Thursday 1 December 2022

A New Tax on Renewable Energy

In his recent autumn statement, the Chancellor introduced the Electricity Generator Levy - a 45% windfall tax on the renewable energy sector from January 2023 and set to last to 2028. It is forecast the tax will raise around £14bn over the 5 year period. The windfall tax for the oil & gas sector has been set at the lower rate of 35%. Perversely, the tax does not apply to the profits of our gas-fired and coal-fired power stations.

The new tax will apply to electricity sold above £75/MWh which is around one third of recent wholesale prices. The tax will not apply to revenues from the contract for difference (CfD) mechanism.

The move has been condemned by the renewable sector who say the tax will risk future investment into renewables and hamper the transition to net zero.

RenewableUK's CEO Dan Mc Grail said:"This windfall tax on low carbon power risks deterring investment, at a time when the Chancellor should be incentivising clean energy. Unlike in oil and gas, under this levy companies which are making significant investments in renewables will get no tax relief and will be hit by a higher windfall rate.

"Any new tax should have focussed on large, unexpected windfalls right across the energy sector, instead profits at fossil fuel plants are inexplicably exempted from the levy. Many renewable generators are on long-term, fixed price contracts and most sold their power for this winter over a year ago, so they haven't been making excess profits”.

The Energy Crisis

In August I was becoming concerned about increasing energy bills and took a brief look at some of the underlying causes.

It’s complicated but with sky-high wholesale gas prices and our dysfunctional electricity pricing market which links our bills to the price of gas under marginal pricing, we all end up paying far more because the low cost of renewable energy which accounts for around 40% of the mix is not reflected in the price we pay for electricity.

The government are supposed to be looking into this broken system under REMA but there does not seem to be any urgency. Instead of fixing the pricing system, they have borrowed billions to subsidise the nations energy bills with a pledge to cap average bills at £2,500 per household for 6 months which will then rise to £3,000 from next April.

Of course, we really need more cheap renewable energy capacity to reduce our dependence on gas so it seems very short-sighted to deter investment in new renewable energy just at the time when we should be building on what we have achieved over recent years.

Instead, the government are granting over 100 new licences to the oil and gas companies operating in the N Sea which is not consistent with our pledge to get to net zero carbon emissions by 2050.

My Investments

For several years I have been avoiding fossil fuels and tried to align my portfolio with a more climate-friendly investments. These have naturally included renewable energy as a part of my 'green' allocation.

At this early stage, my renewable infrastructure investment trusts appear to be relatively unmoved by the levy :

The Renewables Infrastructure Group (TRIG) says its net asset value of 134.3p per share on 30 September was broadly unchanged from 30 June. Although the windfall tax knocked 8.1p off NAV per share, with a further 4.7p hit from higher discount valuation rates and currency movements, it said these were balanced by 13.3p of gains from power prices and higher inflation. 

Bluefield Solar Income (BSIF) says its NAV gain would have been 3% in the third quarter but had been reduced to 0.6% by the levy. NAV per share stood at 141.4p at 30 September up from 140.4p on 30 June. Without the levy it would have been 144.6p.

The levy does not apply to generation from battery storage so I assume the likes of Gore Street Energy (GSF) and Gresham House Energy Storage(GRID) will not be impacted by this new tax.

Thrive Renewables is my latest investment and they recently said (blog article)

“While the full details of the levy and how it will apply is still emerging, we are not concerned about Thrive’s ability to continue funding, building and operating clean energy projects. We can, however, see how it will frustrate growth across the renewables sector, especially when renewable energy generators are paying disproportionately more than all other types of electricity generation and oil and gas companies”.

Finally, it looks like small community energy groups will be exempt from the tax which is very good news for the likes of Ripple Energy. I look forward to the completion of Kirk Hill wind farm towards the end of 2023.

So, whilst it looks like some investments will not be impacted very much and others not at all, it is clear that this 45% tax will hamper investment in the renewable energy sector and this is not a great decision by the government. At this early stage it looks like any reductions to NAV of my renewable energy trusts will be offset by gains from higher power prices and inflation but the longer term outlook remains more uncertain and less attractive.

Maybe the best I can hope for is a general election in the next two years and these measures being scrapped by a new Labour government with their plans to make the UK a clean energy power by 2030 with a doubling of onshore wind, tripling of solar and harnessing tidal energy.

Feel free to have your say on this new tax or the energy crunch in general in the comments below.

Friday 30 September 2022

Bluefield Solar - Full Yr Results

Bluefield Solar (BSIF) was added to my SIPP portfolio in March 2019. Its initial focus was purely on solar power in the UK but in 2020 the Company resolved to broaden its focus to include up to 25% in other forms of renewables such as wind and also energy storage and also expand overseas. They have recognised that storage of renewable energy will become a vital part of the transformation towards net zero emissions over the coming years and I certainly think this is a smart move.

In June, the company announced a deal to acquire 109 small-scale onshore wind turbines for £63 million located throughout the UK. 90% have government subsidies and the remainder will be exposed to fluctuating power prices.

Approximately 60% of solar assets are covered by the old subsidy scheme which provides a guaranteed return for 20 years from the date of connection to the grid. The other 40% have rolling power purchase agreements which generally last for 2 or 3 years and are then renewed.


The company has today issued full year results to end June 2022 (link via Investegate). Underlying earnings per share increased by 4.1% to 9.54p and the share price total return including dividends rose by 14.5% due to a boost in the share price from 121p at the start of the period. Total returns over the past decade since launch have been 92%.

The company pays quarterly dividends and will pay out a total of 8.2p for the year which gives a yield of 6.1% based on the current share price of 133p. They have a target of 8.4p for the coming year however, it is worth noting that the board have now de-linked dividend increases from RPI.

BSIF 12m share price/NAV (click to enlarge)

John Rennocks said: 

"It is highly pleasing to report another set of excellent results for Bluefield Solar. With maiden investments into onshore wind and storage, as well as further acquisitions of solar, supported by two successful capital raises, the financial standing of the Company has never been stronger as it enters the FTSE 250. Furthermore, the growth of the Company's development pipeline to over 1.1GW, provides Bluefield Solar with a wonderful opportunity to play an increasing role in the transformation of the UK's energy map.

Over the past year inflation has surged, reflecting higher commodity and energy prices following a recovery in demand from pandemic lows. Since March 2022, Russia's invasion of Ukraine and the continuing conflict there have helped push inflation to levels not seen since the 1980s. The result is current UK inflation, on an RPI basis, close to 12% (CPI 9.4%).

Prevailing opinion among economic forecasters remains that inflation will abate during 2023, but it is possible that price pressures will endure. Since our income grows with inflation, resulting from the indexation provisions in our regulated revenues, increases in RPI boost both our earnings and the valuation of our assets.''


The ability to store excess renewable energy will be the key to a full transition on the UKs path towards net zero by 2050. The government have recently relaxed the rules to encourage far more storage capacity which should be good for the likes of Bluefield. They have excess capacity and spare land which could lead to productive partnerships with storage providers subject to planning considerations.

Over the past year, good progress has been made on the Company's strategy of investing in the future build out of the UK's renewable mix through receipt of planning consent on two ready to build PV plants totalling 80MW and investments into ready to build co-located solar and storage (45MW and 25MW, respectively), as well as standalone battery storage of over 100MW.

Energy Pricing

Increasing electricity demand, as the world emerged from the Covid 19 pandemic, had seen power prices rising steadily but Russia's invasion of Ukraine sent shockwaves through European energy markets, with concerns around the supply of Russian gas to Europe driving a 45.5% increase in gas prices and sending UK day-ahead power prices surging from c.£78/MWh to highs of c.£593/MWh in August 2022.

Navigating such turbulent times requires care, and the Company's PPA strategy of fixing power for between one and three years has allowed it to fix power contracts throughout the period of rising prices. This not only insulates the portfolio from market volatility, as successfully demonstrated during the Covid pandemic, but also enables it to create pricing certainty at increasing levels for up to three years ahead. Evidence of this is seen in the average fixed price achieved for fixed contracts from January 2022 onwards. As at June 2022 the average weighted price for these contracts were £190.1/MWh, £303/MWh for January 2023 and £230/MWh for June 2023. This provides the expectation of over 2 x dividend cover (post and ex-carried forward earnings) in the financial years ending June 2023 and June 2024.


The energy crisis has resulted in power prices reaching unsustainably high levels, putting pressure on every section of the economy. The government is engaging with renewable energy generators to see how the industry can be part of the solution, recognising that the renewable energy sector is well placed to play a major role in creating a long term solution to this crisis. Solar and wind are today the lowest cost generators in the market, their technologies are relatively quick to deploy and they provide indigenous, clean and secure supplies of energy.

In contrast to many of my other holdings... including government bonds, it's been a good year for this fund and the renewables sector generally due to rising energy prices and the knock-on effect of increased inflation. The share price has increased by 10% over the past year from 121p to currently 133p which reflects a discount to the net asset value of 140p. Hopefully it can move to a premium again when the current market volatility settles.

Earlier in the year I added this fund to my ISA and the combined holdings now account for around 6% of my green portfolio.

I believe the longer term prospects remain bright however we have to contend with the uncertainties around new Truss government over the short term. The markets have been in turmoil since the hapless mini-budget last week and I suspect this new regime will not be around for much longer. After 12 years of an increasingly dysfunctional Tory government, the country is ready for a change. Longer term, the renewable energy sector would benefit from a Labour government which has recently pledged to decarbonise our electricity grid by 2030...very ambitious.

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!

Thursday 15 September 2022

ITM Power - Full Yr Results...Disappointing!

ITM Power (ITM.L) designs and manufactures electrolysers which split water to generate clean hydrogen based on Proton Exchange Membrane technology. Last year it opened its new Gigafactory in Sheffield with the prospect of producing 1GW of clean hydrogen each year. It is estimated that the new factory will cut the costs of electrolysers by 40% due to increased automation and economies of scale.

ITM was one of the first additions to my green portfolio back in August 2019.


It has this week announced results for the year to end April 2022 (link via Investegate).

The share price tumbled by 20% on the unexpected announcement that long-standing CEO Graham Cooley was to step down as soon as a replacement could be found. It looks like the rapid growth over the past couple of years has brought a number of challenges that the CEO feels is now beyond his abilities.

Pre tax losses almost doubled to £46.7m (£27.6m 2021) with revenues of just £5.6m following delays to delivery of its new technology to the Linde Leuna factory. Revenues from this project could not be included for the current year and will therefore roll forward to 2023.

Last October the company raised £250m to build two further factories - one in the UK with a capacity of 1.5GW and the other in Germany with a larger capacity of 2.5GW. However, these plans are currently under review and the likely course will be scrap the 2nd UK factory and to expand the exisiting factory from 1GW to 1.5GW.

The company had net cash of £365m at the end of April and is pushing ahead with expansion plans with an anticipated cash-burn of around £120m over the coming year.

Graham Cooley, outgoing CEO, commented :  "There is only one net zero energy gas that can replace methane to help the world address climate change. Green hydrogen can also help to deliver energy security and contribute to food security through the production of green ammonia for fertilisers. 

These abilities have become very powerful drivers for our business as governments seek to accelerate the share of intermittent renewables in their countries' energy mix to address dependence on weaponised gas supply from Russia. Over the last nine months, as the prices of methane and fertiliser have increased, green hydrogen has achieved first parity and then become cheaper in many cases than producing these commodities from gas feedstocks".

"In and since our last financial year, ITM Power has completed a transformational fund raise, won our first project for green ammonia, further developed our technology and production systems and set out a path that will enable us to remain a world leader in electrolyser manufacture. I believe the next twelve months will see the benefits of our position becoming even clearer as governments urgently address their dependence on methane."

“We are on the verge of a major energy and industrial step-change. I describe it as the fourth industrial revolution, one of interconnectivity and automation, powered by Net Zero, and ITM Power is playing a key role in supporting this revolution.

It has been a privilege to lead ITM Power through its transition from an R&D business to a world leading electrolyser manufacturing company. No CEO can remain in place indefinitely and now, as we seek to become a global manufacturing powerhouse, is a good time for me to step aside and hand over to someone with more experience in this area”.

Following the invasion of Ukraine and the reduction in the supply of gas which is being used as a weapon by Putin, the European Commission announced its EU Hydrogen Strategy and its Energy Systems Integration Strategy. The announcement prioritised the development of renewable hydrogen, produced using mainly wind and solar energy. From 2020 to 2024, they will support the installation of at least 6GW of renewable hydrogen electrolysers in the EU, and they have now doubled earlier longer term plans and aim for 160GW of green hydrogen capacity by 2030. ITM with its partners Linde and Snam should be well positioned to benefit from these opportunities.


Hydrogen is the most commonly occurring element in nature and is set to play a defining role in the 'green' industrial revolution as the world moves to replace fossil fuels. It can be stored and used to power long-distant transport such as cars, lorries, trains and ships. It can be used to generate electricity. It can be stored and transported for use at a later date. Green hydrogen made from renewable energy such as wind and solar is a clean source of energy and when used the only emissions are water and heat.

The potential for green hydrogen worldwide is huge but for investors in the individual companies, it remains risky as nobody really knows who will come out on top. The company still has plenty of cash to maintain operations for the next couple of years but needs to find a new CEO to steady the ship and get plans back on track. The share price reached a high point of over £7 in January 2021 but since then has been in steady decline to currently 117p.

ITM 3 Yr Share Price  (click to enlarge)

If the new management can get to grips with the underlying issues of contract delays and strategy planning then we could see a turn around but for now the shares are no more than a weak hold...fingers crossed for a recovery.

In the past few months I have started to take some of the profits from my green equity investments as I move to a more defensive position.

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 listed on AIM can be rewarding but is higher risk compared to collective investments - always DYOR!

Monday 5 September 2022

Thrive Renewables - New Portfolio Addition

In 2018 I started to transition to a more climate-friendly portfolio to bring my investments more closely into line with my values and lifestyle. I was becoming increasingly uncomfortable making profits from companies which continue to make the climate crisis worse. I decided I needed to avoid the fossil fuel companies such as Shell, BP and Exxon and also the big banks which fund their activities.

So, for the past few years I have dropped the global index funds such as Vanguard Lifestrategy and have moved my portfolio over to greener investments such as iShares Global Clean Energy, a range of renewable infrastructure trusts and various smaller companies with a focus on green hydrogen such as Ceres Power.

In addition to these listed investments, I have taken a stake in a new co-operatively owned wind farm via Ripple Energy which is due to be completed later next year and will then provide a significant reduction in my bills from Octopus. Given the developments in Ukraine over recent months with Putin using the withdrawal of gas supplies as a weapon and the crazy increase in our energy bills I think this will turn out to be a very good investment!

So, staying with the ‘alternative’ green energy investment theme, I have recently taken up a small stake in a new share offer from Thrive Renewables (previously Triodos Renewables).


Thrive has been going since 1994 and is all about connecting ordinary people with sustainable renewable energy opportunities. They now have around 6,000 investors - individuals, businesses and organisations - and have established 31 projects throughout the UK including solar PV, battery storage, geothermal, hydro and wind. The combined capacity has generated over 2 million MWh of clean electricity over the past 25 years.

Thrive is cerified B Corporation from 2020 with a score of 110.8 - the highest scoring renewable energy company in the UK. They currently rank in the top 5% of all global B Corps.(link)

New Offer

The company are now raising £5m to fund the next new phase of renewable energy projects via the Triodos Bank crowdfunding platform. The shares are offered at £2.35 - min. 40 shares for £94 and offer a target return of 5-8% p.a. via dividends and share price appreciation. This an unlisted company so the shares in Thrive are not as easily traded as shares listed on the stock exchange with a low cost broker such as AJ Bell Youinvest for example. Instead, once purchased, any subsequent share sales are facilitated via a monthly share auction.

Here’s a link to the Triodos Crowdfunding site for those who are interested in further info about this share offer. It looks like the initial target of £5m is very close and they are now extending this to £7m with a further month to apply.


Each year we see more and more evidence of the devastating impacts from the climate crisis all around the world. This year we witnessed flooding in Pakistan covering a third of the country and affecting 30 million people. Closer to home we have seen the heatwaves affecting large parts of Europe resulting in wildfires and droughts. Climate scientists have revealed that the Arctic is warming at 4x faster than the global average.

As we move towards the end of 2022, many millions of people will be affected by the energy crisis - we may well see the lights go off here in the UK this winter. Average bills were due to rise to £3,549 from October and maybe as high as £5,000 in the new year but in the past week the government have confirmed that the increase will be capped level of £2,500 from October for a period of two years. Even this will be more than double the average of just a year ago...the energy market is clearly no longer fit for purpose and in urgent need of reform.

Unprecedented flooding in Pakistan

The climate scientists have been warning of the consequences if we fail to reduce carbon emissions and now we are seeing the effects of this failure to take decisive action. We need to start to treat this like the emergency it has become and commit to end our reliance on fossil fuels and transition quickly to a more sustainable system based on a range of renewable energy solutions combined with measures to insulate our homes and factories to conserve energy.

Obviously an investment in Thrive Renewables will only have a small impact on the climate crisis. However, the more people that invest in these sustainable solutions, the quicker we can transition to a less threatening world. Business as usual and continuing to rely on fossil fuels is no longer an option. Never before has it been so important to accelerate home-grown renewables and reduce our dependence on expensive, climate destroying fossil fuels.

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!

Tuesday 9 August 2022

Big News on Climate in the US

The US Senate have now approved the Inflation Reduction Act - a landmark piece of legislation which includes $369bn of tax credits and support, the largest in American history, for a range of measures which will reduce carbon emissions by up to 44% by 2030 and keep the US on track to achieve its goal of net zero emissions by 2050. This is less than the 50 - 52% reduction promised by Joe Biden last year but it has been a difficult 12 months trying to get everyone in his own party on board. 

However, there is no doubt this is a big deal for the climate as the US is responsible for around 15% of global CO2 emissions...second only to China with 28%.

The bill will transform how Americans generate and use their energy and should shape their climate change and industrial policy for decades into the future when formally passed by the House in the next few days.

The legislation will provide billions of dollars for the expansion of solar and wind power production adding an additional 550GW which will more than tripple clean energy production to power over 100m homes. Here’s a summary of the main provisions (pdf).

Of course, investment from the federal government on such a massive scale will give more confidence to attract much more investment from individual states and the private sector in green energy. Some commentators are suggesting this could be as much as $2 trillion.

INRG 3m Share Price

Obviously this will be a welcome boost for the renewable energy industry. The likes of iShares Global Clean Energy (March update) holds many of the US based companies - Plug Power, Enphase, Solaredge - that should benefit from this legislation over the coming years so that’s one I will be holding long term.

Monday 1 August 2022

The Energy Crisis - A Few Thoughts

I’m no expert on energy but in recent months I have been concerned about my ever-increasing energy bills so I decided to take a look at what’s causing these’s a few observations.

So, we have an energy crisis which will cause real hardship to millions over the coming winter months. The latest forecast from BFY suggests that the average family could be paying close to £4,000 by January compared to a price cap of just £1,270 earlier this year. That would be around 40% of the average state pension.

Millions of people will be forced into fuel poverty - you would need a household income in excess of £40,000 to not be caught!


The government can throw billions at the problem to try and help the poorest households but it seems they are unable to offer a long term fix. That’s mainly because this is a global energy problem and the price of oil and more so gas has risen dramatically all around the world. Energy is a global commodity and although the markets are very complex, the bottom line is that it's basically a supply and demand equation and energy is sold to the highest bidder...and when its in short supply - partly because Russia controls a significant proportion of oil and gas - the price goes up.

Wholesale price of gas rises 5x

Of course the big beneficiaries are the countries and big oil companies that extract and supply oil and gas - so USA, Russia, Saudi Arabia and then the likes of Shell, Exxon, BP and Chevron with combined profits of $50bn in just the past 3 months on the back of the high oil and gas prices.

Unfortunately, here in the UK we import most of the oil and gas we require...for example last year we imported 60% of natural gas and with the huge increase in prices this year, it works out at around £70bn which is around 3% of our GDP and roughly equivalent to the amount we spend on education.

The Grid and our Bills

We have made good progress on expanding renewable energy such as wind and solar over recent years. It currently accounts for around 40% of our grid energy. However it is intermittent so we continue to rely heavily on gas and nuclear for baseload energy to ensure continuity and grid stability. We rely on gas for a further 40% of electricity generation with 85% of homes using a gas boiler for heating and hot water.

With our system, gas usually determines the price we pay for our electricity. We have just one market in the UK for electricity which is traded every half hour between suppliers and utility providers. The price will fluctuate according to demand and variable factors such as wind generation. Renewables are the cheapest so they will always be snapped up first followed by the next cheapest which is nuclear/biomass but then the balance of of our requirements at any particular period will have to be gas which is the most expensive. 

credit: Good Energy 

Under the current system, the price we end up paying in any half-hour period is determined by the marginal cost of the last generating unit to be turned off to meet demand...which is inevitably a gas-fired power plant with high marginal costs. Even if we double our renewables capacity to 80%, we would probably still end up paying high bills determined by gas under this system.

So What Can be Done?

Well, one solution would be for the government to bail out every household with continued support - say £3,000 for each household but with around 30m homes, that works out at £90bn per year which is not far off what is paid for state pensions! Maybe it could do this for one year but these high wholesale energy prices could well continue for several years.

We could speed up the roll out of cheaper renewable energy but we are realistically looking at a decade but the faster we become less reliant on imported fossil fuels the better and certainly this is what we should be doing anyway to tackle the climate crisis.

Insulating our homes will dramatically reduce energy use in the winter months - this is relatively cheap and quick so really is a no-brainer.

Heat pumps are around 3x more efficient than gas boilers so it makes sense to speed up the roll out of UK-made heat pumps.


Whoever becomes our new PM next month will be faced with some very urgent issues but the most pressing will be to provide more support this winter on top of the measures already in force to cope with surging bills. At the same time they will need to urgently look at the way our electricity is priced and find a system which more fairly reflects the lower costs associated with renewable energy. The government’s energy department have recently started to look at reforms to the electricity market that would stop volatile gas prices setting the price of our energy supply.(REMA)

Of course, the only long term fix is to move quickly to reduce our dependence on imported fossil fuels and to generate and store much more of the energy we need from renewables. This will take time so we should find ways to use less energy and certainly a public information and education campaign on the simple ways to immediately save on energy would be a good start.

The Boiler Upgrade Scheme was introduced in April giving us a £5,000 towards the cost of a heat pump but the take-up has been slow and the public are skeptical on the benefits. The scheme should be extended to cover the installation of solar PV and back-up storage which would be far more cost effective and certainly quicker than new nuclear power.

So, more immediate financial support, change the structure of pricing, a speedy transition to renewables and a move to energy independence.

We have many of the solutions to these issues but currently lack the political will to implement them so I am not so optimistic for the next couple of years of any significant changes.

As always, if you have any thoughts on this subject, feel free to leave a comment below.

Tuesday 26 July 2022

Gore St Energy Storage - Results

Last year, the government decided to up its ambition on climate change and pledged to reduce CO2 emissions by 78% by 2035 and totally decarbonise our electricity grid by the same date. This will basically mean less oil and gas and much more renewable energy. More wind - both offshore and onshore and more solar...however the drawback is intermittency so energy storage will be fundamental to the growth of renewables to facilitate this transition.

I’m sure the recent heat waves and wildfires throughout Europe combined with the energy security issues resulting from the Ukraine war will act as a wake-up call to push ahead with the transition from fossil fuels to renewable energy.

Here in the UK, renewables currently provide over 40% of our grid energy - up from just 5% a decade ago - and this will only increase as we move to electric vehicles and heat our homes and offices with heat pumps.

There are several ways of storing energy...battery, pumped hydro, flow and hydrogen. National Grid estimate that we will need 50GW of energy storage capacity if we are to achieve net zero emissions by 2050 so quite an increase from the current 1.6GW (link).

Surprisingly there are still only the three energy storage plays in the UK renewable infrastructure sector - Gresham House (GRID) which joined my portfolio two years ago, Gore St Energy Storage which was added last year and newcomer Harmony Energy Income (HEIT) launched last November.

The Set-Up

The fund invests in a portfolio of utility scale energy storage facilities located throughout the UK (296 MW) and Ireland (310 MW). The fund will have a combined stored capacity of 669MW when the latest acquisitions come on stream later this year. This is rapid growth compared to the 29 MW capacity at launch back in 2018. The majority of operations are in the UK/Ireland but the company has recently moved into Germany (22 MW) and the Texas, US (40 MW).

The biggest drawback of wind and solar is intermittency which is a big problem for the Grid which has to provide constant and predictable power output throughout the nation. These facilities provide energy storage for the National Grid and help to provide more stability and flexibility for the entire grid system. The majority of revenues are from frequency response services to the grid. This is mainly dynamic containment which is designed to give a rapid response to significant frequency deviations and then balancing mechanism which is the energy platform used by the grid to buy and sell electricity and manage the system in real time.

As we have witnessed this year following the war in Ukraine, wholesale energy prices have been volatile with gas increasing five-fold due to increased global demand and a reduction in supply from Russia which has weaponised energy in retaliation for sanctions imposed by Europe and the US. This volatility has resulted in a boost to normal revenues for the energy storage sector. This volatility is likely to continue for some time due to the conflict in Ukraine so it will be interesting to see the effect for the energy storage market. 


The company have today released results for the full year to end March 2022 (link via Investegate).

Net assets have increased by 6% per share to 107.1p and share price total return is up 11% over the past year.

Alex O'Cinneide, CEO of Gore Street Capital, the Company's Investment Manager, commented:

"I am pleased to report that the Company continues to enjoy a sustained period of rapid growth, responding to the pressing and global increasing need to enable the energy transition to a low carbon society through energy storage solutions and in the process, further diversifying our portfolio for shareholders. We have achieved this through a mixture of financial and operational success, raising additional capital via highly successful, oversubscribed fundraises, from both institutional and retail investors; as well as delivering on our strategy, first laid out in our IPO of 2018 when we defined this category of investing, of building the industry-leading international portfolio of energy storage assets, now totalling 628.5 MW.

The global transition to clean and renewable energy generation continues to be a dominant priority for governments both domestically and internationally, and our assets play an important role in supporting energy security and the transition to a low-carbon society, as well as creating substantial value for shareholders”.

The company recently raised £74m from a share placing (107p) which will be used to expand the operation with an expected 1GW of capacity in the US and Western Europe.

GSF 3 Yr Chart

The trust is attractive to those seeking income and pays 7.0p  in annual dividends (paid quarterly) which gives a yield of 5.7% at the current price of 123p.


The global transition to clean energy is now becoming a priority for governments in the UK, Ireland and globally. This has become even more urgent following the invasion of Ukraine and the threats to European energy security with Putin weaponising the supply of oil and gas. Energy storage is likely to expand rapidly over the coming decade and will play a pivotal role in the green transition.

One of the factors to be aware of are charges which are relatively high - 1.7% last year (which included 0.4% performance fees) compared to 2.0% in 2021. I hope it will continue to become a lower percentage as the company grows. The share price currently trades at a premium to NAV of around 14% which seems to be par for the renewables sector.

The trust is not as sensitive to power prices compared to the likes of the wind/solar infrastructure trusts but benefit more from price volatility which is likely to increase as we continue to reduce our dependence on fossil fuels. The shares were purchased at 115p last year and I took advantage of the offer/placing in April to top up at 110p. They currently account for 5% of my green portfolio.

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!

Monday 11 July 2022

The Market Risks are Growing...

The other day I was reading the weekend Monevator post and reflecting on the feelings of discomfort experienced by the author due to the current falling market. The Investor has become more mindful of wealth preservation during the current downturn and is trying to work out how to feel emotionally more secure about the assets he has built up so far. What crystallised my own thoughts around this post was the statement that he maintains the belief that the market will always bounce back...and I’m thinking, sure they always have in the past, but....

I’ve been at this investing game for three decades and along the way I’ve seen many ups and downs and had more than a little success with returns as well as a fair few failures. But on the whole, the past decade has been good with an average annualised return of around 9% each year. Last year saw the first negative return for my portdfolio -6% and the current YTD is -12% but could well end up lower. But prior to that there were two really good years... 22% in 2019 and 44% in 2020.

My basic philosophy has always been to buy and hold long term and also to take advantage of market falls to pick up bargains at knock-down prices. This was especially lucrative during the sell-off of 2008/09. We now have another bear market with the S&P falling back over 20% year-to-date...the worst half-year drop EVER (link) The Irrelevant Investor is convinced that the markets will bounce back.

However, this period feels different and I have not been tempted to dip in to pick up ‘bargains’. There are so many negative forces in play that I am not convinced the markets will be seeing a bounce back anytime soon.

Negative Forces

We have increaing geopolitical tensions - obviously the invasion of Ukraine which could play out for another year or more. How will Putin respond to Finland and Sweden joining NATO? But also the tensions between the US and China over trade and the situation over Taiwan. 

Then we have rapidly rising global inflation combined with record debt levels - highest since the end of WW2 - which will put a damper on economic activity and deter new investment.

The cost of living crisis is obviously a concern for millions of ordinary people woried about rising energy and food bills and the sudden reduction in disposable income. The UK energy cap is forecast to rise to over £3,300 by the end of the year...that’s a third of the state pension.

Last, but by far the biggest and most serious negative in my opinion, is the climate crisis and biodiversity loss. Governments seem unwilling or unable to get to grips with this issue and take co-ordinated global action to reduce carbon emissions. 

If governments were serious about addressing the climate crisis, they would eliminate subsidies to the fossil fuel industry and create a more level playing field for renewable energy. Unfortunately, according to the IEA report for 2021, we subsidised the fossil fuels to the tune of $440bn last year, almost back to 2018 levels. Fossil fuels account for 75% of the emissions which are responsible for global warming.

It’s almost a year since the IPCC published their ‘Code Red for Humanity’ report showing how close we are to a multi-faceted global catastrophe as a result of climate breakdown. Unfortunately there has been little progress over the past year and the warming continues...we are on the brink and the global economy will not be immune from the consequences. The UN Secretary General said “The climate crisis poses enormous financial risk to investment managers, asset owners and businesses”.

What Action to Take?

In the face of all these negatives, it would be easy to dismiss the emotional response and just keep doing what I’ve been doing for the past 30-odd years. We’re in a bear market, they come around every 10 or 12 years...ride out the storm and wait for the markets to bounce back...they always do - don’t they? 

This time though it does feel more serious and things could get much worse and I don’t hold a lot of confidence in a bounce back any time soon.

So, I believe the best course of action is to start to de-risk the portfolio and to reduce a large proportion of the more risky equities.

After all, what’s the point in analysing a situation but then taking no action to mitigate the fallout should that analysis prove to be accurate?


I like investing, it’s something I can do quite well and along the way I have been relatively successful. After so many years I’m reluctant to stop. But it’s not something I am addicted to...if I decide to move on to other things, I’m not going to experience withdrawal symptoms.

My fears may be overdone, but at the end of the day, the reality remains that I don’t actually need to carry on investing - I don’t need to generate more income or capital gains - I have my home, I have a guaranteed income from my pension and certainly enough for my modest needs.

The future risks of staying in the equity market seem to have increased significantly in recent months. So for me, in a very uncertain market, it makes perfect sense to move to cash, even though the returns will be eroded by high inflation.

I’ve had a good run over the years, but I’m not greedy for even more so now feels like the right time to lock in some of the gains. I’ve made a start in the past few days with the sale of some equity holdings but will probably hang on to the renewable energy trusts, government bonds and defensives for the time being.

As always, feel free to share any feedback or thoughts generally in the comments below.

Tuesday 21 June 2022

SIPP Drawdown - Yr 10 Update

It's June, another 12 months have rolled by so it must be time to review my SIPP drawdown portfolio at the end of its 10th anniversary. Here’s a link to the previous update of June 2021.

The original plan when I started drawdown in 2012 was to generate a rising natural income from which I would withdraw 4% income. This would bridge the 10 year gap between early retirement at age 55 yrs and state pension.

In 2018 my state pension kicked in - currently £9,500 p.a. after a 3.1% uplift in April - so I am no longer so reliant on income from my SIPP which means I have more flexibility on investment choices. I am wondering if this government will honour their pledge to raise state pensions in line with inflation this year!

Portfolio Changes

My efforts to move towards a more climate-friendly portfolio are well documented and this includes my SIPP drawdown portfolio so there have been a quite few changes over the decade.

I have tried not to make too many changes this year - I have held TRIG and Bluefield Solar and added Greencoat UK Wind. I have my global clean energy ETF and my two technology trusts.

However, my main focus over the past 12 months has been to pull back a little on individual equity holdings, increase defensives and top up collectives - and therefore the sale of the likes of Vestas Wind, Plug Power, Enphase, Sunrun and Invinity... a reduction of individual holdings in ITM Power and Orsted, a reintroduction of the ‘steady Eddie’ Personal Assets Trust, the addition of iShares Gold and a top up of the iShares fossil-free global index ETF and also the index-linked gilts ETF.

(click to enlarge)

My portfolio currently consists of a mix of green investments, technology, gold and government bonds.


The big story over the past year has obviously been the invasion of Ukraine. It has been an inspiration to witness the strength and unity of the Ukrainian people to stand up to the huge Russian war machine against all the odds. Unfortunately this conflict has triggered a global food crisis, rising energy costs and of course inflation is rising and this has resulted in a lot of uncertaintainty and instability - especially around security of energy.

The conflict should speed up the efforts to transition to clean renewable energy and the EU have announced their plans to end its reliance on Russia’s oil and gas and speed up its roll out of alternatives. However in the short term we have sharply rising inflation - CPI hit a 40 year high of 9% in May - also the cost of living increases from the likes of transport, food and rising energy bills. Last week the Bank of England increased interest rates to 1.25% - the highest level since early 2009 and more hikes to come later this year. The cost of borrowing is rising sharply so inevitably people will be prioritising essentials and cutting back on the goods and services they consider they can manage without. This will impact the wider economy and many sectors of the market have seen quite a pull-back these past few months.

Interest Rate Rising Quickly

The oil and gas sector has benefited with huge profits declared from the likes of Shell and BP. In contrast the tech stocks are down 25% YTD, the popular Scottish Mortgage Trust is down 45% but also the traditional safe-haven of government index-linked gilts have also fallen back over 20% which is a bit baffling given the steep rise in inflation. I have a feeling we are now in bear territory which may play out for some time and I hope the larger allocation to defensive positions such as gold, government bonds and Personal Assets can help to preserve some of the gains made over previous years.

The situation in Ukraine combined with the global consequences is naturally dominating the news but the climate crisis continues to throw up more and more challenges every week - more flooding, more heatwaves and more wildfires. Unfortunately our political leaders and policy makers show little signs of acknowledging this crisis and acting decisively to address the issues. The momentum and promises made at COP 26 last year are soon forgotten. The UN Secretary-General says we are on the fast-track to climate disaster and an unlivable world. (link to video)

But getting back to the portfolio...I have had some excellent returns from some of my clean energy holdings. For the year to December 2020 my green portfolio returned over 50% but the green sector and techs have struggled this past year and the SIPP portfolio has failed to make progress. It’s been very mixed...Gresham House Energy Storage is up 30% and my iShares Gold ETF has gained 20%. I took some profits on ITM last year but the share price is currently down by 40% and my L&G Hydrogen holding is down 25%. Overall, with a small loss of just 6% since last June - in the current climate, not bad all things considered.

Here is the current portfolio

(click to enlarge)


In June 2012 when I started this series on my drawdown journey, the FTSE 100 was 5,500 and has risen to 7,120 - a gain of just 29.5%. If we add in average dividends of say 3.8% each year, this gives a rough total return of 68%

In June 2012, the Vanguard LS 60 (acc) price was £105 and today stands at £205.90 - down 7.9% over the past 12 months but a gain of 96% over the decade and CAGR annualised average of 7.2% p.a.

Taking account of the income withdrawn over the earlier years of £19,400, my self-managed SIPP total return including income is 160% which is very satisfactory and works out at an average annualised return of 10.2% p.a.

The past decade has been a relatively favourable one for investors and I am sure many will have generated some good returns...I’m not so confident the coming decade will be so kind so I need to give a little more thought to capital preservation rather than going for more growth. Obviously it helps that I no longer require income from my SIPP.

State Pension

I relied upon income from my SIPP to supplement my ISA income and bridge the 10 year gap between early retirement at age 55 yrs and state pension. This part of the journey became 'mission accomplished' in 2018.

My state pension has now been in payment for just over four years which is long enough for me to know that I do not need to continue with drawdown of income. As it is a flexi-drawdown arrangement, I can always dip in at any time for a lump sum withdrawal if required. I will therefore be less reliant on the income from my SIPP and it will very likely remain invested. When I took a look at inheritance tax last year, I realised it would be more tax efficient to take money from my ISA in future as the SIPP value does not currently count towards the £325,000 tax-free allowance for IHT.

Also, unlike an annuity which, once purchased means the capital lump sum is lost forever, any residue in my SIPP will pass on to my children and free if I go before the age of 75 yrs and thereafter possibly 20% or tax free depending on circumstances. For those interested here's a link on the AJ Bell site.

Summer Solstice

Obviously I am really happy with a decade of self-managing a flexi-drawdown sipp portfolio. For the first few years, the dividend income predictably rolled in much as planned. During the next few years I withdrew significant lump sums tax free and placed the excess which I did not require for income in my ISA.

Since 2018 I have taken no income from my SIPP. The starting sum was £62,000 so the pot has more than doubled in value over the past 10 years but, as I say, I am not so confident that will be repeated over the coming decade. Maybe a little more growth but I think my main focus will be trying to maintain value in real terms after taking account of rising inflation. Hopefully the pot can be inherited by children and grandchildren possibly tax-free at some point in the future if not needed for care home fees!

For me, the big advantage of the SIPP is the flexibility it offers. I started off with a portfolio of income-generating investment trusts. I then introduced the multi-asset, globally diverse index funds such as Vanguard Lifestrategy and now I can focus on more climate-friendly options and do my bit for the planet. It certainly feels much better to have aligned my investments with my values and lifestyle and know I am no longer investing in fossil fuels which are continuing to add to global warming and undermine efforts to tackle the climate crisis.

If you are managing your SIPP (accumulation or drawdown) or you are planning to do this, or just want to comment generally - feel free to share your thoughts in the comments below.

Thursday 9 June 2022

Personal Assets Trust - Full Year Results

This 'Steady Eddie' capital preservation investment trust was added to my portfolio back in 2013...sold a couple of years later but then re-purchased in 2020 as I was re-evaluating asset allocation following the Covid-19 shock to global markets. Given the unfolding situation in Ukraine this year, it’s looking like one of my better investment decisions.

It’s policy is to protect and increase the value of shareholders funds over the long term and the manager Seb Troy and his team aim to achieve this with a mix of diverse assets including global equities, government bonds, gold and cash.

Troy are committed to maintaining high standards of responsible investment and since 2019 have been members of several climate change associations including The Institutional Investor Group on Climate and Climate Action 100+.

In the past, I have also held Capital Gearing Trust but as it has a significant holding in fossil fuels, it is currently excluded from consideration.


The trust has this week published results for the full year to end April 2022 (link via Investegate)

Over the past year, net assets have increased by 7.1% (total return) compared to 8.7% for the FTSE All Share index. Over the past 3 years the returns were 26.3% and 14.1% respectively. The trust's share price is maintained close to NAV and the price has increased by £20.00 to £491 since April 2021.

Commenting on the results, investment manager Seb Lyon said:

“How do we invest amid these febrile conditions? We have been warning for some time that the barbell 'balanced' portfolio strategy of putting nominal bonds alongside equities is long past its sell-by-date. The short-term negative correlation between the two asset classes has been of great value to asset allocators in diversifying portfolios and producing consistent returns. Bonds have thrived on the back of low inflation and low growth, whilst equities performed during periods of improved economic activity. Over the course of decades however, falling interest rates supported ever-higher valuations for equities and bonds alike.

Today, the short-term negative correlation between the two asset classes seems to have broken down. In a new regime of higher inflation, the risk is that bonds and equities fall together. For this reason we have long preferred index-linked bonds and gold bullion, over conventional bonds, and they have held up relatively well in the recent bond market sell off and should thrive in a negative real interest rate environment, also known as 'financial repression'.

Investors are warned that 'past performance is no guide to the future'. The biggest mistake investors can make is to extrapolate historic earnings, share prices, or valuations. Money illusion, the tendency for people to view their wealth and income in nominal terms rather than recognise the real value adjusted for inflation, is hard to resist. This is the mirage between the nominal and the real and will be the enemy of investors seeking returns ahead of inflation. We will endeavour to continue to preserve and grow shareholders' funds in real terms, but we are under no illusion as to the scale of the challenge ahead”.

The trust has paid a small dividend of £5.60 p.a. (paid quarterly) for several years and this year will pay out an additional £1.40 as a result of the higher than expected income from US inflation bonds. The forward yield is 1.1%.

Ongoing charges are 0.67%.


 At the end of the period, asset allocation remained defensive with liquidity at 62% (cash, gold and bonds etc.). Currently equities make up 38% - down from 46% last year - and top portfolio holdings include Microsoft (5.0%), Google (4.7%), Unilever (3.2%), Nestle (3.1%), Visa (4.1%) and Diageo (2.8%). US index linked bonds make up 36% with cash and UK treasuries a further 17%. Gold Bullion accounts for around 9.5% of the portfolio.

The trust will make it much easier for investors to acquire shares via a 100:1 share split after which the purchase price will be nearer to £5.00 per share rather than £500!

The shares were re-purchased for my portfolio at £432 and have advanced to currently £491.

PNL v FTSE AS Index past 3 yrs

The decision by Putin to send troops into Ukraine in February has created huge global uncertainties. With rising debt levels resulting from Covid, global energy price increases, food and inflation on the rise, the invasion of Ukraine and the threats posed by climate change, I think in these uncertain times it's probably a sensible idea to think about the potential downside of the markets and with an eye on capital preservation. 

The shares are held in both my SIPP and ISA and make up around 12% of my portfolio.

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!

Friday 27 May 2022

Greencoat UK Wind - Update

This renewable energy trust was added to my portfolio in late 2019 to sit alongside TRIG and Bluefield Solar.

UKW is one of the largest renewable infrastructure trust with a market value in excess of £3.2bn and a constituent of the FTSE 250. The trust operates a portfolio of 44 onshore and offshore wind farms throughout the UK. The trust was launched in 2013 and over this period, returns for investors including dividends have more than doubled making it one of the best performing trust in the renewables infrastructure sector.

The trust pays quarterly dividends and aims to maintain payments at least in line with RPI inflation. The company's target is for a total shareholder return including dividends of 8% to 9% per year which it has exceeded since launch.


UKW has recently announced results for the full year 2021 (link via Investegate). 

Net assets increased by 40% to £3.1bn (£2.2 in 2020) and generating 2,933 GWh of clean electricity which was 20% below budget as a result of lower wind speeds. However power prices were much higher than anticipated as a result of the surge in gas prices in the second half of the year.

Total return for the year (dividend + net asset appreciation) was 15.4% which includes dividends of 7.18p paid quarterly.

Dividends should keep pace with inflation and the target for the coming year is increased by 7.5% to 7.72p (based on December RPI) which gives a forward yield of 5.1% based on the current share price of 150p.

UKW raised a total of £648m over the year from two oversubscribed placings which has been deployed in new acquisitions. The latest is a 12.5% stake in Hornsea 1 which is the world’s largest offshore wind farm located around 80 miles off the Yorkshire coast in the North Sea.


World's largest Offshore Wind Farm

The renewable infrastructure sector has held up reasonably well these past few months. In contrast, my technology shares have dropped around 20% year-to-date. The energy crisis is likely to prevail for some time subject to the situation in Ukraine, inflation will also remain higher than the 2% we have become accustomed to over the past's forecast to peak at 10% this year in the UK. Then there is always the climate crisis to address. I think on several fronts the likes of UKW have an advantage so I will continue to hold for the foreseeable future.

UKW - SP now close to net asset value...

Over the past couple of months, energy prices have risen by around 30% which will mean more cash coming down the line for UKW which should be a significant boost to net assets by the year end and into 2023. For this reason I have recently topped up my holding in UKW which currently accounts for around 8% of my green portfolio and is one of several renewable energy infrastructure trusts which make up just over one quarter of the portfolio.

Under the renewables obligation certificate (ROC) arrangements, around half of UKW revenues are effectively guaranteed until 2037 and going forward they will likely take advantage of long term contracts for difference which again fixes the prices of the electricity generated. More homes and businesses receive clean energy whilst more carbon dioxide from thermal fossil fuel generation is displaced and investors receive their relatively safe 5% inflation-proofed income...a win, win all around!

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!