Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — H1 2021 Earnings Presentation
54 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, August 2021
Slide 1: Interim Results Presentation: Six Months to 30 June 2021
The Renewables Infrastructure Group Interim Results Presentation: Six Months to 30 June 2021 Generating Sustainable Value. trig-ltd.com Green Hill, Scotland
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 H1 2021 Summary 5 Financial Highlights & Valuation 8 Operational Highlights 17 Responsible Investment 21 Acquisitions & Portfolio Diversification 24 Concluding Remarks 29 Appendices 31 Contacts / Important Information 54 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: H1 2021 Summary
TRIG Enhancing the long-term sustainability of shareholder returns H1 2021 Summary Sustainability in H1 2021 ▲ Resilient financial performance despite low wind A portfolio capable of powering 1.5 million resource and regulatory changes in the period homes with clean energy1 ▲ Investments made enhanc
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: Cumulative Total Return
Strong track record built up over eight years NAV total return1,2 since IPO of 7.9% annualised Disciplined portfolio growth4 180p 3,000 160p 2,500 509 140p 588 120p 2,000 100p 508 £ millions 80p 1,500 60p 114.3 144 230 40p 1,000 255 78 20p 0p 178 500 21 IPO 2014 2015 2016 2017 2018 2019 2020 2021* N
Slide 8: Financial Highlights & Valuation
Financial Highlights & Valuation Beatrice Offshore Wind Farm, Scotland Credit: BOWL trig-ltd.com
Slide 9: Financial Highlights I
Financial Highlights I Six months to 30 June 2021 114.3p 1.8p NAV per share, -1.0p Earnings per share (31 Dec 2020: 115.3p) (H1 2020: 1.0p) £341m1 £240m Equity raised Investments made (H1 2020: £120m) (H1 2020: £281m) Venelle, France2 Past performance is no guarantee of future returns. There can be
Slide 10: Portfolio Valuation Bridge
Portfolio Valuation Bridge Valuation movement in the six months to 30 June 2021 £3,000m £2,500m (88) 33 (39) 44 (68) (29) 83 341 £2,000m £1,500m 2,466 2,466 2,466 2,510 2,477 2,491 2,409 2,380 2,409 2,213 2,213 £1,000m £500m £m 31-Dec-20 New Cash Rebased Change in Movement in Foreign Change in Frenc
Slide 11: Valuation I – Power prices
Valuation I – Power prices Power prices (+£44m) TRIG blended power curve1 70 60 ▲ During H1 2021, blended curve increased overall due to: 50 Real 2019 GBP/MWh ▪ Marked increase in curve over the near term, softening 40 over the longer term (discussed on next 2 slides) 30 20 ▪ Average assumed power p
Slide 12: Valuation II – Power prices
Valuation II – Power prices Near term drivers TRIG blended power curve1 70 Power curve up markedly in the near-term, driven by: 60 50 Real 2019 GBP/MWh ▪ Europe wide gas and carbon prices up c.40% in H1: 40 ▪ Cold winter (incl. Asia, pushing up LNG demand) 30 ▪ Low gas stocks 20 ▪ Economic recoverie
Slide 13: Valuation III – Power prices
Valuation III – Power prices Longer term drivers TRIG blended power curve1 70 ▲ Long-end of the curve reduced across the forecast period, 60 driven by: 50 Real 2019 GBP/MWh 40 ▪ Increased renewables buildout assumptions, 30 including UK offshore wind 20 10 ▪ Consequently, increasing renewable electr
Slide 14: Valuation IV – Other key items
Valuation IV – Other key items Valuation discount rates (+£33m) Mainstreaming of the asset class1 ▲ Reduced by 0.2% reflecting sustained market demand for renewables. Substantial buffer to risk free rate remains. 10% Blended average portfolio Blended rate now 6.5% (31 Dec 2020: 6.7%) 9% 8% 7% discou
Slide 15: Financial Highlights II
Financial Highlights II Six Months to 30 June 2021 £2,491m 6.76p 1.01% Portfolio Value1, +13% FY 2021 Dividend per share target Ongoing charges percentage (December 2020: £2,213m) (FY 2020: 6.76p) (H1 2020: 0.96%) 1.28x Dividend cover (with scrip) £64m 2.1x Cash dividend cover before debt 1.18x Proj
Slide 16: Investment Commitments
Investment Commitments Funding, investments and commitments H2 2021 2022 2023 2024 Total ▲ Investment commitments entered into in H1 Outstanding Commitments (£m) 24 82 50 24 177 – £509m across three investments (see slide 25) *Table does not cast due to rounding. ▲ Outstanding commitments at 30 Jun
Slide 17: Operational Highlights
Operational Highlights Penare Farm, England trig-ltd.com
Slide 18: Production
Production Adverse wind resource dominates H1 2021 generation: 2,113GWh1 ▲ Total generation 12% below budget ▲ Variance driven by resource and grid constraints ▲ Swedish wind and UK solar performing above budget ▲ Merkur - long-term solution being developed, currently expected to be implemented summ
Slide 19: Weather resource
Weather resource Regional monthly and annual volatility smoothed Wind and solar variation to long-term average (last 18months) 80% 60% H1 2021 40% 20% 0% -20% -40% -60% Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 GB Onshore GB Offshore Ireland Onshore France Onshore Scandinavia Onshore Germany Offshor
Slide 20: Value enhancements
Value enhancements Proactive management continues to preserve and enhance value Value preservation Uplift energy yield Proactive portfolio management continues to provide good resilience to Covid-19, with downtime minimised through condition monitoring and strategic spares Maximise revenue Worki
Slide 21: Responsible Investment
Responsible Investment Roos, England trig-ltd.com
Slide 22: Sustainability in practice
Sustainability in practice ESG is integrated at the project level; continued strong performance in H1 2021 To mitigate climate change ▲ 660,000 tonnes of CO2 emissions avoided in H1 20211 CO2 ▲ Over 1.2 million homes powered by clean energy1 ▲ 72% of GB portfolio uses green energy2 To preserve the n
Slide 23: Sustainability in practice
Sustainability in practice Project level sustainability continues, as wider sustainability practices evolve at TRIG TRIG’s 2021 Sustainability Report Sustainability Case Studies1 ▲ Enhanced sustainability disclosure ▲ Highlighting our managers’ programmes ▲ Furthering our sustainability integration
Slide 24: Acquisitions & Portfolio Diversification
Acquisitions & Portfolio Diversification Blary Hill, Scotland trig-ltd.com
Slide 25: Portfolio additions – 2021 to date
Portfolio additions – 2021 to date Diversity of revenue structures, technology and geographies Date of Revenue Net Capacity % of portfolio Project Technology Location Equity share commitment Type1 (MW) value2 January 2021 Beatrice Offshore wind CfD Scotland, UK 17.5% 103 10% Wholesale February 2021
Slide 26: Portfolio diversification
Portfolio diversification 1.9GW net capacity / 79 projects By Jurisdiction / Power Market1,2,3 Top 10 largest assets2 England & Wales Scotland Key: countries as per Jurisdiction / Power Market legend N. Ireland Republic of Ireland Beatrice 15% France Germany 10% Sweden EA1 26% 8% 11% Jadraas Other 7
Slide 27: Swedish onshore wind
Swedish onshore wind Grönhult and Twin Peaks (Ranasjö and Salsjö) Grönhult onshore wind farm, Sweden Ranasjö and Salsjö ▲ 67MW ready-to-build onshore wind farm ▲ Experienced partner: managed by Vattenfall, leading European energy Jädraås company and major renewables developer Stockholm ▲ Established
Slide 28: 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 Region Key Offshore & Technology Onshore Wind Offshore Wind Onshore Wind Solar Focus Onshore Wind1 31 45 37 40 20 35 Estimated 30 30
Slide 29: Concluding Remarks
Concluding Remarks Altahulion, Northern Ireland trig-ltd.com
Slide 30: TRIG: Generating Sustainable Value
TRIG: Generating Sustainable Value Concluding remarks Solid financial performance ▲ Elevated near-term power prices and sustained demand for renewables investments reduces impact of regulatory and taxation changes ▲ Valuation gains from InfraRed’s and RES’s active portfolio and asset management, inc
Slide 31: Appendices
Appendices Egmere Airfield, England trig-ltd.com
Slide 32: Summary June 2021 Financial Statements
Summary June 2021 Financial Statements Reduction in NAV – UK tax and French regulatory changes offset by discount rates reduction and strong near term power prices Income Statement Balance Sheet Cash Flow Statement Six months to Six months to Six months to Six months to 31 December 30 June 2021 30 J
Slide 33: Valuation – key assumptions
Valuation – key assumptions As at 30 June 2021 As at 31 December 2020 Discount Rate Portfolio average 6.50% 6.70% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts UK 2.75% to 2030, 2% thereafter 2.75% Long-term Inflation EU 2.00% 2.00% Foreign Exchange EU
Slide 34: Power price forecasting basics
Power price forecasting basics Illustrative diagram of the approach taken by mainstream forecasts Technology mix Investment Economics OUTPUTS INPUTS Public policy Long-term power price forecast Electricity demand Wholesale market Commodity prices 34 trig-ltd.com
Slide 35: Power price forecasting basics – GB power forecast
Power price forecasting basics – GB power forecast Valuation based on the indicated range provided by mainstream forecasters £/MWh GB Power curve (real) Year 2020 2050 Key Range of INPUTS mainstream forecasters Technology Public Electricity Commodity mix policy demand prices Electricity demand 100 C
Slide 36: 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 – Green Deal: ‘fit for 55’ package ▲ European Commission has released a package of regulations and proposals referred to as ‘fit for 55’ to help the
Slide 37: 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 38: 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 curren
Slide 39: 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 40: Portfolio (2) – Revenue profile
Portfolio (2) – Revenue profile Medium-term project-level revenues mainly fixed and indexed Project Revenue by Type1,2 Market 21% Floor 4% Other Next 12 2% Months ROC Buyout 17% Fixed & FIT 57% £600m £500m £400m £300m £200m £100m - '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37
Slide 41: Portfolio construction: power price sensitivity
Portfolio construction: power price sensitivity Portfolio power price sensitivity maintained ▲ 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 the UK, Sweden, France & Germany over the last
Slide 42: 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 43: 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 44: The Team
The Team Experienced Management and Strong Board Independent Board Helen Mahy CBE (Chair) Investment Manager Operations Manager Shelagh Mason Key roles: Key roles: (SID)1 Overall responsibility for day-to-day Providing operational management management services for the portfolio Sourcing, tran
Slide 45: InfraRed Capital Partners – Investment Manager
InfraRed Capital Partners – Investment Manager Over 25 years’ pedigree in infrastructure Key statistics across infrastructure London 25 year US$10bn track record equity (Infrastructure) Seoul managed New York (Investors) (Infrastructure) Mexico (Infrastructure) InfraRed is Sun Life’s global infrastr
Slide 46: RES – Operations Manager
RES – Operations Manager 39+ years experience in renewables 39 years 270+ track record projects delivered worldwide 3,000+ 21GW employees developed and/or constructed 7GW 300MW Operational assets energy storage projects supported World’s largest independent renewable energy company Operating acr
Slide 47: Diversified shareholder base
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 29% of TRIG’s issued share capital ▲ Top 10 holders account for 44% of
Slide 48: Taxation and regulatory changes
Taxation and regulatory changes Increase in UK Corporation Tax and revision of French Solar Tariffs French Solar Tariffs retroactive UK Corporation Tax increase change ▲ Increase from 19% to 25% from April 2023 ▲ H2 2020: Discussions began on reducing subsidy levels of older French solar projects wi
Slide 49: NAV sensitivities
NAV sensitivities Based on portfolio at 30 June 2021 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -4.1p 4.4p Output P90 / P10 (10 -13.8p 14.9p year) Power price -/+ 10% -7.8p 7.8p 1 Inflation -/+ 0.5% -4.4p 4.8p Reduction in assumption Operating costs +/- 10% -5.4p 5.4p I
Slide 50: Counterparty exposure
Counterparty exposure Broad spread of counterparties monitored regularly Electricity off-takers Equipment & maintenance providers (PPA) (O&M/OEM) 40% 7 Number of associated projects % of Portfolio Valuation of associated projects¹ 30% 17 10 20% 8 5 22 10% 2 6 4 4 1 27 3 1 1 1 3 3 3 1 1 1 2 4 5 1 1 1
Slide 51: Approach to gearing
Approach to gearing Disciplined approach Term Project Debt TRIG’s portfolio at 30 June 2021 Gearing1 Project Category typically ▲ Limited to 50% of portfolio enterprise value (Younger = <10yrs) Average % of # of available gearing1 portfolio projects2 ▲ Fully amortising within the subsidy period Youn
Slide 52: 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 Low Average High 100 70 Demand Demand Demand 60 80 Peaking plant 50 45 40 60 Gas Coal 30 40 Biomass & 20 Interconnectors 10 20
Slide 53: 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 114.3p (30 June 2021) Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Market Capitalisation c.£2.7bn (30 June 2
Slide 54: 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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