TIDMRNEW
RNS Number : 3720M
Ecofin US Renewables Infrastr.Trust
14 September 2023
EI: 2138004JUQUL9VKQWD21
14 September 2023
ECOFIN U.S. RENEWABLES INFRASTRUCTURE TRUST PLC
(the "Company" or "RNEW")
Half-yearly report for the six months ended 30 June 2023
Investment Objective
The Company's investment objective is to provide Shareholders
with an attractive level of current distributions by investing in a
diversified portfolio of mixed renewable energy and sustainable
infrastructure assets ("Renewable Assets") predominantly located in
the U.S. with prospects for modest capital appreciation over the
long term.
Why RNEW?
RNEW targets attractive risk-adjusted returns and a sustainable
dividend yield through a differentiated investment strategy focused
on the middle market of U.S. renewable energy:
l Fully invested portfolio: Diversified portfolio of U.S.
renewable energy assets with an attractive long-term income
stream;
l Long-term income: Portfolio generating 100% contracted
revenues which together offer geographical diversification and
opportunity for both capital growth and some inflation protection;
and
l U.S. renewables market with promising growth outlook: $360
billion growth opportunity projected over the next decade with
historic unified government support to achieve the U.S.'s 2035
carbon-free power sector goal.
Highlights
Financial
As at 30 June 2023
91.8 cents $126.8 million 60.5 cents(2)
72.2 pence(1) GBP99.7 million(1) 46.5 pence(2)
Net Asset Value ("NAV")
per share NAV Share price
38.1%(3)
Leverage
For the period ended 30 June 2023 ("Period")
0.3%(4) -24.7%(4) 2.1 cents
NAV total return Share price total return Dividends per share declared
Operational
14.1 years(5) 65 29,400
Weighted average remaining Assets Equivalent number of households
term of revenue contracts supplied in H1 2023
177 MW(6) 97,000 tonnes(7) 157 GWh(6)
Portfolio generating capacity CO(2) e avoided in H1 2023 Clean electricity generated
in H1 2023
Figures reported either as at the referenced date or over the
six months ended 30 June 2023. All references to cents and dollars
($) are to the currency of the U.S., unless stated otherwise.
1. 30 June 2023 exchange rate of GBP0.78641 = $1.00
2. RNEW & RNEP LSE closing prices as at 30 June 2023.
3. Calculated based on Gross Asset Value ("GAV") and aggregate
debt. Additional information can be found in the financing section
of the Investment Manager's Report..
4. These are alternative performance measures ("APMs").
Definitions of how these APMs and other performance measures used
by the Company are calculated can be found at the last section of
this report..
5. Includes all construction-stage and committed assets.
6. Represents the Company's share of portfolio generating
capacity (including assets under construction).
7. CO(2) e based on the Company's proportionate ownership
interest in the assets. CO(2) e calculations are derived using the
U.S. Environmental Protection Agency's ("EPA") Emissions &
Generation Resources Integrated Database.
Invested and committed assets
l As at 30 June 2023, RNEW's diversified renewable energy
portfolio consisted of 65 assets spread across eight states with a
total capacity of 177 MW that generated 157 GWh of clean
electricity in the Period and included:
l 60 operating solar assets totalling 97 MWdc
l 4 assets being commissioned totalling 20 MWdc
l 1 operating wind asset totalling 60 MWdc
l No major health and safety incidents occurred across the
portfolio during the Period, other than those discussed below
regarding the Whirlwind asset.
l In respect of the reporting period, the Company declared
dividends of 2.1 cents per Share in total. The Company is targeting
dividends of 3.5 cents for FY 2023, of which 2.1 cents has already
been paid and/or declared(8) .
l The Company's NAV was $126.8 million or 91.8 cents per Share
at 30 June 2023. The NAV total return over the Period was 0.3%.
l The Company's U.S. subsidiaries at a project level had $45.1
million of long term, non-recourse project-specific debt
representing approximately 22.0% of GAV(9) and $32.8 million of
short-term, non--recourse debt representing approximately 16.0% of
GAV(9) .
As at or period As at or year
to to
Financial information 30 June 2023 31 December 2022
Net assets (million) $126.8 $130.2
Shares in issue (million) 138.1 138.1
NAV per share (cents) 91.8 94.3
Share price (cents) 60.5 83.3
Share price discount to NAV(11) 34.1% 11.7%
Dividends declared per share (cents)(10) 2.1 5.6
NAV total return per share(11) 0.3% 1.1%
Share price total return(11) (24.7)% (10.8)%
Cash (million) $1.9 $3.4
Leverage (million) $77.9 $64.4
8. The target dividends set out above are targets only and are
not profit forecasts. There can be no assurance that these targets
can or will be met and they should not be seen as an indication of
the Company's expected or actual results or returns. The Company's
ability to distribute dividends will be determined by the existence
of sufficient distributable reserves, legislative requirements and
available cash reserves.
9. Represents the Company's proportionate share of total debt at
the asset special purpose vehicle ("SPV") level across its existing
investments as at 30 June 2023.
10. Dividends declared relating to the Period/year.
11. These are alternative performance measures ("APMs").
Definitions of how these APMs and other performance measures used
by the Company are calculated can be at the last section of this
report.
Chair's Statement
On behalf of the Board, I am pleased to present the Company's
half--yearly report for the six months ended 30 June 2023
("Half--yearly Report"). This has been a difficult first half for
your fund. In common with much of the UK investment trust sector,
RNEW's share price has been trading at a discount to NAV. While the
UK investment trust sector as a whole is currently out of favour
with equity investors against a back drop of high inflation and
increased interest rates, these factors have been exacerbated in
the case of RNEW by the resignation of a number of the Ecofin
management team during Summer 2022, as well as more recent
asset-related issues including the tornado damage in Q2 to the
electricity substation to which Whirlwind, our largest investment,
is connected.
Share price
At 31 December 2022, the share price was 83.25 cents per Share,
representing an 11.7% discount to NAV of 94.3 cents per Share at
the same date. As a result of the asset-related factors mentioned
above, the share price declined in the first half to 60.5 cents per
Share at June 30 2023, a 34.1% discount to NAV of 91.8 cents as at
the same date.
The Board has considered initiating a share buyback programme
but, with the benefit of advice from the Company's brokers and
considering the funds available to conduct such a programme, the
Board does not believe buying back shares would have a material
impact on the current discount to NAV. The Board was also concerned
that it would further reduce liquidity in the trading of the
Company's shares.
Notwithstanding, the Board is not content with the current level
of discount and continues to work with the Investment Manager and
our advisers to achieve value for shareholders, consistent with
good governance. Accordingly, the Board announced on 8 September
2023 a review of the Company's strategy in order to maximise value
for shareholders. The review will centre on a sale of the Company's
assets. If successful, and subject to the terms of such disposal,
it is expected to return cash to shareholders.
Investment manager
As set out in my statement in the 2022 Annual Report, the
Investment Manager appointed Eileen Fargis as group lead and
portfolio manager for RNEW in October 2022. Eileen has settled well
into her role. Working closely with Eileen are Jason Benson, who
oversees portfolio management and funding activities for the
Company, and Nancy Johnson, who heads the Finance and Asset
Management team, Nancy works with Eileen and Jason on the
operational performance of each of the assets in the portfolio and
to onboard new assets smoothly.
First Half Milestones
l During the first six months of 2023, the portfolio generated
156.6 GWh of clean electricity (2022: 177 GWh), equivalent to
powering 29,400 households, from a fully contracted portfolio of
diversified solar and wind projects across eight states. The assets
all benefit from long term Power Purchase Agreements ("PPAs") with
investment-grade equivalent utility, municipal or corporate
off-takers with a weighted average PPA term remaining of 14.1 years
(18.8 years excluding Whirlwind).
l In June, the Company completed an amendment and extension to
its $65 million revolving credit facility ("RCF") with KeyBank, one
of the premier lenders to the U.S. renewable energy industry. The
RCF, which comprises two tranches, has been extended by 12 months.
The $50 million tranche has been extended to October 2024 and the
$15 million tranche to October 2025.
l Progress continued in completing construction and financing of
the Echo Solar Portfolio, a 36.0 MWdc commercial solar portfolio
spread across Minnesota, Virginia and Delaware, including the
completion of several tax equity milestone fundings during the
second quarter and nearing completion on negotiation of a back
leverage debt facility. Currently, two projects have achieved
commercial operation, and the four remaining projects are
mechanically complete and being commissioned for commercial
operation during Q3 2023.
Portfolio management
As at 30 June 2023, RNEW's portfolio comprised 65 solar and wind
assets with a combined capacity of 177MW across eight states:
California, Connecticut, Delaware, Massachusetts, Minnesota, New
Jersey, Texas and Virginia.
As at 30 June 2023, 61 assets were in operation and four assets
had achieved mechanical completion and were undergoing
commissioning and final testing with commercial operation expected
during Q3 2023. Operating assets made up 89% of the portfolio
valuation. Total generation during the Period of 156.6 GWh was
below budget, principally due to lower-than-expected energy
production as a result of historically low wind resource during the
second quarter at Whirlwind, a phenomenon that was experienced
across the U.S. This was accompanied by curtailments and unforeseen
operational issues experienced by certain assets towards the end of
the first half, which have had a temporary negative impact on the
overall performance and valuation of the portfolio. Principal among
these were:
l the tornado on 21 June 2023 in Matador, Texas which destroyed
the substation through which the Company's Whirlwind asset (located
approximately 20 miles west-northwest of Matador) transmits its
power;
l damage to DC wiring at the Ellis Road solar project caused by
a rodent infestation during the first quarter of 2023 which forced
40% of the total system capacity to be de-energised; and
l voltage issues at the office building on which the Skillman
project is located causing the project to be tripped offline from
the end of April to June 2023; this was rectified and power
restored on 7 July 2023.
The Investment Manager is working diligently with all relevant
counterparties, O&M providers, insurance providers and others
to rectify these operational issues as fast as possible, and also
to recoup any potential losses through insurance coverage on the
assets. Further details are set out in the Investment Manager's
Report.
Results
Unaudited NAV as at 30 June 2023 was 91.8 cents per Share (31
December 2022: 94.3 cents per Share) or $126.8 million (31 December
2022: $130.2 million). During the first half of 2023, NAV per Share
decreased by 2.7% as described further in the Portfolio Valuation
section of the Investment Manager's Report.
The valuation of the portfolio at 30 June 2023 is supported by
an independent valuation firm, Marshall & Stevens, and is based
on an underlying blended weighted average pre-tax discount rate of
7.3%. This reflects a small decrease from 31 December 2022 due to a
0.25% reduction in the discount rates applied to the SED Solar
portfolio and Delran Solar assets to conform them with the
Company's broader solar portfolio, as well as the inclusion of part
of the Echo Solar Portfolio at Fair Market Value ("FMV") rather
than cost. As part of their review, Marshall & Stevens opined
that the continued level of activity in the U.S. renewable energy
market had kept cost of capital down despite the rising interest
rate environment, implying compression of the equity risk
premium.
RNEW's profit before tax for the six months to 30 June 2023 was
$429,000 (2022: $1.2 million) and earnings per Share were 0.3 cents
per Share (2022: 0.9 cents per Share).
The Company's total gearing at 30 June 2023 was 38.1% (31
December 2022: 33.3%) based on GAV(1) of $204.7 million and
aggregate debt of $77.9 million. The Company had both non-recourse
debt at project level ($45.1 million secured on the two Beacon
solar projects in California) and debt at group level, consisting
of $32.8 million drawn under the Company's RCF.
Dividends
During the Period, the Board declared two quarterly interim
dividends of 1.4 cents per Share each, in respect of the quarters
ended 31 March 2023 and 31 December 2022. On 7 August 2023, after
the Period end, the Board declared a further interim dividend of
0.7 cents per Share for the quarter ended 30 June 2023. The
reduction in dividend for the quarter ended 30 June 2023 was
flagged in our announcement on 29 June 2023 and reflects an
anticipated decline in cash flows due to the operational issues
discussed above, including the recent events at Whirlwind, and
certain one-off costs. As a result, the Board expects the Company's
dividend for each of the quarters ending 30 September 2023 and 31
December 2023 to remain at the lower level of 0.70 cents per share.
Taken together with the dividends declared for the quarters ended
31 March 2023 and 30 June 2023, this would equate to a dividend
target of 3.5 cents per share for the 2023 financial year. The
Board and Investment Manager continue to monitor closely the
operating cash flows of the business with Whirlwind expecting to be
operating below capacity for 18 months until early 2025, and are
keeping the appropriate level of future quarterly dividends under
review.
Board
The Board continues to work well with Ecofin. There are four
directors (two women and two men) who together have a good balance
of sector, investment trust and wider financial investment
experience, including significant experience in the U.S. renewable
energy sector and the benefit of geographic market knowledge from
U.S. residency and citizenship.
Outlook
As set out in the Investment Manager's Report, a number of key
drivers continue to create a strongly favourable outlook for the
U.S. renewable energy industry, particularly for solar and wind
power. These include increasing climate change awareness in the
U.S., as evidenced by the growing appetite among U.S. corporates to
buy their electricity from renewable sources; strong federal and
state policy support, in particular the Inflation Reduction Act
("IRA"), and the increasing cost-competitiveness of solar and wind
relative to fossil fuel generation.
While some challenges remain, including supply chain disruption,
trade restrictions, uncertainty around the detailed application of
certain IRA provisions, and inflation, these are expected to be
more than offset by the key drivers above and, as a result, the
U.S. renewable energy industry is set for significant growth in the
rest of 2023 and beyond.
Also, as we saw in our own portfolio this half year, severe
weather events can give rise to both challenges and opportunities
for the sector. On the one hand, events like the Texas tornado that
indirectly incapacitated our Whirlwind asset raise concerns about
the resilience of energy systems, including renewables. On the
other hand, weather events such as the heat waves which
simultaneously affected the southern U.S., southern Europe and
parts of China in mid-2023 reinforce concerns over global warming
and are likely to spur further demand for clean energy
solutions.
While the pipeline of investment opportunities for the Company
remains strong, we are currently fully invested, and the Investment
Manager is focusing on asset management and operational
improvements for the foreseeable future.
The Board will make further announcements about the strategic
review announced on 8 September 2023 when appropriate.
Patrick O'D Bourke
Chair of the Board
13 September 2023
Investment Manager's Report
Investment activity - 2023 Year to Date ("YTD")
4 April 2023 - the Company completed the first tax equity
funding on the 6.5 MWdc Hemings Solar Partners, LLC in Virginia
("VA") (Echo Solar - VA 3) and the 5.9 MWdc Heimlich Solar
Partners, LLC project in Delaware ("DE") (Echo Solar - DE 1).
21 June 2023 - the Company's 59.8 MW Whirlwind Energy wind farm,
Whirlwind, in Floydada, Texas, ceased operations due to a tornado,
which damaged five project-owned transmission poles. Additionally,
the American Electric Power ("AEP") owned substation in
neighbouring Matador, through which Whirlwind transmits
electricity, was severely damaged during the incident. Based on AEP
estimates, the Company expects to re-gain interconnection during
the fourth quarter of 2023 via an alternate route through a
substation in Paducah, Texas. This alternate transmission
arrangement will allow 80% capacity throughput relative to full
capacity (50 MW versus the full capacity of 59.8 MW) on an interim
basis, with a corresponding reduction in forecasted cash flows. AEP
intends to build a new substation at Matador as quickly as possible
and return Whirlwind to full capacity, which is estimated to take
approximately 18 months, at which time Whirlwind will return to its
prior interconnection route and to full capacity. The Company and
its insurance provider are working together to file claims, where
applicable, for business interruption and necessary repairs to the
damaged project-owned transmission poles. The claims are yet to be
finalised with the insurers, but it is expected that the Company's
insurance policy will provide coverage, at a minimum, for both the
damaged transmission poles and for 120 days of business
interruption losses that occur from outages (following a 45-day
waiting period).
26 June 2023 - the Company completed an amendment to its RCF
with KeyBank, extending the facility by twelve months on
competitive terms:
l $50 million tranche extended to October 2024 at SOFR + 2.00%
to 18 October 2023 and SOFR + 2.125% thereafter
l $15 million tranche extended to October 2025 at SOFR + 2.25%
to 18 October 2023 and SOFR + 2.375% thereafter
As at 30 June 2023, the Company had $32.8 million drawn on the
RCF and had approximately $7.2 million(1) of outstanding net
commitments (net receivables) from tax equity investors on closed
assets. The Company is also in process of negotiating a back
leverage (term debt) facility for the Echo Solar Portfolio, which
is expected to close by the end of Q3 2023, dependent on timetables
to complete commissioning and achieve commercial operation on the
balance of the projects in this portfolio.
1. Figure is shown net of anticipated engineering, procurement
and construction ("EPC") payments due at completion of certain
construction/commissioning milestones and $16.3 million of tax
equity financing commitments.
Events following the Period end
5 July 2023 - the Company completed the first tax equity funding
on the 2.9 MWdc Small Mouth Bass Solar Partners, LLC project (Echo
Solar - VA 4) and the final tax equity funding on the 2.7 MWdc
Monroe Solar Partners, LLC project (Echo Solar - VA 1).
4 August 2023 - the Company completed the first tax equity
funding on the 4.2 MWdc Randolf Solar Partners, LLC project (Echo
Solar - VA 2).
1 September 2023 - the Company completed the final tax equity
funding on the 13.7 Echo Solar - MN project, allowing for a
repayment on the RCF which had an outstanding balance of $28.8
million as at 1 September 2023.
2022 Recap
7 January 2022 - the Company obtained a $15.9 million
non-recourse construction loan from Seminole Financial Services,
LLC, a U.S. specialist renewable lender, for the construction of
the Echo Solar - MN project.
28 January 2022 - the Company closed a tax equity partnership
for the Skillman Solar project.
23 March 2022 - the Company finalised a negotiation for a buyout
wherein the Company sold one 41 kWdc asset within the SED Solar
Portfolio, as per the terms of its PPA, reducing the total number
of assets remaining in the SED Solar Portfolio to 52 (11.3 MWdc)
and the Company's total assets to 60 at the time.
25 March 2022 - the Company declared mechanical completion of
the Skillman Solar project and completed a major milestone tax
equity funding.
28 June 2022 - the Company closed on the acquisition of two
ground mount solar projects in VA at construction stage in the Echo
Solar Portfolio, comprising the 2.7 MWdc Echo Solar - VA 1 and the
4.2 MWdc Echo Solar - VA 2 with an aggregate closing value of $2.6
million, bringing the Company's total assets to 62 at the time.
Future fundings of these projects would be sourced from tax equity
commitments and the Company's RCF.
29 July 2022 - the Company declared mechanical completion of the
Echo Solar - MN project.
22 August 2022 - the Company closed on the acquisitions of three
additional ground mount solar projects at construction stage in the
Echo Solar Portfolio, comprising the 6.5 MWdc Echo Solar - VA 3,
the 2.9 MWdc Echo Solar - VA 4, and the 5.9 MWdc Echo Solar - DE 1,
with an aggregate closing value of approximately $5.5 million,
bringing the Company's total assets to 65. This deployed the
balance of the $12.9 million net proceeds from the placing and
retail share offer completed in May 2022. Fundings of these
projects is being sourced from tax equity commitments and the
Company's RCF.
26 September 2022 - the Company declared substantial completion
of the Skillman Solar project and closed the final tax equity
funding, completing the financing of the project, after having
achieved commercial operation on 15 August 2022.
7 October 2022 - the Company closed a tax equity commitment of
$17.7 million for the Echo Solar Portfolio, which will be funded
upon the achievement of sequential construction milestones at each
project within the portfolio.
5 December 2022 - the Company negotiated a partial termination
of the MIPA for the five remaining unclosed Echo Solar Portfolio
projects, which included an 18-month Right of First Offer on the
unclosed projects.
16 December 2022 - the Company declared commercial operation at
the Echo Solar - MN project, after receiving permission to operate
from the local utility on 13 December 2022. The system was fully
energised and delivering power immediately.
30 December 2022 - the Company declared commercial operation at
the Echo Solar - VA 1 project, after receiving permission to
operate from the local utility on 16 November 2022. The system was
fully energised and delivering power immediately.
Cumulative Invested Capital and Commitments at Each Period Since
IPO (million)(1)
(Q4 2020) (Q1 2021) (Q2 2021) (Q3 2021) (Q4 2021) (Q1 2022) (Q2 2022) (Q3 2022) (Q4 2022) (Q1 2023) (Q2 2023)
-------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(Closed/ Funding
in Construction
Assets) ($11) ($4) ($0) ($9) (--) ($5) ($3) ($19) (--) ($3) ($9)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(Closed/ Funding
in Operating
Assets) ($21) ($25) ($0) (--) ($52) (--) (--) (--) (--) (--) (--)
--------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(Closed/ Funded
in Prior Periods) (--) ($32) ($61) ($61) ($69) ($121) ($126) ($129) ($149) ($147) ($151)
--------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(Closed/ Remaining
Commitments) ($4) (--) (--) ($12) ($5) ($1) ($11) ($4) ($3) ($2) ($7)
--------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(Signed/ Future
Commitments) (--) (--) ($5) ($40) ($40) ($40) ($34) ($22) (--) (--) (--)
--------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
($36) ($61) ($66) ($122) ($166) ($167) ($174) ($174) ($152) ($152) ($153)
1. Cumulative invested capital and commitments declined in Q4
2022 due to the partial termination of an agreement to acquire
certain unclosed Echo Solar Portfolio projects.
2. Represents a net $7M receivable due from tax equity in the Echo Solar Portfolio.
Details of each asset held or committed to at 30 June 2023 are
set out in the table below:
Remaining
revenue
contract
Investment Capacity Number term
Name Sector (MW)(1) of assets State Ownership(2) Phase Status (years)(3)
SED Solar Commercial
Portfolio Solar 11.3 52 Massachusetts, 100% Operational Closed 13.1
Connecticut
Ellis Road Commercial
Solar Solar 7.1 1 Massachusetts 100% Operational Closed 18.0
Commercial
Oliver Solar Solar 4.8 1 California 100% Operational Closed 12.4
Utility-Scale
Beacon 2 Solar 29.5 1 California 49.5% Operational Closed 19.5
Utility-Scale
Beacon 5 Solar 23.9 1 California 49.5% Operational Closed 19.5
Skillman Commercial
Solar Solar 2.6 1 New Jersey 100% Operational Closed 14.0
Commercial
Delran Solar Solar 2.0 1 New Jersey 100% Operational Closed 12.0
Whirlwind Wind 59.8 1 Texas 100% Operational Closed 4.5
Echo Solar Commercial
- MN Solar 13.7 1 Minnesota 100% Operational Closed 24.5
Echo Solar Commercial
- VA 1 Solar 2.7 1 Virginia 100% Operational Closed 24.5
Echo Solar Commercial
- VA 2 Solar 4.2 1 Virginia 100% Commissioning Closed 25.0
Echo Solar Commercial
- VA 3 Solar 6.5 1 Virginia 100% Commissioning Closed 25.0
Echo Solar Commercial
- VA 4 Solar 2.9 1 Virginia 100% Commissioning Closed 25.0
Echo Solar Commercial
- DE 1 Solar 5.9 1 Delaware 100% Commissioning Closed 25.0
Total Portfolio 176.9 65 14.1(3)
Solar-only
Portfolio 117.1 64 18.8(3)
1. Capacity reflects RNEW's proportionate ownership interest in the assets.
2. Cash equity ownership.
3. Average remaining revenue contract term (years).
Portfolio overview
As at 30 June 2023, the portfolio was heavily weighted towards
operating assets with 89% of total invested and committed net
equity capital(1) operating, reflecting the completion of
construction at Westside (Echo Solar Portfolio) and Monroe (Echo
Solar Portfolio). The portfolio benefits from geographic
diversification spanning eight states to provide risk mitigation
against regulatory and resource exposures. Furthermore, RNEW's
portfolio reflects diversification across three renewable energy
sectors of: utility-scale solar (19%), commercial solar (51%), and
wind (30%) to mitigate resource, regulatory, technology and market
risks.
Portfolio summary charts(1) :
Asset Name
Asset Name Portfolio %
Beacon 2&5 19%
------------
SED Solar Portfolio 12%
------------
Oliver Solar 5%
------------
Ellis Road Solar 6%
------------
Skillman Solar 3%
------------
Delran Solar 2%
------------
Whirlwind 30%
------------
Echo Solar - MN 10%
------------
Echo Solar - VA/DE 13%
------------
Sector
Sector Portfolio %
Utility Scale Solar 19%
------------
Commercial Solar 51%
------------
Wind 30%
------------
Asset Status
Operating 89%
Construction 11%
----
1. Includes closed and committed assets based on equity exposure at FMV.
Operating performance for six months ended 30 June 2023:
During the six months ended 30 June 2023, the portfolio
generated 156.5 GWh of clean energy, 19.4% below budget. Of the
total, solar assets generated 83.4 GWh, 9.2% below budget and wind
assets generated 73.1 GWh, 28.5% below budget. Project variances
and further explanations are provided below.
The performance of the underlying operating portfolio combined
with its 100% contracted revenue structure generated revenues of
$6.1 million for the Company. Cash flows were below budget
primarily due to curtailments experienced throughout the fleet,
historically low wind resources at Whirlwind and unexpected
operational issues at Ellis Road Solar and Skillman Solar.
Net Production Variance vs. Budget (GWh)
Actual Budget
Q1 2023 74.6 86.7
------- -------
Q2 2023 82.0 107.0
------- -------
YTD 2023 156.6 193.7
------- -------
Investment GWh Above % Above
Name Sector State Actual (GWh) Budget (GWh) (Below) Budget (Below) Budget
Utility-Scale
Beacon 2 Solar California 30.3(1) 34(1) (3.7) (10.9%)(a)
Utility-Scale
Beacon 5 Solar California 24.9(1) 26.2(1) (1.3) (5%)(a)
Commercial Massachusetts,
SED Solar Portfolio Solar Connecticut 6.1 6.3 (0.2) (3.2%)
Ellis Road Commercial
Solar Solar Massachusetts 2.7 4.3 (1.6) (37.2%)(b)
Commercial
Oliver Solar Solar California 3.9(2) 3.9(2) - -
Commercial
Delran Solar Solar New Jersey 1.2 1.3 (0.1) (7.7%)
Commercial
Skillman Solar Solar New Jersey 0.9 1.8 (0.9) (50%)(c)
Echo Solar Commercial
(MN) Solar Minnesota 11.1 11.4 (0.3) (2.6%)
Echo Solar Commercial
(VA 1) Solar Virginia 2.3 2.6 (0.3) (11.5%)
Solar Subtotal 83.4 91.8 (8.4) (9.2)%
Whirlwind Wind Texas 73.1 102.3 (29.2) (28.5%)(d)
Wind Subtotal 73.1 102.3 (29.2) (28.5%)
Total 156.5 194.1 (37.6) (19.4%)
Values and totals have been rounded to the nearest decimal.
1. Reflects RNEW's pro forma share of production based on ownership.
2. Oliver Solar reached its Commercial Operation Date ("COD") on
29 November 2021 and has been earning PPA revenue from the
off-taker based on P50 modelled production since that date.
However, due to some inspection and testing delays with its
off-taker, a global commerce company, the system had not been
energised as at 30 June 2023.
Production variance summary:
a Underperformance primarily due to the need for fuse holder
replacements in combiner boxes, which have been delayed in receipt
due to supply chain constraints. Completion of replacements
occurred during Q2 2023. Projects also experienced curtailments
during Q2, further increasing the variance.
b Underperformance primarily due to damage resulting from a
rodent infestation. Repairs are projected to be completed before
the end of 2023.
c Underperformance due to Schweitzer Engineering Laboratories
("SEL") relay tripping issue resulting in lack of production most
of Q2. Production restored in July and project is undergoing an
engineer review to prevent recurrence.
d Underperformance primarily due to higher than expected
curtailment during the first quarter, historically low wind
resource in the U.S. during Q2, downtime for site maintenance and
nine days of no production due to the tornado in Matador, TX.
Revenues
As at 30 June 2023, RNEW's portfolio had 100% of its revenue
contracted with a weighted average remaining term of 14.1 years;
this includes all construction and committed assets. Approximately
99% of the portfolio benefits from fixed-price revenues, many with
annual escalators of 1-2%, through PPAs, contracted solar renewable
energy credits ("SREC"), and fixed rents under leases. These fixed
price contracts mitigate market price risk for the term of the
contracts. Less than 1% of the portfolio has a variable form of
revenue contract. These contracts are set at a fixed discount to a
defined Massachusetts utility electric rate, which provides an
ongoing economic benefit to the customer (i.e., the
off-taker/rooftop owner), as opposed to receiving the higher
utility electric rate when consuming electricity from the grid.
While the variable rate contract introduces an element of price
volatility, it also offers the potential to hedge inflation risk as
utility rates in Massachusetts have appreciated 3.0% per annum on
average from 1990-2022.
The revenue profile reported below represents a snapshot of
RNEW's existing revenue contracts as at 30 June 2023 and does not
assume any replacement revenue contracts following the expiry of
these contracts. With increased adoption of renewable energy in the
U.S. and rising natural gas prices (which tend to result in higher
power prices in U.S. markets where natural gas is the marginal
fuel), we believe that RNEW's prospects for re-contracting at the
end of revenue contract terms remain positive.
Portfolio revenue breakdown(1)(2)
Contracted Contracted Contracted Uncontracted
- Fixed - Variable - Fixed - Market
Price Revenue Price Revenue Price Incentive Revenue
(%) (%) Revenue (%)
(%)
(2023) 86.7% 1.0% 12.3% 0.0%
--------------- --------------- ----------------- -------------
(2024) 89.0% 1.0% 10.0% 0.0%
--------------- --------------- ----------------- -------------
(2025) 89.2% 2.2% 8.6% 0.0%
--------------- --------------- ----------------- -------------
(2026) 88.9% 2.2% 8.9% 0.0%
--------------- --------------- ----------------- -------------
(2027) 91.1% 2.3% 6.6% 0.0%
--------------- --------------- ----------------- -------------
(2028) 51.6% 2.1% 3.0% 43.2%
--------------- --------------- ----------------- -------------
(2029) 52.0% 2.1% 2.7% 43.1%
--------------- --------------- ----------------- -------------
(2030) 50.7% 2.1% 2.6% 44.6%
--------------- --------------- ----------------- -------------
(2031) 50.0% 2.1% 2.6% 45.2%
--------------- --------------- ----------------- -------------
(2032) 50.8% 2.2% 2.6% 44.4%
--------------- --------------- ----------------- -------------
(2033) 49.4% 2.2% 2.6% 45.8%
--------------- --------------- ----------------- -------------
(2034) 48.3% 2.2% 2.5% 47.0%
--------------- --------------- ----------------- -------------
(2035) 47.7% 2.1% 1.9% 48.3%
--------------- --------------- ----------------- -------------
(2036) 44.4% 2.0% 1.2% 52.4%
--------------- --------------- ----------------- -------------
(2037) 43.3% 1.9% 0.9% 53.9%
--------------- --------------- ----------------- -------------
(2038) 82.9% 3.4% 0.0% 13.7%
--------------- --------------- ----------------- -------------
(2039) 83.1% 0.3% 0.0% 16.6%
--------------- --------------- ----------------- -------------
(2040) 83.1% 0.0% 0.0% 16.9%
--------------- --------------- ----------------- -------------
(2041) 78.9% 0.0% 0.0% 21.1%
--------------- --------------- ----------------- -------------
(2042) 76.6% 0.0% 0.0% 23.4%
--------------- --------------- ----------------- -------------
(1) The increase in uncontracted market revenue from 2028
onwards is due to the maturity of the Whirlwind PPA.
(2) The decrease in uncontracted market revenue from 2038
onwards is due to Whirlwind reaching the conclusion of its
technical useful life.
Active management
Ecofin maintains an active approach to managing RNEW's
portfolio. For operating assets, our process involves actively
monitoring production through direct, real-time system access,
review of monthly O&M and asset management reports, and meeting
at least monthly with project operators and asset managers to
review and enhance performance. For construction stage assets, the
process is appropriately structured for more frequent engagement
with the relevant EPC contractor to review project milestones,
troubleshoot issues, and review and approve payments in accordance
with contracts.
Financing
As at 30 June 2023, the Company's U.S. subsidiaries at a project
level had debt balances of $45.1 million, with a further $32.8
million drawn under the RCF. This total debt balance corresponds to
approximately 38.1% of GAV and compares to the maximum limit of 65%
in the Company's Investment Policy, as further detailed in the
table below. Given that the Company's portfolio primarily comprises
operating assets that have long-term, fixed-price revenue contracts
with investment grade counterparties, construction and term loan
financing opportunities at both a project and group level are
widely available. With that in mind, the Company's Investment
Manager and Board favour a measured approach of using leverage to
mitigate interest rate and default risk. In Q2, the Company
successfully extended its existing RCF as described below:
l The RCF, which comprises two tranches, has now been extended
by 12 months. The $50 million tranche has been extended to October
2024 with a rate of SOFR + 2.00% to 18 October 2023 and SOFR +
2.125% thereafter, and the $15 million tranche was extended to
October 2025 with a rate of SOFR + 2.25% to 18 October 2023 and
SOFR + 2.375% thereafter. The RCF is secured upon certain of the
Company's investment assets and offers the ability to substitute
reference assets. The RCF also includes an accordion option which
provides access to $20 million of additional capital which can be
accessed subject to certain conditions. This substantial commitment
with attractive pricing and terms reflects the high quality of
RNEW's portfolio. As at 30 June 2023, the RCF was $32.8 million
drawn.
Through the 49.5% acquisition of the Beacon 2 and 5 operating
solar assets, the Company assumed its share of amortising project
term loans secured on these projects that totalled $45.1 million,
as referred to above.
On 30 June 2023, the Company had GAV(1) of $204.7 million, and
total recourse and non-recourse debt of $77.9 million, resulting in
total leverage of 38.1%. The borrowing facilities available to the
Company and its subsidiaries as at 30 June 2023 were as set out in
the table below:
Facility
amount Amount drawn
Applicable
Loan type Provider Borrower ($m) ($m) Maturity rate
$50.0 $32.8 Oct-24 SOFR + 2.00%(2)
Revolving credit RNEW Capital,
facility KeyBank LLC $15.0 - Oct-25 SOFR + 2.25%(2)
Beacon Solar
Term loan KeyBank 2 $24.9 $24.9 May-26 SOFR + 1.25%
Beacon Solar
Term loan KeyBank 5 $20.2 $20.2 May-26 SOFR + 1.25%
Total Facility/Debt $110.1 $77.9
1. Includes closed and committed assets based on equity exposure at FMV.
2. From 18 October 2023, the margin on the 2 year facility will
increase to 2.125% and the margin on the 3-year facility will
increase to 2.375%.
Portfolio valuation
Valuation of the Company's portfolio is performed on a quarterly
basis. A discounted cash flow ("DCF") valuation methodology is
applied, which is customary for valuing privately owned renewable
energy assets. The valuation is performed by Ecofin at 31 March and
30 September, and by Marshall & Stevens at 30 June and 31
December.
FMV for each investment is derived from the present value of the
investment's expected future cash flows, using reasonable
assumptions and forecasts for revenues and operating costs, and an
appropriate discount rate. More specifically, such assumptions
include annual energy production, curtailment, merchant power
prices, useful life of the assets, and various operating expenses
and associated annual escalation rates often tied to inflation,
including O&M, asset management, balance of plant, land leases,
insurance, property and other taxes, and decommissioning bonds,
among other items.
NAV bridge for the six month period ($MM)
NAV 31 Dec 2022 $130.2
Change in ProjectCo DCF Rollforward ($1.1)
-------
Change in ProjectCo DCF - discount
rates $0.5
-------
Change in ProjectCo DCF - Assumptions $0.9
-------
Distributions from ProjectCos to
RNEW $3.6
-------
Dividend to Shareholders ($3.9)
-------
Expenses Paid ($1.2)
-------
Change in Financial Assets ($2.2)
-------
NAV 30 June 2022 $126.8
-------
Change in project company DCF: Represents the impact on NAV from
changes to DCF depreciation and quarterly cashflow roll-forward and
change in project-level debt outstanding balances, including
principal amortization.
Change in project company DCF discount rates: Represents the
impact on NAV from changes to the discount rates applied to the DCF
models of each project company. As at 30 June 2023, the weighted
average unlevered pre-tax discount rate was 7.3%, a decrease from
7.5% at 31 December 2022 principally related to a 25 basis points
reduction in the SED Solar Portfolio and Delran Solar discount
rates to bring them in line with the balance of the solar
Portfolio, as well as the inclusion of the Echo Solar Portfolio at
FMV in the weighted average calculation.
Change in project company DCF merchant curves: Represents the
impact on NAV from changes to the forward merchant price curves
used in the DCF models of each project company. The increase was
principally due to the update of the DCF models with the most
recently published regional market forward prices by the U.S.
EIA.
Distributions from project companies to RNEW: Represents cash
generated by project companies, which was distributed up to RNEW
during the Period for purposes of paying dividends to
shareholders.
Dividends to shareholders: Dividends for Q4 2022 and Q1 2023 of
$3.9 million (2.8 cents per share) were paid during the Period.
After the Period end, the Company declared a further dividend of
0.7 cents per share in respect of the quarter ended 30 June
2023.
Expenses paid: Represents the impact on NAV due to management
fees and expenses paid during the Period.
Change in financial assets: Represents the impact on NAV due to
increases or decreases in cash, receivables, payables and other net
working capital account balances.
Deferred tax liability: Represents the impact on NAV due to
accruals arising from operations in the Period and from fair market
value adjustments at RNEW Holdco, LLC, the Company's wholly-owned
U.S. subsidiary, which is subject to U.S. income taxes. On a
rounded basis, there has been no change in the deferred tax
liability during the Period.
Portfolio valuation sensitivities
The figure below shows the impact on the portfolio valuation of
changes to the key input valuation assumptions ("sensitivities")
with the horizontal x-axis reflecting the percentage impact on NAV
per Share. The valuation sensitivities are based on the portfolio
as at 30 June 2023. For each sensitivity illustrated, it is assumed
that potential changes occur independently with no effect on any
other assumption. The relatively moderate impact of a change in
forecast merchant-power prices reflects the long-term fixed price
contracted revenues of the Company's portfolio, with a weighted
average remaining contracted term of 14.1 years as at 30 June 2023.
Similarly, the moderate impacts due to variations in operational
expenses reflect a number of the Company's assets having fixed
price, long-term operating expenses including O&M, property
leases, and payments in lieu of taxes.
Sensitivity Impact on NAV per Share
Energy Production P75/P25 (6.4%) to 6.3%
------------------------
Discount Rates +/- 50 bps (5.0%) to 5.4%
------------------------
Merchant Power Prices +/- 10.0% (4.9%) to 4.9%
------------------------
Operating Expenses +/- 10.0% (4.1%) to 4.1%
------------------------
Curtailment +/- 50% (3.8%) to 3.5%
------------------------
Market outlook
The outlook for the U.S. renewables industry, particularly in
the solar and wind sectors, remains positive and poised for growth
in 2023 and 2024. We continue to watch several key trends which are
contributing to this positive trajectory:
l Climate Change Awareness and Energy Security: Growing
awareness and concern about climate change and the need for energy
security in the U.S. are driving the transition towards renewable
energy sources. This is resulting in long-term policy support for
renewables development.
l Policy Tailwinds: Structural policy support, such as the
Inflation Reduction Act (IRA), is providing a strong foundation for
sustained growth in the renewables sector. Tax benefits and capital
allocation for renewable energy and climate programs are
encouraging investment.
l Cost Competitiveness: Solar and wind power have become
increasingly cost-competitive compared to traditional fossil fuel
alternatives. This has attracted the attention of investors,
utilities, and consumers, further driving momentum in the
sector.
l Corporate Adoption: Corporations are embracing renewable
energy supply, with contracts for substantial renewable energy
capacity signed. This corporate interest not only helps achieve
sustainability goals but also contributes to the overall growth of
the renewable energy market.
l Solar PV Growth: Solar photovoltaic (PV) capacity is expected
to see significant growth, with projections indicating new capacity
additions of 29.1 GW of utility-scale solar PV capacity and 9.4 GW
of battery storage in 2023. This growth is facilitated by the
steady reduction in the costs of these technologies, improved
module efficiency, enhanced load factors, economies of scale
created by larger project sizes, technological advancements, and
improved maintenance practices. Solar energy accounted for more
than half of all new electricity-generating capacity integrated
into the U.S. grid in early 2023, led by strong growth in the
utility-scale segment of the market.
l Onshore Wind Growth: According to the U.S. Department of
Energy, wind power accounted for 22% of new electricity capacity
installed in the United States in 2022, second only to solar. The
U.S. currently has over 140 GW of installed wind capacity and
expectations for annual wind additions are ambitious, projected to
double from around 10 GW to over 20 GW by the end of this decade.
Clearing supply chain obstacles and innovation within the sector
are driving this expansion which, in turn will reinforce investment
in the domestic equipment supply chain, establishing the U.S. as a
prominent player within the global wind industry.
Notwithstanding the positive outlook, some challenges remain,
including international supply chain disruptions, trade
restrictions, uncertainties around detailed application of certain
IRA provisions, extreme weather and inflation. These challenges may
impact project timelines, costs, and financial viability of some
new projects in the short term.
In conclusion, the U.S. renewables industry, particularly in
solar and wind, is set for significant growth in 2023 and beyond
due to a combination of favourable factors such as policy support,
cost competitiveness, and increased demand. While challenges
persist, the sector's overall trajectory appears promising.
Furthermore, we believe that the Company's current portfolio
benefits from attractive sector fundamentals that support
attractive and sustainable valuations.
Ecofin Advisors, LLC
13 September 2023
ESG Integration and Impact
The Company's and Ecofin's strategy is to allocate capital using
an ESG integrated investment process to build and operate a
diversified portfolio of Renewable Assets that achieves RNEW's
investment objective.
RNEW is focused on allocating capital using an investment
process which integrates ESG considerations and analysis to invest
in and operate a diversified portfolio of Renewable Assets
consistent with RNEW's investment objective.
Ecofin is a signatory to the Principles for Responsible
Investment (PRI) and incorporates ESG analysis into its investment
and reporting process. Ecofin's investment strategies related to
renewables infrastructure are designed to provide investors with
attractive long-term returns and a level of impact that aligns with
United Nations Sustainable Development Goals:
This strategy seeks to achieve positive impacts that align with
the following UN Sustainable Development Goals
-- 7 Affordable and clean energy
-- 8 Decent work and economic growth
-- 9 Industry, innovation and infrastructure
-- 11 Sustainable cities and communities
-- 13 Climate action
The Investment Manager's sustainability and impact policy is
further described in the Sustainability & Impact section of its
website ecofininvest.com/sustainability-impact.
ESG integration
The Company was established to offer investors direct exposure
to renewable energy and sustainable infrastructure assets including
solar, wind, and battery storage that reduce greenhouse gas ("GHG")
emissions and promote a positive environmental impact. The
Investment Manager integrates analysis of ESG issues throughout the
lifecycle of its investment activities spanning due diligence,
investment approval, and ongoing portfolio management.
Environmental criteria analysis considers how an investment
performs as a steward of nature; social criteria analysis examines
its impact and relationships with employees, suppliers, customers
and the communities in which it operates; and governance criteria
analysis examines internal controls, business ethics, compliance
and regulatory status associated with each investment.
Ecofin has developed a proprietary ESG due diligence risk
assessment framework ("ESG Risk Assessment") that combines both
qualitative and quantitative data. This ESG Risk Assessment is
embedded in Ecofin's investment memoranda and systematically
applied by the investment team to all opportunities prior to
investment authorisation by Ecofin's Investment Committee. Each of
the Company's eight closed and committed investments spanning 65
assets was analysed through Ecofin's ESG Risk Assessment prior to
investment commitment. Ecofin believes this approach to assessing
ESG issues serves to mitigate risk and enhance RNEW's impact.
Environmental factors affecting climate risk are reviewed to
determine an investment's impact and ability to reduce GHG
emissions, air pollution and water consumption.
Analysis of environmental issues may also consider the impact
that the investment will have on land use and considers mitigation
plans when issues are identified. Analysis of social issues may
encompass an investment's impact on the local community and
consider health and safety issues together with the counterparties
to be engaged to construct and operate the assets. Governance is
reviewed in partnership with qualified third-party legal counsel to
ensure compliance with all laws and regulations, strong ongoing
corporate governance through strict reporting protocols with
qualified operators, project asset managers and annual independent
financial statement audits.
Ecofin applies a systematic approach to ESG monitoring once
acquisitions are closed. Through Ecofin's engagement with third
party O&M and asset management service providers, Ecofin
reviews asset level reporting on health and safety metrics,
environmental matters and compliance. Issues identified are
reviewed and addressed with service providers through periodic
meetings such as monthly operations meetings.
Importantly, ESG factors are analysed then reported in a
transparent manner so that investors and key stakeholders can
measure their impact.
Impact
RNEW's portfolio produced approximately 157 GWh of clean
electricity during the six month period to 30 June 2023, enough to
power approximately 29,400 homes, offsetting approximately 97,000
tonnes of CO(2) e and avoiding the consumption of approximately
19,800 million litres of water. RNEW focuses on investments that
have a positive environmental impact by reducing GHG emissions, air
pollution and water consumption. Ecofin seeks to analyse and report
on ESG factors on a consistent basis to maximise the impact of its
investment activities. To assess environmental impact, Ecofin goes
beyond measuring CO(2) emissions avoided and quantifies other GHG
emissions, such as methane and nitrous oxide, and also measures the
contribution that investments make to save water consumption. Water
is consumed by thermoelectric (i.e. coal and gas) power plants in
the cooling process associated with steam turbine generators. Water
savings occur in the same way that renewable energy generation
offsets CO(2) emissions from thermoelectric generators. Ecofin
calculates estimated water savings by reference to the EIA
thermoelectric cooling water data by location and applying it to
the production from RNEW's portfolio.
Ecofin's methodology for calculating the environmental impact of
investments relies on trusted data sources including the U.S. EPA
and the EIA.
Portfolio impact
97,000 19,800M
Tonnes of CO(2) e Reduction Litres of water savings
29,400 7,900
Households supplied Olympic size swimming pools
Investment Objective and Investment Policy
The Company's investment objective and investment policy
(including defined terms) are as set out in its IPO prospectus:
Investment objective
The Company's investment objective is to provide Shareholders
with an attractive level of current distributions by investing in a
diversified portfolio of mixed renewable energy and sustainable
infrastructure assets ("Renewable Assets") predominantly located in
the United States with prospects for modest capital appreciation
over the long term.
Investment policy and strategy
The Company intends to execute its investment objective by
investing in a diversified portfolio of Renewable Assets
predominantly in the United States, but it may also invest in other
OECD countries.
Whilst the principal focus of the Company will be on investment
in Renewable Assets that are solar and wind energy assets ("Solar
Assets" and "Wind Assets" respectively), sectors eligible for
investment by the Company will also include different types of
renewable energy (including battery storage, biomass, hydroelectric
and microgrids) as well as other sustainable infrastructure assets
such as water and waste water.
The Company will seek to invest primarily through
privately-negotiated middle market acquisitions of long-life
Renewable Assets which are construction-ready, in-construction
and/or currently in operation with long-term PPAs or comparable
offtake contracts with investment grade quality counterparties,
including utilities, municipalities, universities, schools,
hospitals, foundations, corporations and others. Long-life
Renewable Assets are those which are typically expected by Ecofin
to generate revenue from inception for at least 10 years.
The Company intends to hold the Portfolio over the long term,
provided that it may dispose of individual Renewable Assets from
time to time.
Investment restrictions
The Company will invest in a diversified portfolio of Renewable
Assets subject to the following investment limitations which, other
than as specified below, shall be measured at the time of the
investment:
l once the Net Initial Proceeds are substantially fully
invested, a minimum of 20 per cent. of Gross Assets will be
invested in Solar Assets;
l once the Net Initial Proceeds are substantially fully
invested, a minimum of 20 per cent. of Gross Assets will be
invested in Wind Assets;
l a maximum of 10 per cent. of Gross Assets will be invested in
Renewable Assets that are not Wind Assets or Solar Assets;
l exposure to any single Renewable Asset will not exceed 25 per cent. of Gross Assets;
l exposure to any single Offtaker will not exceed 25 per cent. of Gross Assets;
l once the Net Initial Proceeds are substantially fully
invested, investment in Renewable Assets that are in the
construction phase will not exceed 50 per cent. of Gross Assets,
but prior to such time investment in such Renewable Assets will not
ex-ceed 75 per cent. of Gross Assets. The Company expects that
construction will be primarily focussed on Solar Assets in the
shorter term until the Portfolio is more substantially invested and
may thereafter include Wind Assets in the construction phase;
l exposure to Renewable Assets that are in the development
(namely pre-construction) phase will not exceed 5 per cent. of
Gross Assets;
l exposure to any single developer in the development phase will
not exceed 2.5 per cent. of Gross Assets;
l the Company will not typically provide Forward Funding for
development projects. Such Forward Funding will, in any event, not
exceed 5 per cent. of Gross Assets in aggregate and 2.5 per cent.
of Gross Assets per development project and would only be
undertaken when supported by customary security;
l Future Commitments and Developer Liquidity Payments, when
aggregated with Forward Funding (if any), will not exceed 25 per
cent. of Gross Assets;
l once the Net Initial Proceeds are substantially fully
invested, Renewable Assets in the United States will represent at
least 85 per cent. of Gross Assets; and
l any Renewable Assets that are located outside of the United
States will only be located in other OECD countries. Such Renewable
Assets will represent not more than 15 per cent. of Gross
Assets.
References in the investment restrictions detailed above to
"investments in" or "exposure to" shall relate to the Company's
interests held through its Investment Interests.
For the purposes of this Prospectus, the Net Initial Proceeds
will be deemed to have been substantially fully invested when at
least 75 per cent. of the Net Initial Proceeds have been invested
in (or have been committed in accordance with binding agreements to
investments in) Renewable Assets.
The Company will not be required to dispose of any investment or
to rebalance the Portfolio as a result of a change in the
respective valuations of its assets. The investment limits detailed
above will apply to the Group as a whole on a look-through basis,
namely, where assets are held through a Project SPV or other
intermediate holding entities or special purpose vehicles, and the
Company will look through the holding vehicle to the underlying
assets when applying the investment limits.
Gearing policy
The Group primarily intends to use long-term debt to provide
leverage for investment in Renewable Assets and may utilise
short-term debt, including, but not limited to, a revolving credit
facility, to assist with the acquisition of investments.
Long-term debt shall not exceed 50 per cent. of Gross Assets and
short-term debt shall not exceed 25 per cent. of Gross Assets,
provided that total debt of the Group shall not exceed 65 per cent.
of Gross Assets, in each case, measured at the point of entry into
or acquiring such debt.
The Company may employ gearing either at the level of the
relevant Project SPV or at the level of any intermediate subsidiary
of the Company. Gearing may also be employed at the Company level,
and any limits set out in this Prospectus shall apply on a
consolidated basis across the Company, the Project SPVs and any
such intermediate holding entities (but will not count any
intra-Group debt). The Company expects debt to be denominated
primarily in U.S. Dollars.
For the avoidance of doubt, financing provided by tax equity
investors and any investments by the Company in its Project SPVs or
intermediate holding companies which are structured as debt are not
considered gearing for this purpose and are not subject to the
restrictions in the Company's gearing policy.
Currency and hedging policy
The Group may use derivatives for the purposes of hedging,
partially or fully:
l electricity price risk relating to any electricity or other
benefit including renewable energy credits or incentives, generated
from Renewable Assets not sold under a PPA, as further described
below;
l currency risk in relation to any Sterling (or other non-U.S.
Dollar) denominated operational expenses of the Company;
l other project risks that can be cost-effectively managed
through derivatives (including, without limitation, weather risk);
and
l interest rate risk associated with the Company's debt facilities.
In order to hedge electricity price risk, the Company may enter
into specialised derivatives, such as contracts for difference or
other hedging arrangements, which may be part of a tripartite or
other PPA arrangement in certain wholesale markets where such
arrangements are required to provide an effective fixed price under
the PPA.
Members of the Group will only enter into hedging or other
derivative contracts when they reasonably expect to have an
exposure to a price or rate risk that is the subject of the
hedge.
Cash management policy
Until the Company is fully invested the Company will invest in
cash, cash equivalents, near cash instruments and money market
instruments and treasury notes ("Near Cash Instruments"). Pending
re-investment or distribution of cash receipts, the Company may
also invest in Near Cash Instruments as well as Investment Grade
Bonds and exchange traded funds or similar ("Liquid Securities"),
provided that the Company's aggregate holding in Liquid Securities
shall not exceed 10 per cent. of Gross Assets measured at the point
of time of acquiring such securities.
Amendments to the investment objective, policy and investment
restrictions
In the event that the Board considers it appropriate to amend
materially the investment objective, investment policy or
investment restrictions of the Company, Shareholder approval to any
such amendment will be sought by way of an ordinary resolution
proposed at an annual or other general meeting of the Company."
Interim Management Report
The Directors are required to provide an Interim Management
Report in accordance with the FCA Disclosure Guidance and
Transparency Rules. They consider that the Chair's Statement and
the Investment Manager's Report in this Half-yearly Report provide
details of the important events which have occurred during the
Period and their impact on the financial statements. The following
statements on related party transactions, going concern and the
Directors' Responsibility Statement below, together with the
Chair's Statement and Investment Manager's Report, constitute the
Interim Management Report for the Company for the six months ended
30 June 2023.
Principal Risks and Uncertainties
The Directors have identified the following as the Company's
principal risks and uncertainties. These are described in the
Company's Annual Report for the year ended 31 December 2022 (pages
31 - 33):
1. Electricity price
2. Interest rate, currency and inflation
3. Investment performance
4. Investment valuation
5. Political
6. Discount management
7. Cyber
8. Service provider reliance
9. Counterparty
10. Climate
11. ESG
12. Financing
Related Party Transactions
The Company's Investment Manager, Ecofin, is considered a
related party under the Listing Rules. Details of the amounts paid
to the Company's Investment Manager and the Directors during the
Period are detailed in Note 11 to the Financial Statements.
Going Concern
The Directors have adopted the going concern basis in preparing
the interim financial statements. The following is a summary of the
Directors' assessment of the going concern status of the
Company.
In reaching their conclusion, the Directors considered the
Company's cash flow forecasts, cash and net debt position, and the
financial covenants in its borrowing facilities. The Company's net
assets at 30 June 2023 were $126.8 million (31 December 2022:
$130.2 million). As at 30 June 2023, the Company held $1.9 million
in cash (31 December 2022: $3.4 million), had borrowings of $77.9
million (31 December 2022: $64.4 million) and $32.2 million
headroom on its RCF (31 December 2022: $46 million).
The Company's holds 100% of the share capital of Holdco which in
turn holds investments in renewable energy project companies
through SPVs. Underlying SPV revenues are derived from the sale of
electricity by project companies under PPAs in place with
creditworthy utilities, municipalities, and corporations. Most of
these PPAs are contracted over a long period with a weighted
average remaining life as at 30 June 2023 of 14.1 years (31
December 2022: 14.6 years). As announced on 7 August 2023,
following a review of recent performance of the Company's assets,
the Company expects net cash flows at the portfolio level to be
meaningfully lower than previously forecast for the quarters ending
30 September 2023 and 31 December 2023 due principally to
historically low wind resource in Q2 at Whirlwind, compounded by
the tornado affecting Whirlwind's substation on 21 June 2023, and
other operating issues. The Directors' assessment of going concern
has taken into account these revised cashflows.
The Company continues to meet its day-to-day liquidity needs
through its cash resources. Total expenses for the Period were $1.1
million (30 June 2022: $1.2 million), which represented
approximately 0.89% of average net assets during the Period (30
June 2022: 0.94%). At the date of approval of this Half-yearly
Report, based on the aggregate of investments and cash held, the
Company had substantial cover for its operating expenses. Further,
the Company has the ability to draw on its $65 million RCF which
was amended and extended by 12 months in Q2. The Company and
underlying SPVs continue to comply with debt covenants.
The major cash outflow of the Company is the payment of
dividends. The Directors review financial reporting and forecasts
at each quarterly Audit Committee meeting, which includes reporting
related to indebtedness, compliance with borrowing covenants and
fund investment limits. The Board prudently decided to reduce the
Q2 2023 Dividend, following an anticipated decline in cash flows
due to the operational issues discussed in the Chair's Statement,
Investment Manager's report and as announced on 29 June 2023. As a
result, the Board expects the Company's dividend for each of the
quarters ending 30 September 2023 and 31 December 2023 to remain at
a reduced level of 0.70 cents per share. The Directors are
confident that the Company has sufficient cash balances, borrowing
headroom and anticipated tax equity arrangements in order to fund
the commitments detailed in note 12 to the financial statements,
should they become payable.
The Directors have fully considered each of the Company's
investments. Other than described in this report, the Directors do
not foresee any immediate material risk to the Company's investment
portfolio and/or the income it receives from underlying SPVs. A
prolonged and deep market decline could lead to falling values in
the underlying investments or interruptions to cashflow, however
the Company currently has sufficient liquidity available to meet
its future obligations. The Company's ability to continue as a
going concern has been assessed by the Directors for a period of at
least 12 months from the date the financial statements were
authorised for publication.
Directors' Statement of Responsibility for the Half-Yearly
Report
The Directors confirm to the best of their knowledge that:
l The condensed set of financial statements contained within the
interim financial report has been prepared in accordance with FRS
104 Interim Financial Reporting; and
l The Interim Management Report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA's Disclosure
Guidance and Transparency Rules.
Patrick O'D Bourke
Chair
For and on behalf of the Board of Directors
13 September 2023
Financial Statements
Unaudited Condensed Statement of Comprehensive Income
For the six months ended 30 June 2023
For the six months ended For the six months ended
30 June 2023 30 June 2022
(Unaudited) (Unaudited)
Revenue Capital Total Revenue Capital Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Losses on investments 3 - (2,091) (2,091) - (1,770) (1,770)
Net foreign exchange
gains - 16 16 - 4 4
Income 4 3,648 - 3,648 4,457 - 4,457
Investment management
fees 5 (637) - (637) (638) - (638)
Other expenses (507) - (507) (558) - (558)
Profit/(loss) on ordinary
activities before taxation 2,504 (2,075) 429 3,261 (1,766) 1,495
Taxation - - - - - -
Profit/(loss) on ordinary
activities after taxation 2,504 (2,075) 429 3,261 (1,766) 1,495
Earnings per Share
(cents) - basic and
diluted 6 1.81c (1.50c) 0.31c 2.55c (1.38c) 1.17c
The total column of the Condensed Statement of Comprehensive
Income is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the six months to 30 June 2023 (the "Period").
Profit on ordinary activities after taxation is also the "Total
comprehensive profit for the Period".
The accompanying notes form part of these interim financial
statements.
Unaudited Condensed Statement of Financial Position
As at 30 June 2023
As at As at
30 June 31 December
2023 2022
(Unaudited) (Audited)
Notes $'000 $'000
Non-current assets
Investments at fair value through profit
or loss 3 125,284 127,375
Current assets
Cash and cash equivalents 1,910 3,394
Trade and other receivables 28 11
1,938 3,405
Current liabilities: amounts falling due
within one year
Trade and other payables (472) (593)
Net current assets 1,466 2,812
Net assets 126,750 130,187
Capital and reserves: equity
Share capital 7 1,381 1,381
Share premium 12,732 12,732
Special distributable reserve 8 121,250 121,250
Capital reserve (9,198) (7,123)
Revenue reserve 585 1,947
Total Shareholders' funds 126,750 130,187
Net assets per Share (cents) 9 91.8c 94.3c
Approved and authorised by the Board of directors for issue on
13 September 2023.
Patrick O'D Bourke
Chair of the Board
The accompanying notes form part of these interim financial
statements.
Ecofin U.S. Renewables Infrastructure Trust PLC is incorporated
in England and Wales with company number 12809472.
Unaudited Condensed Statement of Changes in Equity
For the six months ended 30 June 2023
Six months ended 30 June 2023 (Unaudited)
Share Special
Share premium distributable Capital Revenue
capital account reserve reserve reserve Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Opening equity as at
1 January 2023 1,381 12,732 121,250 (7,123) 1,947 130,187
Transactions with Shareholders
Dividends paid - - - - (3,866) (3,866)
Total transactions with
Shareholders 1,381 12,732 121,250 (7,123) (1,919) 126,321
Profit/(loss) and total
comprehensive income
for the Period - - - (2,075) 2,504 429
Closing equity as at
30 June 2023 1,381 12,732 121,250 (9,198) 585 126,750
Six months ended 30 June 2022 (Unaudited)
Share Special
Share premium distributable Capital Revenue
capital account reserve reserve reserve Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Opening equity
as at 1 January
2022 1,251 29 121,250 (759) 1,952 123,723
Transactions with
Shareholders
Shares issued during
the period 7 129 13,027 - - - 13,156
Shares issued to
Investment Manager - 44 - - - 44
Share issue costs - (411) - - - (411)
Dividends paid - - - - (3,683) (3,683)
Total transactions
with Shareholders 1,380 12,689 121,250 (759) (1,731) 132,829
Profit/(loss) and
total comprehensive
income for the
period - - - (1,766) 3,261 1,495
Closing equity
as at 30 June 2022 1,380 12,689 121,250 (2,525) 1,530 134,324
The Company's distributable reserves consist of the Special
distributable reserve, Capital reserve attributable to realised
gains and Revenue reserve. Total distributable reserves as at 30
June 2023 were $121.8 million (31 December 2022: $123.2
million).
The accompanying notes form part of these interim financial
statements.
Unaudited Condensed Statement of Cash Flows
For the six months ended 30 June 2023
Six months Six months
ended 30 June ended 30 June
2023 2022
(Unaudited) (Unaudited)
Notes $'000 $'000
Operating activities
Profit on ordinary activities before taxation 429 1,495
Adjustment for unrealised losses on investments 2,091 1,770
(Increase) in trade and other receivables (17) (35)
(Decrease)/increase in trade and other payables (121) 22
Net cash flow from operating activities 2,382 3,252
Investing activities
Purchase of investments 3 - (13,861)
Net cash flow used in investing activities - (13,861)
Financing activities
Proceeds of share issues 7 - 13,200
Share issue costs - (411)
Dividends paid (3,866) (3,683)
Net cash flow from financing activities (3,866) 9,106
(Decrease) in cash (1,484) (1,503)
Cash and cash equivalents at start of period 3,394 5,362
Cash and cash equivalents at end of period 1,910 3,859
As at 30 June As at 30 June
2023 2022
(Unaudited) (Unaudited)
$'000 $'000
Cash and cash equivalents
Cash at bank - -
Money market cash deposits 1,910 3,859
Total cash and cash equivalents at end
of period 1,910 3,859
The accompanying notes form part of these interim financial
statements.
Notes to the Interim Financial Statements
For the six months ended 30 June 2023
1. General Information
Ecofin U.S. Renewables Infrastructure Trust PLC ("RNEW" or the
"Company") is a public company limited by shares incorporated in
England and Wales on 12 August 2020 with registered number
12809472. The Company is a closed-ended investment company with an
indefinite life. The Company commenced operations on 22 December
2020 when its Shares were admitted to trading on the London Stock
Exchange. The Directors intend, at all times, to conduct the
affairs of the Company as to enable it to qualify as an investment
trust for the purposes of section 1158 of the Corporation Tax Act
2010, as amended.
The registered office and principal place of business of the
Company is 6th Floor, 125 London Wall, London, EC2Y 5AS.
The Company's investment objective is to provide Shareholders
with an attractive level of current distributions, by investing in
a diversified portfolio of mixed renewable energy and sustainable
infrastructure assets predominantly located in the U.S. with
prospects for modest capital appreciation over the long term.
The financial statements comprise only the results of the
Company, as its investment in RNEW Holdco, LLC ("Holdco") is
included at fair value through profit or loss ("FVTPL") as detailed
in the key accounting policies below.
The Company's AIFM and Investment Manager is Ecofin Advisors,
LLC.
Apex Listed Companies Services (UK) Limited provides
administrative and company secretarial services to the Company
under the terms of an administration agreement.
2. Basis of Preparation
The unaudited interim financial statements of the Company have
been prepared in accordance with IAS 34 "Interim Financial
Reporting". The accounting policies, critical accounting
judgements, estimates and assumptions are consistent with those
used in the latest audited financial statements for the year ended
31 December 2022. The interim financial statements have been
prepared in accordance with UK-adopted international accounting
standards. The interim financial statements are prepared on the
historical cost basis, except for the revaluation of certain
financial instruments at FVTPL.
The interim financial statements have also been prepared as far
as is relevant and applicable to the Company in accordance with the
Statement of Recommended Practice ("SORP") issued by the
Association of Investment Companies ("AIC") in July 2022.
These condensed interim financial statements do not include all
information and disclosures required in the annual financial
statements and should be read in conjunction with the Company's
annual financial statements as at 31 December 2022. The audited
annual accounts for the year ended 31 December 2022 have been
delivered to Companies House. The audit report thereon was
unqualified.
The functional currency of the Company is U.S. Dollars as this
is the currency of the primary economic environment in which the
Company operates and where its investments are located. The
Company's investment is denominated in U.S. Dollars and a
substantial majority of its income is receivable, and of its
expenses is payable, in U.S. Dollars. Also, a majority of the
Company's cash and cash equivalent balances is retained in U.S.
Dollars. Accordingly, the interim financial statements are
presented in U.S. Dollars rounded to the nearest thousand
dollars.
Basis of consolidation
The Company has adopted the amendments to IFRS 10 which state
that investment entities should measure all of their subsidiaries
that are themselves investment entities at fair value.
The Company owns 100% of its subsidiary Holdco and invests in
SPVs through its investment in Holdco. The Company and Holdco meet
the definition of an investment entity as described by IFRS 10.
Under IFRS 10, investment entities measure subsidiaries at fair
value rather than being consolidated on a line-by-line basis,
meaning Holdco's cash, debt and working capital balances are
included in investments held at fair value rather than in the
Company's current assets. Holdco has one investor, which is the
Company. In substance, Holdco is investing the funds of investors
in the Company on its behalf and is effectively performing
investment management services on behalf of such unrelated
beneficiary investors.
Going concern
The Directors have adopted the going concern basis in preparing
the financial statements. In reaching their conclusion, the
Directors considered the Company's cash flow forecasts, cash and
net debt position, and the financial covenants in its borrowing
facilities. Details of the Directors' assessment are given in the
Going Concern section.
Critical accounting judgements, estimates and assumptions
Preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amount of assets,
liabilities, income and expenses. Estimates are, by their nature,
based on judgement and available information, hence actual results
may differ from these judgements, estimates and assumptions. The
estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying value of assets and liabilities
are those used to determine the fair value of the investments as
disclosed in note 3 to the interim financial statements.
Key estimation and uncertainty: Investments at fair value
through profit or loss
The Company's investments in unquoted investments through Holdco
are valued by reference to valuation techniques approved by the
Directors and in accordance with the International Private Equity
and Venture Capital Valuation ("IPEV") Guidelines.
The Company uses DCF models to determine the fair value of the
underlying assets in Holdco. The value of Holdco includes any
working capital not accounted for in the DCF models (deferred tax
liabilities, cash plus any receivables or payables at the entity
and not at the asset level). The fair value of each asset is
derived by projecting its future cash flows, based on a range of
operating assumptions for revenues and expenses, and discounting
those future cash flows to the balance sheet date using a discount
rate appropriately calibrated to the risk profile of the asset and
market dynamics. The key estimates and assumptions used within the
DCF models are consistent with those used in the latest audited
financial statements to 31 December 2022 and include discount
rates, annual energy production, curtailment, merchant power
prices, useful life of the assets, and various operating expenses
and associated annual escalation rates often tied to inflation,
including operations and maintenance, asset management, balance of
plant, land leases, insurance, property and other taxes and
decommissioning bonds, among other items. An increase/(decrease) in
the key valuation assumptions would lead to a corresponding change
in the fair value of the investments. The Company's investments at
fair value are not traded in active markets.
Segmental reporting
The Chief Operating Decision Maker, which is the Board, is of
the opinion that the Company is engaged in a single segment of
business, being investment in renewable energy infrastructure
assets to generate investment returns whilst preserving capital.
The financial information used by the Chief Operating Decision
Maker to manage the Company presents the business as a single
segment.
3. Investment Held at Fair Value Through Profit or Loss
As at 30 June 2023, the Company had one investment, being
Holdco. The cost of the investment in Holdco is $134,065,052 (31
December 2022: $134,065,052).
As at As at
31 December
30 June 2023 2022
Total Total
$'000 $'000
(a) Summary of valuation
Analysis of closing balance:
Investment at fair value through profit or
loss 125,284 127,375
Total investment 125,284 127,375
(b) Movements during the period
Opening balance of investment, at cost 134,065 119,204
Additions, at cost - 14,861
Cost of investment at period end 134,065 134,065
Revaluation of investment to fair value:
Unrealised movement in fair value of investment (8,781) (6,690)
Fair value of investment at period end 125,284 127,375
(c) Losses on investment during the period
Unrealised movement in fair value of investment
brought forward (6,690) (322)
Unrealised movement in fair value of investment
during the period (2,091) (6,368)
Losses on investments (8,781) (6,690)
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy within financial assets or
financial liabilities is determined on the basis of the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their
entirety into one of the following three levels:
Level 1
The unadjusted quoted price in an active market for identical
assets or liabilities that the entity can access at the measurement
date.
Level 2
Inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or
liability, either directly or indirectly.
Level 3
Inputs are unobservable (i.e. for which market data is
unavailable) for the asset or liability.
As at 30 June 2023 As at 31 December 2022
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investment at fair
value through profit
or loss:
Equity investment in
Holdco - - 125,284 125,284 - - 127,375 127,375
Total investment - - 125,284 125,284 - - 127,375 127,375
Due to the nature of the underlying investments held by Holdco,
the Company's investment in Holdco is always expected to be
classified as Level 3. There have been no transfers between levels
during the Period.
The movement on the Level 3 unquoted investment during the
Period is shown below:
As at As at
30 June 31 December
2023 2022
$'000 $'000
Opening balance 127,375 118,882
Additions during the period - 14,861
Unrealised loss on investment (2,091) (6,368)
Closing balance 125,284 127,375
4. Income
Six months Six months
ended 30 ended 30
June June
2023 2022
$'000 $'000
Income from investment
Dividends from Holdco 3,600 4,450
Deposit interest 48 7
Total income 3,648 4,457
5. Investment Management Fee
Six months ended 30 June Six months ended 30 June
2023 2022
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Investment Management Fee 637 - 637 638 - 638
The Investment Management Agreement ("IMA") dated 11 November
2020 between the Company and Ecofin Advisors, LLC, appointed the
AIFM to act as the Company's Investment Manager for the purposes of
the AIFM Directive. Accordingly, the AIFM is responsible for
providing portfolio management and risk management services to the
Company.
Under the IMA, the Investment Manager receives a fee of 1.00%
per annum of NAV up to and including $500 million; 0.90% per annum
of NAV in excess of $500 million up to and including $1 billion;
and 0.80% per annum of NAV in excess of $1 billion, invoiced
quarterly in arrears. Until such time as 90% of the Net Initial
Proceeds of the Company's IPO was committed to investments, the
Investment Management fee was only charged on the committed capital
of the Company. No performance fee or asset level fees are payable
to the AIFM under the IMA.
The Investment Manager reinvests 15% of its annual management
fee in Shares (the "Management Fee Shares"), subject to a rolling
lock-up of up to one year, subject to certain limited exceptions.
The Management Fee Shares are issued on a quarterly basis. Where
the Shares are trading at a premium to NAV, the Company issues new
Shares to the Investment Manager equivalent in value to the
management fee reinvested. Where the Shares are trading at a
discount to NAV, the Management Fee Shares are purchased by the
Company's Brokers at the prevailing market price.
The calculation of the number of Management Fee Shares to be
issued is based upon the NAV as at the relevant quarter concerned.
The Investment Manager is also entitled to be reimbursed for
out-of-pocket expenses reasonably and properly incurred in respect
of the performance of its obligations under the IMA.
Unless otherwise agreed by the Company and the Investment
Manager, the IMA may be terminated by the Company or the Investment
Manager on not less than 12 months' notice to the other party, such
notice not to expire earlier than 36 months from the Effective Date
of the IMA (11 November 2020). The IMA may be terminated by the
Company with immediate effect from the time at which notice of
termination is given or, if later, the time at which such notice is
expressed to take effect in accordance with the conditions set out
in the IMA.
The Company's Brokers have purchased the following Management
Fee Shares in respect of the Period under review:
Purchase
Investment price
Management
fee per Share Number of Date of
Shares purchased ($) (cents) Shares purchase
1 January 2023 to 31 March 2023 48,095 79.0 60,879 10 May 2023
6. Earnings per Share
Earnings per Share are based on the profit for the six months
ended 30 June 2023 of $429,000 (30 June 2022: $1,495,000)
attributable to the weighted average number of Shares in issue of
138,078,496 in the Period (30 June 2022: 127,710,783). Revenue
profit and capital losses were $2,504,000 and ($2,075,000)
respectively (30 June 2022: $3,261,000 and ($1,766,000)
respectively).
7. Share Capital
As at 31 December
As at 30 June 2023 2022
Nominal Nominal
Number of value Number of value
Allotted, issued and fully paid: shares $ shares $
Opening balance 138,078,496 1,380,784.98 125,053,498 1,250,534.98
Placing and retail offer
Shares issued - - 12,927,617 129,276.17
Management Fee Shares issued
Shares issued - - 97,381 973.81
Closing balance 138,078,496 1,380,784.98 138,078,496 1,380,784.98
The Shares have full voting, dividend and capital distribution
(including on winding-up) rights. They confer rights of
redemption.
As at 30 June 2023, the Company's issued share capital comprised
138,078,496 Shares (30 June 2022: 138,026,751; 31 December 2022:
138,078,496) and this is the total number of Shares with voting
rights in the Company.
8. Special Distributable Reserve
Following admission of the Company's Shares to trading on the
LSE in December 2020, the Directors applied to the Court and
obtained a judgement on 29 January 2021 to cancel the amount
standing to the credit of the share premium account of the Company.
The amount of the share premium account cancelled and credited to
the Company's Special distributable reserve was $121,250,000, which
can be utilised to fund distributions to the Company's
Shareholders.
9. Net Assets per Share
Net assets per Share is based on $126,750,000 of net assets of
the Company as at 30 June 2023 (31 December 2022: $130,187,000)
attributable to the 138,078,496 Shares in issue as at the same date
(December 2022: 138,078,496).
10. Dividends
(a) Dividends paid during the Period
The Company paid the following interim dividends during the
Period:
Revenue
Cents per reserve Total
Share $'000 $'000
Quarter ended 31 December 2022 1.40c 1,933 1,933
Quarter ended 31 March 2023 1.40c 1,933 1,933
Total 2.8c 3,866 3,866
Revenue
Cents per reserve Total
Share $'000 $'000
Quarter ended 31 December 2021 1.40c 1,751 1,751
Quarter ended 31 March 2022 1.40c 1,933 1,933
Total 2.8c 3,684 3,684
(b) Dividends paid and payable in respect of the period
The dividends paid and payable in respect of the Period are the
basis on which the requirements of s1158-s1159 of the Corporation
Tax Act 2010 are considered.
Revenue
Cents per reserve Total
Share $'000 $'000
Quarter ended 31 March 2023 1.40c 1,933 1,933
Quarter ended 30 June 2023 0.70c 967 967
Total 2.1c 2,900 2,900
Revenue
Cents per reserve Total
Share $'000 $'000
Quarter ended 31 March 2022 1.40c 1,933 1,933
Quarter ended 30 June 2022 1.40c 1,933 1,933
Total 2.8c 3,866 3,866
After the Period end, the Company declared an interim dividend
of 0.7 cents per Share for the quarter 1 April 2023 to 30 June
2023, which was paid on 8 September 2023 to Shareholders on the
register at 18 August 2023.
11. Related Party Transactions with the Investment Manager and
the Directors
Investment Manager
Fees payable to the Investment Manager are shown in the
Statement of Comprehensive Income. As at 30 June 2023, the fee
owing to the Investment Manager was $317,000 (31 December 2022:
$329,000).
As at 30 June 2023, the Investment Manager's total holding of
Shares in the Company was 8,780,378 (31 December 2022:
8,787,792).
Directors
The Company is governed by a Board of Directors (the "Board"),
all of whom are non-executive, and it has no employees. Each of the
Directors was appointed on 22 October 2020.
Each of the Directors is entitled to receive a fee from the
Company at such rate as may be determined in accordance with the
Articles. Each Director receives a fee payable by the Company at
the rate of GBP40,000 per annum.
The Chair of the Board receives an additional GBP10,000 per
annum. The Chair of the Audit Committee, the Chair of the
Management Engagement Committee and the Chair of the Risk Committee
each receive an additional GBP6,000 per annum.
The Directors had the following shareholdings in the Company,
all of which were beneficially owned.
Shares at Shares at
30 June 31 December
Director 2023 2022
Patrick O'Donnell Bourke 104,436 104,436
David Fletcher 61,584 59,406
Tammy Richards 25,000 25,000
Louisa Vincent 35,728 34,435
12. Commitments and Contingencies
As at 30 June 2023 the Company had the following future
investment obligations:
The Company had a collective future unlevered net equity
commitment amount of $9.1 million, which will be funded by $16.3
million of pending future financing on closed construction assets.
These commitment figures are subject to change based on the
vendor's ability to deliver on certain conditions to close, which
may impact the price paid for certain projects. Additional funding
required is expected to be facilitated in the short term through
the RCF, and subsequently through a term debt facility as the
projects become operational.
13. Post Balance Sheet Events
Other than as disclosed in this half-yearly report, no post
balance sheet events have occurred.
14. Status of this report
These interim financial statements are not the Company's
statutory accounts for the purposes of section 434 of the Companies
Act 2006. They are unaudited. The unaudited Half-yearly report will
be made available at the registered office of the Company. The
report will also be available in electronic format on the Company's
website, http://www.ecofininvest/rnew.
The financial information for the year ended 31 December 2022
has been extracted from the statutory accounts which have been
filed with the Registrar of Companies. The auditor's report on
those accounts was not qualified and did not contain statements
under sections 498 (2) or (3) of the Companies Act 2006.
This Half-yearly report was approved by the Board of Directors
on 13 September 2023.
Alternative Performance Measures
In reporting financial information, the Company presents
alternative performance measures, ("APMs"), which are not defined
or specified under the requirements of IFRS. The Company believes
that these APMs, which are not considered to be a substitute for or
superior to IFRS measures, provide stakeholders with additional
helpful information on the performance of the Company. The APMs
presented in this report are shown below:
Premium/Discount
The amount, expressed as a percentage, by which the share price
is greater or less than the NAV per Share.
As at
30 June 2023
NAV per Share (cents) a 91.8
Share price (cents) b 60.5
Discount (b÷a)-1 34.1%
Total return
Total return is a measure of performance that includes both
income and capital returns. It takes into account capital gains and
the assumed reinvestment of dividends paid out by the Company into
its Shares on the ex-dividend date. The total return is shown
below, calculated on both a share price and NAV basis.
NAV per
Share price share
For the six months ended 30 June 2023 (cents) (cents)
Opening at 1 January 2023 a 83.3 94.3
Closing at 30 June 2023 b 60.5 91.8
Dividends paid during the Period c 2.8 2.8
Dividend/income adjustment factor(1) d 0.7946 0.9939
Adjusted closing e=b+(c*d) e 62.7 94.6
Total return (e÷a)-1 -24.7% 0.3%
1 The dividend adjustment factor is calculated on the assumption
that the dividends paid out by the Company are reinvested into the
shares of the Company at share price and NAV respectively at the
ex-dividend date.
Ongoing charges ratio
A measure, expressed as a percentage of average NAV, of the
regular, recurring annual costs of running an investment
company.
As at As at
30 June 31 December
2023 2022
Average NAV ($'000) a 127,491 129,345
Annualised expenses ($'000) b 2,307 2,332
Ongoing charges ratio (b÷a) 1.81% 1.80%
Enquiries:
Company Secretary
Apex Listed Companies Services (UK) Ltd
Tel: +44 (0) 20 3327 9720
The Half-yearly financial report will be submitted to the
National Storage Mechanism and will shortly be available for
inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR BLGDCIUBDGXX
(END) Dow Jones Newswires
September 14, 2023 02:00 ET (06:00 GMT)
Ecofin U.s. Renewables I... (LSE:RNEP)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Ecofin U.s. Renewables I... (LSE:RNEP)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
