Octopus Renewables Infrastructure Trust (LSE:ORIT) — Investor Presentation

0:01 Good afternoon, and welcome to the OCTOPUS Renewables Infrastructure Trust PLC investor presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged, can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Simply click q and a, scroll to the bottom, type your question, and press send. The company may not be in a position to answer every question received during the meeting itself. Have the company review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Chris Daygaden, David Bird, investment directors of the OCTOPUS RENEWABLES INFRASTRUCTURE TRUST. Good afternoon.

0:34 Thanks, Paul, and good afternoon, everyone, and thank you for joining our presentation of OCTOPUS RENEWABLES INFRASTRUCTURE TRUST, one of the leading diversified renewable energy funds listed on the LSE. Our ambition with ORIT is to deliver both income and growth to investors while helping to mitigate the impacts of climate change. So my name is Chris Gayden. I'm an investment director at OCTOPUS Energy Generation, and I'm joined by my colleague, David Bird, who's actually sitting right next to me despite being on a different camera. And together, we manage ORIT on a day to day basis. So my background is mainly on the industrial side of renewables, having been developing wind and solar farms across Europe for almost twenty years now. I joined OCTOPUS back in 2015.

1:20 I currently sit on the OCTOPUS Energy Generation leadership team and the renewables investment committee. David?

1:28 Thanks, Chris, and afternoon, everybody, and and thanks for joining. As Chris said, I'm one of the investment directors and and fund managers for the RENEWABLES INFRASTRUCTURE TRUST. I have been working on the financial side investing in renewables for around thirteen years, just over eight of those as part of the OCTOPUS energy generation team.

1:56 Okay. So today, we will hopefully be answering the question of why invest in renewables. We will give you a bit of background on Octopus Energy generation, and then we will be looking at both the portfolio and what's in store for ORIT in the future.

2:20 Okay. So I'd like to start off by highlighting some of the key reasons for investing in renewables. We've set this out in four key themes. The first of these refers to the strategic tailwinds that we see in the renewable sector. And the first of these tailwinds is that renewables is now the cheapest form of energy generation in most parts of the world. Renewables is the medium long... Is is the medium to long term solution for bringing down the costs of energy, and that's particularly pertinent in the in the current energy crisis that we're currently facing. The second tailwind is growing political and social momentum behind responding to the threat of climate change. And in fact, clean energy investment needs to triple versus forecast in order to deliver net zero by 2050.

3:11 And finally, the war in Ukraine is really focusing minds on energy security. And renewables is the obvious homegrown energy supply that we're able to harvest. Now the second reason for investing in renewables is that it's able to provide a long term and sustainable income. So operational renewables can generate predictable, long term, inflation linked and annuity like revenues. But what we're also doing in ORIT is investing into developers and construction projects in order to deliver the next wave of renewable energy projects and hopefully deliver an element of capital growth to ORIT's return.

3:57 The third column here refers to positive impact. Now because we are investing in those development and construction projects, it means that we're able to actually add to the stock of renewable generating plant, and that helps remove some of the more polluting legacy, perhaps fossil fuel fired generating equipment. So an investment into ORIT is making a positive impact on the impacts of climate change. And then finally here is portfolio diversification. And we see climate change as a growing threat to perhaps other asset classes, other types of infrastructure, whereas renewable energy is well placed to benefit from the energy transition that is required to deliver or to tackle climate change, I should say.

4:55 So a little bit about OCTOPUS Energy generation. A little over a year ago, OCTOPUS decided to merge its renewable fund management business, which is where, David and I sit with OCTOPUS Energy, which is one of, if not the, world leading energy transition companies. So we still run our fund management business on an entirely arm's length basis, but there are substantial benefits from having our two businesses sitting side by side. This energy transition is affecting all parts of the energy value chain, and the tie up gives us as fund managers visibility on what's coming down the track. And it helps us find new opportunities for ORIT, whether that's investing in the next wave of new technologies, whether it's trading our power in a different way, or whether it's in in investing in equipment to deliver new products such as hydrogen or ammonia or other other other products which we think will have value in the energy transition.

6:00 Since inception, back in 2010, when we started the fund management business, we've invested around about £4,400,000,000 in a mixture of wind and solar, but also biomass and some other generating assets. We're now present in seven different countries.

6:23 And most of... One of the things that we pride ourselves in is being able to actually construct these projects ourselves. So of the £4,400,000,000 that we've currently invested in, a little under half of that are projects that we have built ourselves. And we can only do that with a highly experienced team. So on this next slide, you'll be able to... Well, in addition to pictures of me and David, you'll be able to see the 90 plus strong team of people within our fund management business, which are delivering on the ORIT mandate amongst the other mandates that we manage. We... You can see that we've split the team up into an investment team, round about 39 people in there.

7:10 They are the people who go out and find opportunities and and execute on those transactions. We have a development team as well, which is focused almost entirely on finding the developers and the development pipelines, which are going to deliver the next wave of ready to build renewable energy projects. We have a strong asset management team as well who ensure that the assets are both built and operated in a best in class way. And we have our fund management team who ensure that all of our finance and accounting, and most importantly, our reporting back to to you, our investors, is done in a... In in in a... In in the most appropriate way. One thing I would like to say about our team is that many of us, most of us even, actually come from industry.

8:02 We've got people on our team, engineers who have got experience, dirt under the fingernails from building wind and solar farms in various countries around the world. And it's really that experience that we rely on to deliver strong returns to our investors and also reduce the risks that are inherent in both development and construction of projects.

8:27 So I'll now hand over to David, who's got a few words to say on ORIT. Thanks, Chris. So so, yeah, Chris has given a background on on why we think investing in renewables is attractive and then the background to Ops Energy Generation, which is the team where I sit. We're now gonna focus really on on the company itself, ORIT, the company we manage, but the... Any investor can can access virus listing on the LSE. The first thing to say about ORIT is that it is an impact fund. And when we talk about being an impact fund, one thing that's really important to note is that we're not talking about any sort of trade off here between investment returns and and delivering on an impact.

9:13 Indeed, the way we think about the impact strategy for ORIT is through three lenses. The first of which is performance, and that that includes ensuring that the renewable energy assets within the fund are performing and generating as as as well as they can. And ultimately, that investor returns are are optimized and that we're delivering on targets. What we mean when we talk about being an impact fund is not only the things that Chris has already talked about whereby the investments we're making are delivering inherently a positive impact on the world through decarbonizing the power sector and indeed facilitating wider decarbonization across the economy, But we're also very mindful of the way in which we make those investments.

10:01 So we look at all our investments through these three pillars, performance, planet, and people. And what that means when we're looking at something like the the planet lens is is making sure that not only are the projects improving the the the power grid by having low carbon, but they're also at a very local level mindful of any impact they might have on the environment. So when we're building these projects, making sure we're not polluting local streams. And indeed, going further than that, but seeing what can we do even further to benefit. Can we enhance biodiversity by having wildflower meadows around our solar sites? Can we have schemes around wind farms that that are designed to protect vulnerable species?

10:47 And that goes to the people lens as well. So examples of what we've done there is looking to have local workforce involved in the construction of the projects, bringing local school children onto sites to learn about the benefits of renewable energy, and also having community benefit funds in order to to allow the locals around our sites to see some of the benefits of of the sites that they're hosting.

11:14 Moving on then to the to the core investment objectives of ORIT, and ORIT is designed to deliver an attractive level of income returns, but also an element of capital growth through investing in that diversified portfolio of renewable energy assets across The UK and Europe. And the way we think about delivering on this objective is through these four pillars. And the first and a really key one is diversification. ORIT has a broader mandate than many other investment companies focused on renewables and similar investment areas. We're diversified not just by technology, by being able to invest in onshore and offshore wind and solar and indeed other technologies, but also we're focused on diversifying by geography and by stage in the asset life cycle.

12:07 As Chris has said, we see a huge opportunity set ahead of us because of that broad mandate, because we can invest across Europe, we can access the full range of investment opportunities that might be available as governments are changing policies and as we're seeing where the most attractive investment opportunities lie. The second pillar, which which sets ORIT apart from from many of the other companies in the space, is our focus beyond just existing operational assets. So we've got a real focus on assets at the development and construction stage, which gives the potential for investors to see higher net asset value growth beyond

12:51 the return. And from construction and development allows us to to target that shareholder return of seven to 8% over the long term. It's really important if you're thinking about investing at the construction and development stage that you've got the expertise to do that. And indeed, our team, OCTOPUS Energy Generation, started off backing a developer that's since become one of the largest solar developers in the world. And around 2,000,000,000 of the portfolio that we've built over the last twelve years or so are assets that we funded at the construction stage.

13:25 And that leads on to the third pillar, which is our approach to selecting and managing these assets. So we have a number of specialist teams. We're very hands on throughout the life cycle of the assets. So making sure that at the development stage, the right projects are being taken forward, making sure that construction, we've got the right contractors and that they're properly overseen, and that we can step in if if issues do arise and make sure that they're resolved. And then throughout the life of the asset, we're making sure we're optimizing the way that the the assets generate, the way that they sell their power, and and looking for further opportunities to add value to those projects, be it by adding other technologies such as storage alongside or improving the overall reliability of the equipment.

14:13 The fourth and and final pillar, which I've already talked about a bit, is that impact approach. So we look not only to deliver the primary impact and the additionality that comes through not just buying existing plants, but putting new green and generation onto the grid. But we also look to to have those extra benefits around our projects.

14:39 So I've talked a bit about the diversification that's key to the ORIT mandate, but we wanted to go a little bit into more detail about what our investment policy says and and how that diversification is made up. So we're diversified by technology. We can invest up to 60% in either of wind or solar. But we can also invest up to 20% of the gross value of the portfolio into other technologies, and we'll come back to that in a bit more detail later. So we'd expect over the long term to have somewhere between 40 to 60% in each of wind and solar to keep those broadly in balance, but also to make use of that other technology allocation as well as being able to invest up to 5% in development stage assets.

15:29 We're also looking to be diversified by geography, so we can have up to 50% of the gross value of the portfolio into The UK... In The UK and up to 40% in any one other country. And again, you'll see when we come on to the the current portfolio that we've we've already delivered a large amount of diversification into the company. And then finally, diversification by asset life cycle stage. So we can have up to 5% of the portfolio in development stage assets, and then we will seek to to maintain a healthy amount in construction as well to deliver that additional growth. The amount of construction assets we can have isn't explicitly capped in the investment policy. But because we're trying to deliver that balance between income yields and and broader capital growth, we tend to expect the amount of construction stage assets in the portfolio to be around 30% over the long term.

16:26 So secondly on this slide is how how do go about delivering all of that, and we've talked about the importance of our team. So we we have a specialist development team. Those are the guys who are working hand in glove with our developer investments, making sure that every time that we're we're looking to put money into a project to move it along the development life cycle, we're really challenging those developers on whether it's the right project and whether it has the right chance of success. So we're not putting money into projects that are are doomed to failure. On the construction management side of things, we've got this in house team of engineers so we can really reduce and manage the the construction risk and ensure that we're delivering successful construction projects on time and on budget.

17:11 And then again, we've got the operational team who are really optimizing the performance of the asset. And all of that leads to the return targets that we're seeking. When we launched back in 2019, ORIT was targeting dividends of 3p per share in the first year, $5.05 pence in the second year, and progressive though... Thereafter. We delivered those target dividends in in 2020 and 2021, and we were able to... And what the board decided to increase the dividend for 2022 in line with CPI. So we're targeting a 5.24p per share dividend for for calendar year 2022. And all of that, together with the additional growth from the construction and development stage investments, leads to the the total target shareholder return of seven to 8% over the medium to long term.

18:02 One of the other things that we haven't talked about yet is is the the active approach we take to portfolio management beyond just looking after the assets. We will we will also look at opportunistic disposals if we think that's the right way of, again, driving further growth and recycling capital that we can then reinvest into new construction projects, for example. So I'm gonna hand back to Chris now, and he'll run through the portfolio that we've built in a bit more detail. K. Thanks, David. So this slide sets out the portfolio that we have put together for ORIT to date. Since we IPO ed in December 2019, we have acquired 34 assets,

18:44 and that totals about $5.83 megawatts of generating capacity. We've also made some conditional acquisitions. And if and when those acquisitions are finalized, then we'd expect that generating capacity to be in excess of 900 megawatts. So we've invested into solar. We've invested into onshore wind and offshore wind and increasingly looking at batteries and other technologies. We've invested into operational assets to underpin our yield targets. So some examples of those are The UK or the French solar portfolios. We've also invested into construction assets to drive growth into the into the portfolio.

19:30 And again, you know, we've seen the construction of our wind farm up in Sweden, currently building a wind farm down in France as well. And there's a number of other assets that that I'll I'll touch on in a couple of slides time. So David has already touched on, the diversification, and I think this slide brings that to life. We have a mix of technologies, a mix of countries, and all that means that there's there's a mix of regulatory regimes and mix of grid networks and a mix of revenue streams as as well.

20:05 The other thing I'd like to point out on this slide is our approach to origination. I've touched on our team and the various backgrounds that people in our team have. What that means is that they all, we all have relationships across the sector. Now the sector is still still fairly nascent and and niche actually, so a few relationships goes a long way. But what it means is that we're able to originate opportunities on off market... On an off market basis. Now there's a lot of competition for, in particular, operational assets at the moment, but we've been able to avoid some of the more competitive processes by buying projects through the various relationships that we have in the sector. And we do that because we think it drives investor value.

20:56 Now the next slide provides a bit of an x-ray of the portfolio and again the that we have built into it. So by country, we're now still... The UK is our... Is very much our home market with 28%. But as I mentioned before, we're now present in seven different countries here. Technology wise, we are maintaining a fairly even split between onshore wind and solar, but we're increasingly focusing on technologies such as offshore wind, batteries, and and developers, and possibly even at some point hydrogen. In terms of the stage of the asset life cycle, so we don't actually have a limit on the amount of construction we can do in ORIT, but because we are aiming to pay a fully covered dividend each period, that creates a sort of natural constraint on the amount of development that we can do. And I think longer term, we could expect to see the construction component there be somewhere between 3040%.

22:04 So this slide really just sets out the, I guess, timeline of the evolution of ORIT to date. I won't go through each of these individually. If there is any particular assets or anything that you would like me to talk about, please do just pop it into the q and a. But I will just touch on the construction assets, mainly because construction is one of the the main differentiators between our fund and some of our listed peers. So the first construction project that we entered into was the Lundbion Wind Farm up in Sweden. That was in fact our first investment back in March 2020. We we... With our partner, o x two, on that project, we delivered it both on time, on budget, and we're very happy with the quality of the build as well.

22:50 Just going down the list, we have a couple of other construction projects which we've completed, and those two are in Poland where we acquired projects which were at various stages in their construction. Again, we managed those through to handover, and I can tell you that they're now both successfully operational. In terms of projects which are still being constructed, so the Sarasu Wind Farm in France, that is now in its final stages of commissioning. We've been working on that project now for for almost a couple of years. And again, that project remains on time, and we're expecting it to be delivered on time and again on budget. And likewise, on our Cumber Headwind Farm, we acquired last year, we've been busy building the foundations, the electrical network, and access roads to that site. Turbines are are due to be delivered in the next week or so. We'll start taking deliveries on-site, and those will be installed over the second half of... Well, over the over the fourth quarter of this year.

24:01 Again, if there's any other questions on on the portfolio, please do just pop something in the q and a. In the meantime, I'll hand over to David to talk about some of the other technologies we're looking at. Thanks, Chris. So so we've talked about the core investment strategy for for ORIT being wind and solar. And indeed, building a lot more wind and solar capacity on European networks is is the key to both decarbonization, but also relieving the current energy costs and security crisis that we're seeing. But also alongside that wind and and solar generation, there will need to be other technologies that come along to support the transition of a grid from being dominated by fossil fuels to being dominated by wind and solar, which which are by their very nature not going to be generating a 100 of the time.

24:57 So one of the technologies that is already quite well established on on that side of things is battery storage.

25:04 Battery storage is is already at at a stage where there's been over three gigawatts of that's either in operation or or being built in The UK and many, many more gigawatts. So hundreds and hundreds of millions of investment needed over the coming years into battery storage. We've already made our first investments into battery storage earlier this year. It's a sector we've been looking at probably for about six years now, and it's it's really got to the maturity now and the the business model for these battery assets is such that we we now think the time is right for them to start forming a more material part of the portfolio.

25:52 This will still be part of this 20% other technology allocation that we have within the company, but but it's something that we've already done with the Woven Road asset. And we've we've also made an investment into the solar farm in in Cambridgeshire, the Breach Solar Farm, and that has a battery asset alongside it that is going through planning permission, and and we'd hope to be able to fund in due course as well. And it... It's certainly something that we'd expect to become a a growing part of the portfolio over time. And we see real benefits of having battery storage alongside renewable generation in the same portfolio because there... There's a natural sort of anti correlation between the way that they make money. Renewable generation makes money when the wind is blowing, when the sun is shining, by selling power into the grid.

26:46 Batteries are are making money by filling in the gaps and and by looking at the periods of when there's price volatility in the market. So there's a of a non correlation between their revenue streams that really makes sense from a portfolio construction point of view.

27:07 Another slightly more nascent technology that we're we're been looking at for a little while now that that could form part of the other technology allocation within the company is green hydrogen. So hydrogen is already widely used in the economy. It's used making fertilizers and and in various other parts of of manufacturing and industry. Almost all of the hydrogen that's used currently is made in a way that's very polluting. It's it's made from natural gas and releases a lot of carbon dioxide into the atmosphere. So all of that hydrogen needs to be replaced by clean hydrogen. But beyond that, hydrogen is is a way in which we might be able to deal with some of the other more challenging parts of our energy transition. So hydrogen, for example, might be a way that we can have longer term forms of storage by using electricity to produce hydrogen and then converting that hydrogen back into electricity in due course. It also may be part of how we decarbonize some parts of heavy industry, potentially heavy shipping, maybe not directly to hydrogen, but perhaps with other sort of hydrogen based fuels.

28:19 And it could also be part of the answer to aviation. So we've we've... As I say, we've been looking at hydrogen for a little while. Our team within OCTOPUS Energy Generation has already announced partnership with with RES who are a leading UK based renewables developer, looking at providing hydrogen to heavy industry as as part of their decarbonization. So the way this works is is you have an electrolyzer, which you you use electricity to split water into hydrogen and oxygen. And that's what's known as green hydrogen. So this this could be a really interesting part of the portfolio in due course, again, alongside renewable generation, which is essential if you're gonna actually produce green hydrogen. So switching focus a little bit now back to the the company as it stands today rather than what what we might be doing in the future.

29:15 We wanted to give a... Just a a bit of a summary of the investment performance of the company in the... In this two and a half years or so since it was launched. What we've seen since then is we've been able to grow grow the company quite rapidly. £350,000,000 was raised on IPO back at the end of twenty nineteen. We've done two further fundraisers, each of which was oversubscribed, and and the market the market capitalization of the company now is is over 600,000,000. And as Chris touched on on the portfolio slide, the total value of all of our investments once they're fully constructed and and factoring in some of the debt that we have in the portfolio will be over a mid... Over £1,000,000,000 once all those assets fully constructed.

30:05 In doing that, we've been able to deliver on the target dividends, and and our target for this year is 5.24p per share. That dividend, the intention would be to to grow aggressively over time. And in doing all of this, we've been able to deliver attractive returns to shareholders. So 17 and a half percent total shareholder return since IPO as at the end of June. And and at the end of June, the share price was a bit of few pence lower than it is now as well. So that that number would would be a little higher if you were recalculating it as of today. So I'm gonna move on a bit now to to talk about how we're seeing the market, how everything that's going on in the world at the moment is is affecting the investment landscape for renewables and and the ORIT in particular.

31:00 I think what... What's clear, certainly to us, and I think it is is very widely acknowledged, is that building a lot more renewable generation as as quickly as as we can is absolutely essential to getting ourselves out of the the current energy crisis. So that the only way that we can reduce European reliance on Russian gas is to to have to have a lot more renewable generation on the grids. When you then layer on top of that decarbonization targets, and again, the need to get off gas as a key driver for electrifying things like home heating and and and transport, then we're gonna see a lot more demand for power and for that power to be green.

31:52 You've then also got the context where where no power prices, and I'll I'll come back on to power prices on the on the next slide, but they're they're at very high levels currently. It seems reasonable to expect that there will be certain although they may not be at that high level, they will remain elevated for some time. And all of that and other factors is driving heightened inflation. One of the things we haven't talked about a lot yet, actually, in terms of the investment merits are is as an inflate form of inflation protection. So if you look at the way renewables have been built, a lot a lot of renewable assets have government schemes in place that give them explicit inflation linkage in their revenues. If you look at ORIT's portfolio as of today, roughly half of the expected revenues over the next ten years are explicitly contractually linked to inflation. So you see a lot a lot of inflation protection within the portfolio.

32:49 So all of these factors mean that we think there's real tailwinds behind the sector and behind ORIT, which has this particular focus on building new assets, has got to be a real focus across Europe now. And that... The other the other key thing for ORIT is that diversification point as well. So there's a lot going on. Different countries and different markets are gonna address things in slightly different ways. Having that diversified mandate, firstly, means on the risk side, we're not exposed in in any sort of outweighed measure to any one particular country or one particular regulatory regime, but it also applies on the opportunity side. So we're seeing across Europe governments increasing their targets for new renewable generation.

33:37 And depending on what schemes come in and and how markets deal with unlocking grid capacity and and availability of land, our broad mandate means we can be nimble and and focus new investment on those markets which are most attractive at the time. So I promised a bit more detail on power prices. It's something that we're seeing daily in the press at the moment. You can see from that chart on the top right that prices have risen dramatically and become very volatile. They remain very volatile at the moment. Then what what you can see here, firstly, as we've talked about a number of times, getting more renewables built is the way to relieve that price pressure in medium to long term.

34:28 You can see in that bottom right chart the power prices that are used in our valuation forecast. So we do expect that in the medium to long term, building more renewables will push fossil fuels off the grid. That dominant influence of gas on pricing will be pushed out, and pricing will return to more manageable levels. You can see we're not assuming our valuations at the current anything near the current high prices persist in the long term. So I'll hand back to Chris to sum up before we go into questions. Okay. Thanks, David. So just a few concluding remarks then about ORIT. So first of all, we have a very wide and flexible mandate that allows us to create diversification in the portfolio.

35:26 And it also helps us access opportunities from a much wider opportunity set. That's particularly helpful in a market that is competitive and and increasingly so. As David has just described, we aim to provide a degree of inflation, protection. And as I mentioned earlier, we, we are aiming to deliver what we call genuine additionality, and that's by installing and connecting new renewable generating capacity to the grid and displacing some of the older, more polluting forms of energy generation. Since since our various raises have completed, we have now fully committed the equity that we have raised to date and are currently using some of our debt facilities to carry on investing.

36:17 And looking ahead, we see that there's an ever growing opportunity for ORIT, and that's really as a result of the three tailwinds which I mentioned at the top of the call. Just a reminder, our dividend target for FY twenty two is 5.24p per share. So with that, I might just hand back to Paul briefly before booking. Fantastic. Chris Davis, thank you indeed for the presentation. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the right hand corner of your screen. Just while the team take a few moments to review those questions submitted today, I'd like to remind you the recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard. As you can see, we've received a number of questions throughout today's presentation and a couple pre submitted as well. Chris, David, if I may just ask you just to read out the questions where appropriate to do so and give you a response, that'll be fantastic, and I'll pick up from you at the end.

37:12 Okay. Thank you. I might address... Just to kick this off, I might just address the questions around the technologies that we're looking at. And there's a couple of questions here from both Anthony and Andrew. Thank you for those questions. Asking whether we're looking at technologies such as hydrogen, wave, tidal power, and also forestry, and agriculture, and battery. So some of these, yes, absolutely, we are we are looking at them. So we've been speaking about adding potentially batteries and hydrogen production to the portfolio. Wave and tidal power, that's a little bit more nascent. It's something that's been on the horizon, continues to be on the horizon for many years.

38:03 But we are... We we do... Through one of our developers, we are spending a bit of time keeping an eye on the latest developments in that sector. Forestry and agriculture are probably a little bit further away from us, except to say that a growing theme for solar farm development around UK and Europe is around land use. And our developers are spending a lot of time looking at how they can better combine both solar PV and agriculture. And there's a phrase called... Which is agri PV, which I think is growing in importance for both local communities, farmers, and and and investors such as us. So perhaps some... There might be a little bit more focus on on those agri PV opportunities.

38:53 Forestry, I think, is a little bit will be a little bit further down the track. And in fact, I'd probably suggest we'd be targeting investments such as direct air carbon capture before we head towards forestry. Another question here from from Andrew. So we described hydrogen production as currently highly polluting because it releases c o two. Are we saying c o two is a a pollutant? I think what we're saying is that c o two is a greenhouse gas. Yeah. Clearly, o two is an important part of the atmosphere, but we're now at a period in in history where we have elevated levels of c o two in the atmosphere and levels higher than than than our records...

39:43 Than than we can see in our records, but record high levels of c o two, I should say. And that is leading to global warming. And so we are looking... We're aiming to reduce the amount of c o two that's being put into the atmosphere, not just from electricity production, but also industrial processes, transport, heating, and and many other ways that we that we release these gases into the atmosphere. David, do you see a a question there you wanted to answer? Yes. If I pick up on a few, I think we we may have covered, but just to to make sure they're covered off. So it's a question around whether we continue to see investor demand since since the IPO. I mentioned that that we have grown the size of the company so that there's been two fundraising windows so far since the original IPO.

40:34 Both of those fundraisers were oversubscribed, so we... We've definitely seen. I'm very grateful for the support we've had from from investors. And so, yeah, we've definitely seen that demand. You you can also see at the moment that the the shares are are tending to trade at a at a premium to to the net asset value, which would suggest that there... There's an appetite in the market, in the secondary market for for the shares. So, yeah, we we do see continued interest from from a range of investors, and and very grateful for the support we've had from them over over the last few years. K. I've got another question here from Anthony. So you have an investment in Simply Blue. Could you give us some more detail on this position and other holdings like this? And and thanks for this question, Anthony, because I I haven't spent much time talking about developers in today's session.

41:26 So in q one last year, we... Or the end of q one is... Start of q two, we updated our investment policy to allow for up to 5% of gross asset value to be invested into developer... Developers and development pipelines. And our first such investment was into Simply Blue Energy. Really exciting investment this one, fantastic management team, very entrepreneurial. And Simply Blue are targeting the development of floating offshore wind farms. And we're we're very keen on floating offshore wind partly because if we are going to go through with this energy transition, then we're going to need a whole lot more renewable power connected to the grid. And the greatest opportunity to produce renewable energy is through offshore wind farms.

42:21 The challenge though is that offshore wind farms are very much constrained by sea depths. Those areas are being developed. They're the most economic ones at the moment. But as we look to go beyond that, we will need to move into floating. And there's lots of additional benefits to floating. Things like higher wind speeds, the further out at sea, less visibility from the shoreline, the ability to build the turbines in a port and tow them to position rather than having to go through the complex engineering of building them in situ, and the same applies for for the operations and maintenance as well. So we're we're very we're very happy with the investment that we've made in Simply Blue. They are doing exactly what they said they would do and more.

43:09 We've also made some other developer investments. We've been got a small stake in a developer developing wind farms up in Finland. We're also developing wind farms in both Scotland and Wales. And I think we are going to carry on investing into developers. Actually, that we're looking at on the on the horizon, David touched on, is is developing industrial scale hydrogen production. On that that theme of development, it it really is ever more important at the moment, both from a sort of an impact point of view in in in helping to bring forward the next projects that are gonna come onto the grid. It's really valuable for the company as well to have those development stage investments, not just for the extra return it delivers, but for the access it gives to them deploy more capital into constructing some of those projects when they come through. So in in a market where where we are seeing...

44:11 You know, continue to see quite a lot of competition for some assets, being able to to give the company proprietary access to pipeline where it's not having to compete in some of these sort of adviser led processes, which would tend to lead to higher pricing, which we think we can we can deliver much better value for the company. So I've got a question here from Peter. So how has the diversification helped the trust? Investors could diversify and do the asset allocation themselves. And I I totally totally agree. Actually, there are a number of

44:45 more sort of narrow mandate... Mandated funds on the LSE and I'm sure in other markets around the world. What we hope to bring with our diversification approach is, well, all the expertise of our team, our ability to select assets, and actually access those opportunities from the market. I think we're also able to bring exposure to opportunities which you wouldn't get from other funds such as with the developers that we're currently working with. So I think... So I totally agree. And and actually, some of our institutional investors also look to build their own portfolios.

45:30 I think, you know, we've we've got something to add and and hopefully, our approach to diversification drives investor value. And I think as well on... In in The UK and if you were looking only to invest in one geography and and have all your exposure in one geography, there probably are a few different funds, but but it's probably quite a bit harder for for, you know, for investors who aren't big institutions so you can access big to private fund management vehicles. Actually, to get exposure to renewable generation assets across a broad range of European geographies is is is not so straightforward. You you won't find a a dedicated French fund and German fund, etcetera, etcetera on on the London market.

46:19 You may or may not be able to access them, but that... Those listed products tend to be less common in in certain European markets. So we are able to, I guess, give access to to opportunities you might not see if you were trying to build a portfolio yourself unless you have access to those private funds.

46:38 I've got another question here. So do you see investment opportunities in providing base energy supply for the gaps between wind and sunshine? There was a lot of discussion about nuclear or immediate gas generation, but are there any other opportunities? We... Within our team, we do actually have some investments in very short term gas gas turbines, but we're not doing more of those. I think, actually, this concept of baseload power arguably is is a little bit passe. And actually, where the world is moving to is is to more flexible grid networks.

47:23 Flexibility, I think, is is the catch word for the future. So,

47:28 you know, we can provide flexibility to grids by deploying more batteries, and there is a lot of r and d going into longer term energy storage. Things like liquid air is something that seems to show some promise. But flexibility doesn't just have to come from from storage devices. It can also come from increased interconnectors to other markets so that the renewable energy that is being put onto the grid is coming from different weather patterns and therefore creating a level of diversification and less volatility in the supply. And then there's the demand side of the equation. And OCTOPUS Energy is, as I mentioned earlier, one of the leading energy transition companies, and we are using technology to help demand respond to the amount of renewable energy that is on the grid. We've already got a few products out in the market such as our fan club tariff, and that allows people to adjust their energy usage based on the amount of wind that is being injected to the grid from the nearby turbines.

48:38 So we think it's a very complex picture. Flexibility is the key going forward and, you know, I feel OPTURE TRUST is very much at the forefront of developments in that area.

48:55 What trends are you seeing on acquisitions and pricing? What is the completion for what is the competition for assets like? Thanks, Mark. So I think the tailwinds that I mentioned at the top of this call are definitely leading to more capital coming into the sector. We are seeing a lot of competition in particular for operational assets, but that competition is filtering down through the value channel... Through the, yeah, I guess, value chain of renewable energy assets. So it's it's moving into construction and and to a small degree into development. Now the thing with development and construction is you do need specialist teams to manage that. So there's a lot of capital that wants to get in, but doesn't necessarily have the team to be able to do that on a on a prudent basis.

49:47 And as we've said on a couple of times so far, because of our wide mandate, because of our relationships in the market, we we work to originate opportunities through noncompetitive off market basis and hopefully sort of, I guess, avoid some of the highly competitive pressures that we're seeing on some trophy assets. I'll pick up the next one we've got here, is from RODRIGHT, which is a question around how much power that we produce is sold on long term contracts rather than on spot pricing and and whether that's likely to change. And and what I might do here, actually, is I might put up a a bonus slide. So this gives a sense of the answer to that question. Just stepping back from the detail here, what what we're not looking to do is a 100% lock out all of the power sales for the twenty five, thirty plus year asset lifetime. If we were able to do that, I don't think the the returns would be very, very exciting for people. So we do expect to have some exposure to to power prices over the long term, but we want to to manage that exposure. So we're we're not looking to

51:01 have a sort of heightened volatility of the fund value linked to power prices. If you look over the next two years or so, about 60%, just under 60% at the moment of the forecast revenues are fixed either by some sort of subsidy mechanism or by having put in place a longer term fixed price contract on the power sales. The remainder is effectively exposed to to spot prices in the market. How that changes is quite hard to predict at the moment given given the... All the changes going on in the market. But but big picture, we we... I don't think we'd expect to have significantly lower amount of fixed revenues on a two year time horizon than that. And there's been times over the last couple of years where that figure's been much higher.

51:47 So as we sort of went into to COVID, we were... For example, we were mindful of the uncertainty around power prices and a and a downward trend on power prices at that point. So at times, we had around 90% of the of the next two years' revenues fixed.

52:06 I guess what we're looking to do here is is to manage certainty of dividend cover, to manage volatility of of NAV, but also to to give some flexibility to to sort of optimize the the revenue mix and and and not try to to trade away value just to lock in every last unit of generation. Is there anything... Paul's asked a similar question above. Is there anything you wanted to add maybe to address his question? Which one are we... So if if renewables are the cheapest form of energy, why are renewable prices higher too? How are high energy prices impacting the fund? Yeah. So this is... It's quite it's quite a complex area. So I'll try and sort of explain it simply. But the the way that power markets work and and indeed actually the way that most markets work is

52:58 the the sort of the last and most expensive unit of production that you need to satisfy demand is what sets the price. So if you look at if you look at that in the context of power markets, there there is a certain amount of demand for electricity. The... That demand tends to be satisfied by a mixture of renewables, nuclear, and then fossil fuels, Particularly acutely at the moment, fossil fuels generation is very expensive, but we do still need some of it to to meet power demand. And so it's that gas driven generation which is setting the price, and and that price is just what any generator in the market receives unless they've fixed their pricing elsewhere, which to a large extent we have.

53:45 So I think it's it's true to say that we have seen some some increases in power prices on that component of power cells that aren't fixed over the last six, nine months or so. We've also seen that on the other side. So all of this price inflation has

54:03 affected construction costs. The construction projects that we do, we tend to fix those construction costs at the outset. So that's that's a risk that sits more with the contractors and and not with the company in in general. What it means going forward, we can't really speculate. But as I say, the approach we take is to try and prudently manage our exposure to power prices so that, yes, we will see some ups and downs as the power price moves up and down, We're not fully exposed to those movements because we will have quite a lot fixed. There's a couple of questions here from Donald. So could you consider timing capital raises to the start of the tax year so that individual ISA investors can can invest more freely?

54:50 So on that that one, I think we'll need to take away and discuss with with our sponsor, Peel Hunt. There's lots of factors that sort of impact when we're able to raise capital, so we'll... But we'll need to add this to the thought process around that. You're also asking, are there any plans to invest in power, electricity, interconnected infrastructure? And that is something that we are... Those are opportunities that we're seeing increasing numbers of, whether it's interconnectors to Belgium or Germany. We're also seeing... And in fact, OCTOPUS Energy as a group has partnered with the X Links team to develop an interconnected downtown Morocco and a large generating project down there.

55:37 So those are things which are which are on the radar, but not in the immediate future. Peter asks, are you willing to sell assets to invest in other projects and change the asset allocation? Yes. We are. As our sort of active approach to management, that doesn't isn't just limited to the construction operation of projects, but also to the way we shape the portfolio. And if we see an opportunity to perhaps crystallize some development gains via a sale and recycle that capital into new construction projects, And that is something that we would consider at the time, but always keeping an eye on the balance of the portfolio, the level of contracting we have in there, and and other aspects.

56:24 So there's a a question here from Paul. So there are a lot of renewable infrastructure funds and trusts. How do you... How how does ORIT differentiate itself, and why should I invest in ORIT rather than trig, the... Which is, I guess, the full name is the renewables infrastructure group. So that's a fund that we know well. I think they've got an excellent management team, actually. But where we differentiate is that, you know, our mandate

56:55 well, their mandate is is essentially a subset of ours. They do have some construction, but they are more heavily weighted towards The UK than ORIT. So we provide a more diverse mandate in terms of geography. We have a much higher percentage of construction in our fund, which means that we have a greater capability to drive capital growth into the returns. And we also have our our allocation to developers, which is... It's not unique, but it's almost unique amongst our listed peers. I think you'd see as well with... Within ORIT, the technology split is is much more balanced between wind and solar. We're we're roughly roughly even at the moment.

57:45 And although Trig does invest in in multiple technologies, it's much more heavily weighted towards wind, certainly at the moment, and particularly wind in in The UK. Maybe a question for you, David. What makes ORIT an impact fund, and what other sustainable... Sustainability initiatives do you undertake? And I I think you've probably covered a fair bit of that already. Yeah. We touched on this before. So it is... But it is important, I think, reiterate that when we talk about impact fund, we... Now this this is very much a a win win. We're not we're not saying that investment returns will be constrained because of our impact activities. So the the assets we're investing into inherently have positive impact, particularly because of this additionality, particularly the fact that we're putting new additional generation onto the grid and helping provide the solution to decarbonization and now high prices and energy security.

58:45 But but also these other things. So I can I can perhaps give a couple more brief examples of what we've done beyond that? So one of the things we've done, for example, is we've worked with a business called Sugi, and we've funded the planting of some highly diverse forests in in areas close to our generation where we are now increasing biodiversity. We're we're helping with, again, with decarbonization by having these these these planting schemes.

59:17 We... We've also... So I thinking about examples on-site. So one of the examples in in the first wind farm that we constructed, we worked very closely with our construction counterparties. One, to make sure that they've got all the right policies in place, that they're looking after their staff, that they're looking after the environment and local communities. But on on the Lyumbiol wind farm in Sweden, we were able to to work with them as well to to make sure that they were taking full advantage of the local geography and and using some less carbon intensive foundations. And one one thing I'd say on on some questions around impact is that we we we work very hard to try and bring all this to life. So there's... On the on the website for ORIT, there is a a video and a number of reports talking in in a lot more detail about some of the the work that the team does on on the impact side of things and all of these extra initiatives.

1:00:13 Okay. And then finally, will you... Will ORIT be challenged by increased interest rates, and surely the cost of its debt will be increasingly expensive? Yeah. Really good question. So we've definitely seen interest rates rising over the last over the last months. If you look at the debt that's within the company's portfolio currently, all of that debt that's long term in nature, we've fixed the interest rates on that on on around 80, 85% of of the exposure on the debt that we've got in place. We've got debt secured against the French solar assets, the French wind asset, the Polish wind asset. So that that debt's in place. It...

1:00:58 It's paid off over the entire lifetime of the the subsidies for those assets. So we we don't have to refinance that debt, and the interest rate is predominantly fixed. So that... There's not really any exposure there. Where where we do see it more is either on short term borrowings, so our revolving credit facility, and and also if we're we're looking to make new investments where we're putting in new debt. So so, yes, the the cost of debt definitely has increased there, but not to the extent that we we think it's it's limiting our ability to find attractive investment opportunities that make sense with those higher debt costs. It's it's maybe having an impact on on sort of valuations for new build assets if those assets are reliant on debt. So we're definitely factoring that into our thinking when we're looking at investing into new assets.

1:01:46 But for the portfolio as it stands, it it really doesn't have a particularly significant impact because interest costs are largely fixed. David, Chris, thank you very much indeed. You've answered every single question we've had through, so thank you very much indeed. Of course, any further questions that do come through, the team will be able to review those, and we'll publish responses where appropriate to do so on the investor me company platform. Christopher May, just before redirecting investors to provide you with your their feedback, which I know is particularly important to you, could I ask you just for a few closing comments, please? Yeah. Sure. So all all I wanted to say was thank you very much to those of you who are investors in ORIT. We really do appreciate your support over the over the years. And to those who are not yet an investor in ORIT or are thinking about it, we we hope to welcome you on board very soon. But you very much for your time this morning. That's fantastic. Chris Davis, thanks again for updating investors today. Can I please ask investors not to close the session? It should be automatically redirected to provide your feedback, nor the team can better understand your views and expectations.

1:02:48 This will only take a few moments to complete. And is greatly valued by the company. On behalf of the management team, OCTOPUS Renewables INFRASTRUCTURE TRUST PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all.