Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — H1 2023 Earnings Presentation
60 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, August 2023
Slide 1: The Renewables Infrastructure Group
The Renewables Infrastructure Group Interim Results Presentation: Six Months to 30 June 2023 Cadiz solar, Spain 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: Contents
Contents Section Slide H1 2023 Results Summary 4 Financial Highlights & Portfolio Valuation 9 Capital Allocation 15 Portfolio Growth & Active Management 19 Concluding Remarks 25 Appendices Slide 1 – Financials & Valuation 28 2 – Portfolio Construction & Sustainability 41 3 – Sector Backdrop 46 4 – B
Slide 4: H1 2023 Results Summary
H1 2023 Results Summary Richard Crawford Grönhult, Sweden Fund Manager trig-ltd.com
Slide 5: H1 2023: Financial Highlights
H1 2023: Financial Highlights Resilient portfolio performance £264m 132.2p £3.7bn operational cashflow2 NAV per share Portfolio Value Strategic investment activity £119m £65m 301MW project debt repayments construction expenditure commissioned Sustainable dividend 3.0x / 1.7x 7.18p c.6% gross / net d
Slide 6: Key themes increasing returns
Key themes increasing returns Cashflow resilience Active management Portfolio optimisation Strong inflation Attractive power price Portfolio diversification correlation fixes benefits Low sensitivity to Development & Higher return portfolio interest rates construction progress mix Disciplined Operat
Slide 7: Significant benefit expected from the forecast increase in power prices and inflation
Significant benefit expected from the forecast increase in power prices and inflation Increase in revenue forecasts following disruption to energy markets (from 31 Dec 2021 to 30 June 2023) +22% +13p +1.3% Higher inflation in expected revenues NAV per share in expected return1 Higher power prices De
Slide 8: Inflation-linked returns
Inflation-linked returns TRIG’s UK inflation assumption is below Discount rate implies portfolio return1 of market implied levels inflation + 5.2% 4.5% 10% Portfolio 9% discount rate1: 7.9% 4.0% 8% UK gilt market implied inflation2 7% TRIG’s real 3.5% 6% UK 20 year gov. return is bond yield: compris
Slide 9: Financial Highlights & Portfolio Valuation
Financial Highlights & Portfolio Valuation Phil George Merkur, Germany CFO trig-ltd.com
Slide 10: Portfolio Valuation bridge
Portfolio Valuation bridge Valuation movement in the six months to 30 June 2023 1 1. Investments in the period predominately relate to funding the construction of Ranasjö, Salsjö and Grönhult wind farms and the Cadiz solar projects. 10 * Foreign exchange movement before hedges. The valuation loss re
Slide 11: Market movements: power prices
Market movements: power prices Power prices (-£86m) TRIG assumed blended power price curves1 ▲ Elevated compared to historic levels due to reduced supply 160 of Russian gas 140 ▲ Mild winter and increased gas storage levels significantly 120 decreased near-term power prices Real 2022 GBP/MWh 100 ▲ W
Slide 12: Market movements: inflation and discount rates
Market movements: inflation and discount rates Discount rates (-£142m) Breakdown of TRIG’s 30 Jun 31 Dec 30 Jun ▲ Increased reflecting rising interest rates (+0.5%) and higher valuation discount rate1 2022 2022 2023 returning portfolio mix (+0.2%), Weighted average risk- ▪ Higher increase in the UK
Slide 13: Active management added c.£160m / 6.4p per share to NAV
Active management added c.£160m / 6.4p per share to NAV NAV per share movement in the six months to 30 June 2023 Variance Active Macro to budget management - Power prices Poor UK & Investment - Discount rates - Ireland wind ▲ activity into resource development + Inflation & construction Impact of Va
Slide 14: Active management enhances value
Active management enhances value 6.4p of value enhancements across three broadly equal categories Asset specific value enhancements ▲ Attractive fixed 10-year CPPA signed at Blary Hill onshore windfarm ▲ Favourable fixes entered into for Valdesolar and GB solar & wind projects ▲ Construction premia
Slide 15: Capital Allocation
Capital Allocation Minesh Shah The Grange, England Investment Director trig-ltd.com
Slide 16: Responsible cashflow management
Responsible cashflow management Capital allocation in H1 2023 2.8GW1 portfolio £173m 2,947 GWh reinvested clean electricity produced in H1 2023 Operational £264m cashflows2 Repayment of 3x £119m project level debt Gross cash cover £145m Cash available for distributions 1.7x Reinvestment Net dividend
Slide 17: Disciplined debt management: c. £110m net repayment in H1
Disciplined debt management: c. £110m1 net repayment in H1 Portfolio gearing profile 100% 37% portfolio gearing Portfolio Gearing (%) 80% 60% 40% 3.5% average interest rate 20% 0% '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40 39% of portfolio ungeared Portfolio revenue prof
Slide 18: Prudent capital allocation
Prudent capital allocation Prioritisation of balance sheet management ▲ Prudent capital structure that reduces leverage over time through disciplined debt repayment supporting TRIG’s long-term business model Net dividend cover of 1.7x in the period after repayment of £119m project-level debt ▲ Key c
Slide 19: Portfolio Growth & Active Management
Portfolio Growth & Active Management Minesh Shah Chris Sweetman Agrinergie 1, France (Réunion Investment Director Operations Director trig-ltd.com
Slide 20: Diversified portfolio across geographies and technologies
Diversified portfolio across geographies and technologies 2.8GW net generation capacity once projects in development & construction are operational Diversification across multiple countries1,2,3 Low single asset concentration2,4 2% 31% 24% 8% 10% 10% 13% 2% Hornsea One 9% England & Wales Scotland N.
Slide 21: Three key sources of growth
Three key sources of growth Active management Portfolio Development Value profile and Construction Enhancements Higher Divestments New Existing Energy Revenues & returning considered projects sites yield costs investments 21 trig-ltd.com
Slide 22: Enhancing portfolio through development and construction with attractive risk adjusted returns
Enhancing portfolio through development and construction with attractive risk adjusted returns Return range Solar ▲ 234MW Cadiz solar projects commissioned in H1 2023 c.8% ▲ 67MW Grönholt wind farm commissioned in H1 2023 Onshore wind ▲ Turbines being erected at Ranasjö and Salsjö in Sweden Repoweri
Slide 23: Diversification moderated impact of weak GB and Ireland generation in H1 2023
Diversification moderated impact of weak GB and Ireland generation in H1 2023 H1 2023 H1 2023 ▲ Low wind speeds impacted production in the period, Technology Region generation Generation vs partly offset by above-budget solar production (GWh)1 Budget ▲ GB wind 14% below budget; impact on portfolio-w
Slide 24: Proactive and innovative approach enhances value for stakeholders
Proactive and innovative approach enhances value for stakeholders • Yield-enhancing aerodynamic solutions to be rolled out to further GB Increase onshore windfarms following successful trial in 2022 energy yield • Bespoke blade furniture trialled to reduce noise-related losses Maximise • Corporate P
Slide 25: Concluding Remarks
Concluding Remarks Richard Crawford Garreg Lwyd, Wales Fund Manager trig-ltd.com
Slide 26: Concluding remarks
Concluding remarks 1 Energy security and transition essential Inflation correlated portfolio, with 2 minimal exposure to interest rates Active management from investment & 3 operations experts Past performance is no guarantee of future returns. There can be no assurance that targets will be met or t
Slide 27: Appendices
Appendices Egmere Airfield, England trig-ltd.com
Slide 28: Appendix 1 – Financials & Valuation
Appendix 1 – Financials & Valuation Roussas–Claves, France trig-ltd.com
Slide 29: Summary June 2023 Financial Statements
Appendix 1 – Financials & Valuation Summary June 2023 Financial Statements Income Statement Balance Sheet Cash Flow Statement Six months to Six months to Six months to Six months to 31 December 30 June 2023 30 June 2022 30 June 2023 30 June 2022 30 June 2023 2022 £m £m £m £m £m £m Cash from investme
Slide 30: Valuation – key assumptions
Appendix 1 – Financials & Valuation Valuation – key assumptions As at 30 June 2023 As at 31 December 2022 Discount Rate Portfolio average 7.9% 7.2% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts Actual (to May 2023), 5% (2023), 3.5% Actual, 6% (Dec-22),
Slide 31: Government bond yield and portfolio discount rate analysis
Appendix 1 – Financials & Valuation Government bond yield and portfolio discount rate analysis Benchmark 31 Dec 31 Dec 30 Jun 1 Aug government bond 2021 2022 2023 2023 yields1 UK 0.97% 3.67% 4.39% 4.40% EU markets weighted 0.22% 2.99% 2.81% 2.94% average Germany -0.18% 2.57% 2.39% 2.56% France 0.20%
Slide 32: Inflation linkage
Appendix 1 – Financials & Valuation Inflation linkage ▲ Linkage of portfolio revenues over the next 10 years to Aggregate 10-year revenue forecast mapped by jurisdiction and revenue type3 inflation: Directly linked through subsidies: 56% o Related through power price exposure1: 36% Indexed o The bal
Slide 33: Government intervention summary
Appendix 1 – Financials & Valuation Government intervention summary Summary of government interventions into electricity markets in TRIG’s markets ▲ In 2022, as power prices increased pressure on consumer and government balance sheet, a number of interventions were announced in the UK and EU. These
Slide 34: GB forward power prices
Appendix 1 – Financials & Valuation GB forward power prices 250 Valuation assumption for FY 2023 Valuation assumption for FY 2024 Valuation assumption for FY 2025 200 150 £/MWh 100 50 0 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Source: Argus Media and InfraRed analysis 34 trig-ltd.com
Slide 35: 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 ▲ High-levels of gas storage due to mild temperatures and reduced demand from industrial consumers over the winter have put downward pressure on prices du
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 30 June 2023 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -4.2p 4.5p Output P90 / P10 (10 year) -16.3p 17.6p Power price -/+ 10% -8.8p 8.6p Inflation -/+ 0.5% -5.3p 6.4p Reduction in assumption Op
Slide 38: Approach to gearing
Appendix 1 – Financials & Valuation Approach to gearing Disciplined approach Term Project Debt Gearing1 TRIG’s portfolio at 4 August 2023 Project Category typically ▲ Limited to 50% of portfolio enterprise value (Younger = <10yrs) Average % of # of available gearing1 portfolio projects2 ▲ Fully amor
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 30 June 2023 using Directors’ valuation plus investment commitments. Where projects have mo
Slide 40: Equipment manufacturers exposure
Appendix 1 – Financials & Valuation Equipment manufacturers exposure Shown on an invested portfolio valuation basis Siemens 46% GE 7% 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 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 43: Constructing a balanced portfolio
Appendix 2 – Portfolio Construction Constructing a balanced portfolio Understanding the range of revenue types available: illustrative 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 Characteri
Slide 44: Revenue profile
Appendix 2 – Portfolio Construction Revenue profile Medium-term project-level revenues mainly fixed and indexed Breakdown of forecast revenues Next 12 Months Next 12 Months Next 10 years with EGL without EGL Indexed Fixed PPAs and FiTs / CfDs Indexed ROCs (Buyout and 4% Recycle) 23% 31% 22% REGO, Go
Slide 45: Sustainability in practice
Appendix 2 – Portfolio Construction Sustainability in practice Further reporting against our sustainability goals in H1 2023 Mitigate adverse Climate Preserve the Natural Positively impact the Maintain ethics and integrity Change Environment communities we work in in governance 1.0m tonnes of carbon
Slide 46: Appendix 3 – Sector Backdrop
Appendix 3 – Sector Backdrop Roussas–Claves, France trig-ltd.com
Slide 47: Decarbonisation and energy security developments
Appendix 3 – Sector backdrop Decarbonisation and energy security developments 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 and
Slide 48: Reform of GB and EU electricity market design
Appendix 3 – Sector backdrop 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) Aims to enhance UK energy security (including increasing renewable energy production) and cu
Slide 49: 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 4
Slide 50: 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 normalised power price: natural gas and carbon prices £/MWh Low Average High Demand Demand Demand £/MWh 240 120 Market 200 100 Price Peaking 160 plant 8
Slide 51: Appendix 4 – Board & Management Team
Appendix 4 – Board & Management Team Roussas–Claves, France trig-ltd.com
Slide 52: The Managers
Appendix 4 – Board & Management Team The Managers Investment Manager Operations Manager Key roles: Key roles: Overall responsibility for day-to-day Providing operational management management services for the portfolio Sourcing, transacting and approving Implementing the strategy for electri
Slide 53: The Board of Directors
Appendix 4 – Board & Management Team The Board of Directors Strong board with extensive experience Richard Morse Tove Feld John Whittle Erna-Maria Trixl Selina Sagayam Chairman SID Director Director Director ▲ Extensive energy, environmental ▲ Extensive Renewables and ▲ Extensive experience at multi
Slide 54: Investment and Advisory Committees
Appendix 4 – Board & Management Team Investment and Advisory Committees Investment Committee Jack Paris Chris Gill Richard Crawford Phil George Edward Hunt Minesh Shah CEO, InfraRed Deputy Chief Executive, Head of Energy Income CFO Energy Income Head of Core Income Managing Director, Fund InfraRed F
Slide 55: InfraRed Capital Partners – Investment Manager
Appendix 4 – Board & Management Team InfraRed Capital Partners – Investment Manager Over 25 years’ pedigree in infrastructure Key statistics across infrastructure 25 year US$14bn+ track record equity London (Infrastructure) Seoul managed New York (Investors) (Infrastructure) InfraRed is Sun Life’s g
Slide 56: RES – Operations Manager
Appendix 4 – Board & Management Team RES – Operations Manager World’s largest independent renewable energy company Operating across 14 countries globally Complete life cycle support from inception to repowering Class-leading Asset Management and O&M Services Actively progressing Green Hydrog
Slide 57: Appendix 5 – Company Information
Appendix 5 – Company Information Roussas–Claves, France trig-ltd.com
Slide 58: Diversified shareholder base
Appendix 5 – Company Information Diversified shareholder base Shareholders by Type, as % of Register1 Selected segments of TRIG’s shareholder base1 ▲ Top five holders account for 28% of TRIG’s issued share 7% capital 9% ▲ Top 10 holders account for 42% of TRIG’s issued share capital ▲ Retail shareho
Slide 59: Key facts
Appendix 5 – Company Information Key facts Fund Structure ▲ Guernsey-domiciled closed-end investment company Performance ▲ Dividends to date paid as targeted for each period ▲ NAV per share3 of 132.2p (30 June 2023) Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Market
Slide 60: Contacts / important information
Appendix 5 – Company Information Contacts / important information 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
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