Happy to add my 2 cents, certainly don’t expect to change your mind but always good to have a few opinion points in the mix. @anthony75 always has solid views so its hard to add to that!
A key difference for me is IFN’s various channels to market. Aus is being swamped with new generators coming in and PPAs/merchant is their their only revenue source. This is tough for investors due to a) PPA values dropping rapidly (have a read here https://reneweconomy.com.au/australia-solar-costs-hit-extraordinary-new-lows-50s-mwh-27007/) … there’s more competition bringing prices down, margins are getting tighter. B) merchant revenue is becoming more risky; the more renewable developments get up means that when they’re all generating (often at the same or similar times), the dispatch weighted spot price is lower.. so for these two revenue streams there’s lower attainable $/MWh streams. IFN’s difference? They’re a Gentailor and can Retail. Support Retail contract with their generation over short, medium and even (more rarely though) long term fixed price contracts. This is what investors now value. To Retail is too take risk, as a Gentailor is exposed when they’re contracted to deliver price when the wind (or sun) may not be there. However, these guys have teams of Traders who are a hell of a lot smarter than you or I in valuing hedging risk…so there’s margin to be made in there.
I do agree that advancements in wind tech should probably increase at a slightly higher rate than solar tech. You can go bigger/better yet technology improvements in solar cells is somewhat limited (at time of writing).
Mixed feelings on battery. Personally I feel (like many others I suspect) that with the emergence of many utility scale solar farms that the market peak pricing will move to the shoulder periods - 630/7-830am and 5pm-8pm (when solar isn’t there, and wind only may be a percentage of the time) Solar serves the latter I don’t argue there, however if you look at price trends the average midnight to 6am pricing is extremely low due to the abundance of wind in SA and the lack of demand at that time. Huge opportunity to stock up your battery then to dispatch in the morning peak. Based on that, you’re about equal with solar. Add to that, wind may only be there 25-40% of the time solar is in terms of stacking up the battery for the evening peak, and it’s pretty clear to see you have opportunity to serve both of the new ‘peak pricing’ periods instead of solar which can only serve one.
Check out the published utility scale solar developments coming up in SA, you’ll see just how many MW are being added to the SA market during sunlight hours… (think it may be a CER publication??)
Let’s also not forget the alternate markets a battery can participate in. Hornsdale (IMO) exceeded many expectations. It has completely dominated the FCAS market since switching on. I do anticipate an argument though that entry of new batteries will erode this revenue stream however, and take that on board.
Pumped hydro absolutely has its merits. Cost can be a limiter however. Don’t think though that they need to be independent of each, a wind-backed Gentailor would see a Hydro partnership as absolutely crucial to filling in its gaps when the wind isn’t blowing and it is required to deliver contract price energy to customers (hence avoiding high spot price exposure). Just need to find that balance/partnership and that’s they key to making money.
Anyway, the usual IMO only caveat, though am always interested in others opinions on the topic. Great industry and only going up from here.
Cheers
Ozmacca
IFN Price at posting:
66.0¢ Sentiment: Buy Disclosure: Held
