Minesto - predictable tidal energyOcean power
Hydro power is still the biggest renewable energy source with 1 132 GW of world total power capacity. Ocean power however, and I am not talking about wave energy (not predictable), but tidal energy is an untapped predictable energy source with an global expansion potential of 600 GW which has an estimated value of $ 167 billion .
Minesto is one of a few companies that is unlocking this vast source of renewable energy.
But first, I want to talk more about solar- and wind power and I will get back to Minesto. So stay with me.
More solar- and wind power, that is good, right?
I am convinced that everyone knows by now that the pressure on politicians globally, to accelerate an energy shift towards a CO2 net zero using green energy, such as wind power and solar energy, is currently neither well thought out, nor feasible in a good way.
Without energy storage from the produced wind power and solar energy, it only creates instability in the energy power grid.
2021 has been a year that clearly has shown just that. China is world leading in producing renewable energy to the power grid and had a lot of issues this year. Clean energy has created an irregular supply of power in China. Extensive power outages have disrupted factory production around the country and Chinese energy producers have had a tough time dealing with the sharp decline in production because of this irregular supply of power. Europe have the same problem. As renewable energy grows, so does the instability on our conventional grids. Why?
Conventional grids
Our energy has since the first half of the last century, given us electricity from coal, oil, and natural gas. The production of this power is according to a scheduled and centralized system, and has given the society grid stability most of the time. These conventional grids, have synchronous generators to support their stability. For a power grid, to remain stable, it needs to respond to volatility in voltage and frequency disturbances.
Renewable energy
There needs to be a balance in production and consumption within an electrical grid. To achieve stability, the energy generated must be equal to the energy consumed. There is a couple of things that is a challenge for conventional grids with the renewables.
- The frequency and voltage produced from solar and wind are unreliable. The time of day and the weather conditions continuously affect power production.
So, “unreliable” energy sources don’t fare well with conventional grids, and that is a big issue.
- The capacity that matches the inflow and outflow of power becomes more easily overloaded during peak hours and the existing transmission lines have their specified capacity, and if this limit is exceeded, thermal loads will build up, leading to damage. This can easily happen if producers generate too much power without warning, causing an overloading in the transmission lines.
- Demand and supply mismatch is also a big issue. Homes, offices and buildings need electricity to run their business and everyday life, regardless of whether the sun is not shining or the wind is not blowing.
Solution for renewable energy
Energy storage technology and the implementation of smart grids is the solution to this problem. The development has progressed, but not fast enough and out of sync in which we now see the consequences.
Now back to Minesto, OMXSTO:MINEST.
Minesto and tidal energy
Minesto is a Swedish company. Their Deep Green technology produces electricity from slow tidal streams and ocean currents by a unique principle. By sweeping a small turbine across a large area, at a speed several times the actual speed of the underwater current, Minesto's subsea kite enhances the energy conversion compared to other technologies. As a result it is applicable in areas where no other known technology can operate cost effectively.
The speed has a cubic relationship to the power production. This means that when a Deep Green power plant multiplies the relative speed which the turbine is pushed through the water, the electricity produced by the generator is several hundred times greater compared to if the turbine would be stationary.
What makes the Deep Green technology different from other tidal energy technologies is the wing, the size of the turbine and the fact that the power plant is “flying” under water.
How it works
Tides are generated by the relative motion of the Earth, sun and moon, which can be calculated with almost 100% accuracy. Ocean currents are nearly constant.
Minesto’s Deep Green technology generates electricity from low-flow tidal streams and ocean currents by a unique and patented principle similar to a stunt kite flying in the wind.
The wing uses the hydrodynamic lift force created by the underwater current to move the kite. With onboard control system and rudders, the kite is autonomously steered in a pre-determined figure of eight, pushing the turbine through the water. By doing so, the turbine experiences a water flow several times higher than the actual stream speed.
The turbine diffuse power to the generator which outputs electricity via power cable in the tether. Seabed umbilical transfers the electricity to the onshore connection.
Projects and commercial partnership
- In 2020, Minesto established a collaboration with the multinational electric utility company EDF (EURONEXT:EDF).
- Minesto also established a strategic partnership with Schneider Electric (EURONEXT:SU) this year, for the development of marine energy parks and to accelerate the commercial roll-out of marine energy. This applies to opportunities for sales, project financing, technical system integration and more. Schneider Electric is a global leader in the digital transformation of energy management and automation.
Faroe Islands
World's first tidal kite electricity to grid took place in December 2020. Minesto reached the milestone of delivering electricity to the Faroese grid from the DG100 tidal kite system in Vestmannasund. This historical achievement was the result of a successful installation, testing and commissioning program during the summer and autumn 2020.
The collaboration with SEV is the first phase of a long-term ambition to add further tidal energy capacity by Minestos Deep Green technology to the Faroe Island’s energy mix, which is estimated to approximately 100 MW + total potential installed capacity.
Holyhead Deep, Wales
Holyhead Deep marked the starting point of the industrialization of Minesto´s unique marine energy technology Deep Green. It was not only the first utility-scale project – but also the first low-velocity tidal energy project in the world.
One 0.5MW demonstrator, called DG500 was installed in June 2018 and the purpose of this first installation was to prove functionality and power production performance in utility scale.
Minesto´s long-term plan is to expand the Holyhead Deep site to a commercial tidal energy array with a total installed capacity of up to 80MW.
France / TIGER
The TIGER project will demonstrate that tidal stream energy (TSE) is a maturing industry, capable of achieving an accelerated cost reduction pathway. The project aims to drive the growth of tidal stream energy by installing up to 8 MW of new tidal capacity at sites in and around the Channel region. The TIGER project was launched in October 2019 and will be completed in 2023 and with a collaboration with EDF.
Taiwan
Minesto’s establishment in Taiwan also consolidates a commercial expansion rollout throughout Asia, by both autonomously operated Deep Green Microgrid systems and array installations of Minesto Utility Scale systems.
Minesto is looking to install a device at a pre-consented tidal stream site in the North of Taiwan. In addition, development work and dialogues with industrial partners are ongoing to move towards installations in the Kuroshio current, which could see the world's first electricity generated from ocean currents.
Products
Dragon Class is an upgrade of the company's Deep Green technology with increased performance and reduced manufacturing costs. The new product series will be installed in all of Minesto's ongoing projects as well as in the expansion of the company's marine energy parks.
The Dragon Class’ increased customer value is straight to the point – maximize yield and minimize costs. This is the backbone product for Minesto´s ongoing commercial scale-up.
Conclusion and summary
This market is untapped and with a few technologies that are capable to extract energy from tidal currents. There are also a lack of real competitors in this market. The competition is low or basically non-existent, therefore it has a greater growth potential than already established technologies with a lot of competitors. But above all, there is a big difference between a predictable tidal energy and unplanned solar- and wind energy. The market has not yet discovered that. In fact, it does even know that this type of energy already exists, and already has began its journey. But in time I am sure it will.
TA analysis
It has come as no surprise to anyone, that clean energies globally have declined sharply this year. Minesto is of course one of them.
ICLN, the global clean energy index is already down -38% measured from all time high, and it is easy to see in hindsight that the whole clean energy market boomed mid 2020 and up to early this year and now the bubble has burst. ICLN is at the moment very bearish and down to the last floor of support, and it may collapse very soon. Why? Because clean energy stocks are as crowded as tech before dotcom crash and pretty much every renewable company, has no impressive numbers that motivates any increase in stock price and at the same time tripled in stock price under 2020 and early 2021.
Most likely the support will break and I focus primarily on an index of 15.90 for ICLN, which will be a decline of -53% measured from all time high. If it may get as badly as dotcom bubble maybe will se a -78% decline and an index of 11.
Looking at the chart, we now see that POC for the entire period is established around SEK 14.80 and the chance of reaching that increases if the support breaks bellow SEK 16.20.
VWAP for the entire period is SEK 15.78 and it also acted as support in late August.
The sentiment of the market is currently depressed and also signals a good buying opportunity. If the lows don´t break from August, you can already spot an inverted H&S formation on the weekly chart.
Above we have VWAP since all time high around SEK 25 and potentially will act as resistance.
A lot of volume is trapped att SEK 30 and it will be challenging to break that resistance in the future if not the market participants unload the shares before like we all saw when the pandemic hit the markets early 2020. You will however see an increase in selling volume and a drop in shareholdings if that is the case.
Further on, it is estimated by Pareto, that Minesto can reach a total revenue of SEK 465 million in 2023, with an EBITDA of SEK 92 million. The target price per share is set at SEK 28.
Minesto´s value per share for (FY) is SEK 23.89 and for (FQ) is SEK 17.71. That makes the actual share price a bit undervalued based on current figures. See bellow.
But it is without a doubt that Minesto is unique in every way and this market is both untapped and predictable. Long lead times are the big challenge now that the world is screaming for change, but such a unique opportunity and company is rarely found on the current markets.
Thank you for your time and your thoughts!
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