Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — H1 2022 Earnings Presentation
58 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, August 2022
Slide 1: Interim Results Presentation: Six Months to 30 June 2022
The Renewables Infrastructure Group Interim Results Presentation: Six Months to 30 June 2022 Generating Sustainable Value. trig-ltd.com Construction at Malabrigo, Cadiz Portfolio, Spain
Slide 2: Important Information
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 presen
Slide 3: Important Information
Important Information The publication and distribution of this document may be restricted by law in certain jurisdictions and therefore persons into whose possession this document comes or who attend the presentation should inform themselves about and observe any such restrictions. Any failure to co
Slide 4: Contents
Contents Section Slide H1 2022 Summary 6 Financial Highlights & Portfolio Valuation 9 Operational Highlights 15 Portfolio Diversification 19 Outlook 22 Appendices Slide 1 – Financials & Valuation 27 2 – Portfolio Construction 37 3 – Sector Backdrop 43 4 – Board & Management Team 51 5 – Company Infor
Slide 5: Speakers
Speakers Helen Mahy CBE Richard Crawford Phil George TRIG Chairman InfraRed Capital Partners InfraRed Capital Partners Chris Sweetman Jaz Bains Minesh Shah Renewable Energy Systems Renewable Energy Systems InfraRed Capital Partners 5 trig-ltd.com
Slide 6: Generating Sustainable Value.
Generating Sustainable Value. Purpose: To generate sustainable returns from a diversified portfolio of renewables infrastructure that contribute towards a net zero carbon future ▲ Diverse independent Board Portfolio construction1 to ▲ Sets and monitors adherence to the enhance resilience & strategy
Slide 7: Strong track record
Strong track record NAV total return1,2 since IPO of 9.3% annualised Disciplined portfolio growth4 200p 3,500 442 NAV & Cumulative Dividends 180p 160p 3,000 479 (pence per share) 140p 588 Investments (£m) 2,500 120p 100p 2,000 508 80p NAV: 1,500 60p 144 134.2p 230 40p 1,000 255 78 20p 178 500 21 0p
Slide 8: Strategic themes in H1 2022
Strategic themes in H1 2022 Supportive market Further portfolio Strong portfolio environment diversification performance Energy trilemma Strategic acquisitions Elevated power (security, affordability, prices decarbonisation) Defensive vs high Attractive investment Construction delivery inflation opp
Slide 9: Financial Highlights & Portfolio valuation
Financial Highlights & Portfolio valuation Mid Hill, Scotland trig-ltd.com
Slide 10: Financial highlights
Financial highlights Six months to 30 June 2022 6.84p FY 2022 Dividend per share target 134.2p (FY 2021: 6.76p) £3,236m NAV per share Portfolio Value1 (31 Dec 2021: 119.3p) 1.39x (31 Dec 2021: £2,726m) Dividend cover (with scrip)2 (H1 2021: 1.28x w. scrip) £83m £442m Project finance debt repayments3
Slide 11: Portfolio Valuation bridge
Portfolio Valuation bridge Valuation movement in the six months to 30 June 2022 £3,500m 92 32 124 212 £3,000m 169 (119) £2,500m £2,000m 3,236 £1,500m 2,726 2,775 £1,000m £500m £m 31-Dec-21 New Cash Rebased Change in Change1 in Foreign Balance 30-Jun-22 Valuation Investments 1 Distributions Valuation
Slide 12: Power prices
Power prices Power prices (+£212m) TRIG blended power price curve1 200 ▲ Elevated power prices driven by higher gas prices, a key Real 2021 GBP/MWh component of electricity pricing in Europe. 150 ▲ Low gas reserves and gas supply / demand imbalance, 100 exacerbated by the conflict in Ukraine, result
Slide 13: Inflation
Inflation Inflation assumptions used in the Portfolio Valuation Actual and forecast inflation (+£124m) 2022 ▲ Actual inflation: significantly above Dec 21 assumptions 2024- Index 2023 2030+ – 5% higher in the UK and mainland Europe1. Forecast Full-Year 2029 Compounds into future cash flows. (Jun-Dec
Slide 14: Other valuation movements
Other valuation movements Foreign exchange (+£32m before hedging) Benchmark government 30 June 2022 2 August 2022 bond yields1 ▲ FX gain of £32m, offset by hedging giving a net gain of £14m reflecting 2% weakening of Sterling. UK 2.23% 1.87% Germany 1.34% 0.82% Balance of portfolio return (+£92m) ▲
Slide 15: Operational highlights
Operational highlights The Grange, England trig-ltd.com
Slide 16: Operational highlights
Operational highlights Portfolio diversification keeps overall performance close to budget ▲ Strong weather resource for GB and Scandinavia onshore. 2022 H1 Generation by Region Electricity Performance vs ▲ Offshore impacted by grid restrictions. Technology Region production (GWh)1 Budget ▲ Merkur r
Slide 17: Value enhancements
Value enhancements Proactive management continues to preserve and enhance value Technical enhancements Collaboration of RES specialists maximises value across the full project lifecycle Blade enhancements being rolled out following successful trial with significant yield uplift. Uplift energy yiel
Slide 18: Projects in construction
Projects in construction Blary Hill completed with other in-construction projects progressing well Completion programme for projects in construction Sustainability considerations 2021 2022 2023 2024 2025 Community engagement Regular meetings with local people; Vannier, France – 43MW onshore wind far
Slide 19: Portfolio diversification
Portfolio diversification Hornsea One, England trig-ltd.com
Slide 20: Portfolio additions – 2022 to date
Portfolio additions – 2022 to date Complementary revenue structures, technology and geographies Date of Revenue Net Capacity % of portfolio Project Technology Location Equity share commitment Type1 (MW) value2 March 2022 / Hornsea One Offshore wind CfD GB 10.2% 122 9% July 2022 Wholesale March 2022
Slide 21: Portfolio diversification
Portfolio diversification 2.4GW net generation capacity once projects in construction are operational By jurisdiction / power market1,2,3 Top 10 largest assets2,4 3% 30% 27% 8% 8% 9% 12% 3% Hornsea One 9% England & Wales Scotland N. Ireland Republic of Ireland Spain France Beatrice 7% Germany Sweden
Slide 22: Outlook
Outlook Valdesolar, Spain trig-ltd.com
Slide 23: Market backdrop
Market backdrop Imperative of arresting adverse climate change ▪ IPCC latest trajectory: 3.2C temperature rise by 2100. ▪ Acceleration of electrification and hydrogen strategies across Europe. ▪ Flexible capacity and grid resilience are key enablers. Net Energy Policy to reduce dependence on importe
Slide 24: >80GW new renewables capacity expected by 2030
>80GW new renewables capacity expected by 2030 Range of revenue types and market segments support balanced portfolio growth Largely subsidised Largely unsubsidised markets1 markets1 Largely subsidised markets UK & Ireland Nordics Largely unsubsidised markets +20GW +5GW +3 GW +9GW Offshore Onshore Fl
Slide 25: Concluding remarks
Concluding remarks Strong performance in H1 2022 Defensively positioned portfolio performing well ▲ On course to deliver 2022 aggregate dividend target of 6.84p1. ▲ Elevated energy prices and inflation support strong dividend coverage and valuation growth. ▲ Blary Hill construction delivered on time
Slide 26: Appendices
Appendices Egmere Airfield, England trig-ltd.com
Slide 27: Appendix 1 – Financials & Valuation
Appendix 1 – Financials & Valuation Roussas–Claves, France trig-ltd.com
Slide 28: Summary June 2022 Financial Statements
Appendix 1 – Financials & Valuation Summary June 2022 Financial Statements Income Statement Balance Sheet Cash Flow Statement Six months to Six months to Six months to Six months to 31 December 30 June 2022 30 June 2021 30 June 2022 30 June 2021 30 June 2022 2021 £m £m £m £m £m £m Cash from investme
Slide 29: Valuation – key assumptions
Appendix 1 – Financials & Valuation Valuation – key assumptions As at 30 June 2022 As at 31 December 2021 Discount Rate Portfolio average 6.7% 6.6% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts Actual, 6% (2022), 3.50% (2023), 2.75% (to 3.75% (2022), 3
Slide 30: GB forward power prices
Appendix 1 – Financials & Valuation GB forward power prices 450 Valuation assumption for H2 2022 Valuation assumption for FY 2023 400 Valuation assumption for FY 2024 350 300 250 200 150 100 50 0 31-Dec-2021 31-Jan-2022 28-Feb-2022 31-Mar-2022 30-Apr-2022 31-May-2022 30-Jun-2022 2022 (rest) 2023 202
Slide 31: Power price forecasting basics – GB power forecast
Appendix 1 – Financials & Valuation Power price forecasting basics – GB power forecast Valuation based on the range provided by mainstream forecasters £/MWh 200 GB Power curve (real) 90 0 Year 2022 2050 Key Range of INPUTS mainstream forecasters Technology Public Electricity Commodity mix policy dem
Slide 32: Power price forecasting basics
Appendix 1 – Financials & Valuation Power price forecasting basics Illustrative diagram of the approach taken by mainstream forecasters (simplified) Technology mix Investment Economics OUTPUTS INPUTS Public policy Long-term power price forecast Electricity demand Wholesale market Commodity prices 32
Slide 33: NAV sensitivities
Appendix 1 – Financials & Valuation NAV sensitivities Based on portfolio at 30 June 2022 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -4.4p 4.7p Output P90 / P10 (10 -16.1p 17.8p year) Power price -/+ 10% -10.0p 10.2p Inflation -/+ 0.5% -4.8p 5.6p Reduction in assumption
Slide 34: Approach to gearing
Appendix 1 – Financials & Valuation Approach to gearing Disciplined approach Term Project Debt Gearing1 TRIG’s portfolio at 4 August 2022 Project Category typically ▲ Limited to 50% of portfolio enterprise value (Younger = <10yrs) Average % of # of available gearing1 portfolio projects2 ▲ Fully amor
Slide 35: Counterparty exposure
Appendix 1 – Financials & Valuation Counterparty exposure Broad spread of counterparties monitored regularly 7 Number of associated projects % of Portfolio Valuation of associated projects¹ 1. By value, as at 30 June 2022 using Directors’ valuation plus investment commitments. Where projects have mo
Slide 36: Equipment manufacturers exposure
Appendix 1 – Financials & Valuation Equipment manufacturers exposure Shown on an invested portfolio valuation basis 7% Siemens 3% 5% Vestas 2% GE 5% Renesolar 43% 3% Nordex 7% Enercon Trina Solar JA Solar 25% Other 36 trig-ltd.com
Slide 37: Appendix 2 – Portfolio Construction
Appendix 2 – Portfolio Construction Roussas–Claves, France trig-ltd.com
Slide 38: Acquisition of Hornsea One, UK
Acquisition of Hornsea One, UK 10.2% equity interest in the world’s largest operational offshore wind farm ▲ Contract-for-Difference (CfD) inflation-linked subsidy with 13 Beatrice TRIG’s years remaining, reducing portfolio power price sensitivity offshore ▲ Established turbines: Siemens Gamesa 7MW
Slide 39: Acquisition of Valdesolar, Spain
Acquisition of Valdesolar, Spain 49% equity interest in operational solar park ▲ Operational since December 2021: Total capacity of 264MW ▲ Acquired from Repsol, a Spanish-listed global energy company, who operates the solar park & retains 51% Valdesolar ▲ 616 hectare site comprising of 648,000 mono
Slide 40: Constructing a balanced portfolio
Appendix 2 – Portfolio Construction Constructing a balanced portfolio Understanding the range of revenue types available: illustrative 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 higher Characteri
Slide 41: Revenue profile
Appendix 2 – Portfolio Construction Revenue profile Medium-term project-level revenues mainly fixed and indexed Project Revenue by Type1 Market 32% Next 12 Fixed & FiT/CfD Months 52% Floor 2% ROC Other Buyout 2% 12% £700m £500m £300m £100m '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36
Slide 42: Power price sensitivity
Appendix 2 – Portfolio Construction Power price sensitivity Portfolio power price sensitivity maintained Impact on equity return of change in power price1,2 -2.0% -1.0% 0.0% 1.0% 2.0% ▲ Acquisitions over past 12 months comprise subsidised and unsubsidised projects, with -1.0% Portfolio at 31 Dec 201
Slide 43: Appendix 3 – Sector Backdrop
Appendix 3 – Sector Backdrop Roussas–Claves, France trig-ltd.com
Slide 44: Decarbonisation agenda remains central to public policy
Appendix 3 – Sector backdrop Decarbonisation agenda remains central to public policy Announcements bring 2030 targets into sharp focus – whole economy approach emerging European Union – Fit for 55 ▲ Fit for 55 measures announced as part of the €1.8tn European Green Deal: ▪ 2030 climate ambition incr
Slide 45: Supply-side ambitions
Appendix 3 – Sector backdrop Supply-side ambitions UK Renewables rollout ▲ The generation mix is a key driver of electricity UK Forecast Capacity by technology1 and target for offshore wind pricing, particularly the percentage of intermittent generators (wind and solar) where higher deployment 160 t
Slide 46: Demand-side ambitions
Appendix 3 – Sector backdrop Demand-side ambitions Electrification and hydrogen; and consequences for power price forecasts ▲ The UK Government aspires to 5GW of low-carbon hydrogen production capacity by 2030 and electricity demand increase. Government forecasts for electricity demand by 2035 are c
Slide 47: Greater renewable penetration requires greater flexibility
Appendix 3 – Sector backdrop Greater renewable penetration requires greater flexibility Flexible capacity from current and developing technologies key to enabling energy transition H2O Energy Storage Gravity H2 Enabling Demand Capacity Market greater side renewables response Distributed generation 4
Slide 48: Short-run marginal cost supply curve (merit order)
Appendix 3 – Sector backdrop Short-run marginal cost supply curve (merit order) Gas-fired power tends to set the marginal price Key elements of the normalised power price: natural gas and carbon prices £/MWh £/MWh Low Average High 70 100 Demand Demand Demand 60 80 Peaking plant 50 45 40 60 Gas Coal
Slide 49: Regulatory risk areas
Appendix 4 – Risk & Risk Management Regulatory risk areas Taxation Market reform Government intervention UK corporation tax: UK REMA: French FiT cuts: ▲ Increase from 19% to 25% from ▲ Review of Electricity Market ▲ French solar projects affected by April 2023. Arrangements – a major retroactive cut
Slide 50: Review of Electricity Market Arrangements (REMA)
Appendix 4 – Risk & Risk Management Review of Electricity Market Arrangements (REMA) Major review by UK govt. into Britain’s electricity market design What is REMA?: ▲ Part of the government’s British Energy Security Strategy (BESS). ▲ Aims to radically enhance UK energy security (including increasi
Slide 51: Appendix 4 – Board & Management Team
Appendix 4 – Board & Management Team Roussas–Claves, France trig-ltd.com
Slide 52: The Team
Appendix 5 – Management Team The Team Experienced Management team and independent Board Independent Board Helen Mahy CBE (Chairman) Investment Manager Operations Manager Tove Feld Key roles: Key roles: (SID)1 Overall responsibility for day-to-day Providing oversight of the construction and manag
Slide 53: 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$12bn+ track record equity London (Infrastructure) Seoul managed New York (Investors) (Infrastructure) InfraRed is Sun Life’s global in
Slide 54: RES – Operations Manager
Appendix 5 – Management Team RES – Operations Manager 40+ years experience in renewables 40+ years 270+ track record projects delivered worldwide 2,500+ 22GW+ employees developed and/or constructed 9GW+ 300MW Operational assets energy storage projects supported World’s largest independent renewabl
Slide 55: Appendix 5 – Company Information
Appendix 5 – Company Information Roussas–Claves, France trig-ltd.com
Slide 56: Diversified shareholder base
Appendix 6 – Company Information Diversified shareholder base TRIG has a high quality institutional shareholder base as well as retail investors Selected segments of TRIG’s shareholder base1 Shareholders by Type, as % of Register1 ▲ Top five holders account for 27% of TRIG’s issued share capital ▲ T
Slide 57: 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 134.2p (30 June 2022) Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Market C
Slide 58: Contacts
Appendix 6 – Company Information Contacts Investment Manager Operations Manager Renewable Energy Systems Limited InfraRed Capital Partners Limited Beaufort Court Level 7, One Bartholomew Close, Egg Farm Lane Barts Square, Kings Langley London, EC1A 7BL Hertfordshire WD4 8LR +44 (0)20 7484 1800 +44 (
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