James Carthew: Will rising energy prices really aide struggling renewables?
A spike in power prices has given green energy trusts a much-needed boost in recent weeks, but it may not be a long-term solution to its problems.
SDCL Efficiency Income (SEIT) has become the latest renewable energy investment company to propose a managed wind down strategy. The shares have not reacted well to the news and are now about 20% down so far this year, putting SEIT on a 15% yield.
I am a shareholder and I am sitting on a loss on the investment. I do not think I would have supported the board’s original plan of cutting the dividend, buying the manager, and shifting the company’s listing category to that of an operating company. I understand why some shareholders pushed for a realisation of the assets, but I am concerned that now is not the time to be pursuing this aggressively. The board has made it very clear that this is not a seller’s market.
SEIT’s recent share price falls have been in contrast to gains from some of the leading stocks in the sector such as Bluefield Solar Income (BSIF), Greencoat UK Wind (UKW), and Renewables Infrastructure (TRIG).
In BSIF’s case, we should be getting closer to an announcement about which of the potential bidders for the company has secured the board’s recommendation. The share price is still more than 20% below the NAV. I am hoping that there is still upside from here but, even for an asset of BSIF’s quality, nothing is certain in this market…. read more here