Tuesday, 24 November 2020

Invinity Energy Storage - Portfolio Addition


Just as there are many ways to generate energy - wind, nuclear, coal. solar - so there are many ways to store the energy - lithium-ion batteries, pumped hydro, flow battery and hydrogen for example. In recent years there has been a move away from generating energy from fossil fuels due to climate change and a corresponding transition to cleaner solutions such as wind and solar. As the world increases capacity for these clean generation options, the costs of solar and wind have fallen which makes them the cheapest way for creating energy in many parts of the world. As costs fall, it follows that more and more capacity can be deployed which will create more energy than can be used at certain periods and this energy can be stored for use at a later time.

The reality is that renewable energy has arrived and will increasing dominate the world's energy requirements in the future as we retire coal, oil and natural gas (fossil fuels). However, these renewable forms of energy are inherently intermittent - the wind doesn't always blow and there is no sun at night so we will need to store excess energy when available in much greater volumes than is required at the time and the excess will be stored for use later.

Vandium Flow Battery

V-flow batteries are large, containerised operations which can store and discharge energy over long periods, typically 20 to 25 years. They offer unlimited options by merely by using larger storage tanks. Because of their size, they are not suited to vehicles but more for industrial and utility applications.

Most grid storage is currently pumped hydro but obviously there are constraints on where this can be deployed as it relies on gravity. As baseload energy from fossil fuels is phased out we will need reliable forms of storage to fill the gap. It is estimated that flow batteries could provide up to one third of all stored energy over the coming decade. Vanadium is more common in the Earth's crust than Lithium and we currently extract about twice as much V compared to Li.

Invinity

The company is a merger of redT (UK) and Avalon(Canada). The company aims to become a global leader in flow batteries and compete head-to-head with Li-ion batteries and provide energy storage solutions to decarbonise global energy to achieve net zero emissions by 2050.

The company has around 40 energy storage operations worldwide

Invinity Storage Solutions from Renewable Solar

Earlier this month the Company announced a 1.8 MWh deal with European Marine Energy for a project in Orkney to provide clean power from tidal energy combined with storage and green hydrogen. The project is due for delivery next year and will be a world-first.

The Company are involved with the Energy Superhub Oxford project which will demonstrate the key role played by flow batteries in the decarbonisation of the world's transport and electricity networks. The smart power network installed in Oxford will deliver flexible, reliable power to fast-track the roll-out of EVs. If all goes to plan the aim is to roll out this syten throughout the UK.

Results

According to the latest half-year results to end June 2020 (link via Investegate) the company increased revenues by 50% to £0.3m. Net assets increased from £12.6m at the end of 2019 to £38.7m.

"Without a viable alternative, project developers interested in large-scale energy storage have looked almost exclusively to lithium-ion systems, even when they aren't the optimum fit. Invinity's strategy is to make Invinity the commercially viable complement or alternative to lithium-ion batteries.

The Company has made significant commercial progress in the months following the merger as the June 2020 Trading Update detailed with over £1m of orders signed. Since then, Invinity's late stage project pipeline has continued to expand in terms of both project quality and scale. Thanks to the ongoing work of Invinity's transatlantic commercial team, the Company remains confident in its ability to close a significant number of these opportunities into confirmed orders over the coming months".

The company are focused on key markets in UK, West Coast US, S Africa and Australia.

Conclusion

The vanadium flow battery technology seems to be gaining traction as the limitations of Li-ion batteries becomes apparent and as the transition towards renewable energy drives the structural changes for storage solutions. There are environmental concerns in relation to the extraction of lithium in areas such as Tibet and Bolivia where local water supplies have been polluted as the mineral is mined from vast salt flats. Also the batteries can become unstable and burst into flame or explode.

As demand for renewable electricity surges, so too does the requirement for safe, sustainable storage solutions. The market for energy storage will become huge over the coming decade and beyond and hopefully provide opportunities for the likes of Invinity to take advantage.


Invinity Share Price YTD

This is a small AIM-listed company with big ambitions but has yet to turn its potential into profits. The share price has had a good run moving from 40p 6 months back to a high of 185p (currently) so there could well be some volatility and taking of profits and maybe better opportunities at lower prices down the line. However I have recently sold some of my ITM Power shares at 370p (purchase price 37p) so I can take a little more risk with this acquisition. The shares were purchased in my SIPP at 165p and I will add to my holding should there be any significant pull-back in the coming weeks. I hope the performance can match some of my other acquisitions this past year such as McPhy, Plug Power, Ceres etc.

To Invinity and Beyond... (With apologies to Buzz...I'll get my coat...)

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation... investing in smaller AIM-listed companies can be rewarding but is usually higher risk - always DYOR!

Thursday, 19 November 2020

My Next (and Final) House Move


It's certainly been quite a year. During three months of Lockdown 1 earlier in the year I had plenty of time to reflect on many aspects of life. It's just four years since I made my last house move and I have always thought I would be making another move at some point but have been putting it off for the past year or two.

In any event, one of the decisions I made during those periods of quiet contemplation during April/May was to make a move. When the Chancellor announced the stamp duty holiday in July, this was the trigger to start the ball rolling. So, I spent a few weeks making the place look a bit more presentable and put my property on the market following the lifting of restrictions and the opening of estate agents. Of course, there had been a great deal of pent-up demand and so lots of interest and viewings during the first week. I was lucky to get an offer at the asking price and so began my search for a suitable property.

For some time I have had the idea of finally retiring to a nice quiet bungalow. I started life in the 1950s in a modest wooden bungalow in South Yorkshire so maybe there is some need to return and complete the gestalt. Unfortunately in the area that I live they are not so common - mainly traditional Victorian terraced or pre-war semi-detached two storey houses so the few bungalows that occasionally come on to the market are quite expensive - particularly in the better, quieter locations. Luckily after a couple of weeks searching on Rightmove, I saw just the sort of property I wanted and after the first visit put in my offer which was accepted the next day.

I am ignoring the warning of 'bungalow legs' from my family but I guess it's surprising just how many times I am up and down the stairs in my house!

Finances

I was pleased to see property prices receiving a boost from all the demand built up during lockdown combined with the Chancellor's decision to suspend stamp duty which resulted in a boost to prices generally and my house suddenly being valued at 35% more than I bought it for in 2016. Of course, the property I want to purchase has no doubt gone up as well this year!

My investment portfolio has grown quite a fair bit over recent years - average returns of 9% each year has resulted in a doubling of its value over the past 8 years. Last year saw an above-average year with a 21% uplift and with a further 30% uplift since the meltdown in March so I have decided to sell down quite a large proportion of my ISA and put this towards a really nice final retirement property.

I have had a good run these past few years and I am thinking there may not be so much upside in the equity markets going forward - Covid, climate change, huge public debt etc. so a nice property may be a better bet and certainly there is very little incentive to remain in cash. But financials aside, it just makes sense to finally retire to a life of peace and quiet in the leafy suburbs.

The property is detached and hopefully nice and quiet which will be a contrast to my current house which is close to a busy main road. It has a garden which should be ideal for a return to growing my veggies - I may need a few tips from weenie - and also some space for a wildflower patch for the bees and butterflies. I also want to make the house carbon neutral and will be looking at the option of adding solar PV + battery storage...will give Enphase a call! So should be plenty to keep me occupied for the first couple of years!


Conclusion

It is very satisfying to reap some rewards from my lifetime habit of saving and the ability to generate a decent return from these savings to afford a really nice house. I have to thank my green investments such as Orsted, Vestas, ITM, McPhy and Tesla for providing a nice boost these past couple of years. I have aspergers (autism) and have experienced an increased sensitivity to noise as I get older so it will hopefully be much quieter in a detached house in a cul-de-sac away from the busy/vibrant area I am leaving behind.

I have been thinking of starting another (final) book so maybe in the new year this will be an opportunity to make a start as well as update some chapters of existing titles.

I may be offline for a week or so while the broadband service is transferred over to the new property so maybe no posts for a short while.

Fingers crossed all goes smoothly on the big day!

Update 24/11...I am pleased to report that all went well on the big day, just 3 hours from the removal van arriving to unloading at my new place and now all boxes unpacked and phone/broadband switch completed.


A Green Industrial Revolution for the UK


This week the Prime Minister unveiled his 10 point plan to tackle climate change. This is the vision to bring about the UK's transition to net zero emissions by 2050 and the plan will focus on the coming decade to 2030.

The plan includes:

Offshore Wind ... confirming a manifesto pledge to increase capacity to 40GW by 2030...includes 1GW of floating offshore wind. This is a really big deal and will provide around 50% of our current energy demand. Clearly some big opportunities for the likes of Vestas and Orsted.


Hydrogen
  ... £500m to provide 5GW from low carbon hydrogen by 2030 includings plans to provide home heating solutions with a blend of gas/hydrogen mix for heating by 2023 and a competition to become the country's first hydrogen town. Really good to see the government are switched on to the potential of hydrogen and also good for the likes of ITM Power and Ceres Power!

Nuclear ...less clear on detail but expecting to give the green light to a large operation - probably Sizewell C - as well as a range of small reactors and £525m to help it all along. A big mistake imho.

Electric Vehicles ...the phasing out of petrol/diesel cars by 2030 to accelerate the take up of EVs. This will be the first global major market to take such a big step. There is £1.3bn for the widespread roll-out of charging points and grants for buyers to help them to switch. Maybe top up my Tesla holding! Possibly the biggest change since the days of the horse and carriage!


Carbon Capture
...a plan to remove 10m tonnes of CO2 via this untried technology. The government have been promising this for the past 10 years but nothing has developed and I suspect not much will happen over the coming 10 years...but they will be planting a lot more trees which do capture carbon!

(click to enlarge)

Heat Pumps
...plans to make public buildings and homes more energy efficient which includes a plan to instal 600,000 heat pumps each year by 2028 (currently 26,000). The government will bring forward the date to phase out gas for all new homes to 2023. The Green Homes Grant will be extended by a further 12 months to March 2022.

Other provisions include more provision for cleaner public transport and also cycling/walking, protection and restoration of the natural environment, research for zero emission aircraft and shipping and plans to make London the global centre for green finance.

The government will add a further £4bn of new money making a total of £12bn for these initiatives and expect there will be much more than this coming from industry and the private sector...maybe £40bn in total so not an insignificant amount. However critics say it is a good start but not enough and point to the £100bn for HS2 and the billions spent on the likes of track n trace.

Chris Stark, Chief Executive of the Climate Change Committee said:

“The plans announced today will transform Britain for the better, bringing new opportunities and new investment. This is our path out of the economic challenges created by the COVID crisis. And it is a set of commitments that will raise the UK’s credibility ahead of the pivotal COP26 climate summit next year. This is just the tonic as we look to 2021.”

I agree, this is a good start but will need more finance and policies to get us where we need to be. The governments Energy White Paper should provide some of the nitty-gritty when published next month. Once the ball is rolling it will become easier to add other complimentary provisions - carbon pricing, energy storage, wave power etc. and hopefully get us on track to meet our targets for zero carbon. I think it was important that this came directly from the PM and gives a clear indication to all that the government is serious about climate change.

Of course, for us small investors there will be lots of opportunities to invest in the green technologies which will thrive in the new industrial revolution.

What do you think...are you looking forward to driving EVs? What do you think of the plans generally? Leave a comment below.

Tuesday, 17 November 2020

Zoom - Portfolio Addition


Before Covid I suspect not many people would have heard of this company...today almost everyone has heard of it and many will have installed the app for virtual meetings during lockdown.

The company was founded in 2011 with HQ in California (where else...?). It provides online facilities for video conferencing via its cloud-based software. Obviously the Covid situation has provided a unique opportunity for the company providing face-to-face communication solutions for governments, businesses, organisations and groups of people to meet up in a virtual online world.

The company went public in April last year raising $750m and shares priced at $36. Today it is worth over $100bn

Demand for their video conferencing software has surged as many countries around the world entered lengthy periods of lockdown and we were told to work from home. It has quickly morphed into a social norm as it became the easy way to keep in touch with family, friends and work colleagues via zoom.

The key to the surge in demand is that the basic package is free but also it is intuitively easy to use. Conversations can be one-to-one, one-to-many or many-to-many. On a larger scale, Zoom webinars allow customers to conduct large-scale online events such as conferences and town hall meetings for up to 10,000 view-only attendees and 100 panelists.

Of course, as more and more people routinely use Zoom, there have been concerns over privacy and the company have recently introduced their end-to-end encryption software to address these issues.

Results

The company announced Q2 results in August and record revenues of $663m an increase of 355% year-on-year. Free cash flow was $373m compared to $17m a year earlier and cash in the bank of $1.5bn at the end of July 2020.


12 month share price


The share price has really taken off this past year rising from under $100 in January to over $500 by October. However, the price has retreated sharply in recent weeks following the announcement of two Covid vaccines and a light at the end of the tunnel for recovery from the global pandemic.

The company is due to release Q3 results on 30 November.

Obviously there will be competition from the likes of Google, Microsoft and Facebook but I am hoping Zoom now has a secure foothold in this market and can make further progress. I also would not rule out the possibility of takeover activity in the coming year.


Increasingly over the past year I have started to adopt the twin strategy of technology and climate-friendly green for my investments. I strongly believe they will provide the best opportunities for returns over the coming decade and beyond. These shares will not form part of my green portfolio but clearly any technology which reduces the need for travel on a global scale is good for the environment and tackling climate change.

I may be wrong, but I take the view that many of the new practices we have been forced to adopt due to Covid will continue after the pandemic has passed and I believe the video conference offered by Zoom will be one such habit. I added the shares to my ISA earlier this week at the price of $385 (approx. £290). The funding came from a partial sale of some Plug Power shares which have had a remarkable run since purchase @ $11.40 in September to $25 today. This means the Zoom shares are effectively free which makes the purchase at these lofty levels a little easier.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation... investing in individual companies can be rewarding but is higher risk compared to collective investments - always DYOR!