Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — FY2023 Earnings Presentation
62 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, Feb 28, 2024
Slide 1: The Renewables Infrastructure Group Annual Results 2023
The Renewables Infrastructure Group Annual Results 2023 Renewables infrastructure for a clean and secure future 28 February 2024 www.trig-ltd.com
Slide 2: Important Information
Important Information For Investment Professionals (as defined under FSMA 2000). Individuals without professional experience in matters relating to investments should not rely on this information By attending the meeting where this presentation is made, or by reading the presentation slides, you agr
Slide 3: Investment Proposition & Highlights
2023 Annual Results Investment Proposition & Highlights www.trig-ltd.com 3
Slide 4: Our proposition
Our proposition Favourable fundamentals Responsible investment Balanced portfolio >8 Portfolio expected return1 % Operational excellence Past performance is not a reliable indicator of future results. There can be no assurance that targets will be met or that the Company will make any distributions,
Slide 5: A balanced portfolio across geographies and technologies
A balanced portfolio across geographies and technologies 87 Diversified European Projects 2.8GW portfolio 6 Renewable electricity Power 6TWh generated in 2023 markets 4 1GW Development pipeline Technologies Countries where TRIG has investments Countries complementary to TRIG’s existing portfolio www
Slide 6: Healthy cash generation in 2023
Healthy cash generation in 2023 Strong underlying performance Capital allocation pro-forma portfolio investments in £610m EBITDA2 £92m construction RCF reduction – distributable cash 11.4p flow per share3 £34m >£200m more expected Durable balance sheet Sustainable dividend growth1 project debt gross
Slide 7: Financial Highlights & Valuation
Financial Highlights & Valuation www.trig-ltd.com 7
Slide 8: Financial Highlights
Financial Highlights Year ended 31 December 2023 127.7p £3,509m 0.2p NAV per share Portfolio Value Earnings per share (31 Dec 2022: 134.6p) (31 Dec 2022: £3,737m) (FY 2022: 21.5p) 2.8x 1.6x Dividend cover Gross cash dividend cover £610m (FY 2022: 2.6x) (FY 22: 1.55x) Pro-forma portfolio EBITDA (FY 2
Slide 9: Portfolio valuation bridge
Portfolio valuation bridge Valuation movement in the year to 31 December 2023 1. 2. 3. 4. 5. 6. 1. New investments 2. Disposal proceeds 3. Power prices ▪ Construction spend on projects in the year ▪ Three assets disposed of in the period at a ▪ Decrease in front end of power curve premium to valuati
Slide 10: Near-term decline in power price forecasts mitigated by fixed revenues
Near-term decline in power price forecasts mitigated by fixed revenues TRIG blended power price curve1,4 Average assumed power prices5 140 Average Average Average Average Region 2024-2028 2029-2033 2034-2050 2051-2060 120 GB Real 2022 GBP/MWh (Real £/MWh) 62 49 43 40 100 2 80 EU jurisdictions (Real
Slide 11: Increased discount rates weighted towards the UK
Increased discount rates weighted towards the UK 31 Dec 31 Dec 23 Feb 2022 2023 2024 Benchmark government bond yields1 UK 3.7% 3.5% 4.1% UK risk-free rate higher than EU rates EU markets weighted average 2.9% 2.3% 2.7% Breakdown of TRIG’s valuation discount rate Weighted average risk-free rate 3.3%
Slide 12: Increased inflation assumptions
Increased inflation assumptions TRIG’s long term UK inflation assumption is below ▪ Inflation assumption for 2024 increased by 0.75% at H1 2023, market implied levels compared to FY Dec 22 4.0% ▪ Medium and long-term UK CPI assumption increased to 2.5% ▪ RPI inflation implied by UK gilts appreciably
Slide 13: Active management has helped reduce impact of externalities
Active management has helped reduce impact of externalities + 6.8 (11.0) (2.7) Actuals & changes Macro 134.6p to budgets 127.7p 31 Dec 2022 NAV Poor UK & Ireland Development and 31 Dec 2023 NAV - Power prices - + wind resource construction activity - Discount rates Impact of Value enhancement + + +
Slide 14: Robust underlying portfolio performance
Robust underlying portfolio performance Key underlying portfolio metrics 2023 (£m) 2022 (£m) Pro-forma portfolio Revenues1 793 838 TRIG’s share of revenues for each project in the portfolio Revenue less project operating costs such as operations, Pro-forma portfolio EBITDA1 610 677 maintenance, rent
Slide 15: Operational Excellence
Operational Excellence www.trig-ltd.com 15
Slide 16: Diversification moderated impact of weak UK & Ireland generation
Diversification moderated impact of weak UK & Ireland generation 2023 Electricity Performance Technology Region production ▲ UK & Ireland generation 13% below budget; vs. Budget (GWh)1 moderated by diversification of other regions UK & Ireland 1,492 -13% ▲ Low wind speeds partially offset by above b
Slide 17: Wind / solar resource variation against the long-term mean
Wind / solar resource variation against the long-term mean 20% 15% 10% 5% 0% -5% -10% -15% -20% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 France Wind GB Offshore UK&I Onshore Wind Germany Offshore Scandinavia Solar & Storage Weighted Ave. www.trig-ltd.com 17
Slide 18: 2023 actual wind speeds compared to the 30-year historical average
2023 actual wind speeds compared to the 30-year historical average ▲ Actual wind speed in 2023 compared to the long-term 30- year historical average ▲ Blue colours denote lower than average wind, red colours higher than average ▲ Broadly speaking, 2023 was windier in the south than the north compare
Slide 19: RES's best-in-class operational expertise
RES’s best-in-class operational expertise Procurement Minimise downtime Increase Repowering yield (MWh/Yr) Add ▲ RES’ pedigree in the industry and deep Development revenue In-house Increase experience in all stages of project lifecycle Streams expertise revenue provide unparalleled capabilities (£/Y
Slide 20: Significant pipeline of yield enhancements
Significant pipeline of yield enhancements Active programme of trial and implementation Expected Enhancement 2020 2025 2030 yield enhancement1 Blade hardware Trial at 2 sites 7 sites 1-5% TuneUp 4 sites ~1% Wind Wake steering Inc. Altahullion trial Offshore and Onshore sites ~1% Altahullion Power cu
Slide 21: Case study: AeroUp – a multi-year blade hardware roll out
Case study: AeroUp – a multi-year blade hardware roll out Proprietary technology delivers up to 5% yield uplift £m Maximising earnings Innovative Motorsport inspired innovative aerodynamic technologies combined with across all sites Wider technologies RES’ proprietary turbine controller upgrade port
Slide 22: Capital allocation
Capital allocation www.trig-ltd.com 22
Slide 23: Responsible cash flow management
Responsible cash flow management £311m reinvested 6TWh clean electricity produced in 2023 Operational £502m cash flows1 2.8x Gross cash cover Repayment of £219m project level debt £283m Cash available 11.4p for distributions Reinvestment /share £105m (£92m capital investment; £13m RCF repayment) 1.6
Slide 24: Proactively reducing floating rate debt
Proactively reducing floating rate debt £750m Key considerations when allocating excess cash flows and disposal proceeds: £600m ▲ Completing existing project builds Construction ▲ Reducing RCF borrowings RCF drawings £450m investment ▲ Accretive investments inc. share buybacks Retained Fig Power cas
Slide 25: Realising value through selective divestments
Realising value through selective divestments Portfolio rotation a key tool of active management Portfolio construction considerations ▲ Identifying disposals takes into account the impact on the overall portfolio ▲ During the period, sale of three onshore wind assets completed at a 26% premium to c
Slide 26: Clear visibility on reducing gearing profile
Clear visibility on reducing gearing profile Portfolio gearing profile 100% 300 Annual project level debt 250 Portfolio gearing % 80% repayment (£m) Project level debt repayment (£m, RHS) 60% 200 150 37% Portfolio gearing (%, LHS) portfolio gearing 40% 23% 100 20% 50 0% '23 '24 '25 '26 '27 '28 '29 '
Slide 27: Responsible Investment
Responsible Investment www.trig-ltd.com 27
Slide 28: Pipeline provides significant growth opportunity
Pipeline provides significant growth opportunity Development activities 1GW Re-powering typically offer double digit returns New Co-location sites & Extension Creating value Exclusive development through sale or hold opportunities to 2030 optionality Batteries - portfolio www.trig-ltd.com 28
Slide 29: Strategic drivers for TRIG's platform investment in flexible capacity
Strategic drivers for TRIG’s platform investment in flexible capacity Enhances diversification; complementary technology The UK is a leading market; Europe emerging Enhances revenue diversification Increasing renewables penetration & limited Benefits from increased renewables low carbon altern
Slide 30: Fig Power - an exciting growth driver
Fig Power - an exciting growth driver ▲ Fig Power was chosen following a process screening 50+ developers, including the detailed evaluation of 10 opportunities ▲ 100% ownership of a Bristol-based development platform ▲ An 11-person team with deep experience in battery storage and energy generation,
Slide 31: Concluding Remarks
Concluding Remarks www.trig-ltd.com 31
Slide 32: Concluding remarks
Concluding remarks Favourable fundamentals Decarbonisation and energy security provide supportive policy backdrop Diverse exposure to mature renewables markets with well-established regulatory frameworks Responsible investment Experienced management team and robust investment framework Appro
Slide 33: Appendices
Appendices www.trig-ltd.com 33
Slide 34: Summary 2023 Financial Statements
Appendix 1 – Financials & Valuation Summary 2023 Financial Statements Year to Year to As at As at Year to Year to Income 31 December 31 December Balance 31 December 31 December 31 December 31 December 2023 2022 Cash Flow Statement 2023 2022 Statement 2023 2022 Sheet £m £m £m £m £m £m Cash from inves
Slide 35: Valuation – key assumptions
Appendix 1 – Financials & Valuation Valuation – key assumptions As at 31 December 2023 As at 31 December 2022 Discount Rate Portfolio average 8.1% 7.2% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts UK (RPI) 3.5% (2024), 3.25% to 2030, 2.5% thereafter 5
Slide 36: Blended average portfolio discount rate
Appendix 1 – Financials & Valuation Government bond yield and portfolio discount rate analysis Benchmark government bond yields1 31 Dec 2022 31 Dec 2023 23 Feb 2024 Portfolio discount rate compared to UK Govt 10yr gilt yield1 UK 3.7% 3.5% 4.1% 10% EU markets weighted average 2.9% 2.3% 2.7% Blended a
Slide 37: GB forward power prices 2024-2026
Appendix 1 – Financials & Valuation GB forward power prices 2024-2026 300 ▲ UK and EU forward power prices have reduced c. 20%1 since the date of the year end valuation ▲ Sensitivity: a 10% decrease in power prices over the next 5 years would reduce the portfolio valuation by £(56)m / (2.2)p/share 2
Slide 38: Cannibalisation assumptions
Appendix 1 – Financials & Valuation Cannibalisation assumptions % 31 December 2023 Average cannibalisation Segment portfolio value assumption ▲ Cannibalisation is the effect whereby renewable GB onshore 26% -22% power generators typically earn less than the GB offshore 24% -19% average wholesale pow
Slide 39: The variability of power prices
Appendix 1 – Financials & Valuation The variability of power prices Weather-driven gas supply and demand heavily influence near-term power prices ▲ Gas supply and demand moves with storage targets and weather conditions, and is heavily influencing power prices for markets where gas is the price sett
Slide 40: Renewable Energy Guarantee of Origin certificates
Appendix 1 – Financials & Valuation Renewable Energy Guarantee of Origin certificates Guarantees of Origin certificate assumptions REGOs - £/MWh 14 12 10 ▲ REGOs (Renewable Energy Guarantees of Origin) in the UK and 8 GoOs (Guarantee of Origin) are certificates which are intended to 6 demonstrate th
Slide 41: Power price forecasting – GB power forecast
Appendix 1 – Financials & Valuation Power price forecasting – GB power forecast Valuation based on the range provided by mainstream forecasters 200 200 100 GB onshore wind curve (real) Carbon price (£/tCO₂) Gas price (£/MWh) 180 90 160 80 140 70 120 60 GBP / MWh 100 100 50 80 40 60 30 40 20 20 10 0
Slide 42: NAV sensitivities
Appendix 1 – Financials & Valuation NAV sensitivities Based on portfolio at 31 December 2023 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -4.1p 4.4p Output P90 / P10 (10 year) -15.3p 17.1p Power price -/+ 10% -8.3p 8.5p Inflation -/+ 0.5% -5.1p 6.2p Reduction in assumptio
Slide 43: Approach to gearing
Appendix 1 – Financials & Valuation Approach to gearing Disciplined approach TRIG’s portfolio at 31 Dec 2023 Project Category Term Project Debt (Younger = <10yrs) % of Average gearing1 # of projects2 portfolio ▲ Limited to 50% of portfolio enterprise value Younger projects c.55% 39% 14 ▲ Fully amort
Slide 44: Diversified portfolio across geographies and technologies
Appendix 2 – Portfolio construction Diversified portfolio across geographies and technologies Diversification across multiple countries1,2,3 Low single asset concentration2,4,5 2% 33% 24% 7% 10% 10% 13% 1% Hornsea One 10% England & Wales Scotland N. Ireland Republic of Ireland Beatrice 7% Spain Fran
Slide 45: Portfolio breakdown
Appendix 2 – Portfolio construction Portfolio breakdown Across technologies and geographies England & Total per Scotland1 N. Ireland UK subtotal Ireland Sweden France Germany Spain Wales technology Onshore 6% 17% 2% 26% 1% 13% 8% - - 48% Wind Offshore 17% 7% - 24% - - - 10% - 34% Wind Solar 4% - - 4
Slide 46: Constructing a balanced portfolio
Appendix 2 – Portfolio construction Constructing a balanced portfolio Understanding the range of revenue types available for wind and solar generation Revenue Profile FiT & CfD UK ROC Unsubsidised Investment 100% 100% 100% Fixed1 Type Power sales 1 years 30 1 years 30 1 years 30 Revenue Risk lower h
Slide 47: Revenue profile
Appendix 2 – Portfolio construction Revenue profile Medium-term project-level revenues mainly fixed and indexed Breakdown of forecast revenues over the next 12 months PPA Market Revenue 25% Next 12 Indexed Fixed REGO, GoO Months PPAs & FiTs 58% and Other 2% Indexed ROC's (Buyout & Recycle) 15% £800m
Slide 48: Introduction to battery storage revenues
Appendix 2 – Portfolio construction Introduction to battery storage revenues ▲ Batteries capture value through their ability to respond to the needs of increasingly intermittent electricity systems. In practice, this means that the primary revenue drivers for battery assets are a function of power p
Slide 49: Moderated operational revenues assumed
Appendix 2 – Portfolio construction Moderated operational revenues assumed Core battery revenues* actual and forecast ▲ Macroeconomic environment combined with market (£k/MW annualised real 2022 prices) reaction to fall in revenues provided attractive entry 300 Average point High 250 ▲ Forecasters e
Slide 50: Short-term price pressures expected to subside in the medium-term
Appendix 2 – Portfolio construction Short-term price pressures expected to subside in the medium-term ▲ Relatively low battery revenues in 2023 were attributable to unfavourable conditions in three key battery value drivers: Wholesale arbitrage is expected to become a ▪ Narrowing intraday power pric
Slide 51: System changes are expected to improve Balancing Mechanism value capture
Appendix 2 – Portfolio construction System changes are expected to improve Balancing Mechanism value capture ▲ Battery dispatch rates in the Balancing Mechanism, measured as the percentage of total energy dispatched by the National Grid ESO control room, was just 1.7% in 2023, despite other technolo
Slide 52: Counterparty exposure
Appendix 2 – Portfolio construction Counterparty exposure Broad spread of counterparties monitored regularly 1 2 3 Percentages are in relation to portfolio value as at 31 December 2023 using Directors’ valuation plus investment commitments. Where projects have more than one contractor, valuation is
Slide 53: Sustainability in practice
Appendix 3 – Sustainability Sustainability in practice Further reporting against our sustainability goals in 2023 Mitigate adverse Climate Change Preserve the Natural Environment Positively impact the communities Maintain ethics and integrity in we work in governance 2.1m tonnes of carbon emissions
Slide 54: Reform of GB and EU electricity market design
Appendix 4 – Market backdrop Reform of GB and EU electricity market design Major reviews of electricity market design in GB and European markets UK Government Review of Electricity Market Arrangements (REMA) Initial consultation closed in October 2022 with a second consultation expected in 2024. Pro
Slide 55: Short-run marginal cost supply curve (merit order)
Appendix 4 – Market backdrop Short-run marginal cost supply curve (merit order) Gas-fired power tends to set the marginal price 160 Average Key elements of the power price: 140 Low Demand Demand High Demand natural gas and carbon prices Peaking 120 Capacity 100 £/MWh Gas CCGT 80 Coal Market Price 60
Slide 56: Experienced Management and Board
Appendix 5 – Management team Experienced Management and Board Independent Board Richard Morse (Chairman) Investment Manager Operations Manager Key roles: Key roles: Tove Feld Overall responsibility for day-to-day Managing performance of the portfolio (SID) management Collaborating with asset m
Slide 57: InfraRed Capital Partners – Investment Manager
Appendix 5 – Management team InfraRed Capital Partners – Investment Manager Over 25 years’ pedigree in infrastructure Key statistics across infrastructure 25+ year US$14bn track record equity London (Infrastructure) Seoul managed New York (Investors) (Infrastructure) InfraRed is Sun Life’s global in
Slide 58: RES – Operations Manager
Appendix 5 – Management team RES – Operations Manager World’s largest independent renewable energy company 40+ 345+ Years of experience Projects delivered worldwide 2,500+ 23GW+ Employees Developed and/or constructed 12GW+ 776MW Operational assets Energy storage projects supported Operating across
Slide 59: Diversified, high-quality shareholder base
Appendix 6 – Company information Diversified, high-quality shareholder base Shareholders by Type, as % of Register1 Selected segments of TRIG’s shareholder base1 6% 8% ▲ Top five holders account for c. 26% of TRIG’s issued share capital ▲ Top 10 holders account for c. 42% of TRIG’s issued share capi
Slide 60: Significant track record established over ten years
Appendix 6 – Company information Significant track record established over ten years NAV total return1,2 200p Annualised NAV total return since IPO: 9.1% 160p Annualised NAV total return since IPO: 8.4% 120p 80p 40p 0p IPO 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Balance Sheet NAV per share
Slide 61: Key facts
Appendix 6 – Company information Key facts Fund Structure ▲ Guernsey-domiciled closed-end investment company Performance ▲ Dividends to date paid as targeted for each period ▲ NAV per share of 127.7p (31 December 2023) Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of the Lo
Slide 62: Contacts
Appendix 6 – Company information Contacts Investment Manager Operations Manager InfraRed Capital Partners Limited Level 7, One Bartholomew Close, Renewable Energy Systems Limited Barts Square, Beaufort Court London, EC1A 7BL Egg Farm Lane Kings Langley +44 (0)20 7484 1800 Hertfordshire, WD4 8LR Key
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