IFN (ASX) Future of energy

Originally posted by Ashentegra: ↑

Agreed, strange.

Anyone wanting to exit their existing windfarms over the next two years will have to do so at a savage discount. Those currently offering WFs for sale (John Laing) have had negotiations abruptly terminated.

The beneficiaries, as you observe, are wind operators with cash, cashflow, access to credit, equity and deep industry expertise. IFN is definitely one of these. Further, credit is abundant and borrowing costs to trusted businesses is now near nil.

I hope RR & team can resist the siren song of utility solar, unless it is dirt dirt dirt cheap on an EV basis - beware assuming others' debt.

The CV-19 induced shutdown of major industrial electricity consumers - including malls, which use a staggering amount of juice - will reduce the demand for and price of electricity. Renew is tracking this new home-office demand profile, though it is too early to show in the stats just yet.

Struggling coal power plants cannot compete at lower price points with renewables' nil marginal cost. Even if Angus Taylor makes them stay open, blown boilers won't be repaired now or later unless on the government teat.

The risks and rewards in the energy revolution were huge before. How do they scale now?

Ash

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Seems lower prices are coming to a grid near you soon!
From the AFR:
"Baseload futures fall below $60MWh
Vesna Poljak
Electricity demand from the grid declined 7 per cent in March, according to Morgan Stanley, as NSW experienced the lowest March demand in NEM history down 6.6 per cent, and South Australian demand was down 11.1 per cent, the lowest on record.Electricity demand has been down.
Bloomberg "We anticipate demand reduction will accelerate for remainder of this financial year, in line with COVID-19 policy measures," the broker said.South East Queensland fell 6.3 per cent last month for the lowest March since 2014, and in Victoria it fell 6.8 per cent, the lowest since 1999.
For AGL Energy and Origin Energy, the decline in demand is relevant in the context of lower-margin commercial and industrial customers."While we anticipate higher consumer demand during this period, on increased working from home, these margin gains could be offset by higher bad debt provisions," Morgan Stanley warned.
What investors should really be watching are 2020-21 base load futures, which have fallen below $60MWh in NSW and Victoria, it said."

Given how undervalued and geo/source-diversified IFN is this will help even the playing field IMO. The price drop may mean traditional fossil source users bow out faster due to a margin crunch which will mean more FCAS requirements at a minimum. Although the spot margin will drop, IFN's base cost for energy is capital cost, management and maintenance only as the wind is not currently charging anybody for the resource it provides.
That means to me that IFN is a very competitive energy provider. It also means hey will be laser-focused on debt and management costs.