Editing Openai/6914efcd-d7d8-800a-85de-4212b5b63948 (section)

=== I built a conservative, transparent, project-level FCFE (free cashflow to equity) style DCF aggregated to Group equity. I do not pretend accuracy beyond the quality of public info — instead I show assumptions and sensitivity. ===

General / finance assumptions
* Discount rates (applied to equity cashflows / risk): - Base case: 11% (reflects small AIM renewable dev / IPP risk + leverage). - Bull case: 9% (lower risk premia, smoother execution). - Bear case: 14% (execution, funding, market weakness).
* Corporate tax rate applied to operating cashflows: 25% (UK headline rate assumption). (If projects sit in ring-fenced SPVs with special tax treatment this will change; I keep 25% for conservatism.)
* Shares now: 722,812,335 (base). I model dilution by simple share issuance assumptions (see below).
* Net debt starting point: £52.65m (31/12/24 net debt computed from notes). I run projections of company net debt as projects reach close/operation; project non-recourse debt is modelled as ring-fenced in the project company where RNS says 'project financing' (so only the group equity contribution impacts plc net debt unless RNS says otherwise). Where company guidance says the majority of project debt sits in the subsidiary (e.g., MeyGen), I treat it as project-level debt not fully on plc — but I do include the current reported plc net debt as the starting point for equity claims. Ampeak Energy<ref>{{cite web|title=Ampeak Energy|url=https://ampeak.energy/wp-content/uploads/2025/07/270190-SAE-Annual-Report-2024-CL-web.pdf|publisher=Ampeak Energy|access-date=2025-11-13}}</ref>

Project economics assumptions / simplifications (reasonable, transparent):

AW1 (observed, most certain):
* Use company guidance: Group share of AW1 EBITDA = 0.753 × £9.0m = £6.78m p.a. (first five full years; 2027 onward as full year).
* Apply tax 25% → after-tax contribution ≈ £5.09m p.a. to group FCFE. (I treat AW1 EBITDA as near-cash; the project debt services are within the project company.) Ampeak Energy<ref>{{cite web|title=Ampeak Energy|url=https://ampeak.energy/sae-completes-financial-close-for-the-aw1-battery-storage-project/|publisher=Ampeak Energy|access-date=2025-11-13}}</ref>

MeyGen Phase 1 (existing island array):
* H1 2025 revenue to group = £3.2m; annualise => ~£6.4m p.a. (2025 run-rate).
* Assume EBITDA margin 60% for tidal operations (lower opex once operational). That gives EBITDA ≈ £3.84m, after tax 25% → ~£2.88m p.a. contribution. (This is conservative-to-moderate; some analysts use 60% as tidal opex is low.) Ampeak Energy<ref>{{cite web|title=Ampeak Energy|url=https://ampeak.energy/wp-content/uploads/2025/09/25-06-Ampeak-Interim-Report_FINAL.pdf|publisher=Ampeak Energy|access-date=2025-11-13}}</ref>

AW2 & MeyBESS (large, not closed): — bigger uncertainty, modelled as future ramping projects with two approaches:
* Base case (medium productivity): assume per-MWh EBITDA scales from AW1 but with some market cannibalisation / lower optimisation value for very large portfolios: use 60% of AW1 per-MWh EBITDA. AW1 implied EBITDA per MWh = £9.0m / 240MWh = £37,500 / MWh p.a. → Base per-MWh EBITDA for later builds = £22,500 / MWh p.a. - AW2 (1,250MWh) EBITDA ≈ 1,250 × £22.5k = £28.125m p.a. (company share assumption below). - MeyBESS (1,200MWh) EBITDA ≈ £27.0m p.a.
* Bull case: assume AW1 economics replicate (100% of AW1 per-MWh EBITDA = £37.5k/MWh) or higher due to duration extension / optimisation.
* Bear case: assume 40% of AW1 per-MWh EBITDA (market saturation / lower price stacking) => £15k/MWh p.a.

Ownership / share of project cashflows (explicit assumptions)
* AW1: company retained 75.3% (explicit). Ampeak Energy<ref>{{cite web|title=Ampeak Energy|url=https://ampeak.energy/wp-content/uploads/2025/09/25-06-Ampeak-Interim-Report_FINAL.pdf|publisher=Ampeak Energy|access-date=2025-11-13}}</ref>
* AW2: the company has a JV with Econergy — public text references (JV). For base case I assume 50% group economic interest for AW2 (conservative). For bull case assume 75% (company keeps majority), bear case 30% (JV / dilution). Shares Magazine<ref>{{cite web|title=Shares Magazine|url=https://www.sharesmagazine.co.uk/news/market/LSE20251013090853_5858222/aw2-battery-project-receives-formal-planning|publisher=Shares Magazine|access-date=2025-11-13}}</ref>
* MeyBESS: the Mey site is company-owned; for base assume 75% (company keeps majority) — bull 90%, bear 50%.

Timings (operational years used in model)
* AW1: financial close Aug 2025; commercial operations Q4 2026 → first full year 2027. (company guided) Ampeak Energy<ref>{{cite web|title=Ampeak Energy|url=https://ampeak.energy/wp-content/uploads/2025/09/25-06-Ampeak-Interim-Report_FINAL.pdf|publisher=Ampeak Energy|access-date=2025-11-13}}</ref>
* AW2: target grid connection 2029 (company guidance / planning) → first full year 2030. Ampeak Energy<ref>{{cite web|title=Ampeak Energy|url=https://ampeak.energy/investor-relations/company-documents/|publisher=Ampeak Energy|access-date=2025-11-13}}</ref>
* MeyBESS: target grid connection 2029 → first full year 2030. Ampeak Energy<ref>{{cite web|title=Ampeak Energy|url=https://ampeak.energy/wp-content/uploads/2025/07/270190-SAE-Annual-Report-2024-CL-web.pdf|publisher=Ampeak Energy|access-date=2025-11-13}}</ref>
* MeyGen CfD expansion revenues assumed to begin around 2029+ as CfDs start (dates per CfD round: many CfDs run from 2028/2029). Ampeak Energy<ref>{{cite web|title=Ampeak Energy|url=https://ampeak.energy/sae-secures-support-to-deliver-more-capacity-at-the-world-leading-meygen-project/|publisher=Ampeak Energy|access-date=2025-11-13}}</ref>

Dilution modelling (explicit):
* Because the company has meaningful plc net debt and likely needs to fund equity contributions to large projects, I model dilution scenarios as simple issuance of new shares at the then-prevailing market price to raise corporate equity when needed. (Project debt assumed mostly non-recourse.) I show three dilution bands: - Bull: minimal raises; +5% shares issued between now and year 5. - Base: moderate raise; +15% shares issued (raising equity for some project equity contributions). - Bear: larger raise; +30% shares issued (if company needs to shore up plc balance sheet / larger equity stakes). (I show sensitivity — if you prefer I can model issuance amounts rather than % dilution.)