Friday, 13 December 2019

We Are Leaving...At Last!

Fortunately I still have a pretty good June 2016 we voted to leave the EU. For many people, especially in the North of England,  it was a long-awaited chance to make the powerful elites in London listen. Shamefully, our politicians failed to take on board the simple message given to them by the people and we spent the next three years going round in circles.

After losing her majority in an ill-advised general election in June 2017, Mrs May spent the next year putting together her Chequers Agreement with the assistance of arch-remainers Phil Hammond and Olly Robbins - a deal of sorts which pleased neither remainer or leaver and wasn't really Brexit. The deal could have kept us trapped in the backstop arrangements and undermine our negotiating position with the EU over a future trade deal. Fortunately our remain Parliament rejected this deal - three times, and Mrs May was forced to agree to extend the leaving date from 31st March to 31st October. She then decided to step down and hand over the reins to Boris Johnson who promised to ditch the backstop and renegotiate a better deal. He promised to take us out of the EU 'do or die' by Halloween!

Much to everyone's surprise, his team did manage to negotiate a new deal and actually succeeded where Theresa May had previously failed by getting the new deal approved in Parliament at its second reading with the help of some Labour MPs from leave voting areas. Unfortunately time was tight and the remain Parliament voted for more time to debate the bill which Boris was not prepared to offer and eventually he was forced to apply for a further Brexit extension to 31st January. The opposition then eventually agreed to the PM's demand to dissolve Parliament and call a general election for 12th December to try to resolve the Brexit deadlock.

This would be the Brexit election - the most important general election since 1979 and the first GE in December for almost a century. The lines of demarcation were clear - the Tories wanted a clear majority to complete the 'oven-ready' deal already negotiated and leave the EU by end January 2020 "Let's get Brexit done". Labour's position was less clear - they would renegotiate a further deal with the EU (no certainty the EU would negotiate a third time), then put this new deal to the public in a second referendum with 'remain' on the ballot and Mr Corbyn would remain 'neutral' on the question of whether to leave or remain although many senior figures say they would campaign to remain. The Lib Dems would revoke Article 50 if they won the election and remain in the EU - no second referendum.

So, a weary nation returned once again to the polling stations and guess what...they voted to see the back of Brexit rather than more delay. The Tories won 365 seats (+47), Labour 203 (-59), it's worst result since 1935 and the Lib Dems a paltry 11 seats and their leader lost her own seat. In Scotland the SNP made a little progress on their ticket to avoid Brexit and push for a second independence referendum and raised their seats to 48

Therefore a majority of 80 for Boris Johnson and it can now surely be announced that we are, at last, after three long years of delay, uncertainty and frustration, leaving the EU on 31st January 2020!

Brexit clearly played a big part in how people voted but I think the other defining factor was the rejection of a hard left Corbyn government and lots of feedback from Labour canvassing which suggested many voters just did not see him as a credible leader of the country. Mr Corbyn has already announced he will not lead the Party into the next election so it will be interesting to see whether they persist with the same formula which has lost them the last three GEs. They now have five years to get their act GE will be 2024 (December again?).

We had the vote in 2016

So a good night for those who want us to leave the EU and a bad night for those who refuse to accept the referendum. In 2015, we voted for the party which promised us an in/out referendum on the EU. In that referendum of June 2016 we voted to leave the EU. We had another election in 2017 where 85% of the MPs were elected on manifestos promising to respect the referendum result, 500 MPs voted to trigger Article 50 and now we've voted overwhelmingly for the only party promising to deliver Brexit. I'm hoping the liberal graduate remainers from London and Oxford have finally accepted that the majority of the people of this country want to leave the EU...but somehow I doubt it.

I can just see Barry Blimp metaphorically raising the Union Jack up the flagpole and waving a two finger salute to that People's Vote poster on his office wall which he's been using as a dart board! He allows himself a self-satisfied smile at the thought that democracy has finally prevailed - as he always knew it would.

OK it's not all done and dusted - so now we have to move on to the next stage of trade negotiations with Europe and with other nations around the world which could be just as tricky but the log-jam of the past couple of years is released and I really hope our new parliament can move on to address other important issues - especially the climate emergency.

Feel free to leave a comment below with your thoughts on Brexit and the general election.

Monday, 2 December 2019

Gresham House Energy Storage - Portfolio Addition

For the past year I have been building my climate-friendly 'green' portfolio. This includes a mix of renewable energy infrastructure trusts such as TRIG and Bluefield Solar and more recently, several individual companies such as Orsted and AFC Energy. The UK is moving quickly to replace its dependence on fossil fuels and embrace clean energy alternatives such as solar and wind.

However, the national grid system needs to match supply with demand. This is easier to do with coal and gas but with intermittent solar and wind, it becomes more unpredictable and it's therefore important to introduce forms of storage to smooth supply throughout the national grid system. The greater the proportion of wind/solar renewable energy, the greater the need for storage to balance the grid.

We are now at the stage where generation from renewables is matching fossil fuel so I expect the demand for storage solutions to increase from here. Coal is due to be phased out completely by 2025 and there is increasing pressure on policy makers to reduce our generation from gas due to climate change emissions. Our government have legislated for net zero emissions by 2050 which means that gas needs to be replaced by clean energy over the coming 30 years - maybe sooner. We need utility-scale storage back-up to make this a reality.

In the past year planning applications for battery storage have increased by 50% from 6,900MW to 10,500MW today according to a report from RenewableUK. This has prompted me to take another look at investing into this fast-growing sector of the clean energy revolution.

Gresham House Energy Storage (GRID)

This investment trust came to the market in 2018 and it has been on a back burner as a possibility for my portfolio since reading an excellent article last year by IT Investor. It currently owns seven utility-scale energy storage systems around the UK with a combined capacity of 124MW. The most recent addition was the largest - a 49MW project at Red Scar near Preston which should be operational later this month.

The company released half year results in August (link via Investegate) which suggested a strong share price performance to end June - up 5.4% and confirmed dividend of 4.5p for 2019.

Commenting on the Fund's results, John Leggate CBE, Chairman of Gresham House Energy Storage Fund PLC said:
"The UK needs more grid-scale batteries. The growth in renewables demands this and recent events including the recent National Grid outage on 9 August provide confirmatory evidence that batteries can make a difference. The Fund is very well-positioned to build on its initial premise and to grow to significant scale and materiality. The Board and the Gresham House Team have the bench strength, capabilities and experience to create an impactful portfolio of high-performing assets in this sector which is becoming of critical national importance."

Shortly after these results, GRID completed a further placing of new shares raising an additional £42m which brings the total raised since launch to £200m which makes it the leading player in the UK grid-level energy storage field. The company have three further projects totalling 105MW which are due to be completed by March 2020 which will increase capacity to 229MW.

National Grid Control Room


In October, the government (BEIS) announced a consultation on relaxation of planning regulations for utility scale storage which should be a significant boost for this sector as it will mean larger projects over 50MW will be cheaper to progress. The consultation period ends on 10th December so it will be interesting to see what they decide.

The company is due to go XD for a quarterly dividend payment of 1.0p later this week and has a target pay-out of 7.0p for the coming year.

We are due to host the UN climate change COP26 next year and the government will be keen to demonstrate its climate credentials to the world so I am hoping this will give a boost to all things related to renewable clean energy including storage.

This acquisition is not without a degree of risk. The energy market is complex with many players and subject to government policy changes as well as competition from some of the larger energy companies likely to be looking at the increasing attractiveness of this sector. However, the company appears to have established itself over the past year so, as I like to maintain a diverse portfolio, hence the reason for adding this trust to my 'green' collection. My initial purchase was 105p in my ISA.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!