SAE Renewables (LON:SAE) Chief Executive Officer Graham Reid caught up with DirectorsTalk for an exclusive interview to discuss key points from their new strategy, Uskmouth & Meygen sites, battery opportunities, and why investors should be interested in the company .
Q1: Graeme, can you tell us what the key points are from your new strategy?
A1: Our strategy really is centred around our two sites, one at Uskmouth and one at Meygen near Caithness. At those two sites we have approximately one gigawatt of battery energy storage systems under development. A key part of our strategy is we’re intending to build these, own and operate them in the future, to give us a long-term sustainable revenue stream.
Q2: What is it that makes these two sites so good for the development?
A2: When you take the Uskmouth Sustainable Energy Park, there’s a couple of factors that make this really superb. The first one is we’ve got access to the grid as we sit here now, and therefore the cost of developing the grid and timing of those connection dates is very, very good. We also have rail access, which is very good for our ESG credentials, so we can obviously reduce the amount of carbon involved in the construction of these new projects.
Q3: Why do you see batteries as an exciting opportunity for the company?
A3: Well, we took the decision a year to 18 months ago to curtail the development of Uskmouth Conversion Project because it had been called in by the Welsh Government. Linked to that, we could see an opportunity to pivot and utilise the asset that we have, which is the site which we own 100% of, and the grid connection and the railway, we saw the opportunity to convert the site or parts of the site into battery energy storage systems. So, that was really the start of things.
Once we got further into it, we realised the value of the grid asset was huge, and likewise that of the railway. Coupled to that, with the government’s targets for net zero 2050 and all the renewables coming online and all the fossil fuels coming offline, it really increased the demand for batteries.
So, the stars seemed to align, we had the site, we had the grid connection, there was the government legislation requirement, etc. so that really persuaded us to move into becoming a battery developer.
Since selling our first project, we’ve now decided that our strategy should be one of developing further projects where we retain an ownership stake, and hence we’re moving into becoming more of an IPP. That is also augmented or helped by our experience on the tidal side where we’ve been an IPP for a number of years.
Q4: So, Graham, could you tell us a bit more about this move to become an IPP, and why it’s a good thing for SAE shareholders?
A4: Well, initially, the first project, as I mentioned, was one that we’ve developed, and we sold, which we needed to generate cash for working capital, and develop future projects. Obviously, once you’ve sold a project, you’ve sold a project, it’s non-recurring so the opportunity to build out Uskmouth to its full potential, which we estimate to be approximately one gigawatt, which will give us a long term revenue stream. If we retain an ownership stake, then obviously the revenues will come through our books, which will, again, increase the value of our company.
I guess the exciting thing also is the initial projects are based around a two hour battery duration, whereas in the coming years, we see that changing to a four hour battery duration. So, all the planning consents, and the site locations that we have at Uskmouth are capable of being grown to four hours so that will give us the long term sustainable revenue growth.
Q5: Now, one of the points you make in this report is around the benefits of the Uskmouth sustainable, and that it’s one site. Can you talk us through a bit more about why that’s a benefit to SAE Renewables?
A5: We have a rich history of activity on the site and we have a number of personnel who’ve been there for many years, who have very, very strong local relationships, whether that’s with the community, or the local authorities, councils.
Linked to that, we have the railway access that exists, which will help us build out these projects and also the access to the National Grid substation, which can accelerate the projects or the bringing of the projects onto line.
Q6: You’ve talked a lot about the benefits of Uskmouth but there’s also a project in Meygen in Scotland. Can you tell us more about that project, please?
A6: The benefit of that project is, we have an option for the land, there is a substation built on the site already, and a grid connection is going to be built in the near future so access to the grid for our 200 megawatt project is defined and contractually established.
Q7: Now there’s rightly a lot of focus in the report around how batteries have helped deliver these great results and provide opportunity going forward. Is tidal still a focus for the business?
A7: The business is very much focused on tidal, albeit we see it as a long-term play. We’re utilising the expertise that we have gained through developing the tidal projects, and the local knowledge obviously we have at Caithness, Meygen, to apply that to our battery energy storage system development.
Q8: Why should investors choose your company to invest in?
A8: I think there’s a whole host of compelling reasons why somebody should invest in our company.
To name a few, we have two really great battery project sites. We have a tidal array, which is the largest array in the world, which we seek to develop from its current 6 megawatts up to 86 megawatts in total.
We have an invested senior leadership team who own a stake in the company, but also bring with them a wealth of experience both in the UK and abroad, developing, and operating projects similar to the ones that we’re talking about.
I guess all these projects give us this long-term sustainable revenue stream.
Q9: You talked about the reasons to invest, what actions have you and the SAE Renewables team taken to get you to a stage where people should be investing?
A9: I think the last three years have been one of really looking at how we can reduce our cost space, reduce our cash burn, but also establish a solid foundation for growth.
So, our strategy we’re launching now is really building off that solid platform and looking at how we can grow our business and grow our revenue streams for the future.
