Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — H1 2024 Earnings Presentation
52 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, Aug 9, 2024
Slide 1: Interim Results 2024
The Renewables Infrastructure Group Interim Results 2024 Renewables infrastructure for a clean and secure future 9 August 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 & H1 2024 Highlights
Investment Proposition & H1 2024 Highlights www.trig-ltd.com 3
Slide 4: Our proposition
Our proposition Favourable fundamentals Responsible investment Balanced portfolio >8 Portfolio base case 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 Diversified UK & 38% UK 2.7GW European portfolio Rest of Europe 62% Renewable electricity 3TWh generated in H1 2024 5% 13% Onshore Wind Offshore Wind 47% Solar PV Development 35% Flexible Capacity 1GW opportunities Portfolio charts represent T
Slide 6: Reducing gearing, investing accretively, and commencing buybacks
Reducing gearing, investing accretively, and commencing buybacks A resilient and Disposals reaffirm NAV Durable balance sheet progressive dividend1 gross cash cover / disposals made H1 2024 project 2.2x / 1.1x net dividend cover 3 £210m since June 2023 £103m debt repayment 2024 dividend average disp
Slide 7: Disciplined capital allocation
Disciplined capital allocation H1 Operational FY24 Uses of cash cash flow Operational Project-level debt cash flow1 amortisation £203m £205m Reduce gearing H2 c. 55% Net RCF Net dividend reduction cover c.£145m c.1.1x H1 Dividends Disposal proceeds £50m £184m Shareholder returns H2 Disposals agreed
Slide 8: Proprietary development pipeline provides significant growth opportunity
Proprietary development pipeline provides significant growth opportunity Creating value through sale or hold optionality Co-location 1GW Re-powering & extension 78MW New sites Exclusive development Ryton battery storage project: opportunities to 2030 the first development pipeline opportunity to ent
Slide 9: Financial Highlights & Valuation
Financial Highlights & Valuation www.trig-ltd.com 9
Slide 10: Financial highlights
Financial highlights Half year ended 30 June 2024 123.4p £3,358m -0.6p NAV per share Portfolio Value Earnings per share (31 Dec 2023: 127.7p) (31 Dec 2023: £3,509m) (FY 2023: 0.2p) 2.2x 1.1x 7.47p Gross cash dividend cover Dividend cover FY 24 Dividend per share target (FY 2023: 2.8x) (FY 2023: 1.6x
Slide 11: Portfolio valuation bridge
Portfolio valuation bridge Valuation movement in the half year to 30 June 2024 3, 00m Portfolio Valuation 3, 00m 3,50 41 3,500m 3,3 4 (51) 4 3,35 (£m) 3,300m (125) (44) (15) (32) 3,100m 2, 00m 2, 00m 1. 2. 3. 4. 5. 6. 2,500m 31 ec 23 Ne isposal ash Rebased hange in ovement in hange in ovement in Por
Slide 12: Fixed revenues reduce impact of decline in near-term power price forecasts
Fixed revenues reduce impact of decline in near-term power price forecasts TRIG blended power price curve1,4 Average assumed power prices5 70 Average Average Average Average Region 60 2024-2028 2029-2033 2034-2050 2051-2060 GB Real 2023 GBP/MWh (Real £/MWh) 64 56 48 44 50 2 40 EU jurisdictions (Real
Slide 13: Inflation and discount rates – mechanical adjustments
Inflation and discount rates – mechanical adjustments Discount rates Inflation ▪ No change to valuation discount rates ▪ Slight reduction in 2024 full year UK expected inflation for RPI and CPI ▪ Weighted average discount rate increased to 8.3% as a result of portfolio ▪ Longer-term forecast inflati
Slide 14: Healthy disposal premia underscores the portfolio valuation
Healthy disposal premia underscores the portfolio valuation Disposal activity Guarantees of Origin certificate forecast REGOs - £/MWh GoOs - €/MWh ▪ +0.6p per share impact from accretive disposals 7.0 8.0 ▪ Sales of four windfarms: Little Raith, Forss, Pallas and 6.0 7.0 Jun-24 Jun-24 partial stake
Slide 15: Active portfolio management reduced the NAV impact of adverse macro movements
Active portfolio management reduced the NAV impact of adverse macro movements and below budget electricity generation 140p + 120p 100p Pence per Ordinary Share 0p Macro Actuals 127.7p 123.4p 0p 31 Dec 2023 NAV 30 June 2024 NAV - Power prices - Cable outages + Disposals - Inflation + Impact of + Deve
Slide 16: Current priority remains to reduce floating rate debt
Current priority remains to reduce floating rate debt; with new investments benchmarked to buybacks H1 2024 actual movements H2 2024 expected movements3 2025 projected movements3 £364m £334m Retained cash, Retained cash Construction disposal and disposal investment1 proceeds, proceeds & Fig Power re
Slide 17: Clear pathway for debt reduction
Clear pathway for debt reduction with vast majority of debt being at project level, amortising and fixed rate c. £400m Portfolio debt / gearing profile debt repayable 100% 250 Annual project level debt Portfolio gearing % 80% 200 37% repayment (£m) Project level debt repayment £m 60% 150 portfolio g
Slide 18: Operational Excellence
Operational Excellence www.trig-ltd.com 18
Slide 19: Electricity generation below budget, with diversification mitigating impact
Electricity generation below budget, with diversification mitigating impact of externalities H1 2024 ▪ Europe-wide weather resource weak in March & May Electricity Performance impacting generation, plus cable and grid outages Technology Region production vs. Budget (GWh)1 ▪ 60% of overall portfolio-
Slide 20: Wind / solar resource variation against the long-term mean
Wind / solar resource variation against the long-term mean shows benefit of diversification 20% 15% 10% 5% 0% -5% -10% -15% -20% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 France Onshore Wind Germany Offshore Wind Scandinavia Onshore Wind UK Onshore Wind UK Offshore Wind Spain Solar GB &
Slide 21: 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 8 sites 1-5% TuneUp 4 sites ~1% Wind Wake steering Inc. Altahullion trial Offshore and Onshore sites ~1% Altahullion Power cu
Slide 22: Swedish wind farms successfully commissioned into operations
Swedish wind farms successfully commissioned into operations Construction now complete at 2023 2024 2025 2026 Ranasjö & Salsjö, Sweden 242MW1 Ranasjö & Salsjö, Sweden adjacent onshore wind farms 78MW Ryton, UK Battery storage 100MW Spennymoor, Battery storage UK 90MW Drakelow, UK Battery storage 40
Slide 23: Concluding Remarks
Concluding Remarks www.trig-ltd.com 23
Slide 24: Concluding remarks
Concluding remarks Decarbonisation & energy security central to government policies Favourable Diverse exposure to mature renewables markets fundamentals Disposal activity & construction progress enhance portfolio composition & quality Balanced New generation capacity being added to portfoli
Slide 25: Appendices
Appendices www.trig-ltd.com 25
Slide 26: Summary June 2024 Financial Statements
Appendix 1 – Financials & Valuation Summary June 2024 Financial Statements Six months to 30 Six months to 30 Six months to 30 Six months to 30 Balance Income 31 December Cash Flow Statement June 2024 June 2023 June 2024 June 2023 £m £m Statement Sheet 30 June 2024 2023 £m £m £m £m Cash from investme
Slide 27: Valuation – key assumptions
Appendix 1 – Financials & Valuation Valuation – key assumptions As at 30 June 2024 As at 31 December 2023 Discount Rate Portfolio average 8.3% 8.1% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts UK (RPI) 3.0%1 (2024), 3.25% to 2030, 2.5% thereafter 3.5%
Slide 28: Government bond yields and portfolio discount rate analysis
Appendix 1 – Financials & Valuation Government bond yields and portfolio discount rate analysis Portfolio discount rate compared to UK Govt 10yr gilt yield1 30 Jun 31 Dec 30 Jun 1 Aug 10% Blended average portfolio discount rate 2023 2023 2024 2024 9% Benchmark government bond yields1 8% 7% UK 3.7% 3
Slide 29: GB forward power prices 2024-2027
Appendix 1 – Financials & Valuation GB forward power prices 2024-2027 UK and EU forward power prices have risen c. 3% since the date of the interim valuation 100 95 90 30 June 2024 Forward power price £/MWh 85 80 75 70 65 60 55 50 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Balance of 20
Slide 30: Cannibalisation assumptions
Appendix 1 – Financials & Valuation Cannibalisation assumptions ▪ Cannibalisation describes the effect that renewables % 30 June 2024 Average cannibalisation (an intermittent generator) can have on the overall Segment portfolio value assumption power prices, whereby the marginal cost of generation,
Slide 31: 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 300 40 Gas price (£/MWh) 120 GB onshore wind curve (real) Carbon price (£/tCO₂) 35 100 30 200 80 25 GBP / MWh 60 20 15 40 100 10 20 5 0 0 0 2024 2050 2024 2
Slide 32: NAV sensitivities
Appendix 1 – Financials & Valuation NAV sensitivities Based on portfolio as at 30 June 2024 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -4.0p 4.3p Output P90 / P10 (10 year) -15.7p 16.8p Power price -/+ 10% -8.1p 8.1p Inflation -/+ 0.5% -4.8p 5.9p Reduction in assumption
Slide 33: Disciplined approach to gearing
Appendix 1 – Financials & Valuation Disciplined approach to gearing TRIG’s portfolio as at 30 Jun 2024 Project Category Term Project Debt (Younger = <10yrs) % of Average gearing1 # of projects2 portfolio ▪ Limited to 50% of portfolio enterprise value Younger projects 54% 39% 11 ▪ Fully amortising wi
Slide 34: Responsible cash flow management
Appendix 1 – Financials & Valuation Responsible cash flow management £144m reinvested 3TWh clean electricity produced in H1 2024 Operational £203m cash flows1 2.2x Gross cash cover Repayment of £103m project level debt £100m Cash available 4.0p for distributions /share £41m Investment3 £9m 1.1x Divi
Slide 35: Balanced portfolio across geographies and technologies
Appendix 2 – Portfolio construction Balanced portfolio across geographies and technologies Diversification across multiple countries1,2,3 Low single asset concentration2,4,5 34% 25% 3% 7% 8% 10% 13% Hornsea One 11% England & Wales Scotland N. Ireland Spain Germany France Sweden Beatrice 7% Establish
Slide 36: Portfolio breakdown
Appendix 2 – Portfolio construction Portfolio breakdown Across technologies and geographies England & Total per Scotland N. Ireland UK subtotal Sweden France Germany Spain Wales technology Onshore 5% 18% 3% 26% 13% 8% - - 47% Wind Offshore 19% 7% - 27% - - 8% - 35% Wind Solar 5% - - 5% - 2% - 7% 13%
Slide 37: 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 38: 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 & Other Months PPAs, FiTs & CfDs 57% 4% Indexed ROC's (Buyout & Recycle) 14% £
Slide 39: 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 40: 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 41: 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 42: 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 43: Sustainability in practice
Appendix 3 – Sustainability Sustainability in practice Mitigate adverse Climate Change Preserve the Natural Environment Positively impact the communities Maintain ethics and integrity in we work in governance community funds within 1.0m tonnes of carbon emissions displaced in H1 2024 1 44 the TRIG p
Slide 44: Operational enhancements glossary
Appendix 4 – Market backdrop Operational enhancements glossary Blade hardware Physical components that are added to turbine blades to improve aerodynamics and increase energy yield Proprietary turbine controller update that optimises the way in which the turbine responds to the site-specific wind co
Slide 45: 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 46: Experienced Board and Management team
Appendix 5 – Management team Experienced Board and Management team Independent Board Richard Morse Chair 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 man
Slide 47: InfraRed Capital Partners – Investment Manager
Appendix 5 – Management team InfraRed Capital Partners – Investment Manager Over 25 years’ pedigree in infrastructure Key statistics across infrastructure London 25+ year US$13bn1 (Infrastructure) track record equity Madrid Seoul managed New York (Infrastructure) (Investors) (Infrastructure) InfraRe
Slide 48: RES – Operations Manager
Appendix 5 – Management team RES – Operations Manager World’s largest independent rene able energy company ACTIVITIES TECHNOLOGIES Develop Construct Services Digital Wind Solar Storage T&D Green Biomass Hydro Hydrogen +40 24 #1 24GW 41GW OVER 4,500 YEARS COUNTRIES Experience in Worldwide The world’s
Slide 49: 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 8% 8% ▲ Top five holders account for c. 2 % of TRIG’s issued share capital ▲ Top 10 holders account for c. 43% of TRIG’s issued share capi
Slide 50: Significant track record established over eleven years
Appendix 6 – Company information Significant track record established over eleven years NAV total return1,2 200p Annualised NAV total return since IPO: 8.1% 160p 120p 80p NAV p/s: 123.4p 40p 0p IPO 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* NAV per share Cumulative Dividends Share price
Slide 51: 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 123.4p (30 June 2024) Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of the London
Slide 52: 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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