Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — FY2020 Earnings Presentation
51 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, February 2021
Slide 1: Annual Results Presentation: Year to 31 December 2020
The Renewables Infrastructure Group Annual Results Presentation: Year to 31 December 2020 Generating Sustainable Value. Venelle, France trig-ltd.com
Slide 2: Important Information
Important Information This document has been issued by and is the sole responsibility of The Renewables Infrastructure Group Limited ("TRIG"). This document has not been approved by a person authorised under the Financial Services & Markets Act 2000 ("FSMA") for the purposes of section 21 of FSMA. T
Slide 3: Contents
Contents Section Slide Introduction 5 Financial Highlights & Valuation 9 Operational Highlights & Sustainability 17 Acquisitions & Portfolio Construction 23 Concluding Remarks 30 Appendices 32 Contacts / Important Information 50 3 trig-ltd.com
Slide 4: Speakers
Speakers Helen Mahy CBE Richard Crawford Phil George TRIG InfraRed Capital Partners InfraRed Capital Partners Chairman Director, Infrastructure Director, Infrastructure Chris Sweetman Jaz Bains Minesh Shah Renewable Energy Systems Renewable Energy Systems InfraRed Capital Partners TRIG Operations Di
Slide 5: TRIG in 2020
TRIG in 2020 ▲ Resilient financial and operational performance, Sustainability achievements in 2020 despite Covid-19 challenges, underpinned by portfolio diversification and enhancement Powering 1.1 million homes with clean energy2 ▲ Health & safety prioritised throughout the pandemic – technology u
Slide 6: Generating Sustainable Value
Generating Sustainable Value. Purpose: To generate sustainable returns from a diversified portfolio of renewables infrastructure that contribute towards a zero-carbon future ▲ Diverse independent Board Portfolio construction1 to ▲ Sets and monitors adherence to the enhance resilience & strategy and
Slide 7: Continued financial performance underpinning a sustainable dividend
Continued financial performance underpinning a sustainable dividend Net Asset Value NAV per share increased by 17% over 8 years 180p ▲ NAV per share increased by +2.3p from H1 2020 160p NAV total return since IPO 8.1%1 and +0.3p for the year to 115.3p 140p 120p ▲ Robust operational performance and p
Slide 8: Growing scale, good liquidity and low correlation to wider markets
Growing scale, good liquidity and low correlation to wider markets Investments Portfolio growing in scale 3,000 ▲ £588m of gross investments made during the year, continuing to selectively grow the portfolio 2,500 Investments made (£m) with attractive acquisitions 2,000 588 508 ▲ Disciplined growth
Slide 9: Financial Highlights & Valuation
Financial Highlights & Valuation Merkur, Germany trig-ltd.com
Slide 10: Financial Highlights I
Financial Highlights I Year ended 31 December 2020 115.3p 5.9p NAV per share, +0.3p Earnings per share (Dec 2019: 115.0p) (2019: 11.4p) £588m £320m Investments made Equity raised (2019: £508m) (2019: £530m) Jadraas, Sweden 10 Past performance is no guarantee of future returns. There can be no assura
Slide 11: Portfolio Valuation Bridge
Portfolio Valuation Bridge Valuation movement in the twelve months to 31 December 2020 £2,500m (118) (148) 43 177 588 63 £2,000m (137) £1,500m 2,213 £1,000m 2,068 1,745 £500m £m 31-Dec-19 New Sell-downs Cash Rebased Change in Movement in Foreign Balance 31-Dec-20 Valuation Investments and exits Dist
Slide 12: Valuation I – Power prices
Valuation I – Power prices Power prices (-£137.2m) TRIG blended power curve1 ▲ During 2020, blended curve down 12%: ▪ Demand side: reduction in economic activity due to the pandemic ▪ Supply side: increased expectations of renewables build-out and lower future gas/other commodity price forecasts ▲ G
Slide 13: Valuation II – Power prices
Valuation II – Power prices Forecast proportion of revenues fixed per unit of generation Next 12 Months to Dec 25 to Dec 30 to Dec 40 84% fixed 78% fixed 74% fixed 58% fixed Portfolio revenues: Fixed power price (partially indexed) Market power price exposure Careful portfolio construction provides
Slide 14: Valuation III – Other key items
Valuation III – Other key items Valuation discount rates (+£62.8m) Mainstreaming of the asset class1 ▲ Reduced by 0.4% reflecting sustained market demand for 10% Blended average portfolio discount renewables. Blended rate now 6.7% (31 Dec 2019: 7.25%) 9% 8% ▲ Sovereign interest rates have decreased
Slide 15: Financial Highlights II
Financial Highlights II Year ended 31 December 2020 £2,213m 6.76p 0.94% Portfolio Value1, +27% FY 2021 Dividend per share target3 Ongoing charges percentage (Dec 2019: £1,745m) (FY 2020: 6.76p) (2019: 0.98%) 1.2x Dividend cover (with scrip) £98m 2.0x Cash dividend cover before debt 1.13x Project fin
Slide 16: Investment Commitments
Investment Commitments Reconciliation of investment commitments and invested cash Equity Funding and Investments H1 2021 H2 2021 2022 Total ▲ Investment commitments entered into in Outstanding Commitments 2020 – £588m across six investments (see (£m) 313 26 53 392 slide 25), £118m of divestment proc
Slide 17: Operational Highlights & Sustainability
Operational Highlights & Sustainability Construction activities commence at Blary Hill, Scotland trig-ltd.com
Slide 18: Production
Production Solid performance despite challenging year 2020 Generation: 3,953GWh1 2020 Generation by Region ▲ 30% increase over Jan-Dec 2019 Electricity Performance Technology Region production vs Budget ▲ Total generation 1.3% above budget (GWh) Wind onshore GB 1,321 +6% ▲ GB wind, Scandinavia and U
Slide 19: Weather and Operational Highlights
Weather and Operational Highlights Solid performance despite challenging year Wind and solar variation to long-term average Total generation 1.3% above budget Geographic diversification smoothens variations Strong wind resource dominated H1, with grid availability in Germany and Ireland impactin
Slide 20: Value enhancements
Value enhancements Proactive management continues to preserve and enhance value Value preservation Portfolio resilience to Covid-19 achieved through: ▪ Proactive management of major components through Uplift energy yield condition monitoring & strategic spares approach ▪ Adapted safe systems of wo
Slide 21: Sustainability in practice
Sustainability in practice ESG is integrated at the project level To mitigate climate change • 1.2m tonnes of CO2 emissions avoided in 20201 • Over 1.1 million homes powered by clean energy1 • 72% of GB portfolio uses green energy2 To preserve the natural environment • 14 Active Environmental Manage
Slide 22: Positively Impacting Communities
Positively Impacting Communities 47 community contributions made by the TRIG Covid-19 Fund in 2020 Wells Community Support Hub, supported by Egmere Solar Farm ▲ Wells Community Hospital provides health and wellbeing services to the local community ▲ A support hub was created in 2020, with services i
Slide 23: Acquisitions & Portfolio Construction
Acquisitions & Portfolio Construction Merkur, Germany trig-ltd.com
Slide 24: Responsible investment process
Responsible investment process InfraRed’s investment process integrates sustainability considerations at each step Negative Screening End of investment life ▪ Checks made against TRIG’s Investment ▪ Responsible and collaborative approach Negative Policy and InfraRed’s exclusion list to asset decommi
Slide 25: Portfolio additions
Portfolio additions Diversity of revenue structures, technology and geographies Date of Net Capacity % of portfolio Project Technology Location Equity share Revenue Type1 commitment (MW) value2 2020 Investments January 2020 Blary Hill Onshore wind (construction) Scotland, UK 100% 35 Wholesale market
Slide 26: Portfolio – Increased Diversification
Portfolio – Increased Diversification 1.8GW net capacity / 77 projects (31 Dec 2020 plus Beatrice & Grönhult) By Jurisdiction / Power Market1,2 Top 10 largest assets2 and Portfolio age UK 63% EU 37% Dec-20+ 27% 33% 3% 3% 12% 10% 12% Beatrice 12% Dec-19 23% 28% 4% 3% 10% 17% 15% Dec-18 36% 41% 5% 6%
Slide 27: East Anglia 1 and Beatrice offshore wind farms
East Anglia 1 and Beatrice offshore wind farms Attractive projects with leading market participants UK offshore wind ▲ Largest offshore wind market in the world and crucial to UK’s net-zero plans ▲ Each backed by a 15-year Contract-for-Difference subsidy reducing portfolio power price sensitivity ▲
Slide 28: TRIG's growing offshore wind portfolio
TRIG’s growing offshore wind portfolio Five offshore wind investments across UK and Germany TRIG’s offshore wind portfolio Time of TRIG’s offshore wind investments1 ▲ Across five investments, since 2017, TRIG has 82.5MW 99MW 102.1MW 102.9MW invested in projects with gross capacity of 2.3GW 46.6MW ▲
Slide 29: Forecast new capacity of 90GW by 2030
Forecast new capacity of 90GW by 2030 New capacity from a broad range of revenue and market types Revenue type Largely subsidised markets Largely unsubsidised markets Key Offshore & technology Onshore Wind Offshore Wind Onshore Wind Solar Onshore Wind1 focus 30 40 Estimated 35 20 32 capacity 26 30 2
Slide 30: Concluding Remarks
Concluding Remarks Garreg Lwyd, Wales trig-ltd.com
Slide 31: TRIG: Generating Sustainable Value
TRIG: Generating Sustainable Value Remaining resilient; strong performance despite challenging year Robust operational and financial performance ▲ Portfolio diversification and strong asset management reduced operational impact of Covid-19, resulting in good availability and generation ▲ Valuation g
Slide 32: Appendices
Appendices Altahullion, Northern Ireland trig-ltd.com
Slide 33: Summary December 2020 Financial Statements
Summary December 2020 Financial Statements Resilient financial performance - NAV per share up 0.3p despite challenges Income Statement Balance Sheet Cash Flow Statement Year to Year to Year to Year to 31 December 31 December 31 December 31 December 31 December 31 December 2020 2019 2020 2019 2020 20
Slide 34: Valuation – key assumptions
Valuation – key assumptions Power price reductions offset by longer asset lives and reduced discount rates As at 31 December 2020 As at 31 December 2019 Discount Rate Portfolio average 6.70% 7.25% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts UK 2.75%
Slide 35: Decarbonisation agenda remains central to public policy
Decarbonisation agenda remains central to public policy Governments setting out the need for new demand-side technologies and investment European Union – 2030 Climate Target Plan ▲ Accompanied by plans: ▪ To increase EU-27's offshore wind capacity from its current level of 12GW to at least 60GW by 2
Slide 36: Supply-side ambitions
Supply-side ambitions GB 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 tends to reduce prices (other
Slide 37: Demand-side ambitions
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. 10-20% higher than in curre
Slide 38: Portfolio (1) – Constructing a balanced portfolio
Portfolio (1) – Constructing a balanced portfolio Understanding the range of revenue types available ▲ FiT & CFD contracts (France, Ireland, Germany and UK) typically have subsidy revenues of 15-20 years then market revenues for the balance of a project’s life ▪ Least revenue risk (early on), scope
Slide 39: Portfolio construction: power price sensitivity reduced
Portfolio construction: power price sensitivity reduced Additions of subsidised assets have reduced the Portfolio’s power price sensitivity ▲ Acquisitions comprise a range of FiT, CfD and Impact on equity return of change in power price1,2 unsubsidised projects, with different gearing levels, across
Slide 40: Portfolio (2) – Revenue profile
Portfolio (2) – Revenue profile Medium-term project-level revenues mainly fixed and indexed Project Revenue by Type Floor Market 4% 12% Other 2% ROC Next 12 Buyout 17% months Fixed & FIT 65% Split of Project Revenues by Contract Type for the Portfolio as at 31 December 2020 £600m £500m £400m £300m £
Slide 41: Risks relating to implementation of UK/EU trade agreement
Risks relating to implementation of UK/EU trade agreement Although a trade deal has been agreed residual risks remain Risk Factor Key Mitigants Political / regulatory Brexit may affect the relationship between Scotland and the UK as a whole. An independent Scotland’s energy policies may impact the
Slide 42: The Team
The Team Experienced Management and Strong Board Independent Board Helen Mahy CBE (Chair) Investment Manager Operations Manager Key roles: Key roles: Shelagh Mason Overall responsibility for day-to-day Providing operational management (SID) management services for the portfolio Sourcing, trans
Slide 43: InfraRed Capital Partners – Investment Manager
InfraRed Capital Partners – Investment Manager Over 25 years’ pedigree in infrastructure Key statistics across infrastructure and real estate London 25 year $12bn 17 (Infrastructure & track record equity funds Real Estate) Seoul managed raised New York (Investors) (Infrastructure) Hong Kong Mexico (
Slide 44: RES – Operations Manager
RES – Operations Manager 38+ years experience in renewables 39 years 270+ track record projects delivered worldwide 2500+ 19GW employees developed and/or constructed 7GW 300MW Operational assets energy storage projects supported World’s largest independent renewable energy company Operating acro
Slide 45: Diversified shareholder base
Diversified shareholder base TRIG has a high quality institutional shareholder base as well as retail investors ▲ Top five holders account for 29% of TRIG’s issued share capital Shareholders by Type, as % of Register1 ▲ Top 10 holders account for 44% of TRIG’s issued share capital ▲ Over one third i
Slide 46: NAV sensitivities
NAV sensitivities Based on portfolio at 31 December 2020 -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 -14.3p 15.3p year) Power price -/+ 10% -7.6p 7.6p Inflation -/+ 0.5% -4.8p 5.3p Reduction in assumption Operating costs 1 +/- 10% -5.8p 5.
Slide 47: Counterparty exposure
Counterparty exposure Broad spread of counterparties monitored regularly Electricity off-takers Equipment manufacturers Maintenance suppliers 20 40% 7 Number of associated projects % of Portfolio Valuation of associated projects¹ 30% 17 9 20% 5 22 3 6 27 10% 1 4 1 2 1 3 4 5 1 18 3 1 2 4 1 2 5 5 3 1
Slide 48: Approach to gearing
Approach to gearing Disciplined approach Term Project Debt Gearing1 TRIG’s portfolio at 31 Dec 2020 Project Category typically (Younger = <10yrs) Average % of # of ▲ Limited to 50% of portfolio enterprise value available gearing1 portfolio projects2 ▲ Fully amortising within the subsidy period Young
Slide 49: Short-run marginal cost supply curve (merit order)
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 2019 Low Average High 100 70 Demand Demand Demand 60 80 Peaking plant 50 45 40 60 Gas Coal 30 40 Biomass & 20 Interconne
Slide 50: Key facts
Key facts Fund Structure ▲ Guernsey-domiciled closed-end investment company Performance ▲ Dividends to date paid as targeted for each period ▲ NAV per share of 115.3p (31 December 2020) Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Market Capitalisation c. £2.4bn (31 D
Slide 51: Contacts
Contacts Investment Manager Other Advisers InfraRed Capital Partners Limited Administrator / Company Secretary Registrar Level 7, One Bartholomew Close, Barts Square, Aztec Financial Services (Guernsey) Ltd Link Asset Services (Guernsey) Ltd London, EC1A 7BL East Wing Mont Crevelt House Trafalgar Co
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