IFN will be itching to offer its new generating combination into the NEM - NSW wind production now firmed and Smithfield otherwise on offer at whatever price IFN sees fit. Visy had been offering Smithfield at $10,000 a MWh, used a mere 95 hours in 2018. Given Smithfield will be firming own-production, likely on a daily basis, Smithfield will be more often available on a hot-start basis than Visy's cold-start offering. See: https://hotcopper.com.au/posts/38716210/single
IFN says financial derivatives for firming are ineffectual below $300MWh, so is likely to offer its physical firming to third parties at around this price. There is no need to offer it to the market for less when it can displace derivatives at this attractive level.
The 23 May Smithfield announcement says IFN has paid cash in full for the facility. The follow up rerating announcement 6 June say IFN has also paid the extra $14m. Full settlement typically transfers operational control. The May production statement shows no contribution from Smithfield. The June production statement due 10-11 July will be most informative.
From next quarter, the Lake Bonney battery will firm SA production. Taken together, IFN will reprice its East Australia production from electricity-only $45-55MWh to firm wholesale prices of $70-90MWh. These operational benefits and financial consequences are transformative. I expect this to be reflected in the share price once analysts do the sums.
BUY
Ash
IFN Price at posting:
46.0¢ Sentiment: Buy Disclosure: Held
