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#SAE @simecatlantis: a quick delve into developments at Uskmouth and the overall power plant conversion division.
Specifically re: Uskmouth, the importance of a particular update in the 16/07/2020 RNS has been overlooked:
"Development of private wire offtake opportunity."
1/14
Specifically re: Uskmouth, the importance of a particular update in the 16/07/2020 RNS has been overlooked:
"Development of private wire offtake opportunity."
1/14
The house broker's numbers assume a route-to-market private purchase agreement (essentially selling directly to the grid at wholesale prices) for 80% of the 220MW output, with 20% going to a private wire PPA.
The RtM PPA is priced at £45/MWh, whilst the PW PPA is £70/MWh.
2/14
The RtM PPA is priced at £45/MWh, whilst the PW PPA is £70/MWh.
2/14
The PW PPA would be with a data centre. There are DCs already in operation a few miles away; and #SAE is also exploring the option of developing DCs on land directly adjacent to Uskmouth.
Industrial customers usually source power directly from the grid at at least £100/MWh 3/14
Industrial customers usually source power directly from the grid at at least £100/MWh 3/14
I believe it's #SAE's intention to put in place PW PPAs with one or more DCs for ALL of Uskmouth's 220MW output.
DCs would be sourcing energy from Uskmouth at say £70/MWh - a 30% discount to what they would usually have to pay.
Uskmouth would be selling at a ~55% premium...4/14
DCs would be sourcing energy from Uskmouth at say £70/MWh - a 30% discount to what they would usually have to pay.
Uskmouth would be selling at a ~55% premium...4/14
..to what it would normally receive, were it all being fed into the grid. A win-win.
House broker Arden's revenue forecast for Uskmouth in 2025 (assuming 2% inflation pa) is £103m (including ROCS - the government support mechanism - of £21.5m).
Its EBITDA forecast is £70m. 5/14
House broker Arden's revenue forecast for Uskmouth in 2025 (assuming 2% inflation pa) is £103m (including ROCS - the government support mechanism - of £21.5m).
Its EBITDA forecast is £70m. 5/14
If we assume ALL 220MW of output went via PW PPA to DCs, revenue (including ROCS) would increase to £136m.
This would essentially fall right down to EBITDA - which would translate into 2025 EBITDA of just over £100m.
I expect we'll hear of a PW PPA in the next 8 weeks.
6/14
This would essentially fall right down to EBITDA - which would translate into 2025 EBITDA of just over £100m.
I expect we'll hear of a PW PPA in the next 8 weeks.
6/14
The second point relates to the new fuel JV with N+P. This is a historic development for #SAE, second in importance only to 23/06/20 RNS (success in large scale combustion testing of fuel).
Firstly, with regards to Uskmouth:
The JV (50% owned by SAE, 50% by N+P) will be... 7/14
Firstly, with regards to Uskmouth:
The JV (50% owned by SAE, 50% by N+P) will be... 7/14
...constructing 4 fuel processing plants across the UK. Capex for each plant will be ~£30m (based on the cost of the first UK plant already constructed by N+P).
Each plant will produce 220 thousand tonnes pa of fuel (Uskmouth at full output will require 880ktpa of fuel).
8/14
Each plant will produce 220 thousand tonnes pa of fuel (Uskmouth at full output will require 880ktpa of fuel).
8/14
It requires 1t of waste (50% plastic, 50% paper / cardboard) to produce 0.75t of fuel pellets. Thus each 220ktpa processing plant will require ~293ktpa of waste input.
Landfill currently costs circa £100/t. As such, were #SAE's processing plants to charge say £70/t to... 9/14
Landfill currently costs circa £100/t. As such, were #SAE's processing plants to charge say £70/t to... 9/14
receive waste from waste management companies, those companies would be making a 30% saving.
70 x 293,000 = £20.5m
#SAE's JV will then be selling the fuel plants directly to Uskmouth at say £6/t.
6 x 220,000 = £1.3m
Total revenue per 220ktpa plant: £21.8m
Margins?
10/14
70 x 293,000 = £20.5m
#SAE's JV will then be selling the fuel plants directly to Uskmouth at say £6/t.
6 x 220,000 = £1.3m
Total revenue per 220ktpa plant: £21.8m
Margins?
10/14
Assuming an EBITDA margin of 40-50%, that's £8.7m to £10.9m.
4 plants equates to revs of ~£87m, EBITDA of ~£40m.
#SAE's share will be 50% - so an extra £20m EBITDA for the Uskmouth project.
In total then, assuming PW PPAs are agreed with new DCs for the full 220MW, then..11/14
4 plants equates to revs of ~£87m, EBITDA of ~£40m.
#SAE's share will be 50% - so an extra £20m EBITDA for the Uskmouth project.
In total then, assuming PW PPAs are agreed with new DCs for the full 220MW, then..11/14
#SAE's share of the EBITDA generated by the overall Uskmouth project could be £120m to £125m by 2025.
This is what I think the wider market is missing.
Beyond Uskmouth however, the upside is almost unquantifiable. It has the knowhow for coal plant conversions - there are..12/14
This is what I think the wider market is missing.
Beyond Uskmouth however, the upside is almost unquantifiable. It has the knowhow for coal plant conversions - there are..12/14
almost 2,500 plants in operation worldwide. And via the new JV, #SAE now has a proprietary fuel that it is itself going to be manufacturing.
The fuel's emissions are ~60% less than coal - and it also rids the world of vast amounts of non-recyclable plastic waste.
13/14
The fuel's emissions are ~60% less than coal - and it also rids the world of vast amounts of non-recyclable plastic waste.
13/14
I expect there to be a global rollout of #SAE's integrated tech (waste purchase all the way through to energy generation) in the coming years.
The big question is, will it build a huge proprietary estate of plants (the ultimate goal), or focus on provision of services? 14/14
The big question is, will it build a huge proprietary estate of plants (the ultimate goal), or focus on provision of services? 14/14
