Net Asset Value

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21 November 2022

The Renewables Infrastructure Group Limited

"TRIG" or "the Company", a London-listed investment company advised by InfraRed Capital Partners ("InfraRed") as Investment Manager and Renewable Energy Systems ("RES") as Operations Manager

Net Asset Value

TRIG is providing an estimated unaudited Net Asset Value as at 30 September 2022 including the impact of subsequent government action to increase taxes or cap the revenues of electricity generators (the "Estimated NAV"). The Estimated NAV is 134.3p per share, which is broadly unchanged from the Company's NAV at 30 June 2022 and represents an increase of 15.0p per share compared with 31 December 2021.

Since the Company's last published Net Asset Value as at 30 June 2022:

·      the UK Government announced an electricity generator levy as part of its Autumn Statement on 17 November 2022, and the EU has announced its intention to introduce a power price cap;

·      power prices and inflation expectations are higher than assumed within the 30 June 2022 portfolio valuation; and 

·      government borrowing rates have increased.

The table below sets out these movements that, in aggregate, represent an increase of 0.1p per share since 30 June 2022:

Government Intervention

As announced within the Autumn Statement on 17 November 2022, the UK Government will enact legislation as part of the 2023 Finance Bill, to impose a 45% windfall levy on wholesale market revenues in excess of £75/MWh for the period from 2023 to 2028 (the "Electricity Generator Levy"). Based upon the information released, the Investment Manager estimates the expected impact of the legislation has reduced the Company's Estimated NAV by 8.3p/share relative to the valuation that it would have otherwise been as at 30 September 2022.

On 6 October 2022, the European Commission adopted a regulation to introduce an inframarginal electricity price cap of up to €180/MWh, with individual Member States able to set a lower cap level. No significant adverse impact of this action is expected as the Company's investments:

·      in Germany and France earn predominantly fixed price per MWh revenues via government support mechanisms;

·      in Sweden and Spain have forecast power prices which are assumed to be significantly below the proposed cap levels; and

·      in Ireland have limited power price exposure in the context of the portfolio as a whole.

Power prices

Forecast wholesale power prices have increased, adding 8.7p/share to the Company's Estimated NAV. Approximately 80% of this impact relates to GB projects where TRIG has the majority of its near-term power price exposure. As at 30 June 2022, approximately 42% of portfolio revenues until December 2024 were not fixed and were exposed to merchant power prices. The table below sets out the average assumed captured power prices used in TRIG's valuation in the GB market as at 30 June 2022 for 2023 and 2024, and the equivalent figures adopted in the Estimated NAV. These numbers are before the impact of the UK government intervention, which we identify separately above.

The power price assumptions in the table above represent approximately a 30% discount to current baseload forward power prices. The methodology to determine the discount applied is consistent with the approach taken for the valuation as at 30 June 2022. This represents the limited ability to fix at market forwards due to their low liquidity and higher than usual price volatility being observed in the market (and therefore the uncertainty of achieving the forward prices) as well as the cannibalisation effect that results from the intermittent nature of renewables generation. The Company's sensitivity to changes in these power prices down to £75/MWh is significantly reduced as a consequence of the Electricity Generator Levy.

Inflation

Actual inflation has been higher than was forecast at 30 June 2022 across all of the regions in which TRIG invests. In addition, the Company has increased its expectations for near term inflation compared to its assumptions at 30 June 2022, as noted in the table below.

In assessing TRIG's inflation assumptions, we have considered the latest independent near-term inflation forecasts for the UK and European markets.

Overall, these increases added c. 4.6p/share to the Company's Estimated NAV.

Discount Rates

The average of the discount rates used in the valuation across the portfolio is 7.1%. This represents an average increase of 0.5% to the valuation discount rate applied at 30 June 2022 and is after taking account of lower risk investment made in the quarter. Whilst transaction evidence is not yet demonstrating a clear increase in discount rates, the yield of long-term government bonds has continued to increase since 30 June 2022. The valuation discount rates applied to investments in the UK have been increased by more than those in the EU (by approximately twice as much) reflecting the higher long-term government bond yields in the UK.

Enquiries

InfraRed Capital Partners Limited                       +44 (0) 20 7484 1800
Richard Crawford
Phil George

Minesh Shah

Mohammed Zaheer

Maitland/AMO                                                       +44 (0) 20 7379 5151
Rhys Jones

Charles Withey

Investec Bank Plc                                                 +44 (0) 20 7597 4000
Lucy Lewis

Tom Skinner

Denis Flanagan

BNP Paribas                                                         +44 (0) 20 7595 9444
Virginia Khoo

Carwyn Evans

The Company

The Renewables Infrastructure Group ("TRIG" or the "Company") is a leading London-listed renewable energy infrastructure investment company. The Company seeks to provide shareholders with an attractive long-term, income-based return with a positive correlation to inflation by focusing on strong cash generation across a diversified portfolio of predominantly operating projects.

TRIG is invested in a portfolio of wind, solar and battery storage projects across six countries in Europe with aggregate net generating capacity of over 2.4GW; enough renewable power for 1.7 million homes and to avoid over 2 million tonnes of carbon emissions per annum. TRIG is seeking further suitable investment opportunities which fit its stated Investment Policy.

Further details can be found on TRIG's website at www.trig-ltd.com.

Investment Manager

InfraRed Capital Partners is an international infrastructure investment manager, with more than 180 professionals operating worldwide from offices in London, New York, Sydney and Seoul. Over the past 25 years, InfraRed has established itself as a highly successful developer and custodian of infrastructure assets that play a vital role in supporting communities. InfraRed manages US$14bn+ of equity capital¹ for investors across the globe, across listed and private funds in both income and capital gain strategies. 

A long-term sustainability-led mindset is integral to how InfraRed operates as it aims to achieve lasting, positive impacts and deliver on its vision of Creating Better Futures. InfraRed has been a signatory of the Principles of Responsible Investment since 2011 and has achieved the highest possible PRI rating² for its infrastructure business for seven consecutive assessments, having secured a 5 stars rating for the 2021 period. It is also a member of the Net Zero Asset Manager's Initiative, a certified CarbonNeutral® company³, and is a TCFD supporter. 

InfraRed is part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. InfraRed represents the infrastructure equity arm of SLC Management, which also incorporates BentallGreenOak, a global real estate investment management adviser, and Crescent Capital, a global alternative credit investment asset manager.  

www.ircp.com 

¹ Data as at Q2 2022. Equity Capital is calculated using a 5-year average FX rate. 

² Principles for Responsible Investment ("PRI") ratings are based on following a set of Principles, including incorporating ESG issues into investment analysis, decision-making processes and ownership policies. More information is available at https://www.unpri.org/about-the-pri 

³ In accordance with The CarbonNeutral Protocol. Further information is available at https://carbonneutral.com/the-carbonneutral-protocol 

Operations Manager

TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's largest independent renewable energy company.

RES has been at the forefront of wind energy development for over 40 years, with the expertise to develop, engineer, construct, finance and operate projects around the globe. RES has developed or constructed onshore and offshore wind, solar, energy storage and transmission projects totalling more than 22GW in capacity. RES supports over 9.5GW of operational assets worldwide for a large client base. Headquartered in Hertfordshire, UK, RES is active in 11 countries and has over 3,000 employees engaged in renewables globally.

RES is an expert at optimising energy yields, with a strong focus on safety and sustainability. Further details can be found on the website at www.res-group.com.