Start with a fact.
The cost of new renewable projects have been effected severely by inflation.
This means governments need to offer more subsidies. In reality this goes on the electric bill wherever you use it or not. The uk government is supposedly offering to increase the subsidy but supposedly by an insufficient amount. Again it goes on, as far as can make out, on your electric bill. Something i doubt that any government wants to do at the moment.
I have been reading a lot about wind farms being cancelled or likely to be cancelled.
The Thomas loyd energy impact trust (now asian energy impact) being an example of inflation making a project a very very poor investment. Its a solar aray in India.
Also Siemens wind turbine manufacturing is in financial trouble and is going to be bailed out by the Germans.
This article doesn’t mention the UK and appears to be anti renewables but everything is factual in relation to cancelling projects.
The question to ask yourself is what effect does it have on built and paid for projects?
IE investment trusts in the renewables sector on huge discounts.
They wont get more subsidises but what effect will it have on the valuations?
I have a view, whats yours?
Some of the discounts in this sector are mighty tempting and I’m sure there are bargains to be had.
Which would be your picks of the bunch?
I’d steer clear of the esoteric ones as I’m wary of value traps and investing in what I don’t understand.
I do like the idea of UKW and BSIF at a 50:50 ratio as they’re well established and have a good record over longer time frames.
Any ideas why there’s such a disparity between the broader trusts like TRIG? JLEN’s been on a 30% discount lately after a 20%+ price fall, but ORIT seems to have held up remarkably well.
I like DORE but not available on here.
I have TENT on a massive discount and loss to me. Great dividend and discount. Own because it pays a large amount of its income as interest. In other words in part its a debt fund. Run of the river hydro and lots of others thrown in. Problem is its to small. The small ones are getting hit hard.
I have recently bought gcp Infrastructure but it is all debt (not paying anything as interest though). Odd discount as it is large and similar to Sequoia which again is all debt but lower dividend and discount.
GCP does have debt about 10%. Has decided on buybacks instead of only paying down debt.
I have also added SEIT yesterday. They do own assets i couldn’t find reason not to buy them. Big discount big dividend big company.
Not made my mind up on others yet.
One reason is i don’t want to have a big portfolio.
The private equity is still a bargain and i have a reit (SOHO) which i am still tempted to invest more in. Its basically the only reit that i am happy owning.
UKW is on my list as well. Large and as you say proved itself
Same, but I have a slightly irrational fear of such high yields.
It’s a simplistic view, I know, but if a company’s kicking out a near-10% income, I always think, perhaps wrongly, that its business model can’t be that great/growthy – else it would be reinvesting.
It’s more than that though. As much as I love a bargain, I think the importance of discounts is overdone.
I have a 30-year horizon (hopefully) so, more than anything, I try to focus on how I think the assets will perform over the long run and consider a wider-than-usual discount as a bonus.
This is a big one for me. I own too many as it is. I’m minded to rationalise them, as I’ve doubled up in some sectors, and hone in on the ones I’m most confident will outperform the ACWI in the long term.
