Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — FY2022 Earnings Presentation
60 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, February 2023
Slide 1: Annual Results Presentation: Year to 31 December 2022
The Renewables Infrastructure Group Annual Results Presentation: Year to 31 December 2022 Construction at Grönhult, Sweden 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: Contents
Contents Section Slide 2022 Results Summary 5 Financial Highlights & Valuation 9 Operational Highlights 16 Portfolio Development & Diversification 20 Concluding Remarks 25 Appendices Slide 1 – Financials & Valuation 20 2 – Portfolio Construction & Sustainability 41 3 – Sector Backdrop 48 4 – Managem
Slide 4: Speakers
Speakers ▲ Diverse independent Board ▲ Sets and monitors adherence to the strategy and policies ▲ Expertise of two managers Richard Morse Richard Crawford Phil George ▲ Day-to-day management & investment Chairman Fund Manager CFO selection ▲ 25-years investment track record ▲ £10bn equity under mana
Slide 5: 2022 Results Summary
2022 Results Summary Richard Crawford Garreg Lwyd, Wales Fund Manager trig-ltd.com
Slide 6: FY 2022: year in review
FY 2022: year in review Providing investors with pure play energy transition exposure since IPO Strong financial performance 21.5p +15.3p £3.7bn earnings per share NAV growth Portfolio Value Strategic investment activity £694m £277m £750m investments made equity raised Revolving Credit Facility Resi
Slide 7: Cumulative Total Return
Significant track record established over nine years Strong annual NAV total return1,2 220p 18.9% 200p 9.5% Annualised NAV total return since IPO: 9.1% 180p 6.1% 11.9% Pence per share 160p 11.6% 140p 10.1% 2.8% 9.3% 120p 7.0% 100p 80p NAV: 60p 134.6p/share 40p 20p 0p IPO 2014 2015 2016 2017 2018 201
Slide 8: Key strategic themes progressed in 2022
Key strategic themes progressed in 2022 Defensive Further portfolio Strong portfolio qualities diversification performance Limited cashflow 379MW1 construction Power prices boosted exposure to increased delivery performance interest rates Inflation correlated 363MW2 solar PV added Robust dividend co
Slide 9: Financial Highlights & Valuation
Financial Highlights & Valuation Phil George Valdesolar, Spain CFO trig-ltd.com
Slide 10: Financial highlights
Financial highlights Year ended 31 December 2022 7.18p FY 23 Dividend per share target +5% 21.5p £3,737m (FY 2022: 6.84p) Earnings per share Portfolio Value (FY 2021: 10.0p) (31 Dec 2021: £2,726m) 1.55x Dividend cover (with scrip)1 (FY 21: 1.12x with scrip) £694m £174m Project finance debt repayment
Slide 11: Portfolio valuation bridge
Portfolio valuation bridge Valuation movement in the twelve months to 31 December 2022 £4,000m 202 £3,500m (177) 234 73 (280) 266 694 £3,000m Portfolio Valuation (£m) £2,500m £2,000m 3,737 Net of adverse impact of the 3,139 UK Electricity Generator £1,500m Levy (“EGL”): £(188)m 2,726 £1,000m £500m £
Slide 12: Valuation I – Power prices
Valuation I – Power prices Power prices (+£266m) TRIG blended power price curve1 ▲ The blended curve has increased overall, due to: 180 ▪ Commodities driven sharp near-term increases 160 Real 2022 £/MWh 140 ▪ Limited movement over the longer term as increased 120 demand and supply assumptions offset
Slide 13: Valuation II – Government intervention
Valuation II – Government intervention Government intervention % of merchant Threshold Marginal tax rate Intervention Market portfolio (per MWh) above threshold ▲ UK and EU have intervened in electricity revenues (5yr) markets to limit the price received by non- Electricity gas fired generation – ad
Slide 14: Valuation III – Inflation
Valuation III – Inflation Actual and forecast inflation (+£234m) Inflation assumptions used in the Portfolio Valuation ▲ Near-term elevated inflation has led to a valuation uplift Index 20221 2023 2024- 2030+ with forecasts reverting to central bank targets by 2024. 2029 ▲ Actual 2022 inflation 6-9%
Slide 15: Valuation IV – Other key items
Valuation IV – Other key items Valuation discount rates (-£177m) Benchmark 31 Dec 30 Jun 31 Dec 20 Feb government bond ▲ Increased by an average of 0.5% reflecting rising interest 2021 2022 2022 2023 yields1 rates mitigated by continued strong market appetite for both inflation-protected and renewab
Slide 16: Operational Highlights
Operational Highlights Chris Sweetman Blary Hill, Scotland Operations Director trig-ltd.com
Slide 17: Operational highlights
Operational highlights Diversification remains a key portfolio benefit ▲ 5.4TWh generation: 30% increase over 2021, 2021 2022 2022 equivalent to 1.6m homes powered Electricity Electricity Technology Region Generation production production vs Budget ▲ 90 projects, multiple regions, technologies & sup
Slide 18: Value enhancements
Value enhancements Proactive management continues to preserve and enhance value • Blade furniture trial achieved 5% yield uplift at Hill of Towie Uplift energy (expected +£4.3m NPV) – more sites to follow in 2023 yield • Altahullion collective control trial – one of the first in the world • Active P
Slide 19: Completion programme for projects in construction
Completion programme for projects in construction Vannier and Blary Hill completed; Cadiz solar and Grönhult commissioning 2022 2023 2024 2025 Blary Hill, Scotland 35MW onshore wind farm Vannier, France 43MW onshore wind farm Grönhult, Sweden 67MW onshore wind farm operational Cadiz solar, Spain 234
Slide 20: Portfolio Development & Diversification
Portfolio Development & Diversification East Anglia 1, England Minesh Shah Investment Director trig-ltd.com
Slide 21: Responsible cashflow management
Responsible cashflow management 2.8GW1 portfolio £263m 5,376 GWh clean electricity produced in 2022 reinvested Operational £423m cashflow generated2 in 2022 Repayment of £174m project level debt 2.6x gross cash cover Cash available £249m for distributions 1.55x Reinvestment cash dividend cover £89m
Slide 22: Portfolio additions in 2022
Portfolio additions in 2022 Complementary revenue types, technology and geographies Date of Net capacity % of portfolio Project Technology Revenue type1 Location Equity share completion (MW)2 value3 Wholesale March 2022 Valdesolar Solar PV Spain 49% 129 3% market July / October Hornsea One Offshore
Slide 23: Portfolio diversification
Portfolio diversification 2.8GW net generation capacity once projects in construction are operational Diversification across multiple countries1,2,3 Low single asset concentration2,4 2% 31% 26% 7% 8% 11% 13% Hornsea One 8% 2% England & Wales Scotland N. Ireland Merkur 7% Republic of Ireland France S
Slide 24: Forecast transactions of >100GW to 2030 in key markets
Forecast transactions of >100GW to 2030 in key markets New capacity across a range of revenue types and market segments Largely subsidised Largely unsubsidised markets1 markets1 Largely subsidised markets UK & Ireland Nordics Largely unsubsidised markets +20GW +5GW +3GW +9GW Offshore Onshore Flexibl
Slide 25: Concluding Remarks
Concluding Remarks Richard Crawford Egmere, England Fund Manager trig-ltd.com
Slide 26: TRIG: Generating Sustainable Value
TRIG: Generating Sustainable Value Strong earnings and NAV growth ▲ Valuation gains from high near-term power prices (net of govt. interventions), positive correlation to inflation and active portfolio management ▲ Realised power prices supported a strong gross cash cover of 2.6x before the repaymen
Slide 27: Appendices
Appendices Construction at Grönhult, Sweden, trig-ltd.com
Slide 28: Appendix 1 – Financials & Valuation
Appendix 1 – Financials & Valuation Roussas–Claves, France trig-ltd.com
Slide 29: Summary 2022 Financial Statements
Appendix 1 – Financials & Valuation Summary 2022 Financial Statements Strong financial performance: NAV per share +15.3p Income Statement Balance Sheet Cash Flow Statement Year to Year to As at As at Year to Year to 31 December 31 December 31 December 31 December 31 December 31 December 2022 2021 20
Slide 30: Valuation – key assumptions
Appendix 1 – Financials & Valuation Valuation – key assumptions As at 31 December 2022 As at 31 December 2021 Discount Rate Portfolio average 7.2% 6.6% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts UK (RPI) 5.00% (2023), 2.75% to 2030, 2% thereafter 3.
Slide 31: Government bond yield and portfolio discount rate analysis
Government bond yield and portfolio discount rate analysis Benchmark Portfolio discount rate compared to UK Govt 10yr gilt yield1 31 Dec 30 Jun 31 Dec 20 Feb government bond 2021 2022 2022 2023 yields1 10% Blended average portfolio discount rate 9% UK 0.97% 2.23% 3.67% 3.47% 8% EU markets weighted 7
Slide 32: Government intervention summary
Government intervention summary Summary of government interventions into electricity markets in TRIG’s markets ▲ As power prices have increased pressure on consumer and government balance sheet, a number of interventions have been announced in the UK and EU. These are summarised below. % of merchant
Slide 33: GB forward power prices
Appendix 1 – Financials & Valuation GB forward power prices 600 ▲ UK forward power prices have reduced since the date of the year end valuation. 550 ▲ The impact of the EGL reduces portfolio sensitivity to movements by 60%1 ▲ Guarantees of origin certificates are currently trading significantly abov
Slide 34: 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, moving with storage targets and weather conditions, is heavily influencing power prices for markets where gas is the price setter
Slide 35: 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 GB onshore wind curve (real) 300 Dec 2022 forecasters curve pre-EGL TRIG Dec 2022 valuation 1 150 Dec 2021 0 Year 2023 2050 Key Range of INPUTS
Slide 36: 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 36
Slide 37: NAV sensitivities
Appendix 1 – Financials & Valuation NAV sensitivities Based on portfolio at 31 December 2022 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -4.3p 4.6p Output P90 / P10 (10 year) -15.4p 16.7p Power price -/+ 10% -9.2p 8.8p Inflation -/+ 0.5% -5.1p 6.1p Operating costs +/- 10
Slide 38: Approach to gearing
Appendix 1 – Financials & Valuation Approach to gearing Disciplined approach Term Project Debt TRIG’s portfolio at 31 Dec 2022 Project Category ▲ Limited to 50% of portfolio enterprise value (Younger = <10yrs) Average % of # of projects2 gearing1 portfolio ▲ Fully amortising within the subsidy perio
Slide 39: 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 31 December 2022 using Directors’ valuation plus investment commitments. Where projects hav
Slide 40: Equipment manufacturers exposure
Appendix 1 – Financials & Valuation Equipment manufacturers exposure Shown on an invested portfolio valuation basis 40 trig-ltd.com
Slide 41: Appendix 2 – Portfolio Construction & Sustainability
Appendix 2 – Portfolio Construction & Sustainability Roussas–Claves, France trig-ltd.com
Slide 42: 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 43: 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, that operates the solar park & retains 51% ownership Valdesolar ▲ 616 hectare site comprising of 6
Slide 44: Acquisition of Battery Storage Sites, UK
Appendix 2 – Portfolio Construction Acquisition of Battery Storage Sites, UK 100% equity interest in four battery storage site developments ▲ Four development-stage sites located in Northern England providing c.700MWh / 350MW flexible capacity once built ▲ Ryton, Drax and Drakelow developed by and a
Slide 45: Constructing a balanced portfolio
Appendix 2 – Portfolio Construction Constructing a balanced portfolio Understanding the range of revenue types available 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 Characteristics Investme
Slide 46: 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 With EGL Without EGL Electricity Generator Indexed Fixed Levy (EGL) PPAs & FiTs 8% 48% PPA Market Indexed Fixed Revenue PPAs & FiTs 3
Slide 47: Sustainability in practice
Sustainability in practice Further reporting against our sustainability goals in 2022 Mitigate adverse Climate Preserve the Natural Positively impact the Maintain ethics and integrity Change Environment communities we work in in governance 1.9m tonnes of carbon emissions avoided 1 active Environment
Slide 48: Appendix 3 – Sector Backdrop
Appendix 3 – Sector Backdrop Roussas–Claves, France trig-ltd.com
Slide 49: Decarbonisation through the lens of energy security
Appendix 3 – Sector backdrop Decarbonisation through the lens of energy security Announcements in 2022 prioritise security of supply and bolster existing net-zero targets Europe - REPowerEU ▲ REPowerEU is the European Commissions plan to make Europe independent from Russian fossil fuels before 2030
Slide 50: Reform of GB and EU electricity market design
Appendix 4 – Risk & Risk Management 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 government response and further co
Slide 51: 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 5
Slide 52: 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 power price: £/MWh natural gas and carbon prices 2023, real £/MWh Low Average High 180 240 Demand Demand Demand 160 Market Peaking Price 200 plant 140 1
Slide 53: Appendix 4 – Management Team
Appendix 4 – Management Team Roussas–Claves, France trig-ltd.com
Slide 54: The Team
Appendix 6 – Management Team The Team Experienced Management and Strong Board Independent Board Richard Morse (Chairman) Investment Manager Operations Manager Tove Feld (SID) Key roles: Key roles: Overall responsibility for day-to-day Providing operational management management services for the
Slide 55: InfraRed Capital Partners – Investment Manager
Appendix 6 – Management Team InfraRed Capital Partners – Investment Manager Over 25 years’ pedigree in infrastructure Key statistics across infrastructure 25 year US$10bn track record equity London (Infrastructure) Seoul managed New York (Investors) (Infrastructure) InfraRed is Sun Life’s global inf
Slide 56: RES – Operations Manager
Appendix 6 – 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 10GW+ 776MW Operational assets Energy storage projects supported Operating across
Slide 57: Appendix 5 – Company Information
Appendix 5 – Company Information Roussas–Claves, France trig-ltd.com
Slide 58: Diversified shareholder base
Appendix 7 – 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 6%
Slide 59: Key facts
Appendix 7 – 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 134.6p (31 December 2022) Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Mark
Slide 60: Contacts
Appendix 6 – Company Information Contacts Investment Manager Operations Manager InfraRed Capital Partners Limited Renewable Energy Systems Limited Level 7, One Bartholomew Close, Beaufort Court Barts Square, Egg Farm Lane London, EC1A 7BL Kings Langley Hertfordshire, WD4 8LR +44 (0)20 7484 1800 +44
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