Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — FY2021 Earnings Presentation
67 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, February 2022
Slide 1: Annual Results Presentation: Year to 31 December 2021
The Renewables Infrastructure Group Annual Results Presentation: Year to 31 December 2021 Generating Sustainable Value. Blary Hill construction, Scotland trig-ltd.com
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 2021 Summary 6 Financial Highlights, Valuation & Sustainability Disclosures 9 Operational Highlights & ESG Considerations 17 Portfolio Diversification & Responsible Investment 21 Market Outlook & Investment Policy 24 Concluding Remarks 27 Appendices Slide 1 – Financials & Valu
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: 2021 Summary and Sustainability in 2021
The Renewables Infrastructure Group 2021 Summary Sustainability in 2021 ▲ Strong earnings driven by elevated near-term power prices and active portfolio management Generated enough clean energy in 2021 to provide 1.1m homes with clean energy2 ▲ Dividend cash cover moderated by unusually low wind res
Slide 7: 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 8: Strong track record built up over eight years
Strong track record built up over eight years NAV total return1,2 since IPO of 8.3% annualised Disciplined portfolio growth4 180p 3,000 160p Investments made £ millions 2,500 140p 470 479 120p 2,000 508 100p 80p 1,500 NAV: 144 60p 119.3p 230 1,000 78 40p 255 20p 178 500 21 0p IPO 2014 2015 2016 2017
Slide 9: Financial Highlights, Valuation & Sustainability Disclosures
Financial Highlights, Valuation & Sustainability Disclosures Sheringham Shoal, England trig-ltd.com
Slide 10: Financial highlights
Financial highlights Year ended 31 December 2021 6.84p FY 2022 Dividend per share target 119.3p £2,726m (FY 2021: 6.76p) NAV per share, +4.0p Portfolio Value1 (31 Dec 2020: 115.3p) (31 Dec 2020: £2,213m) 1.12x Dividend cover (with scrip)2 (FY 2020: 1.2x w. scrip) £479m £145m Project finance debt rep
Slide 11: Portfolio valuation bridge
Portfolio valuation bridge Valuation movement in the twelve months to 31 December 2021 £3,000m 38 59 143 479 169 60 68 117 29 £2,500m £2,000m £1,500m 2,726 2,523 2,213 £1,000m £500m £m 31-Dec-20 New Cash Rebased Change in Movement in Change in Foreign Change in French Solar Balance 31-Dec-21 Valuati
Slide 12: Valuation I – Power prices
Valuation I – Power prices Power prices (+£117m) TRIG blended power price curve1 100 ▲ The blended curve has increased overall – the net impact Real 2020 GBP/MWh 80 of a sharp increase in the near-term and softening over the 60 longer term 40 ▲ Average assumed power prices to 2050 is £42/MWh in the
Slide 13: Valuation II – Power prices
Valuation II – Power prices Near-term drivers Historic GB monthly average commodity prices 2013-2021 (£/MWh)1 250 Near-term forward power prices are highest since IPO, driven Gas Price by: 200 Carbon Price ▲ Europe wide gas & carbon prices rapidly increasing due to: 150 Power Price ▪ Cold 2020 Winte
Slide 14: Valuation III – Other key items
Valuation III – Other key items Valuation discount rates (+£60m) Movement of risk-free and discount rates since IPO ▲ Reduced by 0.3% reflecting sustained market demand for 10% Blended average portfolio renewables and new assets added. Blended rate now 6.6% 9% (2020: 6.7%) 8% 7% discount rate 6% Inf
Slide 15: Funding and investment commitments
Funding and investment commitments 2022 2023 2024 Total ▲ Investments entered into in 2021 – £479m across four investments Outstanding Commitments (£m) 145 63 23 231 ▲ Outstanding commitments at 31 December 2021 – £231m relating to Ranasjö, Salsjö, Grönhult, and the Cadiz solar projects ▲ Equity iss
Slide 16: Evolving TRIG’s sustainability strategy
Evolving TRIG’s sustainability strategy Enhancing disclosure further: EU Taxonomy SFDR Biodiversity Furthering alignment categorisation strategy emissions reporting CO2 Aligning with industry initiatives: 1. https://www.un.org/sustainabledevelopment 16 trig-ltd.com
Slide 17: Operational Highlights & ESG Considerations
Operational Highlights & ESG Considerations Broxburn, Scotland trig-ltd.com
Slide 18: Production
Production Solid performance but low wind resource 2021 Generation and Operations 2021 Generation by Region Electricity Performance vs ▲ Lowest windspeeds in GB (inc. North Sea) since 2010 Technology Region production (GWh)1 Budget ▲ Ireland onshore and German Offshore impacted by grid Wind onshore
Slide 19: Value enhancements
Value enhancements Proactive management continues to preserve and enhance value Commercial enhancements Uplift energy yield Optimised O&M approach for Sheringham offshore windfarm, reducing costs & securing shared access to large service vessel Cost reductions across a number of operational cont
Slide 20: Projects in construction
Projects in construction Blary Hill completed with other in-construction projects on track Completion programme for projects in construction Sustainability in construction 2020 2021 2022 2023 2024 Community engagement Vannier, France – 43MW onshore wind farm Virtual ‘Meet the Buyer’ event at Blary H
Slide 21: Portfolio Diversification & Responsible Investment
Portfolio Diversification & Responsible Investment Altahullion, Northern Ireland trig-ltd.com
Slide 22: Portfolio additions – 2021
Portfolio additions – 2021 Diversification by revenue structures, technology and geographies Net % of Date of Revenue Equity Project Technology / phase Location capacity portfolio commitment type1 share (MW) value2 Subsidy Scotland, Jan 2021 Beatrice Offshore wind 17.5% 103 9% (CfD) UK Wholesale Feb
Slide 23: Portfolio diversification
Portfolio diversification 2.2GW net generation capacity once projects in construction are operational By Jurisdiction / Power Market1,2,3 Top 10 Largest Assets2 England & Wales Scotland Key: countries as per jurisdiction / power market chart legend Republic of Ireland N. Ireland Beatrice Spain Franc
Slide 24: Market Outlook & Investment Policy
Market Outlook & Investment Policy Salsjö, Sweden trig-ltd.com
Slide 25: Forecast transactions of >80GW to 2030 in key markets
Forecast transactions of >80GW 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 Flexible
Slide 26: Construction & development investment policy limit
Construction & development investment policy limit Company consulting with shareholders to increase limit from 15% to 25% Investment policy Construction / Development ▲ Renewables sector evolution: Current activities Track record ▪ Construction & development risks materially different vs IPO c.200MW
Slide 27: Concluding Remarks
Concluding Remarks Meikle Carewe, Scotland trig-ltd.com
Slide 28: TRIG: Generating Sustainable Value
TRIG: Generating Sustainable Value Strong earnings and NAV growth ▲ Valuation gains from high near-term power prices, increased near-term inflation and active portfolio management ▲ Positive dividend cover despite P90 weather resource; mitigation from elevated power prices whilst managing power pric
Slide 29: Appendices
Appendices Blary Hill, Scotland Credit: Keith Arkins trig-ltd.com
Slide 30: Appendix 1 – Financials & Valuation
Appendix 1 – Financials & Valuation Roussas–Claves, France trig-ltd.com
Slide 31: Summary 2021 Financial Statements
Appendix 1 – Financials & Valuation Summary 2021 Financial Statements Resilient financial performance: NAV per share +4.0p 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 2021 2020
Slide 32: Valuation – key assumptions
Appendix 1 – Financials & Valuation Valuation – key assumptions As at 31 December 2021 As at 31 December 2020 Discount Rate Portfolio average 6.6% 6.7% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts 3.75% (2022), 3.50% (2023), 2.75% to UK (RPI) 2.75% 20
Slide 33: GB forward power prices
Appendix 1 – Financials & Valuation GB forward power prices 300 Valuation assumption for FY 2022 Average independent forecast for FY 2022 250 Valuation assumption for FY 2023 Average independent forecast for FY 2023 200 £/MWh 150 100 50 0 31-Dec-2020 31-Mar-2021 30-Jun-2021 30-Sep-2021 31-Dec-2021 S
Slide 34: 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 120 GB Power curve (real) 60 0 Year 2020 2050 Key Range of INPUTS mainstream forecasters Technology Public Electricity Commodity mix policy dem
Slide 35: 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 35
Slide 36: NAV sensitivities
Appendix 1 – Financials & Valuation NAV sensitivities Based on portfolio at 31 December 2021 Discount rate +/- 0.5% -4.1p 4.4p Output P90 / P10 (10 year) -13.9p 15.2p Power price forecasts -/+ 10% -8.1p 8.0p Inflation -/+ 0.5% -4.3p 4.6p Reduction in assumption Operating costs +/- 10% -5.2p 5.2p Inc
Slide 37: Approach to gearing
Appendix 1 – Financials & Valuation Approach to gearing Disciplined approach Term Project Debt Gearing1 TRIG’s portfolio at 31 Dec 2021 Project Category typically ▲ Limited to 50% of portfolio enterprise value (Younger = <10yrs) Average % of # of available gearing1 portfolio projects2 ▲ Fully amorti
Slide 38: 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 2021 using Directors’ valuation plus investment commitments. Where projects hav
Slide 39: Equipment manufacturers exposure
Appendix 1 – Financials & Valuation Equipment manufacturers exposure Shown on an invested portfolio valuation basis 6% 2% 2% Siemens 2% Vestas 5% GE 3% Renesolar 8% 46% Nordex Enercon Envision Canadian Solar Other 26% 39 trig-ltd.com
Slide 40: Appendix 2 – Portfolio Construction
Appendix 2 – Portfolio Construction Roussas–Claves, France trig-ltd.com
Slide 41: 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 42: Revenue profile
Appendix 2 – Portfolio Construction Revenue profile Medium-term project-level revenues mainly fixed and indexed Project Revenue by Type1 Market 27% Fixed Next 12 & Months FiT/CfD Floor 53% 3% Other ROC Buyout 2% 15% £700m £500m £300m £100m '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36
Slide 43: 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 ▲ Acquisitions in 2021 comprise subsidised and -2.0% -1.0% 0.0% 1.0% 2.0% unsubsidised projects, with different gearing levels, across the UK,
Slide 44: UK offshore wind
Appendix 2 – Portfolio Construction UK offshore wind Beatrice offshore wind farm acquired in January 2021 Beatrice offshore wind farm UK Offshore Wind ▲ 588MW offshore wind farm, 14km off the Caithness coast, Scotland ▲ Largest offshore wind market in the world and ▲ CfD subsidy, 14 years remains cr
Slide 45: Swedish onshore wind
Appendix 2 – Portfolio Construction Swedish onshore wind Grönhult and Twin Peaks (Ranasjö and Salsjö) Grönhult onshore wind farm Ranasjö and Salsjö ▲ 67MW ready-to-build onshore wind farm ▲ Experienced partner: managed by Vattenfall, leading European energy Jädraås company and major renewables devel
Slide 46: Acquisition of Cadiz solar projects
Appendix 2 – Portfolio Construction Acquisition of Cadiz solar projects Cadiz projects: ▪ Arenosas ▪ El Yarte Madrid ▪ La Guita Arenosas, Spain ▪ Malabrigo Cadiz Geographies TRIG is invested in, Malabrigo, Spain including the Cadiz projects ▲ Total capacity of 234MW 1 120,000 homes powered by clean
Slide 47: Pre-Operational projects - I
Appendix 2 – Portfolio Construction Pre-Operational projects - I Recently Completed Completion status: Blary Hill Blary Hill ▲ 35MW onshore wind farm in Scotland – consisting of 14 Nordex 2.5MW ▪ Completed in early 2022 turbines ▪ Built within budget and ahead of ▲ Delivered by RES under an Engineer
Slide 48: Pre-Operational projects - II
Appendix 2 – Portfolio Construction Pre-Operational projects - II Under construction Completion status: Vannier Vannier ▲ 43MW onshore wind farm in France – consisting of 17 Envision E-131 ▪ On-site works resumed following 2.5MW turbines permit challenge ▪ On track with new schedule ▲ Construction p
Slide 49: Appendix 3 – Sector Backdrop
Appendix 3 – Sector Backdrop Roussas–Claves, France trig-ltd.com
Slide 50: 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 51: 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 120 t
Slide 52: 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 53: 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 54: 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: natural gas and carbon prices £/MWh £/MWh, Real 2020 Low Average High 70 100 Demand Demand Demand 60 80 Peaking plant 50 45 40 60 Gas Coal
Slide 55: Appendix 4 – Sustainability
Appendix 4 – Sustainability Roussas–Claves, France trig-ltd.com
Slide 56: Sustainability in practice
Appendix 4 – Sustainability Sustainability in practice ESG is integrated at the project level; continued strong performance in 2021 To mitigate climate change ▲ 1.4m tonnes of CO2 emissions avoided in 20211 CO2 ▲ Over 1.1 million homes powered by clean energy1 ▲ 72% of GB portfolio uses green energy
Slide 57: InfraRed’s Investment Approach
Appendix 4 – Sustainability InfraRed’s Investment Approach Scrutinising the supply chain throughout the investment process Investment Stage1 Approach ▪ Checks made against TRIG’s Investment Policy and InfraRed’s exclusion list Negative Screening ▪ Identifying known contraventions of TRIG’s policies
Slide 58: Appendix 5 – Risk & Risk Management
Appendix 5 – Risk & Risk Management Roussas–Claves, France trig-ltd.com
Slide 59: Taxation and regulatory changes
Appendix 5 – Risk & Risk Management Taxation and regulatory changes Increase in UK Corporation Tax and revision of French Solar Tariffs UK Corporation Tax increase French Solar Tariffs retroactive change ▲ Increase from 19% to 25% from April 2023 ▲ French solar projects affected by retroactive cuts
Slide 60: Appendix 6 – Management Team
Appendix 6 – Management Team Roussas–Claves, France trig-ltd.com
Slide 61: The Team
Appendix 6 – Management Team The Team Experienced Management and Strong Board Independent Board Helen Mahy CBE (Chairman) Shelagh Mason1 Investment Manager Operations Manager (SID)2 Key roles: Key roles: Jonathan Bridel1 Overall responsibility for day-to-day Providing operational management (Aud
Slide 62: 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 63: RES – Operations Manager
Appendix 6 – 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 renewable
Slide 64: Appendix 7 – Company Information
Appendix 7 – Company Information Roussas–Claves, France trig-ltd.com
Slide 65: 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 28% of TRIG’s issued share capital ▲ T
Slide 66: 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 119.3p (31 December 2021) Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Mark
Slide 67: Contacts
Appendix 7 – 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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