professional opinions from leading equity research analysts on companies listed on the London Stock Exchange. This article highlight seven attractive stocks in the health, energy, financial services and telecom sectors. All our equity analyst research is available to access free of charge here. DirectorsTalk aims to help investors make more informed investment decisions.
Panmure Liberum highlights One Health Group (AQSE:OHGR) as a key player in the UK’s healthcare sector, focusing on NHS-funded surgeries in underserved regions.
SAE Renewables (LON:SAE), a forward-thinking UK-based renewable energy company, has shared an encouraging set of H1 2024 results. Notably, the company reports a substantial increase in revenues, driven by the land sale for the Uskmouth Battery Energy Storage System (BESS) project and ongoing developments in its BESS and tidal power portfolios.
The primary contributor to SAE’s strong revenue of £12.0 million was the Uskmouth 230MW BESS land sale to Electric Land, generating £9.9 million in booked revenue. According to Daniel Slater, “SAE has received £7.0m of the £9.9m in cash, with the balance due between now and the end of Q1 2025 as the project progresses.” This strategic revenue generation has enabled SAE to report a robust EBITDA of £7.6 million for the first half of the year, with net cash flow increasing to £7.7 million by June 2024, underscoring the company’s financial strength as it continues developing its projects.
SAE’s renewable initiatives extend beyond immediate revenue generation to include substantial project progress across the BESS and tidal portfolios. The company’s flagship 6MW MeyGen tidal project has been a strong performer, with the cumulative power generation from MeyGen contributing 65% of the global tidal energy generation. A fourth turbine is scheduled to re-enter operation in Q4 2024, bolstering SAE’s position as a global leader in tidal energy production.
In addition to the Uskmouth project, SAE has advanced the 120MW AW1 BESS project, pursuing £65 million in project finance to support future development. The company’s strategy involves retaining a significant equity interest in this project, offering a unique opportunity to establish a successful financing model for future BESS developments. As Slater remarks, “Progression of AW1 through funding to FID would be an important proof of concept for SAE’s strategy of financing its BESS projects while maintaining a significant equity interest.”
SAE is actively positioning itself to benefit from forthcoming grid connection reform, aiming to move multiple projects to a ready-to-build status. The company’s strategic advantage lies in its access to prime land and project positioning, which could potentially fast-track grid connections and attract new funding opportunities. In addition, SAE’s potential growth in the BESS sector remains impressive, with projects such as AW2 (250MW), AW3 (349MW), and MeyBESS (207MW) actively progressing.
In Summary
SAE Renewables’ H1 2024 results highlight both strong revenue generation and significant project advancement across its BESS and tidal portfolios. As Slater notes, “We are pleased to see SAE both generating cash from the existing portfolio, covering ongoing G&A, while also making material progress on the project pipeline.” With plans for additional projects and continued financial stability, SAE appears poised to lead the way in renewable energy, particularly in the UK’s growing battery storage and tidal energy sectors. Investors and renewable energy enthusiasts alike will be watching SAE’s developments closely as it pursues a sustainable future in the energy landscape.
The natural resources sector spans stocks and shares in energy, mining and agricultural, and gives investors access to the global commodities markets. While the Middle East crisis has caused oil prices to rise recently, DirectorsTalk highlights six stocks that have all broken new ground announcing strategically important corporate developments in the last few days and weeks. Are their share prices now at an important inflexion point?
Pulsar Helium (TSXV:PLSR) (OTCQB: PSRHF)
Pulsar Helium is a primary helium exploration and development company, listed in Canada and the USA. The company focuses on discovering and developing helium resources, which are essential for various industries, including technology, healthcare, and research. Pulsar Helium’s current operations are centred around advancing their projects in Minnesota, where they aim to expand their known helium reservoirs and contribute to the growing demand for this critical resource.
SAE Renewables is a company focused on developing renewable energy projects, particularly in the fields of tidal and hydroelectric power. They aim to harness natural, sustainable energy sources to contribute to the global transition towards cleaner, greener energy. By utilising the power of ocean tides and flowing water, SAE Renewables works on reducing carbon emissions and promoting energy independence, while contributing to the renewable energy landscape with reliable, low-impact solutions.
Firering Strategic Minerals is a mineral exploration and development company focused on sourcing critical and strategic minerals, particularly those used in the production of batteries and high-tech applications. Their projects are aimed at securing essential resources like lithium, tantalum, and other minerals critical to the transition towards clean energy and advanced technologies. By developing sustainable supply chains, Firering Strategic Minerals contributes to the growing demand for materials vital to the renewable energy, electric vehicle, and electronics sectors.
Dekel Agri-Vision is an agriculture company engaged in the development and operation of agro-industrial projects in West Africa. They focus on producing and processing agricultural commodities such as palm oil and cashew nuts. Dekel Agri-Vision aims to improve supply chain efficiency and enhance agricultural productivity through sustainable practices, contributing to food security and supporting local economies. Their vertically integrated approach allows them to manage the entire production process, from farming to processing, ensuring quality and consistency in their products.
Challenger Energy Group plc is an oil and gas exploration and production company focused on developing energy resources in the Caribbean and Latin American region. They are involved in both offshore and onshore projects, aiming to unlock the potential of underexplored areas with significant oil and gas reserves. Challenger Energy Group seeks to contribute to regional energy security by efficiently extracting hydrocarbons while also striving to adapt to the evolving energy landscape with a focus on sustainability and value creation for stakeholders.
Quadrise plc is an energy technology company that develops and supplies an innovative fuel known as MSAR® (Multi-phase Superfine Atomised Residue), which is a low-cost, lower-emission alternative to conventional heavy fuel oil. Their proprietary technology emulsifies water with refinery residues to create a stable liquid fuel, which helps reduce both costs and environmental impact for industries such as shipping, power generation, and refining. Quadrise aims to provide more efficient and sustainable energy solutions, supporting the transition to cleaner fuels while addressing the challenges of energy affordability and emissions reduction.
As you can see the natural resources sector remains a dynamic space, influenced by global economic shifts, geopolitical tensions, and technological advances. The recent developments by Pulsar Helium, SAE Renewables, Firering Strategic Minerals, Dekel Agri-Vision, Challenger Energy Group, and Quadrise Plc each signal strategic growth and adaptation to current market opportunities. Whether their share prices are at an inflexion point will ultimately depend on market sentiment, commodity demand, and their ability to execute on these ambitious projects. Investors should closely monitor these companies as they could represent attractive opportunities in natural resources sector.
SIMEC Atlantis Energy Limited (LON:SAE), SAE Renewables, has announced that it has launched a refreshed website and new logo, reflecting the company’s evolution and new strategy. The new logo and website are designed to reflect the new strategy to move to become a full Independent Power Producer delivering Battery storage and tidal stream at scale.
SAE Renewables Limited (LON:SAE) has announced its unaudited interim results for the six months ended 30 June 2024.
Key Highlights
· SAE received £7.0 million from the land sale contract with EL (Uskmouth) Ltd
· SAE acquired 100% ownership of the AW1 120MW/240MWh Battery Energy Storage System (“BESS”) project
· SAE submitted a planning application for Section 36 consent for the 300MW/1.2GWh “Mey BESS” project in the North of Scotland.
· The consolidated cash position of the Group as at 30 June 2024 was £7.7 million (as at 30 June 2023: £2.3 million)
· The Group reported revenues of £12.1 million for the six months ended 30 June 2024 compared to revenues of £12.4m for the same period in 2023
· The loss before tax of £6.0 million for the six-month period to 30 June 2024 (H1 2023: profit £4.5 million) was largely a result of the profit on the land sale contract with EL (Uskmouth) Ltd having been recognised in 2023 whilst the revenue from the sale was realised during 2024.
Chairman’s Statement
At the Annual General Meeting in July this year, SIMEC Atlantis Energy Limited launched its new strategy – Building a Sustainable Future to 2035. This strategy set out the Company’s plans for becoming a leading independent power producer, leveraging on our development, construction and operational teams’ experience as an IPP in tidal stream at MeyGen and operations and maintenance at Uskmouth Power Station, to develop, build, own and operate Battery Energy Storage System (BESS) projects and continue with the build out of the MeyGen project.
I’m very pleased to report that we have continued to make good progress in all these areas. During the past three years, we have been working with several organisations to help position SAE as one of the country’s leading BESS and tidal stream developers, owners and operators. This huge piece of work has seen us reimagine and reinvent the Uskmouth power station and MeyGen sites with a vision to deliver world leading integrated renewable energy generation and storage facilities.
I am also pleased to report a strong financial start to 2024. We continue to receive revenues from our first BESS project at Uskmouth and the MeyGen Phase 1 tidal array continues to break records with its predictable power generation. MeyGen has now generated 68GWh, 65% of global tidal stream generation and more than 80% of UK tidal stream generation, reinforcing MeyGen’s position as the world leader in this technology. We are on schedule to redeploy the fourth MeyGen turbine in Q4-24 bringing the array up to its full 6MW capacity.
Projects Updates
Battery Energy Storage
As a significant landowner at Uskmouth, SAE continues to benefit from the competitive advantages that its strategic location provides. The site benefits from the existing grid and logistical infrastructure located on the site, the continuing support that the local planning authorities are providing for the redevelopment of a brownfield site well established for energy facilities, and the expertise of the local operations and maintenance team we retained from the power station.
The first project, which we developed and divested, continues to deliver as the construction of a 230MW BESS project continues apace, with the receipt of £7.0 million in the first half of this year from the land sale contract with EL (Uskmouth) Ltd. As the construction of this project reaches its conclusion, SAE will be due the final £2.9 million of payments between now and the end of Q1-25. This project has an option to expand its capacity by a further 120MW which, if this option is exercised, would trigger a further development premium under the agreements with Uskmouth Energy Storage Limited, (the now owner of the project), and further land overage payments to SAE under agreements with EL (Uskmouth) Ltd.
Excellent progress is being made towards achieving financial close of the next BESS project at Uskmouth, a 120MW/240MWh BESS project known as Afon Wysg 1 (“AW1”) located on the site of the Uskmouth cooling towers. In January 2024, we announced a major milestone as AW1 was granted planning consent after which we immediately commissioned the demolition of cooling towers, clearing the site in preparation for construction. In August 2024, we announced taking full ownership of the project from the legacy developer alongside completion of the demolition works programme and provided an update on our procurement and financing programme. We are progressing well towards sourcing the project finance for construction of the project, estimated at £65.0 million, alongside finalising the equipment supply and construction agreements. The AW1 project’s target grid connection date is October 2026 and once fully operational is expected to generate annual revenues of £12.0 million.
The development of several additional BESS projects at Uskmouth and in Scotland is being progressed at pace this year. We believe that we are very well placed to take advantage of improved grid connection dates next year once National Grid completes the implementation of its connections reform process. This process changes the historic outdated queue system to a system which is in essence “first ready first connect”. Noting that SAE already has land rights for all of our projects, we have a significant competitive advantage in this new connections methodology which is accelerating projects with land rights and where planning applications have been submitted. Hence our focus is to progress all our projects to “Ready to Build” status, and I am very pleased to provide the following progress updates across the portfolio of our BESS development projects:
· In June 2024, SAE submitted its application for Section 36 consent for the 300MW/1.2GWh “Mey BESS” project in the North of Scotland. This year the project secured the necessary land rights and received an increased offer for grid capacity to 287MW alongside amending its grid connection to be suitable for BESS.
· SAE continues to progress a further 250MW project on the Uskmouth site and recently submitted a screening opinion request to Newport City Council. This project is known as “AW2”.
· In December 2023, we announced that SAE had secured an additional 349MW of grid capacity at our Uskmouth site. This project will be known as “AW3”. This project may receive an earlier grid connection date as the grid connections reform process reaches its conclusions.
· Several additional BESS opportunities have been identified by the management team. Whilst discussions are still at an early stage, they provide the opportunity for us to grow our portfolio further and we look forward to providing further details on these projects as they are progressed.
Tidal Stream
MeyGen Phase 1
The MeyGen Phase 1 array continues to operate successfully, with three turbines in stable operations whilst the fourth is currently completing preventative maintenance and upgrade works and is expected to return to operation in Q4-24. The MeyGen operations team is doing an excellent job operating and maintaining the MeyGen Phase 1 turbines and has developed invaluable expertise and experience that is both enabling the ongoing successful operation of MeyGen Phase 1 and which is being applied to the development of MeyGen Phase 2.
MeyGen Phase 2
I was delighted by the result of the recent AR6 auction in which SAE was successful in securing an additional 9MW of UK Government Contract for Difference (“CFD”) at £172/MWh, bringing the total CFD’s won by the MeyGen Phase 2 project in AR4, 5 and 6 to 59MW. Along with generation from the existing array, MeyGen is best positioned to deliver this technology at scale to the UK.
We continue to develop the MeyGen Phase 2 project with our partners and are pleased to continue to receive support from all Scottish government departments. I would particularly like to thank the MeyGen funders, Scottish Enterprise and Crown Estate Scotland, for their continued unwavering support, as well as the junior lenders, Engie and Morgan Stanley
Summary of Results
The Group reported revenues of £12.1 million for the six months ended 30 June 2024 compared to revenues of £12.4m for the same period in 2023. Revenues available to the Group, which excludes ring-fenced revenue earned by the MeyGen tidal array, were £10.1 million compared to revenues of £10.3m for the comparative period in 2023.
In March 2024, the completion milestone in the land sale contract with EL (Uskmouth) Ltd was completed triggering the recognition of £9.9 million of revenue in the reporting period. The Group received £7.0 million of this total amount during the reporting period.
At the same time, the income statement reported a £9.9 million cost relating to the transfer of land inventory being the profit that was recognised on the land sale contract with EL (Uskmouth) Ltd in the 2023 Annual Report.
In the comparative period last year, the Group recognised revenues of £10.0 million from the sale of development rights to the 230MW Battery Energy Storage System to Uskmouth Energy Storage Ltd.
Revenues generated from the sale of electricity from the MeyGen Phase 1 tidal array remained steady at £1.9 million (H1 2023, £2.1 million).
Operating costs reduced to £4.5 million (H1 2023: £4.6 million). Costs associated with running the MeyGen array halved to £1.5 million (H1 2023: £3.0 million) in the latest six-month period following the completion of major turbine repair and maintenance in the first half of 2023 which have not been repeated to the same extent for the current period. Offsetting this reduction were higher employee costs of £1.9m (H1 2023: £1.0 million) reflecting the investment in all of SAE’s employees and reward for their delivering the strong financial performance of the Group during 2023 and to 30 June 2024. Higher operating expenses of £1.0 million (H1 2023: £0.5 million) due to increased development expenditure on specific BESS projects also contributed to the increase in operating costs.
Financing costs increased to £0.9 million (H1 2023: £0.6 million) primarily due to a higher discount rate applied to the Uskmouth decommissioning provision creating a non-cash adjustment of £0.3 million. Interest payable to bondholders during the six- month period remained unchanged at £0.6 million.
The loss before tax of £6.0 million for the six-month period to 30 June 2024 (H1 2023: profit £4.5 million) is largely a result of the profit on the land sale contract with EL (Uskmouth) Ltd having been recognised in 2023 despite the revenues from the sale being realised during 2024. The Group has improved its liquidity position as £7.0 million of revenue from the land sale contract with EL (Uskmouth) Ltd was received during the reporting period, in line with forecast.
Business Segment Reporting
The Group expanded its Business Segment Reporting in the 2023 Annual Report to include the Battery Storage segment. During the reporting period, the Battery Storage segment reported EBITDA of £9.2 million arising primarily from the completion of the land sale contract with EL (Uskmouth) Ltd.
The Tidal Stream segment, previously named Power Generation, reported EBITDA of £0.4 million following a significant reduction in turbine maintenance costs. The Tidal Stream segment’s financial results are materially impacted by the interest expense on the MeyGen project debt, which is predominantly non-recourse to the Company.
The Project Development segment represents development expenditures incurred on specific BESS projects.
The Corporate segment represents the costs associated with running an AIM listed and Singapore incorporated group and employee costs not allocable to another business segment and were in line with forecast.
Business Segment Analysis
June 2024
Battery Storage
Tidal Stream
Project Dev’t
Corporate
Total
£’ 000
£’ 000
£’ 000
£’ 000
£’ 000
Revenues
10,167
1,882
0
43
12,092
Operating costs
(963)
(1,445)
(682)
(1,357)
(4,447)
EBITDA
9,204
437
(682)
(1,314)
7,645
Depreciation and amortisation
0
(956)
0
(78)
(1,034)
Results from operating activities
9,204
(519)
(682)
(1,392)
6,611
Decommissioning Discount unwind
(218)
(34)
0
0
(252)
Interest expense
0
(1,632)
0
(795)
(2,427)
Exceptionals*
(9,900)
(9,900)
Reportable segment profit/(loss) before tax
(914)
(2,185)
(682)
(2,187)
(5,968)
*Transfer of land inventory on recognition of sale
The unaudited consolidated cash position of SAE Renewables as at 30 June 2024 was £7.7 million (as at 30 June 2023: £2.3 million). Included in cash and cash equivalents in the statement of financial position are encumbered deposits of £0.7 million (as at 30 June 2023: £0.8 million).
SAE Renewables Limited (LON:SAE) has announced that it has secured a Contract for Difference (CfD) in the latest Allocation Round, for the world leading MeyGen site. These CfD contracts, which guarantee 172 (£/MWh), for 15 years from 31st March 2029, the target commissioning date, will allow SAE to increase the size of the MeyGen 2 development by c.9MW, enabling more clean, home-sourced, predictable energy to be generated at its MeyGen site in Scotland.
As previously announced, on 8 September 2023, SAE has already secured contracts for 50MW in AR4 and AR5, and this further success in AR6 will bring the total project under development to 59MW.
This next phase is in addition to the 6MW already operational at the site. MeyGen has so far produced 66GWh of energy, more than all other tidal stream sites in the world combined, clearly demonstrating that MeyGen is the world’s number one site for tidal stream power.
To deliver the 59 MW project, SAE is in advanced discussions with global manufacturing and engineering firms. These non-binding discussions are progressing well, and SAE will provide further updates as and when appropriate.
Graham Reid, CEO of SAE Renewables, commented:
“The scale and opportunity that MeyGen represents for the industry the supply chain, our stakeholders and the wider United Kingdom, is significant and we will work with all involved to ensure its success.”
The London Alternative Investment Market, commonly known by its acronym AIM is a key market on the London Stock Exchange and gives investors the opportunity to invest in smaller, more dynamic, high-growth companies.
While a lot of focus in 2024 has been on American tech stocks, and the so-called best-performing FAANGs, there are a lot of successful and exciting British businesses listed on AIM that are delivering some exceptional returns to shareholders. In this article, we highlight six companies – Time Finance, Cerillion, Quadrise, Hercules Site Services, Poolbeg Pharma and SAE Renewables – who’s share prices have grown by between circa 50% and 150% over the last 12-months. They still remain on low valuations with lots of upside potential in their share prices given the relative position of the UK stock market and their strong investment cases. By contrast, the FTSE AIM All-Share Index has risen only 6.13% today over the same 12 month period.
Time Finance plc (LON:TIME) is an independent AIM listed finance company lending to small UK businesses through a variety of Asset Finance, Invoice Finance, Loans and Vehicle Finance. TIME’s share price has grown over 96% in 1 year to 52 GBX today.
Cerillion plc (LON:CER) is a leading provider of billing, charging and customer management systems with more than 20 years’ experience delivering its solutions across a broad range of industries including the telecommunications, finance, utilities and transportation sectors. Cerillion’s share price has grown c. 59% in 1 year to 1,915 GBX today.
Quadrise plc (LON:QED) produce transition fuels called MSAR® (pronounced ‘em-sar’) and bioMSAR™, which allow clients in the shipping, utilities and industrial sectors to reduce carbon emissions whilst also saving costs. Quadrise’s share price has grown over 72% in 1 year to 1.90 GBX today.
Hercules Site Services plc (LON:HERC) is a collaborative, innovative company delivering services of the highest standards within the Civil Engineering sector of the construction industry. Hercules’s share price has grown over 63% in 1 year to 47.45 GBX today.
Poolbeg Pharma plc (LON:POLB) is committed to the development and commercialisation of innovative medicines targeting diseases with a high unmet medical need, with a growing emphasis on rare and orphan diseases. Poolbeg’s share price has grown over 51% in 1 year to 12.4 GBX today.
SAE Renewables Limited (LON:SAE) aim is to be a global leader in the creation of new, sustainable energy projects for the benefit of our planet. SAE’s share price has grown over 149% in 1 year to 2.5 GBX today.
SAE Renewables Limited (LON:SAE) has announced that the London Stock Exchange has provided it with the Green Economy Mark.
The Green Economy Mark, first introduced in 2019, was created to assist investors in identifying an investible universe of ‘green economy’ equities. The Green Economy Mark identifies companies and funds, admitted to the London Stock Exchange’s markets, that generate 50% or more of total annual revenues from products and services that contribute to the global green economy.
To assess an issuer’s contribution to the green economy, London Stock Exchange utilises the FTSE Russell Green Revenues Classification System (GRCS). The GRCS is a data classification system developed by FTSE Russell, as a comprehensive taxonomy for green products and services to help investors identify a company’s green revenue activities. It takes a broad, bottom-up view of the green economy, capturing products and services across the whole value chain.
SAE is a developer, owner and operator of sustainable energy projects. SAE’s business is aligned with the UK’s binding Net Zero targets, which ensures it is working in harmony with national objectives. SAE is one of the leading BESS developers in the UK and is the world’s leader in tidal stream operations and development.
Graham Reid, CEO of SAE Renewables said:
“We are delighted to have been provided with the Green Economy Mark, demonstrating our clear commitment to being a sustainable business for our planet and our shareholders. The Green Economy Mark helps ensure that our investors and stakeholders understand our green credentials and our efforts to support the transition to a low carbon economy.”
Julia Hoggett, CEO of the London Stock Exchange, added:
“Congratulations to SAE on obtaining the Green Economy Mark, which highlights companies or funds that derive 50% or more of total annual revenues from products and services that contribute to the global green economy. Companies within the Green Economy Mark cohort play an important role in accelerating the transition to a more sustainable economy.”
SAE Renewables Limited (LON:SAE) has achieved the next step in delivering its ‘Building a Sustainable Future to 2035’ strategy by taking full ownership of the 120MW Battery Energy Storage System (BESS) project at the Uskmouth Sustainable Energy Park. According to the Company’s latest estimates, the BESS project will generate average annual revenues of £12m and annual average EBITDA of £9m per annum in its first five full years of operation. The estimated capital cost of the project is £65m, which includes the deferred consideration and transaction costs.
On 6 August 2024, SAE completed a Share Purchase Agreement (SPA) with Enso Green Holdings Limited (EGHL), a joint venture between Cero Generation Limited and Enso Energy Limited, to purchase all the shares in a 120MW/240MWh BESS project at its USEP. SAE has paid EGHL an initial consideration of £299k under the SPA, to acquire 100% ownership of the development vehicle, Enso Green Holdings E Limited, the vehicle which EGHL used to develop the BESS project and hold the grid connection, land option and planning application. Under the SPA, when the project reaches financial close, SAE will pay EGHL an additional amount of £3.85m as a deferred consideration, in recognition of their contribution to the project development to date.
This acquisition is a key part of SAE’s recently announced strategy to become an owner and operator of its future energy projects.
The BESS project will be built on the site of the old cooling towers, which SAE is pleased to report have already been demolished in preparation for the construction phase. The project received planning permission in January 2024. The cooling tower site is large enough and has planning and grid connection rights for a BESS of up to 4-hour duration. For the UK government to achieve its Net Zero targets 4-hour plus duration BESS systems will become necessary in the future. This project is being developed with the ability to expand from the initially planned 2-hour duration, 240MWh capacity, up to 4-hour duration and 480MWh capacity.
The BESS project’s target grid connection date is October 2026 and it will connect into the existing grid infrastructure on the USEP site. During the first half of 2024, SAE completed an extensive tendering process for the BESS project and has selected a preferred technology supplier and an Engineering, Procurement and Construction (EPC) contractor for the Balance of Plant (BOP). SAE is working closely with these two parties and their supply chain in developing the contracts and delivery programmes and anticipates construction starting in 2025 and taking around 18 months.
SAE Renewables is now working to bring the BESS project to financial close with Elgar Middleton appointed as Financial Advisers to assist with sourcing an equity partner and securing construction finance. WSP have been appointed as Owners Engineer to support the EPC contract development, prepare for technical due diligence and oversee construction. Leading BESS power purchase agreement (“PPA”) commercial advisers, Pexapark AG have been appointed to help with the procurement and negotiations on the PPA Optimisation Agreement, which will provide the long-term revenue streams for the project. In summary, the tender process for the build of the project has now been completed with final project technical development and EPC contract negotiations well underway.
This is the second BESS project at the SAE owned USEP. Completing this SPA will enable SAE to progress to close the project financially and then build, own, and operate it.
Graham Reid, CEO of SAE Renewables, commented:
“We have set a clear strategy to become an owner and operator of our projects and this announcement is a key next step in achieving this. A huge amount of work has already taken place to reach this milestone, demonstrating how SAE continues to hit its targets and deliver for its shareholders.”
SAE Renewables (LON:SAE), a prominent player in the UK’s renewable energy sector, is on an ambitious path to reshape the energy landscape. Analyst Daniel Slater of Zeus Capital provides a comprehensive overview of SAE’s prospects, highlighting the company’s strategic focus on Battery Energy Storage Systems (BESS) and tidal power. With significant government support and a robust project portfolio, SAE stands poised for substantial growth in the coming years.
Battery Energy Storage Systems (BESS)
SAE’s BESS portfolio is a cornerstone of its renewable energy strategy. The company has an impressive 1.3GW of BESS projects across sites in Wales and Scotland. Notably, a 230MW project has already been sold and is progressing, indicating the attractiveness and feasibility of these ventures.
Key Highlights of SAE’s BESS Portfolio
Extensive Project Pipeline: SAE’s BESS portfolio includes 926MW of development projects at Uskmouth in Wales and Mey in Scotland. This portfolio is significant for a company of SAE’s size and is expected to drive substantial growth.
Land and Grid Connections Secured: SAE’s projects are bolstered by secured land at its two sites, including the former Uskmouth power station, and grid connection offers that facilitate future BESS deployment. These elements provide a strong foundation for the company’s development plans.
Initial Project Success: The sale of the initial 230MW BESS project at Uskmouth for £19.9 million underscores the project’s appeal, highlighting the potential for additional partners to invest in SAE’s upcoming projects. This could provide crucial funding for the company’s equity capital expenditures (CAPEX).
Financial Projections: Modelling suggests SAE’s BESS portfolio could support an annual EBITDA of around £34 million by the early 2030s once all projects are operational.
Tidal Power: The MeyGen Project
SAE’s MeyGen tidal stream project in Scotland is another critical component of its renewable energy portfolio. With 6MW already operational and government Contracts for Difference (CFDs) covering an additional 50MW, the project represents a significant growth opportunity.
MeyGen’s Potential and Achievements
Proof of Concept: The existing 6MW project has been a global leader in tidal stream power, generating over 63GWh of electricity and validating SAE’s technological approach.
Future Expansion: With a total site capacity of 398MW, MeyGen offers substantial upside. The recent CFDs support further phases of development, providing a solid foundation for additional investment and growth.
Valuation and Outlook
Analyst Daniel Slater’s valuation of SAE includes both the BESS and tidal businesses. The BESS business alone is valued at 5.9p per share, with the tidal business adding another 1.4p per share, totalling 7.3p per share. This valuation reflects the potential growth from ongoing project developments and strategic partnerships.
Slater states, “We believe progress of the project portfolio, particularly the BESS projects, should drive the share price over the coming months and years. “
Final Thoughts
Strategically positioned to capitalise on the UK’s renewable energy targets. With a robust portfolio of BESS and tidal projects, substantial government support, and strategic partnerships, SAE has the potential to drive significant growth and value for shareholders. Investors should monitor the company’s progress in securing funding, advancing project developments, and achieving key milestones to fully realise SAE’s potential in the evolving energy market.
SAE Renewables (LON:SAE) Chief Executive Officer Graham Reid caught up with DirectorsTalk for an exclusive interview to discuss key points from their new strategy, Uskmouth & Meygen sites, battery opportunities, and why investors should be interested in the company .
Q1: Graeme, can you tell us what the key points are from your new strategy?
A1: Our strategy really is centred around our two sites, one at Uskmouth and one at Meygen near Caithness. At those two sites we have approximately one gigawatt of battery energy storage systems under development. A key part of our strategy is we’re intending to build these, own and operate them in the future, to give us a long-term sustainable revenue stream.
Q2: What is it that makes these two sites so good for the development?
A2: When you take the Uskmouth Sustainable Energy Park, there’s a couple of factors that make this really superb. The first one is we’ve got access to the grid as we sit here now, and therefore the cost of developing the grid and timing of those connection dates is very, very good. We also have rail access, which is very good for our ESG credentials, so we can obviously reduce the amount of carbon involved in the construction of these new projects.
Q3: Why do you see batteries as an exciting opportunity for the company?
A3: Well, we took the decision a year to 18 months ago to curtail the development of Uskmouth Conversion Project because it had been called in by the Welsh Government. Linked to that, we could see an opportunity to pivot and utilise the asset that we have, which is the site which we own 100% of, and the grid connection and the railway, we saw the opportunity to convert the site or parts of the site into battery energy storage systems. So, that was really the start of things.
Once we got further into it, we realised the value of the grid asset was huge, and likewise that of the railway. Coupled to that, with the government’s targets for net zero 2050 and all the renewables coming online and all the fossil fuels coming offline, it really increased the demand for batteries.
So, the stars seemed to align, we had the site, we had the grid connection, there was the government legislation requirement, etc. so that really persuaded us to move into becoming a battery developer.
Since selling our first project, we’ve now decided that our strategy should be one of developing further projects where we retain an ownership stake, and hence we’re moving into becoming more of an IPP. That is also augmented or helped by our experience on the tidal side where we’ve been an IPP for a number of years.
Q4: So, Graham, could you tell us a bit more about this move to become an IPP, and why it’s a good thing for SAE shareholders?
A4: Well, initially, the first project, as I mentioned, was one that we’ve developed, and we sold, which we needed to generate cash for working capital, and develop future projects. Obviously, once you’ve sold a project, you’ve sold a project, it’s non-recurring so the opportunity to build out Uskmouth to its full potential, which we estimate to be approximately one gigawatt, which will give us a long term revenue stream. If we retain an ownership stake, then obviously the revenues will come through our books, which will, again, increase the value of our company.
I guess the exciting thing also is the initial projects are based around a two hour battery duration, whereas in the coming years, we see that changing to a four hour battery duration. So, all the planning consents, and the site locations that we have at Uskmouth are capable of being grown to four hours so that will give us the long term sustainable revenue growth.
Q5: Now, one of the points you make in this report is around the benefits of the Uskmouth sustainable, and that it’s one site. Can you talk us through a bit more about why that’s a benefit to SAE Renewables?
A5: We have a rich history of activity on the site and we have a number of personnel who’ve been there for many years, who have very, very strong local relationships, whether that’s with the community, or the local authorities, councils.
Linked to that, we have the railway access that exists, which will help us build out these projects and also the access to the National Grid substation, which can accelerate the projects or the bringing of the projects onto line.
Q6: You’ve talked a lot about the benefits of Uskmouth but there’s also a project in Meygen in Scotland. Can you tell us more about that project, please?
A6: The benefit of that project is, we have an option for the land, there is a substation built on the site already, and a grid connection is going to be built in the near future so access to the grid for our 200 megawatt project is defined and contractually established.
Q7: Now there’s rightly a lot of focus in the report around how batteries have helped deliver these great results and provide opportunity going forward. Is tidal still a focus for the business?
A7: The business is very much focused on tidal, albeit we see it as a long-term play. We’re utilising the expertise that we have gained through developing the tidal projects, and the local knowledge obviously we have at Caithness, Meygen, to apply that to our battery energy storage system development.
Q8: Why should investors choose your company to invest in?
A8: I think there’s a whole host of compelling reasons why somebody should invest in our company.
To name a few, we have two really great battery project sites. We have a tidal array, which is the largest array in the world, which we seek to develop from its current 6 megawatts up to 86 megawatts in total.
We have an invested senior leadership team who own a stake in the company, but also bring with them a wealth of experience both in the UK and abroad, developing, and operating projects similar to the ones that we’re talking about.
I guess all these projects give us this long-term sustainable revenue stream.
Q9: You talked about the reasons to invest, what actions have you and the SAE Renewables team taken to get you to a stage where people should be investing?
A9: I think the last three years have been one of really looking at how we can reduce our cost space, reduce our cash burn, but also establish a solid foundation for growth.
So, our strategy we’re launching now is really building off that solid platform and looking at how we can grow our business and grow our revenue streams for the future.
SAE Renewables Limited (LON:SAE) Chief Executive Officer Graham Reid presents the company strategy and 6 compelling reasons why you might consider investing.
SAE Renewables Limited (LON:SAE) aim is to be a global leader in the creation of new, sustainable energy projects for the benefit of our planet.
SAE are pioneering the use of two fantastic sites in the UK to develop their concept of sustainable energy parks. These parks are designed to utilise the existing infrastructure and natural resources in the local area to unlock new projects and deliver value for the communities and our business.
SAE are global leaders in tidal energy system design, development and operation. Their flagship project MeyGen harnesses the power of the tides to generate clean, renewable energy to the grid.
In this interview, SAE Renewables (LON:SAE), Chief Financial Officer, Simon Hirst, offers insights into the company’s remarkable financial results for the year ending 31st December 2023. Hirst touches on key achievements since 2019, such as strategic initiatives and financial restructuring, which have set the stage for future opportunities in their projects. He also discusses the company’s new strategic direction and its implications for future profitability and growth.
In this video interview, Graham Reid, the Chief Executive Officer of SAE Renewables (LON:SAE), discusses the company’s strategic vision for becoming a global leader in sustainable energy projects. Reid highlights the central focus on their two key sites, Uskmouth and Meygen in Scotland, where they are developing approximately one gigawatt of battery energy storage systems. He explains the advantages of these sites, including excellent grid and rail access, which bolster the company’s environmental credentials by minimising carbon emissions during construction.
Reid elaborates on the decision to pivot to battery energy storage. He emphasises the alignment of government legislation, site ownership, and grid connections, which drove this strategic shift. Additionally, Reid outlines SAE’s transition towards becoming an Independent Power Producer (IPP), aiming to retain ownership stakes in future projects to secure long-term revenue streams.
The interview also touches on the complementary role of tidal energy in SAE’s portfolio, leveraging the company’s extensive expertise and local knowledge. Reid discusses the potential for growth and the compelling reasons for investors to consider SAE Renewables, including the company’s experienced leadership team and a solid foundation for future expansion.
This interview offers insights into SAE’s comprehensive approach to sustainable energy and its plans to drive forward with innovative energy storage solutions.
SAE Renewables Limited (LON:SAE) has announced its audited final results for the year ended 31 December 2023.
The 2023 Annual Report, a notice of Annual General Meeting and a Proxy Form, have been posted to shareholders, and copies are available on the Company’s website at www.saerenewables.com
The AGM will be held at the offices of Ashurst LLP, London Fruit & Wool Exchange, 1 Duval Square, London, E1 6PW at 11.00 a.m. on Thursday 18 July 2024.
The 2023 results reflect a transformational year for the business. SAE has delivered significant progress in the last 12 months against its targets and established a firm foundation to deliver an exciting pipeline of sustainable energy projects and move into becoming an owner and operator of these projects, ensuring long-term value for our shareholders. Our strategy directly supports UK government policy to improve energy security and achieve Net Zero by 2050.
2023 Financial Highlights include:
· The Group reported a profit of £23.2m, compared with a 2022 loss of £11.1m.
· Increase of 292% in Group revenue to £15.3m (2022: £3.9m).
· Revenues available to the Group, which excludes ring-fenced revenue earned by the MeyGen tidal array, rose to £10.7 million (2022: £nil) . The sale, at Uskmouth, of a ready-to-build 230MW BESS project with a grid connection for £10.0 million accounted for the majority of 2023 revenues, with the balance of £0.7 million being rental income from the Uskmouth site.
· Net Assets increased 678% to £44.2m (2022: £5.7m). The major increase in the valuation of the Group arises from the reassessment of the value and size of our battery storage projects.
· Increase in EBITDA to £8.3m (2022: EBITDA loss of £5.8m).
· Reduction of 30% in SAE’s Group debt, excluding MeyGen debt, to £13.7m (2022: £19.7m). This followed the successful execution of the lease agreement for the 230MW BESS project with Uskmouth Energy Storage Limited. SAE also reached an agreement with its bondholders to rephase bond repayments out of 2024 and into periods commencing in December 2025 and culminating in a final £7.7 million repayment in December 2029.
· Reduction of 29% in Operating costs to £5.0m (2022: £7.0m).
Operational highlights include:
· Final payment received on 230MW/460MWh Uskmouth Battery Energy System Storage (BESS) projects, now under construction by Uskmouth Energy Storage Ltd.
· In December 2023, signed conditional land sales agreement with Electric Land for £9.9 million for the 230MW BESS. Milestone income to be received during 2024 and into 2025.
Post-period highlights
· Achieved planning approval for a new 120MW/240MWh BESS which repurposes the site of the Uskmouth power station former cooling towers.
· Commenced development of an additional 600MW/1,200MWh of BESS at the Uskmouth site.
· Submitted the planning application for the Mey BESS project, near Caithness in Scotland. SAE has an agreement option to lease the required land and has secured a modification of the MeyGen grid connection to increase capacity to 287MW with full import and export rights.
Duncan Black, Chairman of SAE Renewables, commented:
“I am excited about the future for SAE. We have the funding and visibility on future revenues we need to be able to deliver our development projects and service our debt. We have a pipeline of projects that would be the envy of many much larger companies, and we have a Board and Executive team who have a track record of successful delivery. I would sincerely like to thank all the members of our team whose hard work and dedication during the past 12 months has delivered outstanding results for SAE. To the stakeholders in our projects, bondholders, shareholders and governments – thank you for your continued support of our business.”
Graham Reid, Chief Executive Officer of SAE Renewables, commented:
“During 2023, the business has met or exceeded all of its objectives. This provides a great platform from which we can embark on our new strategy: Building a Sustainable Future to 2035, advancing our transition towards becoming an Independent Power Producer.”
SAE Renewables (LON:SAE) has announced that it has submitted an application for Section 36 consent to the Scottish Government’s Energy Consents Unit for a battery energy storage system (BESS) project of up to 300MW, sized for up to 4 hours duration (1.2GWh). The project, named “Mey BESS”, will be located inland, 5.5km southwest of SAE’s MeyGen tidal project, 0.5 km southeast of the village of Mey in Caithness and located adjacent to the planned and fully consented SSE Gills Bay 132kV substation project.
SAE has secured all the necessary land rights and 287MW of both import and export grid capacity to allow for the BESS project to be built. The grid capacity is planned to be shared between Mey BESS and the Company’s MeyGen tidal array with 207MW being utilised exclusively for BESS and the balance of 80MW secured for the expansion of the MeyGen tidal stream project. The consent application is sized at 300MW to allow for further expansion from 207MW to 300MW which would be subject to future grid applications.
The grid connection and all infrastructure is consented and ready to be built, with an anticipated completion of April 2027.
It is expected that the Mey BESS project will initially be built using 2 hour duration batteries to give an output capacity of 414MWh, with the site layout sized in the planning application to allow for expansion using 4-hour duration batteries of up to 300MW/1.2GWh.
The development rights in the project are held by Mey Energy Storage Limited, which is owned 84% by SAE and 16% by Scottish Enterprise.
SAE Renewables have significant presence and operations experience in the local area, having been operating the MeyGen tidal array in Caithness for many years.
The dedicated project page will be available at: www.saerenewables.com/mey-BESS
SAE Renewables Limited (LON:SAE) has announced it has received the next milestone payment of £2m under its agreement with EL (Uskmouth) Limited, a subsidiary of FPC Electric Land.
The milestone payment was received following the successful completion of earthworks at the site.
On 5 December 2023, SAE Renewables announced that it had agreed to sell the freehold land owned by SAE to EL, for a milestone-linked total gross cash consideration of £9.8m. The land is being used for a 460MWh (230MW) BESS and represents only a small proportion of the land owned by SAE at the Uskmouth site available for BESS project development. Today’s announcement marks the second milestone payment, following the first £5m payment being received on 28 March 2024.
SAE looks forward to the continued good progress being made on the project. The remaining milestones are the completion of civil works, whereupon SAE will receive £1.5m, and the final payment of £1.425m on the delivery of 10% of the batteries.
Graham Reid, CEO of SAE Renewables, commented:
“The continued success and delivery of this project demonstrates the opportunity that exists at the USEP, with over 1GW of BESS opportunity identified at the site. SAE is focused on delivering the maximum value for the Company and its shareholders from these projects.”
SAE Renewables Limited (LON:SAE) has announced that it has received the first £5m milestone payment under its agreement with EL (Uskmouth) Limited, a subsidiary of FPC Electric Land.
On 5 December 2023, SAE announced that it had agreed to sell the freehold land owned by SAE to EL, for a milestone-linked total gross cash consideration of £9.8m.
The freehold land sold to EL is limited to the land used by Quinbrook Infrastructure Partners, for their 230 MW BESS at SAE’s Uskmouth Sustainable Energy Park.
With the achievement of this first milestone and the payment of £5m to SAE, EL has now taken ownership of this land.
The completion milestone required substantial mobilisation of the main construction phase of the Quinbrook BESS with the importation of 30,000 tonnes of aggregate via rail from a local quarry to begin laying the foundation for the project and raising the levels on site. This was made possible by the hard work of the SAE team, and all our partners, who are proud to be bringing new business back onto this critical energy transition infrastructure site. In particular, this phase included the first rail carriages coming to the site in nearly 10 years.
The remaining balance of £4.8m payable under the EL Agreement will be payable against three further milestones expected to be achieved over the next 12 months.
The freehold land utilised by the Quinbrook BESS represents only a small proportion of the land owned by SAE at the Uskmouth site available for BESS project development. This milestone payment is another demonstration of the value to the Company and its shareholders of the Uskmouth site for the development of BESS projects. SAE has identified and is actively developing a total of over 1GW of further BESS projects at the Uskmouth site, the development of which would transform the Uskmouth site and deliver to SAE and its shareholders substantial value, which could be realised through a combination of development premiums, income from land leases and future continued ownership.
Graham Reid, CEO of SAE Renewables, commented:
“This is another milestone hit and demonstrates how we secure value for our business and shareholders. We have the knowledge, skills and a fantastic site to deliver an exciting pipeline of projects that are expected to provide revenue for the business and increased value for our shareholders in the long term. This experience and knowledge can also provide a platform for future growth, and it’s a truly exciting time at SAE.”
SAE RenewablesLimited (LON:SAE) has announced that the next Battery Energy Storage System (BESS) project at the Uskmouth site has been granted planning consent with conditions by Newport City Council. This is another significant milestone in the business’s plan to develop 1GW of BESS at the Uskmouth Sustainable Energy Park, as set out in the business update provided on 5 December 2023.
The 120MW project is being developed alongside Enso Green Holdings Limited and will be built at the site of the power station’s cooling towers. SAE Renewables has commissioned and mobilised the demolition works on the cooling towers to prepare the site for construction. SAE will provide further updates as the project progresses.
