TIDMTRIG
RNS Number : 4164K
Renewables Infrastructure Grp (The)
22 April 2020
22 April 2020
This announcement contains inside information for the purposes
of the market abuse regulation (EU) No.596/2014.
The Renewables Infrastructure Group Limited
("TRIG" or "the Company", a London-listed investment company
advised by InfraRed Capital Partners ("InfraRed") as Investment
Manager and RES ("Renewable Energy Systems") as Operations
Manager)
Update on COVID-19, power prices and potential NAV impact
The Board of TRIG is issuing this update which follows the
Company update and investor call held on 23 March 2020 (the "March
Update Call"), a transcript of which is available on the Company's
website.
Summary
-- Power price forecasts reduced, with material impact from
COVID-19 in the near term, which if taken in isolation and
excluding value enhancements, would imply a reduction in NAV per
share of approximately 5p
-- Excellent portfolio performance in Q1, with generation 22%
above budget, and asset availability is being maintained in line
with expectations
-- Dividend guidance of 6.76p for year ended 31 December 2020 reaffirmed
Power prices and NAV
COVID-19 is having a materially adverse impact on wholesale
power prices as a result of reduced economic activity due to
movement restrictions introduced across Europe. The global pandemic
has led to a reduction in demand for electricity and caused gas and
carbon prices to fall. These impacts are expected to continue over
the near term impacting all power generators. In addition,
expectations for gas prices in the medium-term have continued to
ease, due to expected softer demand and increased supply.
As a result, the most recent power price forecasts received by
the Company used as part of its process to arrive at the portfolio
valuation, show a material reduction in forecast prices in the near
term as a result of COVID-19, and a lesser reduction over the long
term as a result of lower gas prices, compared with previous
expectations.
Power price forecasts for each of the five jurisdictions across
Europe in which the Company operates show similar reductions.
Based on these forecasts, the projected wholesale power prices
for TRIG's markets, on a blended basis, have reduced on average by
17% over the next 5 years (including a 25% reduction over 2020 and
2021) and by 5% from 2025 until 2050. In the GB market, this
corresponds to an average cannibalised [1] capture price of c.
GBP39 per MWh for the period 2020-2024 and GBP46 per MWh for the
period 2025-2050 (in real prices).
Approximately 74% of the Company's revenues through to 31
December 2024 (and in excess of 80% over the next two years) are
fixed, providing strong levels of visibility on cashflows in the
near-to-medium term. The Company benefits from having projects in
France and Germany with Feed in Tariffs and from fixes entered into
for projects in other jurisdictions, as a result of the Company's
diversification strategy.
These latest power price forecasts, if taken in isolation, would
imply a reduction in NAV per share of approximately 5p. The
Company's last published NAV per share was 115p as at 31 December
2019.
A formal valuation exercise will be undertaken for the 30 June
2020 interim results which will take into account the latest
available sets of power price forecast assumptions, as well as all
other variables and mitigants that are applied in valuing the
portfolio including the strong Q1 operational performance and value
enhancements. The 30 June 2020 interim results are due to be
announced in early August 2020.
Operations
The Company's operating portfolio continues to perform well.
Consistent with the out-performance noted for the partial quarter
on the March Update Call, generation in the first quarter to 31
March 2020 was 22% above budget overall, with offshore wind farms
and the assets in GB and Sweden performing particularly well.
The operational portfolio has enjoyed good availability despite
the operational challenges posed by COVID-19, keeping within
approximately 1% of the availability budget for March, which has
been achieved through the pragmatic, solution-focussed approach
adopted by the asset management and the operation and maintenance
teams.
Activity at TRIG's three construction investments (representing
c. 8% of the portfolio by value) continue to be closely monitored:
Venelle in France is partially commissioned with six operational
turbines generating revenue, and the remaining 10 turbines delayed
but anticipated to be operational this summer. Solwaybank in
Scotland is progressing well with commencement of operations still
expected by the end of the year. Blary Hill in Scotland is expected
to commence construction shortly as scheduled.
InfraRed and RES continue to prioritise safeguarding the health
and welfare of their employees and contractors, as well as
maximising the operational performance of the Company's
portfolio.
Dividends
Notwithstanding that power prices will be lower than expected
for 2020, the Company's projected dividend cash cover remains
positive. The Company has a strong funding position and reserves
which gives further confidence.
The Board reaffirms the dividend guidance of 6.76p for the year
ending 31 December 2020. The ex-dividend date of the first
quarterly interim dividend payment is 14 May 2020 with a payment
date of 30 June 2020.
Enquiries
InfraRed Capital Partners Limited triginfo@ircp.com
Richard Crawford
Phil George
Maitland/AMO trig-maitlandamo@maitland.co.uk
James Isola
Zara de Belder
Notes
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 targeting an aggregate dividend of 6.76 pence per Ordinary
Share for the year to 31 December 2020.
TRIG is invested in a portfolio of over 70 wind, solar and
battery storage projects with aggregate net generating capacity of
1,664MW. 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
TRIG's Investment Manager is InfraRed Capital Partners Limited
("InfraRed") which has successfully invested in over 200
infrastructure projects since 1997. InfraRed is a leading
international investment manager focused on infrastructure and real
estate. It operates worldwide from offices in London, Hong Kong,
New York, Seoul, Sydney and Mexico City. With over 190
professionals it manages in excess of USD 12 billion of equity
capital in multiple private and listed funds, primarily for
institutional investors across the globe. InfraRed is authorised
and regulated by the Financial Conduct Authority.
The infrastructure investment team at InfraRed consists of over
85 investment professionals, all with an infrastructure investment
background and a broad range of relevant skills, including private
equity, structured finance, construction, renewable energy and
facilities management.
InfraRed implements best-in-class practices to underpin asset
management and investment decisions, promotes ethical behaviour and
has established community engagement initiatives to support good
causes in the wider community. InfraRed is a signatory of the
Principles of Responsible Investment.
Further details can be found on InfraRed's website at
www.ircp.com .
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 38 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 17GW in capacity. RES
supports over 5.5GW of operational assets worldwide for a large
client base. Headquartered in Hertfordshire, UK, RES is active in
10 countries and has over 2,000 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 .
[1] Cannibalisation is the term given to the tendency for
renewables (an intermittent generator) to achieve an overall power
price which is lower than the average which would be expected of a
continuous base load generator, caused by prices being influenced
by the additional supply when renewables are generating. Rates
differ over time and between markets but all are affected. This
price cannibalisation is allowed for by the Company in its
valuation process.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
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