IFN energy trading opportunities

In the Smithfield presentation, IFN states it will substantially increase its energy trading activities by contracting the output of other existing intermittent renewable producers. With Smithfield it has the capacity to 'firm' a further 300-400MW of production. In combination with the Lake Bonney battery, likely considerably more.

It already has 'capital lite' contracts with Kiata 31MW and under-construction Cherry Tree 57MW (both Vic), and points to a similar arrangement for the next likely project, the shovel-ready Forsayth 75MW (Qld). There is already a natural hedge in operating all these geographically diverse producers through one control point, with coordinated bidding and managed despatch.

Further, there seems to be plenty of capital available to build wind and solar farms, though not so much interest and expertise in firming and trading, despite the considerable margin capture this level of activity provides. I see less interest in solar as it competes directly with price-insensitive household rooftop installations.

Here is Danske Commodities doing similar elsewhere:
https://www.reuters.com/article/britain-wind-danskecommodities/danske-commodities-takes-over-trading-of-281-mw-in-uks-dudgeon-wind-farm-idUSL8N24H19Y

IFN already plays the bidding and arbitrage game from its control room. We retail holders cannot know whether it has real skills in this area, though IFN does have plenty of experience. Adding more kit - wind farms, batteries, synchronised condensers, OCGT gas or pumped hydro storage - to its mix, whether owned or managed, broadens and enhances its optionality, including playing in the financial futures sandpit.

Expect more trading management announcements and IFN to hold considerably more liquid assets in the future as this strategic opportunity unfolds.

BUY

Ash