At the 2025 Sohn Monaco Conference, Eric Knight, Founder and CEO of Knight Vinke Asset Management, presented an analysis of a Scottish energy company. Knight Vinke Asset Management, based in Monaco since 2013 with around $1B AUM, focuses on long-term value creation for sovereign wealth funds and large family offices, with a particular emphasis on energy and infrastructure. Eric Knight has played a key role in major transactions and in reshaping significant entities, including the transformation of Jan, the merger of Suez COVID with GDF to form NG, the separation of DNI from its gas networks, and the merger of Royal Dutch and Shell transport.
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2025 Sohn Monaco Conference – Knight Vinke Asset Management’s Eric Knight
Knight’s presentation focused on SSE Plc (formerly Scottish and Southern Energy plc), an English public company with a market capitalization of 20 billion pounds. He highlighted SSE’s potential, particularly in its two core divisions: offshore wind and energy transmission. These divisions are roughly equal in size, with renewable generation assets valued at 23 billion and the grids business at 22 billion. Notably, SSE has no US exposure, thereby avoiding potential “Trump exposure”.
A crucial point Knight emphasized is that SSE’s electrical grids are regulated and ring-fenced, meaning they offer no synergies to any other part of the group, with zero intercompany transactions.
The Transformative Power of Offshore Wind
The centerpiece of Knight’s analysis was the offshore wind business, which he describes as “very fast growing”. He indicated that SSE is targeting 30% per annum capacity growth until 2030, which is faster than even solar (25%) or control. The UK, with what is “almost certainly the most ambitious energy decarbonization program in the world,” relies on offshore wind as the backbone of this strategy.
Knight presented a vision for offshore wind in the North Sea. According to studies by the IEA and Imperial College, the North Sea alone has the potential to produce 50,000 terawatt hours per annum. This figure is equivalent to 80 million barrels of oil per day, which is more than the combined oil and gas production of OPEC, the United States, and Russia.
Crucially, this capacity could “cover the entire electricity sector” for Europe by utilizing just one-tenth of the potential offshore wind capacity. Knight suggested that if European leaders recognized this potential, they could gain a political advantage by noting that Europe does not need shale gas from the United States, which could influence trade relations and tariffs.
When comparing this potential to Aramco, the largest listed oil company, Knight’s valuation projections were significant. Aramco has an enterprise value of $1.7 trillion and produces just under 13 million barrels of oil per day. Extrapolating this to the North Sea’s 80 million barrels equivalent leads to a valuation of approximately $10 trillion. However, Knight argued this is still a massive undervaluation because, unlike oil (a depleted asset), offshore wind is “perpetual” – the energy “is there repeating over and over and over again in perpetuity”. He suggested that a multiple of 10 would place its true value at $100 trillion, highlighting a monumental opportunity that oil and gas majors like BP and Shell are “walking away from” by disinvesting in renewables.
Addressing concerns about competitiveness, Knight demonstrated that offshore wind in the UK is competitive with onshore wind and utility-scale solar, and not far off from CCGT (Combined Cycle Gas Turbine), even considering intermittency.
Solving Intermittency: A Game Changer
Intermittency, a common challenge for renewables, was robustly addressed by Knight. He explained that a single North Sea wind farm might experience no production 8-11% of the time due to insufficient or excessive wind. However, by connecting two geographically separated wind farms with subsea cables, this downtime dramatically drops to 3-4%. The “lack of correlation” between wind systems allows this reduction, and by extending the distance to 600 kilometers, downtime can be reduced to a mere 1%. Knight confidently asserted that with a third, strategically located wind farm, “you end up with zero downtime”.
This, he argued, creates “dispatchable power on demand”. The implication is profound: “There is no need… You don’t need batteries. You don’t need thermal power generation either. The whole thing can be done permanently at a very low cost, because those cables are not actually expensive”. He concluded that this provides “permanent, cheap, clean” power on demand.
Furthermore, Knight presented offshore wind as fundamentally “low risk”. He contrasted it with the “Macondo catastrophe” (an oil spill), asserting that serious investors enter “cost plus industry” contracts with revenues and costs tied down, essentially locking in profit. He attributed Orsted’s financial difficulties not to the inherent risk of offshore wind, but to the company being “government controlled” with “risk management not up to scratch,” taking revenue commitments without locking in costs at the same time.
The Resilient and Predictable Grids Business
SSE’s grids business, the energy transmission division, also presented a strong growth story, expanding at 25% per annum. Knight highlighted Scotland as an example, where peak electricity demand is 3 gigawatts, but existing capacity is 15 gigawatts, projected to reach 25 gigawatts by 2030. This “massive oversight of transmission assets, of generation assets, transmission capacity” means surplus electricity will be exported, leading to a “huge acceleration in this business”.
Knight’s research into what drives the value of such companies revealed that total shareholder return (TSR) is not explained by dividend yield, interest rates, or regulatory earnings, but rather by the actual book value or net assets (shareholders’ equity). He noted the “amazing fit” between TSR and book value. Due to the regulated nature of these businesses, future capital expenditure and leverage are predictable, offering “transparency” and high “investment visibility”.
He also highlighted the downside protection for grid businesses: “no inflation” risk (tariffs are inflation-protected), “no competition” (they are monopolies), “no log in risk” (volume can be recovered if used accordingly), and “no correlation with interest rates”. This makes it a “super alternative investment” in times of potential stagnation.
Unlocking SSE’s Undervalued Potential
Despite its strong assets, SSE trades “below its peers and discount to sum of parts”. Knight identified two primary reasons for this undervaluation:
- Dividend Policy: SSE’s historically “steady and growing dividend” over 20 years has attracted 240,000 retail shareholders. These shareholders, focused on yield, have “placed a cap on the stock price around about 20”. Knight proposed an “easy win” to break this mechanism: “bring the dividend yield up to where the peers are”.
- Lack of International Diversification (realized synergies): While SSE has some international projects, Knight argued that “diversification means that the economy is not realized”. Building wind farms in Japan and Scotland, for instance, prevents the use of the same suppliers, diminishing synergies and economies of scale. He stressed that massive capital commitments for large projects (like 10 wind farms, each the size of 250 Eiffel Towers) should bring “huge synergies and huge economies of scale”. He pointed to the potential for massive cost savings by clustering projects, such as those in the Forth and Seagreen areas off Scotland.
To unlock SSE’s potential, Knight proposed several strategic changes:
- Restore Dividend Growth: A “healthy increase” in the dividend (e.g., 60%) funded by uncommitted investment capital.
- Strategic Disposals:
- Selling 25% of the transmission business (which SSE has considered) to realize significant value.
- Selling the onshore wind portfolio, particularly as “speed contracts are expiring within five to 10 years”.
- Disposing of the solar portfolio (e.g., in southern France) as it brings “no synergies with the North Sea legacy assets”.
- Exiting offshore wind projects in Japan and other renewable projects in Southern Europe and Poland.
- Refocus on North Sea Offshore Wind: This strategy would allow SSE to redeploy 15 to 30 billion (potentially much more) of capital, focusing on areas with significant synergy and scale, such as the Derek Mac region.