REG - Ecofin US Renewables - Half-year Report
14/09/2023 07:00
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RNS Number : 3720M Ecofin US Renewables Infrastr.Trust 14 September 2023
EI: 2138004JUQUL9VKQWD21
14 September 2023
ECOFIN U.S. RENEWABLES INFRASTRUCTURE TRUST PLC
(the "Company" or "RNEW")
Half-yearly report for the six months ended 30 June 2023
Investment Objective
The Company's investment objective is to provide Shareholders with an
attractive level of current distributions by investing in a diversified
portfolio of mixed renewable energy and sustainable infrastructure assets
("Renewable Assets") predominantly located in the U.S. with prospects for
modest capital appreciation over the long term.
Why RNEW?
RNEW targets attractive risk-adjusted returns and a sustainable dividend yield
through a differentiated investment strategy focused on the middle market of
U.S. renewable energy:
l Fully invested portfolio: Diversified portfolio of U.S. renewable
energy assets with an attractive long-term income stream;
l Long-term income: Portfolio generating 100% contracted revenues
which together offer geographical diversification and opportunity for both
capital growth and some inflation protection; and
l U.S. renewables market with promising growth outlook: $360 billion
growth opportunity projected over the next decade with historic unified
government support to achieve the U.S.'s 2035 carbon-free power sector goal.
Highlights
Financial
As at 30 June 2023
91.8 cents $126.8 million 60.5 cents(2)
72.2 pence(1) £99.7 million(1) 46.5 pence(2)
Net Asset Value ("NAV") per share NAV Share price
38.1%(3)
Leverage
For the period ended 30 June 2023 ("Period")
0.3%(4) -24.7%(4) 2.1 cents
NAV total return Share price total return Dividends per share declared
Operational
14.1 years(5) 65 ~29,400
Weighted average remaining term of revenue contracts Assets Equivalent number of households supplied in H1 2023
177 MW(6) ~97,000 tonnes(7) 157 GWh(6)
Portfolio generating capacity CO(2)e avoided in H1 2023 Clean electricity generated in H1 2023
Figures reported either as at the referenced date or over the six months ended
30 June 2023. All references to cents and dollars ($) are to the currency of
the U.S., unless stated otherwise.
1. 30 June 2023 exchange rate of £0.78641 = $1.00
2. RNEW & RNEP LSE closing prices as at 30 June 2023.
3. Calculated based on Gross Asset Value ("GAV") and aggregate debt.
Additional information can be found in the financing section of the Investment
Manager's Report..
4. These are alternative performance measures ("APMs"). Definitions of
how these APMs and other performance measures used by the Company are
calculated can be found at the last section of this report..
5. Includes all construction-stage and committed assets.
6. Represents the Company's share of portfolio generating capacity
(including assets under construction).
7. CO(2)e based on the Company's proportionate ownership interest in
the assets. CO(2)e calculations are derived using the U.S. Environmental
Protection Agency's ("EPA") Emissions & Generation Resources Integrated
Database.
Invested and committed assets
l As at 30 June 2023, RNEW's diversified renewable energy portfolio
consisted of 65 assets spread across eight states with a total capacity of 177
MW that generated 157 GWh of clean electricity in the Period and included:
l 60 operating solar assets totalling 97 MWdc
l 4 assets being commissioned totalling 20 MWdc
l 1 operating wind asset totalling 60 MWdc
l No major health and safety incidents occurred across the portfolio
during the Period, other than those discussed below regarding the Whirlwind
asset.
l In respect of the reporting period, the Company declared dividends
of 2.1 cents per Share in total. The Company is targeting dividends of 3.5
cents for FY 2023, of which 2.1 cents has already been paid and/or
declared(8).
l The Company's NAV was $126.8 million or 91.8 cents per Share at 30
June 2023. The NAV total return over the Period was 0.3%.
l The Company's U.S. subsidiaries at a project level had $45.1 million
of long term, non-recourse project-specific debt representing approximately
22.0% of GAV(9) and $32.8 million of short-term, non‑recourse debt
representing approximately 16.0% of GAV(9).
Financial information As at or period to As at or year to
30 June 2023 31 December 2022
Net assets (million) $126.8 $130.2
Shares in issue (million) 138.1 138.1
NAV per share (cents) 91.8 94.3
Share price (cents) 60.5 83.3
Share price discount to NAV(11) 34.1% 11.7%
Dividends declared per share (cents)(10) 2.1 5.6
NAV total return per share(11) 0.3% 1.1%
Share price total return(11) (24.7)% (10.8)%
Cash (million) $1.9 $3.4
Leverage (million) $77.9 $64.4
8. The target dividends set out above are targets only and are not
profit forecasts. There can be no assurance that these targets can or will be
met and they should not be seen as an indication of the Company's expected or
actual results or returns. The Company's ability to distribute dividends will
be determined by the existence of sufficient distributable reserves,
legislative requirements and available cash reserves.
9. Represents the Company's proportionate share of total debt at the
asset special purpose vehicle ("SPV") level across its existing investments as
at 30 June 2023.
10. Dividends declared relating to the Period/year.
11. These are alternative performance measures ("APMs"). Definitions of
how these APMs and other performance measures used by the Company are
calculated can be at the last section of this report.
Chair's Statement
On behalf of the Board, I am pleased to present the Company's half‑yearly
report for the six months ended 30 June 2023 ("Half‑yearly Report"). This
has been a difficult first half for your fund. In common with much of the UK
investment trust sector, RNEW's share price has been trading at a discount to
NAV. While the UK investment trust sector as a whole is currently out of
favour with equity investors against a back drop of high inflation and
increased interest rates, these factors have been exacerbated in the case of
RNEW by the resignation of a number of the Ecofin management team during
Summer 2022, as well as more recent asset-related issues including the tornado
damage in Q2 to the electricity substation to which Whirlwind, our largest
investment, is connected.
Share price
At 31 December 2022, the share price was 83.25 cents per Share, representing
an 11.7% discount to NAV of 94.3 cents per Share at the same date. As a result
of the asset-related factors mentioned above, the share price declined in the
first half to 60.5 cents per Share at June 30 2023, a 34.1% discount to NAV of
91.8 cents as at the same date.
The Board has considered initiating a share buyback programme but, with the
benefit of advice from the Company's brokers and considering the funds
available to conduct such a programme, the Board does not believe buying back
shares would have a material impact on the current discount to NAV. The Board
was also concerned that it would further reduce liquidity in the trading of
the Company's shares.
Notwithstanding, the Board is not content with the current level of discount
and continues to work with the Investment Manager and our advisers to achieve
value for shareholders, consistent with good governance. Accordingly, the
Board announced on 8 September 2023 a review of the Company's strategy in
order to maximise value for shareholders. The review will centre on a sale of
the Company's assets. If successful, and subject to the terms of such
disposal, it is expected to return cash to shareholders.
Investment manager
As set out in my statement in the 2022 Annual Report, the Investment Manager
appointed Eileen Fargis as group lead and portfolio manager for RNEW in
October 2022. Eileen has settled well into her role. Working closely with
Eileen are Jason Benson, who oversees portfolio management and funding
activities for the Company, and Nancy Johnson, who heads the Finance and Asset
Management team, Nancy works with Eileen and Jason on the operational
performance of each of the assets in the portfolio and to onboard new assets
smoothly.
First Half Milestones
l During the first six months of 2023, the portfolio generated 156.6
GWh of clean electricity (2022: 177 GWh), equivalent to powering ~29,400
households, from a fully contracted portfolio of diversified solar and wind
projects across eight states. The assets all benefit from long term Power
Purchase Agreements ("PPAs") with investment-grade equivalent utility,
municipal or corporate off-takers with a weighted average PPA term remaining
of 14.1 years (18.8 years excluding Whirlwind).
l In June, the Company completed an amendment and extension to its $65
million revolving credit facility ("RCF") with KeyBank, one of the premier
lenders to the U.S. renewable energy industry. The RCF, which comprises two
tranches, has been extended by 12 months. The $50 million tranche has been
extended to October 2024 and the $15 million tranche to October 2025.
l Progress continued in completing construction and financing of the
Echo Solar Portfolio, a 36.0 MWdc commercial solar portfolio spread across
Minnesota, Virginia and Delaware, including the completion of several tax
equity milestone fundings during the second quarter and nearing completion on
negotiation of a back leverage debt facility. Currently, two projects have
achieved commercial operation, and the four remaining projects are
mechanically complete and being commissioned for commercial operation during
Q3 2023.
Portfolio management
As at 30 June 2023, RNEW's portfolio comprised 65 solar and wind assets with a
combined capacity of 177MW across eight states: California, Connecticut,
Delaware, Massachusetts, Minnesota, New Jersey, Texas and Virginia.
As at 30 June 2023, 61 assets were in operation and four assets had achieved
mechanical completion and were undergoing commissioning and final testing with
commercial operation expected during Q3 2023. Operating assets made up 89% of
the portfolio valuation. Total generation during the Period of 156.6 GWh was
below budget, principally due to lower-than-expected energy production as a
result of historically low wind resource during the second quarter at
Whirlwind, a phenomenon that was experienced across the U.S. This was
accompanied by curtailments and unforeseen operational issues experienced by
certain assets towards the end of the first half, which have had a temporary
negative impact on the overall performance and valuation of the portfolio.
Principal among these were:
l the tornado on 21 June 2023 in Matador, Texas which destroyed the
substation through which the Company's Whirlwind asset (located approximately
20 miles west-northwest of Matador) transmits its power;
l damage to DC wiring at the Ellis Road solar project caused by a
rodent infestation during the first quarter of 2023 which forced ~40% of the
total system capacity to be de-energised; and
l voltage issues at the office building on which the Skillman project
is located causing the project to be tripped offline from the end of April to
June 2023; this was rectified and power restored on 7 July 2023.
The Investment Manager is working diligently with all relevant counterparties,
O&M providers, insurance providers and others to rectify these operational
issues as fast as possible, and also to recoup any potential losses through
insurance coverage on the assets. Further details are set out in the
Investment Manager's Report.
Results
Unaudited NAV as at 30 June 2023 was 91.8 cents per Share (31 December 2022:
94.3 cents per Share) or $126.8 million (31 December 2022: $130.2 million).
During the first half of 2023, NAV per Share decreased by 2.7% as described
further in the Portfolio Valuation section of the Investment Manager's
Report.
The valuation of the portfolio at 30 June 2023 is supported by an independent
valuation firm, Marshall & Stevens, and is based on an underlying blended
weighted average pre-tax discount rate of 7.3%. This reflects a small decrease
from 31 December 2022 due to a 0.25% reduction in the discount rates applied
to the SED Solar portfolio and Delran Solar assets to conform them with the
Company's broader solar portfolio, as well as the inclusion of part of the
Echo Solar Portfolio at Fair Market Value ("FMV") rather than cost. As part of
their review, Marshall & Stevens opined that the continued level of
activity in the U.S. renewable energy market had kept cost of capital down
despite the rising interest rate environment, implying compression of the
equity risk premium.
RNEW's profit before tax for the six months to 30 June 2023 was $429,000
(2022: $1.2 million) and earnings per Share were 0.3 cents per Share (2022:
0.9 cents per Share).
The Company's total gearing at 30 June 2023 was 38.1% (31 December 2022:
33.3%) based on GAV(1) of $204.7 million and aggregate debt of $77.9 million.
The Company had both non-recourse debt at project level ($45.1 million secured
on the two Beacon solar projects in California) and debt at group level,
consisting of $32.8 million drawn under the Company's RCF.
Dividends
During the Period, the Board declared two quarterly interim dividends of 1.4
cents per Share each, in respect of the quarters ended 31 March 2023 and 31
December 2022. On 7 August 2023, after the Period end, the Board declared a
further interim dividend of 0.7 cents per Share for the quarter ended 30 June
2023. The reduction in dividend for the quarter ended 30 June 2023 was flagged
in our announcement on 29 June 2023 and reflects an anticipated decline in
cash flows due to the operational issues discussed above, including the recent
events at Whirlwind, and certain one-off costs. As a result, the Board expects
the Company's dividend for each of the quarters ending 30 September 2023 and
31 December 2023 to remain at the lower level of 0.70 cents per share. Taken
together with the dividends declared for the quarters ended 31 March 2023 and
30 June 2023, this would equate to a dividend target of 3.5 cents per share
for the 2023 financial year. The Board and Investment Manager continue to
monitor closely the operating cash flows of the business with Whirlwind
expecting to be operating below capacity for 18 months until early 2025, and
are keeping the appropriate level of future quarterly dividends under review.
Board
The Board continues to work well with Ecofin. There are four directors (two
women and two men) who together have a good balance of sector, investment
trust and wider financial investment experience, including significant
experience in the U.S. renewable energy sector and the benefit of geographic
market knowledge from U.S. residency and citizenship.
Outlook
As set out in the Investment Manager's Report, a number of key drivers
continue to create a strongly favourable outlook for the U.S. renewable energy
industry, particularly for solar and wind power. These include increasing
climate change awareness in the U.S., as evidenced by the growing appetite
among U.S. corporates to buy their electricity from renewable sources; strong
federal and state policy support, in particular the Inflation Reduction Act
("IRA"), and the increasing cost-competitiveness of solar and wind relative to
fossil fuel generation.
While some challenges remain, including supply chain disruption, trade
restrictions, uncertainty around the detailed application of certain IRA
provisions, and inflation, these are expected to be more than offset by the
key drivers above and, as a result, the U.S. renewable energy industry is set
for significant growth in the rest of 2023 and beyond.
Also, as we saw in our own portfolio this half year, severe weather events can
give rise to both challenges and opportunities for the sector. On the one
hand, events like the Texas tornado that indirectly incapacitated our
Whirlwind asset raise concerns about the resilience of energy systems,
including renewables. On the other hand, weather events such as the heat waves
which simultaneously affected the southern U.S., southern Europe and parts of
China in mid-2023 reinforce concerns over global warming and are likely to
spur further demand for clean energy solutions.
While the pipeline of investment opportunities for the Company remains strong,
we are currently fully invested, and the Investment Manager is focusing on
asset management and operational improvements for the foreseeable future.
The Board will make further announcements about the strategic review announced
on 8 September 2023 when appropriate.
Patrick O'D Bourke
Chair of the Board
13 September 2023
Investment Manager's Report
Investment activity - 2023 Year to Date ("YTD")
4 April 2023 - the Company completed the first tax equity funding on the 6.5
MWdc Hemings Solar Partners, LLC in Virginia ("VA") (Echo Solar - VA 3) and
the 5.9 MWdc Heimlich Solar Partners, LLC project in Delaware ("DE") (Echo
Solar - DE 1).
21 June 2023 - the Company's 59.8 MW Whirlwind Energy wind farm, Whirlwind, in
Floydada, Texas, ceased operations due to a tornado, which damaged five
project-owned transmission poles. Additionally, the American Electric Power
("AEP") owned substation in neighbouring Matador, through which Whirlwind
transmits electricity, was severely damaged during the incident. Based on AEP
estimates, the Company expects to re-gain interconnection during the fourth
quarter of 2023 via an alternate route through a substation in Paducah, Texas.
This alternate transmission arrangement will allow 80% capacity throughput
relative to full capacity (50 MW versus the full capacity of 59.8 MW) on an
interim basis, with a corresponding reduction in forecasted cash flows. AEP
intends to build a new substation at Matador as quickly as possible and return
Whirlwind to full capacity, which is estimated to take approximately 18
months, at which time Whirlwind will return to its prior interconnection route
and to full capacity. The Company and its insurance provider are working
together to file claims, where applicable, for business interruption and
necessary repairs to the damaged project-owned transmission poles. The claims
are yet to be finalised with the insurers, but it is expected that the
Company's insurance policy will provide coverage, at a minimum, for both the
damaged transmission poles and for 120 days of business interruption losses
that occur from outages (following a 45-day waiting period).
26 June 2023 - the Company completed an amendment to its RCF with KeyBank,
extending the facility by twelve months on competitive terms:
l $50 million tranche extended to October 2024 at SOFR + 2.00% to 18
October 2023 and SOFR + 2.125% thereafter
l $15 million tranche extended to October 2025 at SOFR + 2.25% to 18
October 2023 and SOFR + 2.375% thereafter
As at 30 June 2023, the Company had $32.8 million drawn on the RCF and had
approximately $7.2 million(1) of outstanding net commitments (net receivables)
from tax equity investors on closed assets. The Company is also in process of
negotiating a back leverage (term debt) facility for the Echo Solar Portfolio,
which is expected to close by the end of Q3 2023, dependent on timetables to
complete commissioning and achieve commercial operation on the balance of the
projects in this portfolio.
1. Figure is shown net of anticipated engineering, procurement and
construction ("EPC") payments due at completion of certain
construction/commissioning milestones and $16.3 million of tax equity
financing commitments.
Events following the Period end
5 July 2023 - the Company completed the first tax equity funding on the 2.9
MWdc Small Mouth Bass Solar Partners, LLC project (Echo Solar - VA 4) and the
final tax equity funding on the 2.7 MWdc Monroe Solar Partners, LLC project
(Echo Solar - VA 1).
4 August 2023 - the Company completed the first tax equity funding on the 4.2
MWdc Randolf Solar Partners, LLC project (Echo Solar - VA 2).
1 September 2023 - the Company completed the final tax equity funding on the
13.7 Echo Solar - MN project, allowing for a repayment on the RCF which had an
outstanding balance of $28.8 million as at 1 September 2023.
2022 Recap
7 January 2022 - the Company obtained a $15.9 million non-recourse
construction loan from Seminole Financial Services, LLC, a U.S. specialist
renewable lender, for the construction of the Echo Solar - MN project.
28 January 2022 - the Company closed a tax equity partnership for the Skillman
Solar project.
23 March 2022 - the Company finalised a negotiation for a buyout wherein the
Company sold one 41 kWdc asset within the SED Solar Portfolio, as per the
terms of its PPA, reducing the total number of assets remaining in the SED
Solar Portfolio to 52 (11.3 MWdc) and the Company's total assets to 60 at the
time.
25 March 2022 - the Company declared mechanical completion of the Skillman
Solar project and completed a major milestone tax equity funding.
28 June 2022 - the Company closed on the acquisition of two ground mount solar
projects in VA at construction stage in the Echo Solar Portfolio, comprising
the 2.7 MWdc Echo Solar - VA 1 and the 4.2 MWdc Echo Solar - VA 2 with an
aggregate closing value of $2.6 million, bringing the Company's total assets
to 62 at the time. Future fundings of these projects would be sourced from tax
equity commitments and the Company's RCF.
29 July 2022 - the Company declared mechanical completion of the Echo Solar -
MN project.
22 August 2022 - the Company closed on the acquisitions of three additional
ground mount solar projects at construction stage in the Echo Solar Portfolio,
comprising the 6.5 MWdc Echo Solar - VA 3, the 2.9 MWdc Echo Solar - VA 4, and
the 5.9 MWdc Echo Solar - DE 1, with an aggregate closing value of
approximately $5.5 million, bringing the Company's total assets to 65. This
deployed the balance of the $12.9 million net proceeds from the placing and
retail share offer completed in May 2022. Fundings of these projects is being
sourced from tax equity commitments and the Company's RCF.
26 September 2022 - the Company declared substantial completion of the
Skillman Solar project and closed the final tax equity funding, completing the
financing of the project, after having achieved commercial operation on 15
August 2022.
7 October 2022 - the Company closed a tax equity commitment of $17.7 million
for the Echo Solar Portfolio, which will be funded upon the achievement of
sequential construction milestones at each project within the portfolio.
5 December 2022 - the Company negotiated a partial termination of the MIPA for
the five remaining unclosed Echo Solar Portfolio projects, which included an
18-month Right of First Offer on the unclosed projects.
16 December 2022 - the Company declared commercial operation at the Echo Solar
- MN project, after receiving permission to operate from the local utility on
13 December 2022. The system was fully energised and delivering power
immediately.
30 December 2022 - the Company declared commercial operation at the Echo Solar
- VA 1 project, after receiving permission to operate from the local utility
on 16 November 2022. The system was fully energised and delivering power
immediately.
Cumulative Invested Capital and Commitments at Each Period Since IPO
(million)(1)
( ) ( ) (Q4 2020) (Q1 2021) (Q2 2021) (Q3 2021) (Q4 2021) (Q1 2022) (Q2 2022) (Q3 2022) (Q4 2022) (Q1 2023) (Q2 2023)
(Closed/ Funding in Construction Assets) ($11) ($4) ($0) ($9) (--) ($5) ($3) ($19) (--) ($3) ($9)
(Closed/ Funding in Operating Assets) ($21) ($25) ($0) (--) ($52) (--) (--) (--) (--) (--) (--)
(Closed/ Funded in Prior Periods) (--) ($32) ($61) ($61) ($69) ($121) ($126) ($129) ($149) ($147) ($151)
(Closed/ Remaining Commitments) ($4) (--) (--) ($12) ($5) ($1) ($11) ($4) ($3) ($2) (($7))
(Signed/ Future Commitments) (--) (--) ($5) ($40) ($40) ($40) ($34) ($22) (--) (--) (--)
( ) ( ) ($36) ($61) ($66) ($122) ($166) ($167) ($174) ($174) ($152) ($152) ($153)
( )
1. Cumulative invested capital and commitments declined in Q4 2022 due
to the partial termination of an agreement to acquire certain unclosed Echo
Solar Portfolio projects.
2. Represents a net $7M receivable due from tax equity in the Echo
Solar Portfolio.
Details of each asset held or committed to at 30 June 2023 are set out in the
table below:
Investment Name Sector Capacity (MW)(1) Number of assets State Ownership(2) Phase Status Remaining
revenue contract
term (years)(3)
SED Solar Portfolio Commercial Solar 11.3 52 Massachusetts, 100% Operational Closed 13.1
Connecticut
Ellis Road Solar Commercial Solar 7.1 1 Massachusetts 100% Operational Closed 18.0
Oliver Solar Commercial Solar 4.8 1 California 100% Operational Closed 12.4
Beacon 2 Utility-Scale Solar 29.5 1 California 49.5% Operational Closed 19.5
Beacon 5 Utility-Scale Solar 23.9 1 California 49.5% Operational Closed 19.5
Skillman Solar Commercial Solar 2.6 1 New Jersey 100% Operational Closed 14.0
Delran Solar Commercial Solar 2.0 1 New Jersey 100% Operational Closed 12.0
Whirlwind Wind 59.8 1 Texas 100% Operational Closed 4.5
Echo Solar - MN Commercial Solar 13.7 1 Minnesota 100% Operational Closed 24.5
Echo Solar - VA 1 Commercial Solar 2.7 1 Virginia 100% Operational Closed 24.5
Echo Solar - VA 2 Commercial Solar 4.2 1 Virginia 100% Commissioning Closed 25.0
Echo Solar - VA 3 Commercial Solar 6.5 1 Virginia 100% Commissioning Closed 25.0
Echo Solar - VA 4 Commercial Solar 2.9 1 Virginia 100% Commissioning Closed 25.0
Echo Solar - DE 1 Commercial Solar 5.9 1 Delaware 100% Commissioning Closed 25.0
Total Portfolio 176.9 65 14.1(3)
Solar-only Portfolio 117.1 64 18.8(3)
1. Capacity reflects RNEW's proportionate ownership interest in the
assets.
2. Cash equity ownership.
3. Average remaining revenue contract term (years).
Portfolio overview
As at 30 June 2023, the portfolio was heavily weighted towards operating
assets with 89% of total invested and committed net equity capital((1))
operating, reflecting the completion of construction at Westside (Echo Solar
Portfolio) and Monroe (Echo Solar Portfolio). The portfolio benefits from
geographic diversification spanning eight states to provide risk mitigation
against regulatory and resource exposures. Furthermore, RNEW's portfolio
reflects diversification across three renewable energy sectors of:
utility-scale solar (19%), commercial solar (51%), and wind (30%) to mitigate
resource, regulatory, technology and market risks.
Portfolio summary charts((1)):
Asset Name
Asset Name Portfolio %
Beacon 2&5 19%
SED Solar Portfolio 12%
Oliver Solar 5%
Ellis Road Solar 6%
Skillman Solar 3%
Delran Solar 2%
Whirlwind 30%
Echo Solar - MN 10%
Echo Solar - VA/DE 13%
Sector
Sector Portfolio %
Utility Scale Solar 19%
Commercial Solar 51%
Wind 30%
Asset Status
Operating 89%
Construction 11%
1. Includes closed and committed assets based on equity exposure at
FMV.
Operating performance for six months ended 30 June 2023:
During the six months ended 30 June 2023, the portfolio generated 156.5 GWh of
clean energy, 19.4% below budget. Of the total, solar assets generated 83.4
GWh, 9.2% below budget and wind assets generated 73.1 GWh, 28.5% below budget.
Project variances and further explanations are provided below.
The performance of the underlying operating portfolio combined with its 100%
contracted revenue structure generated revenues of $6.1 million for the
Company. Cash flows were below budget primarily due to curtailments
experienced throughout the fleet, historically low wind resources at Whirlwind
and unexpected operational issues at Ellis Road Solar and Skillman Solar.
Net Production Variance vs. Budget (GWh)
Actual Budget
Q1 2023 74.6 86.7
Q2 2023 82.0 107.0
YTD 2023 156.6 193.7
Investment Name Sector State Actual (GWh) Budget (GWh) GWh Above (Below) Budget % Above (Below) Budget
Beacon 2 Utility-Scale Solar California 30.3(1) 34(1) (3.7) (10.9%)(a)
Beacon 5 Utility-Scale Solar California 24.9(1) 26.2(1) (1.3) (5%)(a)
SED Solar Portfolio Commercial Solar Massachusetts, Connecticut 6.1 6.3 (0.2) (3.2%)
Ellis Road Solar Commercial Solar Massachusetts 2.7 4.3 (1.6) (37.2%)(b)
Oliver Solar Commercial Solar California 3.9(2) 3.9(2) - -
Delran Solar Commercial Solar New Jersey 1.2 1.3 (0.1) (7.7%)
Skillman Solar Commercial Solar New Jersey 0.9 1.8 (0.9) (50%)(c)
Echo Solar (MN) Commercial Solar Minnesota 11.1 11.4 (0.3) (2.6%)
Echo Solar (VA 1) Commercial Solar Virginia 2.3 2.6 (0.3) (11.5%)
Solar Subtotal 83.4 91.8 (8.4) (9.2)%
Whirlwind Wind Texas 73.1 102.3 (29.2) (28.5%)(d)
Wind Subtotal 73.1 102.3 (29.2) (28.5%)
Total 156.5 194.1 (37.6) (19.4%)
Values and totals have been rounded to the nearest decimal.
1. Reflects RNEW's pro forma share of production based on ownership.
2. Oliver Solar reached its Commercial Operation Date ("COD") on 29
November 2021 and has been earning PPA revenue from the off-taker based on P50
modelled production since that date. However, due to some inspection and
testing delays with its off-taker, a global commerce company, the system had
not been energised as at 30 June 2023.
Production variance summary:
a Underperformance primarily due to the need for fuse holder
replacements in combiner boxes, which have been delayed in receipt due to
supply chain constraints. Completion of replacements occurred during Q2 2023.
Projects also experienced curtailments during Q2, further increasing the
variance.
b Underperformance primarily due to damage resulting from a rodent
infestation. Repairs are projected to be completed before the end of 2023.
c Underperformance due to Schweitzer Engineering Laboratories
("SEL") relay tripping issue resulting in lack of production most of Q2.
Production restored in July and project is undergoing an engineer review to
prevent recurrence.
d Underperformance primarily due to higher than expected curtailment
during the first quarter, historically low wind resource in the U.S. during
Q2, downtime for site maintenance and nine days of no production due to the
tornado in Matador, TX.
Revenues
As at 30 June 2023, RNEW's portfolio had 100% of its revenue contracted with a
weighted average remaining term of 14.1 years; this includes all construction
and committed assets. Approximately 99% of the portfolio benefits from
fixed-price revenues, many with annual escalators of 1-2%, through PPAs,
contracted solar renewable energy credits ("SREC"), and fixed rents under
leases. These fixed price contracts mitigate market price risk for the term of
the contracts. Less than 1% of the portfolio has a variable form of revenue
contract. These contracts are set at a fixed discount to a defined
Massachusetts utility electric rate, which provides an ongoing economic
benefit to the customer (i.e., the off-taker/rooftop owner), as opposed to
receiving the higher utility electric rate when consuming electricity from the
grid. While the variable rate contract introduces an element of price
volatility, it also offers the potential to hedge inflation risk as utility
rates in Massachusetts have appreciated 3.0% per annum on average from
1990-2022.
The revenue profile reported below represents a snapshot of RNEW's existing
revenue contracts as at 30 June 2023 and does not assume any replacement
revenue contracts following the expiry of these contracts. With increased
adoption of renewable energy in the U.S. and rising natural gas prices (which
tend to result in higher power prices in U.S. markets where natural gas is the
marginal fuel), we believe that RNEW's prospects for re-contracting at the end
of revenue contract terms remain positive.
Portfolio revenue breakdown((1)(2))
( ) (Contracted - Fixed Price Revenue (%)) (Contracted - Variable Price Revenue (%)) (Contracted - Fixed Price Incentive Revenue (%)) (Uncontracted - Market Revenue (%))
(2023) 86.7% 1.0% 12.3% 0.0%
(2024) 89.0% 1.0% 10.0% 0.0%
(2025) 89.2% 2.2% 8.6% 0.0%
(2026) 88.9% 2.2% 8.9% 0.0%
(2027) 91.1% 2.3% 6.6% 0.0%
(2028) 51.6% 2.1% 3.0% 43.2%
(2029) 52.0% 2.1% 2.7% 43.1%
(2030) 50.7% 2.1% 2.6% 44.6%
(2031) 50.0% 2.1% 2.6% 45.2%
(2032) 50.8% 2.2% 2.6% 44.4%
(2033) 49.4% 2.2% 2.6% 45.8%
(2034) 48.3% 2.2% 2.5% 47.0%
(2035) 47.7% 2.1% 1.9% 48.3%
(2036) 44.4% 2.0% 1.2% 52.4%
(2037) 43.3% 1.9% 0.9% 53.9%
(2038) 82.9% 3.4% 0.0% 13.7%
(2039) 83.1% 0.3% 0.0% 16.6%
(2040) 83.1% 0.0% 0.0% 16.9%
(2041) 78.9% 0.0% 0.0% 21.1%
(2042) 76.6% 0.0% 0.0% 23.4%
( )
( )
(1) The increase in uncontracted market revenue from 2028 onwards is due
to the maturity of the Whirlwind PPA.
(2) The decrease in uncontracted market revenue from 2038 onwards is due
to Whirlwind reaching the conclusion of its technical useful life.
Active management
Ecofin maintains an active approach to managing RNEW's portfolio. For
operating assets, our process involves actively monitoring production through
direct, real-time system access, review of monthly O&M and asset
management reports, and meeting at least monthly with project operators and
asset managers to review and enhance performance. For construction stage
assets, the process is appropriately structured for more frequent engagement
with the relevant EPC contractor to review project milestones, troubleshoot
issues, and review and approve payments in accordance with contracts.
Financing
As at 30 June 2023, the Company's U.S. subsidiaries at a project level had
debt balances of $45.1 million, with a further $32.8 million drawn under the
RCF. This total debt balance corresponds to approximately 38.1% of GAV and
compares to the maximum limit of 65% in the Company's Investment Policy, as
further detailed in the table below. Given that the Company's portfolio
primarily comprises operating assets that have long-term, fixed-price revenue
contracts with investment grade counterparties, construction and term loan
financing opportunities at both a project and group level are widely
available. With that in mind, the Company's Investment Manager and Board
favour a measured approach of using leverage to mitigate interest rate and
default risk. In Q2, the Company successfully extended its existing RCF as
described below:
l The RCF, which comprises two tranches, has now been extended by 12
months. The $50 million tranche has been extended to October 2024 with a rate
of SOFR + 2.00% to 18 October 2023 and SOFR + 2.125% thereafter, and the $15
million tranche was extended to October 2025 with a rate of SOFR + 2.25% to 18
October 2023 and SOFR + 2.375% thereafter. The RCF is secured upon certain of
the Company's investment assets and offers the ability to substitute reference
assets. The RCF also includes an accordion option which provides access to $20
million of additional capital which can be accessed subject to certain
conditions. This substantial commitment with attractive pricing and terms
reflects the high quality of RNEW's portfolio. As at 30 June 2023, the RCF was
$32.8 million drawn.
Through the 49.5% acquisition of the Beacon 2 and 5 operating solar assets,
the Company assumed its share of amortising project term loans secured on
these projects that totalled $45.1 million, as referred to above.
On 30 June 2023, the Company had GAV(1) of $204.7 million, and total recourse
and non-recourse debt of $77.9 million, resulting in total leverage of 38.1%.
The borrowing facilities available to the Company and its subsidiaries as at
30 June 2023 were as set out in the table below:
Facility amount Amount drawn
Loan type Provider Borrower ($m) ($m) Maturity Applicable rate
Revolving credit facility KeyBank RNEW Capital, LLC $50.0 $32.8 Oct-24 SOFR + 2.00%(2)
$15.0 - Oct-25 SOFR + 2.25%(2)
Term loan KeyBank Beacon Solar 2 $24.9 $24.9 May-26 SOFR + 1.25%
Term loan KeyBank Beacon Solar 5 $20.2 $20.2 May-26 SOFR + 1.25%
Total Facility/Debt $110.1 $77.9
1. Includes closed and committed assets based on equity exposure at
FMV.
2. From 18 October 2023, the margin on the 2 year facility will
increase to 2.125% and the margin on the 3-year facility will increase to
2.375%.
Portfolio valuation
Valuation of the Company's portfolio is performed on a quarterly basis. A
discounted cash flow ("DCF") valuation methodology is applied, which is
customary for valuing privately owned renewable energy assets. The valuation
is performed by Ecofin at 31 March and 30 September, and by Marshall &
Stevens at 30 June and 31 December.
FMV for each investment is derived from the present value of the investment's
expected future cash flows, using reasonable assumptions and forecasts for
revenues and operating costs, and an appropriate discount rate. More
specifically, such assumptions include annual energy production, curtailment,
merchant power prices, useful life of the assets, and various operating
expenses and associated annual escalation rates often tied to inflation,
including O&M, asset management, balance of plant, land leases, insurance,
property and other taxes, and decommissioning bonds, among other items.
NAV bridge for the six month period ($MM)
NAV 31 Dec 2022 $130.2
Change in ProjectCo DCF Rollforward ($1.1)
Change in ProjectCo DCF - discount rates $0.5
Change in ProjectCo DCF - Assumptions $0.9
Distributions from ProjectCos to RNEW $3.6
Dividend to Shareholders ($3.9)
Expenses Paid ($1.2)
Change in Financial Assets ($2.2)
NAV 30 June 2022 $126.8
Change in project company DCF: Represents the impact on NAV from changes to
DCF depreciation and quarterly cashflow roll-forward and change in
project-level debt outstanding balances, including principal amortization.
Change in project company DCF discount rates: Represents the impact on NAV
from changes to the discount rates applied to the DCF models of each project
company. As at 30 June 2023, the weighted average unlevered pre-tax discount
rate was 7.3%, a decrease from 7.5% at 31 December 2022 principally related
to a 25 basis points reduction in the SED Solar Portfolio and Delran Solar
discount rates to bring them in line with the balance of the solar Portfolio,
as well as the inclusion of the Echo Solar Portfolio at FMV in the weighted
average calculation.
Change in project company DCF merchant curves: Represents the impact on NAV
from changes to the forward merchant price curves used in the DCF models of
each project company. The increase was principally due to the update of the
DCF models with the most recently published regional market forward prices by
the U.S. EIA.
Distributions from project companies to RNEW: Represents cash generated by
project companies, which was distributed up to RNEW during the Period for
purposes of paying dividends to shareholders.
Dividends to shareholders: Dividends for Q4 2022 and Q1 2023 of $3.9 million
(2.8 cents per share) were paid during the Period. After the Period end, the
Company declared a further dividend of 0.7 cents per share in respect of the
quarter ended 30 June 2023.
Expenses paid: Represents the impact on NAV due to management fees and
expenses paid during the Period.
Change in financial assets: Represents the impact on NAV due to increases or
decreases in cash, receivables, payables and other net working capital account
balances.
Deferred tax liability: Represents the impact on NAV due to accruals arising
from operations in the Period and from fair market value adjustments at RNEW
Holdco, LLC, the Company's wholly-owned U.S. subsidiary, which is subject to
U.S. income taxes. On a rounded basis, there has been no change in the
deferred tax liability during the Period.
Portfolio valuation sensitivities
The figure below shows the impact on the portfolio valuation of changes to the
key input valuation assumptions ("sensitivities") with the horizontal x-axis
reflecting the percentage impact on NAV per Share. The valuation sensitivities
are based on the portfolio as at 30 June 2023. For each sensitivity
illustrated, it is assumed that potential changes occur independently with no
effect on any other assumption. The relatively moderate impact of a change in
forecast merchant-power prices reflects the long-term fixed price contracted
revenues of the Company's portfolio, with a weighted average remaining
contracted term of 14.1 years as at 30 June 2023. Similarly, the moderate
impacts due to variations in operational expenses reflect a number of the
Company's assets having fixed price, long-term operating expenses including
O&M, property leases, and payments in lieu of taxes.
Sensitivity Impact on NAV per Share
Energy Production P75/P25 (6.4%) to 6.3%
Discount Rates +/- 50 bps (5.0%) to 5.4%
Merchant Power Prices +/- 10.0% (4.9%) to 4.9%
Operating Expenses +/- 10.0% (4.1%) to 4.1%
Curtailment +/- 50% (3.8%) to 3.5%
Market outlook
The outlook for the U.S. renewables industry, particularly in the solar and
wind sectors, remains positive and poised for growth in 2023 and 2024. We
continue to watch several key trends which are contributing to this positive
trajectory:
l Climate Change Awareness and Energy Security: Growing awareness and
concern about climate change and the need for energy security in the U.S. are
driving the transition towards renewable energy sources. This is resulting in
long-term policy support for renewables development.
l Policy Tailwinds: Structural policy support, such as the Inflation
Reduction Act (IRA), is providing a strong foundation for sustained growth in
the renewables sector. Tax benefits and capital allocation for renewable
energy and climate programs are encouraging investment.
l Cost Competitiveness: Solar and wind power have become increasingly
cost-competitive compared to traditional fossil fuel alternatives. This has
attracted the attention of investors, utilities, and consumers, further
driving momentum in the sector.
l Corporate Adoption: Corporations are embracing renewable energy
supply, with contracts for substantial renewable energy capacity signed. This
corporate interest not only helps achieve sustainability goals but also
contributes to the overall growth of the renewable energy market.
l Solar PV Growth: Solar photovoltaic (PV) capacity is expected to see
significant growth, with projections indicating new capacity additions of 29.1
GW of utility-scale solar PV capacity and 9.4 GW of battery storage in 2023.
This growth is facilitated by the steady reduction in the costs of these
technologies, improved module efficiency, enhanced load factors, economies of
scale created by larger project sizes, technological advancements, and
improved maintenance practices. Solar energy accounted for more than half of
all new electricity-generating capacity integrated into the U.S. grid in early
2023, led by strong growth in the utility-scale segment of the market.
l Onshore Wind Growth: According to the U.S. Department of Energy,
wind power accounted for 22% of new electricity capacity installed in the
United States in 2022, second only to solar. The U.S. currently has over 140
GW of installed wind capacity and expectations for annual wind additions are
ambitious, projected to double from around 10 GW to over 20 GW by the end of
this decade. Clearing supply chain obstacles and innovation within the sector
are driving this expansion which, in turn will reinforce investment in the
domestic equipment supply chain, establishing the U.S. as a prominent player
within the global wind industry.
Notwithstanding the positive outlook, some challenges remain, including
international supply chain disruptions, trade restrictions, uncertainties
around detailed application of certain IRA provisions, extreme weather and
inflation. These challenges may impact project timelines, costs, and financial
viability of some new projects in the short term.
In conclusion, the U.S. renewables industry, particularly in solar and wind,
is set for significant growth in 2023 and beyond due to a combination of
favourable factors such as policy support, cost competitiveness, and increased
demand. While challenges persist, the sector's overall trajectory appears
promising. Furthermore, we believe that the Company's current portfolio
benefits from attractive sector fundamentals that support attractive and
sustainable valuations.
Ecofin Advisors, LLC
13 September 2023
ESG Integration and Impact
The Company's and Ecofin's strategy is to allocate capital using an ESG
integrated investment process to build and operate a diversified portfolio of
Renewable Assets that achieves RNEW's investment objective.
RNEW is focused on allocating capital using an investment process which
integrates ESG considerations and analysis to invest in and operate a
diversified portfolio of Renewable Assets consistent with RNEW's investment
objective.
Ecofin is a signatory to the Principles for Responsible Investment (PRI) and
incorporates ESG analysis into its investment and reporting process. Ecofin's
investment strategies related to renewables infrastructure are designed to
provide investors with attractive long-term returns and a level of impact that
aligns with United Nations Sustainable Development Goals:
This strategy seeks to achieve positive impacts that align with the following
UN Sustainable Development Goals
• 7 Affordable and clean energy
• 8 Decent work and economic growth
• 9 Industry, innovation and infrastructure
• 11 Sustainable cities and communities
• 13 Climate action
The Investment Manager's sustainability and impact policy is further described
in the Sustainability & Impact section of its website
ecofininvest.com/sustainability-impact.
ESG integration
The Company was established to offer investors direct exposure to renewable
energy and sustainable infrastructure assets including solar, wind, and
battery storage that reduce greenhouse gas ("GHG") emissions and promote a
positive environmental impact. The Investment Manager integrates analysis of
ESG issues throughout the lifecycle of its investment activities spanning due
diligence, investment approval, and ongoing portfolio management.
Environmental criteria analysis considers how an investment performs as a
steward of nature; social criteria analysis examines its impact and
relationships with employees, suppliers, customers and the communities in
which it operates; and governance criteria analysis examines internal
controls, business ethics, compliance and regulatory status associated with
each investment.
Ecofin has developed a proprietary ESG due diligence risk assessment framework
("ESG Risk Assessment") that combines both qualitative and quantitative data.
This ESG Risk Assessment is embedded in Ecofin's investment memoranda and
systematically applied by the investment team to all opportunities prior to
investment authorisation by Ecofin's Investment Committee. Each of the
Company's eight closed and committed investments spanning 65 assets was
analysed through Ecofin's ESG Risk Assessment prior to investment commitment.
Ecofin believes this approach to assessing ESG issues serves to mitigate risk
and enhance RNEW's impact. Environmental factors affecting climate risk are
reviewed to determine an investment's impact and ability to reduce GHG
emissions, air pollution and water consumption.
Analysis of environmental issues may also consider the impact that the
investment will have on land use and considers mitigation plans when issues
are identified. Analysis of social issues may encompass an investment's impact
on the local community and consider health and safety issues together with the
counterparties to be engaged to construct and operate the assets. Governance
is reviewed in partnership with qualified third-party legal counsel to ensure
compliance with all laws and regulations, strong ongoing corporate governance
through strict reporting protocols with qualified operators, project asset
managers and annual independent financial statement audits.
Ecofin applies a systematic approach to ESG monitoring once acquisitions are
closed. Through Ecofin's engagement with third party O&M and asset
management service providers, Ecofin reviews asset level reporting on health
and safety metrics, environmental matters and compliance. Issues identified
are reviewed and addressed with service providers through periodic meetings
such as monthly operations meetings.
Importantly, ESG factors are analysed then reported in a transparent manner so
that investors and key stakeholders can measure their impact.
Impact
RNEW's portfolio produced approximately 157 GWh of clean electricity during
the six month period to 30 June 2023, enough to power approximately 29,400
homes, offsetting approximately 97,000 tonnes of CO(2)e and avoiding the
consumption of approximately 19,800 million litres of water. RNEW focuses on
investments that have a positive environmental impact by reducing GHG
emissions, air pollution and water consumption. Ecofin seeks to analyse and
report on ESG factors on a consistent basis to maximise the impact of its
investment activities. To assess environmental impact, Ecofin goes beyond
measuring CO(2) emissions avoided and quantifies other GHG emissions, such as
methane and nitrous oxide, and also measures the contribution that investments
make to save water consumption. Water is consumed by thermoelectric (i.e. coal
and gas) power plants in the cooling process associated with steam turbine
generators. Water savings occur in the same way that renewable energy
generation offsets CO(2) emissions from thermoelectric generators. Ecofin
calculates estimated water savings by reference to the EIA thermoelectric
cooling water data by location and applying it to the production from RNEW's
portfolio.
Ecofin's methodology for calculating the environmental impact of investments
relies on trusted data sources including the U.S. EPA and the EIA.
Portfolio impact
~97,000 ~19,800M
Tonnes of CO(2)e Reduction Litres of water savings
~29,400 ~7,900
Households supplied Olympic size swimming pools
Investment Objective and Investment Policy
The Company's investment objective and investment policy (including defined
terms) are as set out in its IPO prospectus:
Investment objective
The Company's investment objective is to provide Shareholders with an
attractive level of current distributions by investing in a diversified
portfolio of mixed renewable energy and sustainable infrastructure assets
("Renewable Assets") predominantly located in the United States with prospects
for modest capital appreciation over the long term.
Investment policy and strategy
The Company intends to execute its investment objective by investing in a
diversified portfolio of Renewable Assets predominantly in the United States,
but it may also invest in other OECD countries.
Whilst the principal focus of the Company will be on investment in Renewable
Assets that are solar and wind energy assets ("Solar Assets" and "Wind Assets"
respectively), sectors eligible for investment by the Company will also
include different types of renewable energy (including battery storage,
biomass, hydroelectric and microgrids) as well as other sustainable
infrastructure assets such as water and waste water.
The Company will seek to invest primarily through privately-negotiated middle
market acquisitions of long-life Renewable Assets which are
construction-ready, in-construction and/or currently in operation with
long-term PPAs or comparable offtake contracts with investment grade quality
counterparties, including utilities, municipalities, universities, schools,
hospitals, foundations, corporations and others. Long-life Renewable Assets
are those which are typically expected by Ecofin to generate revenue from
inception for at least 10 years.
The Company intends to hold the Portfolio over the long term, provided that it
may dispose of individual Renewable Assets from time to time.
Investment restrictions
The Company will invest in a diversified portfolio of Renewable Assets subject
to the following investment limitations which, other than as specified below,
shall be measured at the time of the investment:
l once the Net Initial Proceeds are substantially fully invested, a
minimum of 20 per cent. of Gross Assets will be invested in Solar Assets;
l once the Net Initial Proceeds are substantially fully invested, a
minimum of 20 per cent. of Gross Assets will be invested in Wind Assets;
l a maximum of 10 per cent. of Gross Assets will be invested in
Renewable Assets that are not Wind Assets or Solar Assets;
l exposure to any single Renewable Asset will not exceed 25 per cent.
of Gross Assets;
l exposure to any single Offtaker will not exceed 25 per cent. of
Gross Assets;
l once the Net Initial Proceeds are substantially fully invested,
investment in Renewable Assets that are in the construction phase will not
exceed 50 per cent. of Gross Assets, but prior to such time investment in such
Renewable Assets will not ex-ceed 75 per cent. of Gross Assets. The Company
expects that construction will be primarily focussed on Solar Assets in the
shorter term until the Portfolio is more substantially invested and may
thereafter include Wind Assets in the construction phase;
l exposure to Renewable Assets that are in the development (namely
pre-construction) phase will not exceed 5 per cent. of Gross Assets;
l exposure to any single developer in the development phase will not
exceed 2.5 per cent. of Gross Assets;
l the Company will not typically provide Forward Funding for
development projects. Such Forward Funding will, in any event, not exceed 5
per cent. of Gross Assets in aggregate and 2.5 per cent. of Gross Assets per
development project and would only be undertaken when supported by customary
security;
l Future Commitments and Developer Liquidity Payments, when aggregated
with Forward Funding (if any), will not exceed 25 per cent. of Gross Assets;
l once the Net Initial Proceeds are substantially fully invested,
Renewable Assets in the United States will represent at least 85 per cent. of
Gross Assets; and
l any Renewable Assets that are located outside of the United States
will only be located in other OECD countries. Such Renewable Assets will
represent not more than 15 per cent. of Gross Assets.
References in the investment restrictions detailed above to "investments in"
or "exposure to" shall relate to the Company's interests held through its
Investment Interests.
For the purposes of this Prospectus, the Net Initial Proceeds will be deemed
to have been substantially fully invested when at least 75 per cent. of the
Net Initial Proceeds have been invested in (or have been committed in
accordance with binding agreements to investments in) Renewable Assets.
The Company will not be required to dispose of any investment or to rebalance
the Portfolio as a result of a change in the respective valuations of its
assets. The investment limits detailed above will apply to the Group as a
whole on a look-through basis, namely, where assets are held through a Project
SPV or other intermediate holding entities or special purpose vehicles, and
the Company will look through the holding vehicle to the underlying assets
when applying the investment limits.
Gearing policy
The Group primarily intends to use long-term debt to provide leverage for
investment in Renewable Assets and may utilise short-term debt, including, but
not limited to, a revolving credit facility, to assist with the acquisition of
investments.
Long-term debt shall not exceed 50 per cent. of Gross Assets and short-term
debt shall not exceed 25 per cent. of Gross Assets, provided that total debt
of the Group shall not exceed 65 per cent. of Gross Assets, in each case,
measured at the point of entry into or acquiring such debt.
The Company may employ gearing either at the level of the relevant Project SPV
or at the level of any intermediate subsidiary of the Company. Gearing may
also be employed at the Company level, and any limits set out in this
Prospectus shall apply on a consolidated basis across the Company, the Project
SPVs and any such intermediate holding entities (but will not count any
intra-Group debt). The Company expects debt to be denominated primarily in
U.S. Dollars.
For the avoidance of doubt, financing provided by tax equity investors and any
investments by the Company in its Project SPVs or intermediate holding
companies which are structured as debt are not considered gearing for this
purpose and are not subject to the restrictions in the Company's gearing
policy.
Currency and hedging policy
The Group may use derivatives for the purposes of hedging, partially or fully:
l electricity price risk relating to any electricity or other benefit
including renewable energy credits or incentives, generated from Renewable
Assets not sold under a PPA, as further described below;
l currency risk in relation to any Sterling (or other non-U.S. Dollar)
denominated operational expenses of the Company;
l other project risks that can be cost-effectively managed through
derivatives (including, without limitation, weather risk); and
l interest rate risk associated with the Company's debt facilities.
In order to hedge electricity price risk, the Company may enter into
specialised derivatives, such as contracts for difference or other hedging
arrangements, which may be part of a tripartite or other PPA arrangement in
certain wholesale markets where such arrangements are required to provide an
effective fixed price under the PPA.
Members of the Group will only enter into hedging or other derivative
contracts when they reasonably expect to have an exposure to a price or rate
risk that is the subject of the hedge.
Cash management policy
Until the Company is fully invested the Company will invest in cash, cash
equivalents, near cash instruments and money market instruments and treasury
notes ("Near Cash Instruments"). Pending re-investment or distribution of cash
receipts, the Company may also invest in Near Cash Instruments as well as
Investment Grade Bonds and exchange traded funds or similar ("Liquid
Securities"), provided that the Company's aggregate holding in Liquid
Securities shall not exceed 10 per cent. of Gross Assets measured at the point
of time of acquiring such securities.
Amendments to the investment objective, policy and investment restrictions
In the event that the Board considers it appropriate to amend materially the
investment objective, investment policy or investment restrictions of the
Company, Shareholder approval to any such amendment will be sought by way of
an ordinary resolution proposed at an annual or other general meeting of the
Company."
Interim Management Report
The Directors are required to provide an Interim Management Report in
accordance with the FCA Disclosure Guidance and Transparency Rules. They
consider that the Chair's Statement and the Investment Manager's Report in
this Half-yearly Report provide details of the important events which have
occurred during the Period and their impact on the financial statements. The
following statements on related party transactions, going concern and the
Directors' Responsibility Statement below, together with the Chair's Statement
and Investment Manager's Report, constitute the Interim Management Report for
the Company for the six months ended 30 June 2023.
Principal Risks and Uncertainties
The Directors have identified the following as the Company's principal risks
and uncertainties. These are described in the Company's Annual Report for the
year ended 31 December 2022 (pages 31 - 33):
1. Electricity price
2. Interest rate, currency and inflation
3. Investment performance
4. Investment valuation
5. Political
6. Discount management
7. Cyber
8. Service provider reliance
9. Counterparty
10. Climate
11. ESG
12. Financing
Related Party Transactions
The Company's Investment Manager, Ecofin, is considered a related party under
the Listing Rules. Details of the amounts paid to the Company's Investment
Manager and the Directors during the Period are detailed in Note 11 to the
Financial Statements.
Going Concern
The Directors have adopted the going concern basis in preparing the interim
financial statements. The following is a summary of the Directors' assessment
of the going concern status of the Company.
In reaching their conclusion, the Directors considered the Company's cash flow
forecasts, cash and net debt position, and the financial covenants in its
borrowing facilities. The Company's net assets at 30 June 2023 were $126.8
million (31 December 2022: $130.2 million). As at 30 June 2023, the Company
held $1.9 million in cash (31 December 2022: $3.4 million), had borrowings of
$77.9 million (31 December 2022: $64.4 million) and $32.2 million headroom on
its RCF (31 December 2022: $46 million).
The Company's holds 100% of the share capital of Holdco which in turn holds
investments in renewable energy project companies through SPVs. Underlying SPV
revenues are derived from the sale of electricity by project companies under
PPAs in place with creditworthy utilities, municipalities, and corporations.
Most of these PPAs are contracted over a long period with a weighted average
remaining life as at 30 June 2023 of 14.1 years (31 December 2022: 14.6
years). As announced on 7 August 2023, following a review of recent
performance of the Company's assets, the Company expects net cash flows at the
portfolio level to be meaningfully lower than previously forecast for the
quarters ending 30 September 2023 and 31 December 2023 due principally to
historically low wind resource in Q2 at Whirlwind, compounded by the tornado
affecting Whirlwind's substation on 21 June 2023, and other operating issues.
The Directors' assessment of going concern has taken into account these
revised cashflows.
The Company continues to meet its day-to-day liquidity needs through its cash
resources. Total expenses for the Period were $1.1 million (30 June 2022: $1.2
million), which represented approximately 0.89% of average net assets during
the Period (30 June 2022: 0.94%). At the date of approval of this Half-yearly
Report, based on the aggregate of investments and cash held, the Company had
substantial cover for its operating expenses. Further, the Company has the
ability to draw on its $65 million RCF which was amended and extended by 12
months in Q2. The Company and underlying SPVs continue to comply with debt
covenants.
The major cash outflow of the Company is the payment of dividends. The
Directors review financial reporting and forecasts at each quarterly Audit
Committee meeting, which includes reporting related to indebtedness,
compliance with borrowing covenants and fund investment limits. The Board
prudently decided to reduce the Q2 2023 Dividend, following an anticipated
decline in cash flows due to the operational issues discussed in the Chair's
Statement, Investment Manager's report and as announced on 29 June 2023. As a
result, the Board expects the Company's dividend for each of the quarters
ending 30 September 2023 and 31 December 2023 to remain at a reduced level of
0.70 cents per share. The Directors are confident that the Company has
sufficient cash balances, borrowing headroom and anticipated tax equity
arrangements in order to fund the commitments detailed in note 12 to the
financial statements, should they become payable.
The Directors have fully considered each of the Company's investments. Other
than described in this report, the Directors do not foresee any immediate
material risk to the Company's investment portfolio and/or the income it
receives from underlying SPVs. A prolonged and deep market decline could lead
to falling values in the underlying investments or interruptions to cashflow,
however the Company currently has sufficient liquidity available to meet its
future obligations. The Company's ability to continue as a going concern has
been assessed by the Directors for a period of at least 12 months from the
date the financial statements were authorised for publication.
Directors' Statement of Responsibility for the Half-Yearly Report
The Directors confirm to the best of their knowledge that:
l The condensed set of financial statements contained within the
interim financial report has been prepared in accordance with FRS 104 Interim
Financial Reporting; and
l The Interim Management Report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA's Disclosure Guidance and
Transparency Rules.
Patrick O'D Bourke
Chair
For and on behalf of the Board of Directors
13 September 2023
Financial Statements
Unaudited Condensed Statement of Comprehensive Income
For the six months ended 30 June 2023
For the six months ended For the six months ended
30 June 2023
30 June 2022
(Unaudited) (Unaudited)
Revenue Capital Total Revenue Capital Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Losses on investments 3 - (2,091) (2,091) - (1,770) (1,770)
Net foreign exchange gains - 16 16 - 4 4
Income 4 3,648 - 3,648 4,457 - 4,457
Investment management fees 5 (637) - (637) (638) - (638)
Other expenses (507) - (507) (558) - (558)
Profit/(loss) on ordinary activities before taxation 2,504 (2,075) 429 3,261 (1,766) 1,495
Taxation - - - - - -
Profit/(loss) on ordinary activities after taxation 2,504 (2,075) 429 3,261 (1,766) 1,495
Earnings per Share (cents) - basic and diluted 6 1.81c (1.50c) 0.31c 2.55c (1.38c) 1.17c
The total column of the Condensed Statement of Comprehensive Income is the
profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the six months
to 30 June 2023 (the "Period").
Profit on ordinary activities after taxation is also the "Total comprehensive
profit for the Period".
The accompanying notes form part of these interim financial statements.
Unaudited Condensed Statement of Financial Position
As at 30 June 2023
As at As at
30 June 31 December
2023 2022
(Unaudited) (Audited)
Notes $'000 $'000
Non-current assets
Investments at fair value through profit or loss 3 125,284 127,375
Current assets
Cash and cash equivalents 1,910 3,394
Trade and other receivables 28 11
1,938 3,405
Current liabilities: amounts falling due within one year
Trade and other payables (472) (593)
Net current assets 1,466 2,812
Net assets 126,750 130,187
Capital and reserves: equity
Share capital 7 1,381 1,381
Share premium 12,732 12,732
Special distributable reserve 8 121,250 121,250
Capital reserve (9,198) (7,123)
Revenue reserve 585 1,947
Total Shareholders' funds 126,750 130,187
Net assets per Share (cents) 9 91.8c 94.3c
Approved and authorised by the Board of directors for issue on 13 September
2023.
Patrick O'D Bourke
Chair of the Board
The accompanying notes form part of these interim financial statements.
Ecofin U.S. Renewables Infrastructure Trust PLC is incorporated in England and
Wales with company number 12809472.
Unaudited Condensed Statement of Changes in Equity
For the six months ended 30 June 2023
Six months ended 30 June 2023 (Unaudited)
Share Special
Share premium distributable Capital Revenue
capital account reserve reserve reserve Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Opening equity as at 1 January 2023 1,381 12,732 121,250 (7,123) 1,947 130,187
Transactions with Shareholders
Dividends paid - - - - (3,866) (3,866)
Total transactions with Shareholders 1,381 12,732 121,250 (7,123) (1,919) 126,321
Profit/(loss) and total comprehensive income for the Period - - - (2,075) 2,504 429
Closing equity as at 30 June 2023 1,381 12,732 121,250 (9,198) 585 126,750
Six months ended 30 June 2022 (Unaudited)
Share Special
Share premium distributable Capital Revenue
capital account reserve reserve reserve Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Opening equity as at 1 January 2022 1,251 29 121,250 (759) 1,952 123,723
Transactions with Shareholders
Shares issued during the period 7 129 13,027 - - - 13,156
Shares issued to Investment Manager - 44 - - - 44
Share issue costs - (411) - - - (411)
Dividends paid - - - - (3,683) (3,683)
Total transactions with Shareholders 1,380 12,689 121,250 (759) (1,731) 132,829
Profit/(loss) and total comprehensive income for the period - - - (1,766) 3,261 1,495
Closing equity as at 30 June 2022 1,380 12,689 121,250 (2,525) 1,530 134,324
The Company's distributable reserves consist of the Special distributable
reserve, Capital reserve attributable to realised gains and Revenue reserve.
Total distributable reserves as at 30 June 2023 were $121.8 million (31
December 2022: $123.2 million).
The accompanying notes form part of these interim financial statements.
Unaudited Condensed Statement of Cash Flows
For the six months ended 30 June 2023
Six months Six months
ended 30 June ended 30 June
2023 2022
(Unaudited) (Unaudited)
Notes $'000 $'000
Operating activities
Profit on ordinary activities before taxation 429 1,495
Adjustment for unrealised losses on investments 2,091 1,770
(Increase) in trade and other receivables (17) (35)
(Decrease)/increase in trade and other payables (121) 22
Net cash flow from operating activities 2,382 3,252
Investing activities
Purchase of investments 3 - (13,861)
Net cash flow used in investing activities - (13,861)
Financing activities
Proceeds of share issues 7 - 13,200
Share issue costs - (411)
Dividends paid (3,866) (3,683)
Net cash flow from financing activities (3,866) 9,106
(Decrease) in cash (1,484) (1,503)
Cash and cash equivalents at start of period 3,394 5,362
Cash and cash equivalents at end of period 1,910 3,859
As at 30 June As at 30 June
2023 2022
(Unaudited) (Unaudited)
$'000 $'000
Cash and cash equivalents
Cash at bank - -
Money market cash deposits 1,910 3,859
Total cash and cash equivalents at end of period 1,910 3,859
The accompanying notes form part of these interim financial statements.
Notes to the Interim Financial Statements
For the six months ended 30 June 2023
1. General Information
Ecofin U.S. Renewables Infrastructure Trust PLC ("RNEW" or the "Company") is a
public company limited by shares incorporated in England and Wales on 12
August 2020 with registered number 12809472. The Company is a closed-ended
investment company with an indefinite life. The Company commenced operations
on 22 December 2020 when its Shares were admitted to trading on the London
Stock Exchange. The Directors intend, at all times, to conduct the affairs of
the Company as to enable it to qualify as an investment trust for the purposes
of section 1158 of the Corporation Tax Act 2010, as amended.
The registered office and principal place of business of the Company is 6th
Floor, 125 London Wall, London, EC2Y 5AS.
The Company's investment objective is to provide Shareholders with an
attractive level of current distributions, by investing in a diversified
portfolio of mixed renewable energy and sustainable infrastructure assets
predominantly located in the U.S. with prospects for modest capital
appreciation over the long term.
The financial statements comprise only the results of the Company, as its
investment in RNEW Holdco, LLC ("Holdco") is included at fair value through
profit or loss ("FVTPL") as detailed in the key accounting policies below.
The Company's AIFM and Investment Manager is Ecofin Advisors, LLC.
Apex Listed Companies Services (UK) Limited provides administrative and
company secretarial services to the Company under the terms of an
administration agreement.
2. Basis of Preparation
The unaudited interim financial statements of the Company have been prepared
in accordance with IAS 34 "Interim Financial Reporting". The accounting
policies, critical accounting judgements, estimates and assumptions are
consistent with those used in the latest audited financial statements for the
year ended 31 December 2022. The interim financial statements have been
prepared in accordance with UK-adopted international accounting standards. The
interim financial statements are prepared on the historical cost basis, except
for the revaluation of certain financial instruments at FVTPL.
The interim financial statements have also been prepared as far as is relevant
and applicable to the Company in accordance with the Statement of Recommended
Practice ("SORP") issued by the Association of Investment Companies ("AIC") in
July 2022.
These condensed interim financial statements do not include all information
and disclosures required in the annual financial statements and should be read
in conjunction with the Company's annual financial statements as at 31
December 2022. The audited annual accounts for the year ended 31 December 2022
have been delivered to Companies House. The audit report thereon was
unqualified.
The functional currency of the Company is U.S. Dollars as this is the currency
of the primary economic environment in which the Company operates and where
its investments are located. The Company's investment is denominated in U.S.
Dollars and a substantial majority of its income is receivable, and of its
expenses is payable, in U.S. Dollars. Also, a majority of the Company's cash
and cash equivalent balances is retained in U.S. Dollars. Accordingly, the
interim financial statements are presented in U.S. Dollars rounded to the
nearest thousand dollars.
Basis of consolidation
The Company has adopted the amendments to IFRS 10 which state that investment
entities should measure all of their subsidiaries that are themselves
investment entities at fair value.
The Company owns 100% of its subsidiary Holdco and invests in SPVs through its
investment in Holdco. The Company and Holdco meet the definition of an
investment entity as described by IFRS 10. Under IFRS 10, investment entities
measure subsidiaries at fair value rather than being consolidated on a
line-by-line basis, meaning Holdco's cash, debt and working capital balances
are included in investments held at fair value rather than in the Company's
current assets. Holdco has one investor, which is the Company. In substance,
Holdco is investing the funds of investors in the Company on its behalf and is
effectively performing investment management services on behalf of such
unrelated beneficiary investors.
Going concern
The Directors have adopted the going concern basis in preparing the financial
statements. In reaching their conclusion, the Directors considered the
Company's cash flow forecasts, cash and net debt position, and the financial
covenants in its borrowing facilities. Details of the Directors' assessment
are given in the Going Concern section.
Critical accounting judgements, estimates and assumptions
Preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies
and the reported amount of assets, liabilities, income and expenses. Estimates
are, by their nature, based on judgement and available information, hence
actual results may differ from these judgements, estimates and assumptions.
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying value of assets and liabilities are those
used to determine the fair value of the investments as disclosed in note 3 to
the interim financial statements.
Key estimation and uncertainty: Investments at fair value through profit or
loss
The Company's investments in unquoted investments through Holdco are valued by
reference to valuation techniques approved by the Directors and in accordance
with the International Private Equity and Venture Capital Valuation ("IPEV")
Guidelines.
The Company uses DCF models to determine the fair value of the underlying
assets in Holdco. The value of Holdco includes any working capital not
accounted for in the DCF models (deferred tax liabilities, cash plus any
receivables or payables at the entity and not at the asset level). The fair
value of each asset is derived by projecting its future cash flows, based on a
range of operating assumptions for revenues and expenses, and discounting
those future cash flows to the balance sheet date using a discount rate
appropriately calibrated to the risk profile of the asset and market dynamics.
The key estimates and assumptions used within the DCF models are consistent
with those used in the latest audited financial statements to 31 December 2022
and include discount rates, annual energy production, curtailment, merchant
power prices, useful life of the assets, and various operating expenses and
associated annual escalation rates often tied to inflation, including
operations and maintenance, asset management, balance of plant, land leases,
insurance, property and other taxes and decommissioning bonds, among other
items. An increase/(decrease) in the key valuation assumptions would lead to a
corresponding change in the fair value of the investments. The Company's
investments at fair value are not traded in active markets.
Segmental reporting
The Chief Operating Decision Maker, which is the Board, is of the opinion that
the Company is engaged in a single segment of business, being investment in
renewable energy infrastructure assets to generate investment returns whilst
preserving capital. The financial information used by the Chief Operating
Decision Maker to manage the Company presents the business as a single
segment.
3. Investment Held at Fair Value Through Profit or Loss
As at 30 June 2023, the Company had one investment, being Holdco. The cost of
the investment in Holdco is $134,065,052 (31 December 2022: $134,065,052).
As at As at
30 June 2023 31 December 2022
Total Total
$'000 $'000
(a) Summary of valuation
Analysis of closing balance:
Investment at fair value through profit or loss 125,284 127,375
Total investment 125,284 127,375
(b) Movements during the period
Opening balance of investment, at cost 134,065 119,204
Additions, at cost - 14,861
Cost of investment at period end 134,065 134,065
Revaluation of investment to fair value:
Unrealised movement in fair value of investment (8,781) (6,690)
Fair value of investment at period end 125,284 127,375
(c) Losses on investment during the period
Unrealised movement in fair value of investment brought forward (6,690) (322)
Unrealised movement in fair value of investment during the period (2,091) (6,368)
Losses on investments (8,781) (6,690)
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level. The level of
fair value hierarchy within financial assets or financial liabilities is
determined on the basis of the lowest level input that is significant to the
fair value measurement. Financial assets and financial liabilities are
classified in their entirety into one of the following three levels:
Level 1
The unadjusted quoted price in an active market for identical assets or
liabilities that the entity can access at the measurement date.
Level 2
Inputs other than quoted prices included within Level 1 that are observable
(i.e. developed using market data) for the asset or liability, either directly
or indirectly.
Level 3
Inputs are unobservable (i.e. for which market data is unavailable) for the
asset or liability.
As at 30 June 2023 As at 31 December 2022
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investment at fair value through profit or loss:
Equity investment in Holdco - - 125,284 125,284 - - 127,375 127,375
Total investment - - 125,284 125,284 - - 127,375 127,375
Due to the nature of the underlying investments held by Holdco, the Company's
investment in Holdco is always expected to be classified as Level 3. There
have been no transfers between levels during the Period.
The movement on the Level 3 unquoted investment during the Period is shown
below:
As at As at
30 June 31 December
2023 2022
$'000 $'000
Opening balance 127,375 118,882
Additions during the period - 14,861
Unrealised loss on investment (2,091) (6,368)
Closing balance 125,284 127,375
4. Income
Six months Six months
ended 30 June ended 30 June
2023 2022
$'000 $'000
Income from investment
Dividends from Holdco 3,600 4,450
Deposit interest 48 7
Total income 3,648 4,457
5. Investment Management Fee
Six months ended 30 June 2023 Six months ended 30 June 2022
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Investment Management Fee 637 - 637 638 - 638
The Investment Management Agreement ("IMA") dated 11 November 2020 between the
Company and Ecofin Advisors, LLC, appointed the AIFM to act as the Company's
Investment Manager for the purposes of the AIFM Directive. Accordingly, the
AIFM is responsible for providing portfolio management and risk management
services to the Company.
Under the IMA, the Investment Manager receives a fee of 1.00% per annum of NAV
up to and including $500 million; 0.90% per annum of NAV in excess of $500
million up to and including $1 billion; and 0.80% per annum of NAV in excess
of $1 billion, invoiced quarterly in arrears. Until such time as 90% of the
Net Initial Proceeds of the Company's IPO was committed to investments, the
Investment Management fee was only charged on the committed capital of the
Company. No performance fee or asset level fees are payable to the AIFM under
the IMA.
The Investment Manager reinvests 15% of its annual management fee in Shares
(the "Management Fee Shares"), subject to a rolling lock-up of up to one year,
subject to certain limited exceptions. The Management Fee Shares are issued on
a quarterly basis. Where the Shares are trading at a premium to NAV, the
Company issues new Shares to the Investment Manager equivalent in value to the
management fee reinvested. Where the Shares are trading at a discount to NAV,
the Management Fee Shares are purchased by the Company's Brokers at the
prevailing market price.
The calculation of the number of Management Fee Shares to be issued is based
upon the NAV as at the relevant quarter concerned. The Investment Manager is
also entitled to be reimbursed for out-of-pocket expenses reasonably and
properly incurred in respect of the performance of its obligations under the
IMA.
Unless otherwise agreed by the Company and the Investment Manager, the IMA may
be terminated by the Company or the Investment Manager on not less than 12
months' notice to the other party, such notice not to expire earlier than 36
months from the Effective Date of the IMA (11 November 2020). The IMA may be
terminated by the Company with immediate effect from the time at which notice
of termination is given or, if later, the time at which such notice is
expressed to take effect in accordance with the conditions set out in the IMA.
The Company's Brokers have purchased the following Management Fee Shares in
respect of the Period under review:
Investment Purchase price
Management fee per Share Number of Date of
Shares purchased ($) (cents) Shares purchase
1 January 2023 to 31 March 2023 48,095 79.0 60,879 10 May 2023
6. Earnings per Share
Earnings per Share are based on the profit for the six months ended 30 June
2023 of $429,000 (30 June 2022: $1,495,000) attributable to the weighted
average number of Shares in issue of 138,078,496 in the Period (30 June 2022:
127,710,783). Revenue profit and capital losses were $2,504,000 and
($2,075,000) respectively (30 June 2022: $3,261,000 and ($1,766,000)
respectively).
7. Share Capital
As at 30 June 2023 As at 31 December 2022
Number of Nominal value Number of Nominal value
Allotted, issued and fully paid: shares $ shares $
Opening balance 138,078,496 1,380,784.98 125,053,498 1,250,534.98
Placing and retail offer
Shares issued - - 12,927,617 129,276.17
Management Fee Shares issued
Shares issued - - 97,381 973.81
Closing balance 138,078,496 1,380,784.98 138,078,496 1,380,784.98
The Shares have full voting, dividend and capital distribution (including on
winding-up) rights. They confer rights of redemption.
As at 30 June 2023, the Company's issued share capital comprised 138,078,496
Shares (30 June 2022: 138,026,751; 31 December 2022: 138,078,496) and this is
the total number of Shares with voting rights in the Company.
8. Special Distributable Reserve
Following admission of the Company's Shares to trading on the LSE in December
2020, the Directors applied to the Court and obtained a judgement on 29
January 2021 to cancel the amount standing to the credit of the share premium
account of the Company. The amount of the share premium account cancelled and
credited to the Company's Special distributable reserve was $121,250,000,
which can be utilised to fund distributions to the Company's Shareholders.
9. Net Assets per Share
Net assets per Share is based on $126,750,000 of net assets of the Company as
at 30 June 2023 (31 December 2022: $130,187,000) attributable to the
138,078,496 Shares in issue as at the same date (December 2022: 138,078,496).
10. Dividends
(a) Dividends paid during the Period
The Company paid the following interim dividends during the Period:
Cents per Revenue reserve Total
Share $'000 $'000
Quarter ended 31 December 2022 1.40c 1,933 1,933
Quarter ended 31 March 2023 1.40c 1,933 1,933
Total 2.8c 3,866 3,866
Revenue
Cents per reserve Total
Share $'000 $'000
Quarter ended 31 December 2021 1.40c 1,751 1,751
Quarter ended 31 March 2022 1.40c 1,933 1,933
Total 2.8c 3,684 3,684
(b) Dividends paid and payable in respect of the period
The dividends paid and payable in respect of the Period are the basis on which
the requirements of s1158-s1159 of the Corporation Tax Act 2010 are
considered.
Revenue
Cents per reserve Total
Share $'000 $'000
Quarter ended 31 March 2023 1.40c 1,933 1,933
Quarter ended 30 June 2023 0.70c 967 967
Total 2.1c 2,900 2,900
Revenue
Cents per reserve Total
Share $'000 $'000
Quarter ended 31 March 2022 1.40c 1,933 1,933
Quarter ended 30 June 2022 1.40c 1,933 1,933
Total 2.8c 3,866 3,866
After the Period end, the Company declared an interim dividend of 0.7 cents
per Share for the quarter 1 April 2023 to 30 June 2023, which was paid on 8
September 2023 to Shareholders on the register at 18 August 2023.
11. Related Party Transactions with the Investment Manager and the Directors
Investment Manager
Fees payable to the Investment Manager are shown in the Statement of
Comprehensive Income. As at 30 June 2023, the fee owing to the Investment
Manager was $317,000 (31 December 2022: $329,000).
As at 30 June 2023, the Investment Manager's total holding of Shares in the
Company was 8,780,378 (31 December 2022: 8,787,792).
Directors
The Company is governed by a Board of Directors (the "Board"), all of whom are
non-executive, and it has no employees. Each of the Directors was appointed on
22 October 2020.
Each of the Directors is entitled to receive a fee from the Company at such
rate as may be determined in accordance with the Articles. Each Director
receives a fee payable by the Company at the rate of £40,000 per annum.
The Chair of the Board receives an additional £10,000 per annum. The Chair of
the Audit Committee, the Chair of the Management Engagement Committee and the
Chair of the Risk Committee each receive an additional £6,000 per annum.
The Directors had the following shareholdings in the Company, all of which
were beneficially owned.
Shares at Shares at
30 June 31 December
Director 2023 2022
Patrick O'Donnell Bourke 104,436 104,436
David Fletcher 61,584 59,406
Tammy Richards 25,000 25,000
Louisa Vincent 35,728 34,435
12. Commitments and Contingencies
As at 30 June 2023 the Company had the following future investment
obligations:
The Company had a collective future unlevered net equity commitment amount of
$9.1 million, which will be funded by $16.3 million of pending future
financing on closed construction assets. These commitment figures are subject
to change based on the vendor's ability to deliver on certain conditions to
close, which may impact the price paid for certain projects. Additional
funding required is expected to be facilitated in the short term through the
RCF, and subsequently through a term debt facility as the projects become
operational.
13. Post Balance Sheet Events
Other than as disclosed in this half-yearly report, no post balance sheet
events have occurred.
14. Status of this report
These interim financial statements are not the Company's statutory accounts
for the purposes of section 434 of the Companies Act 2006. They are
unaudited. The unaudited Half-yearly report will be made available at the
registered office of the Company. The report will also be available in
electronic format on the Company's website, http://www.ecofininvest/rnew.
The financial information for the year ended 31 December 2022 has been
extracted from the statutory accounts which have been filed with the Registrar
of Companies. The auditor's report on those accounts was not qualified and did
not contain statements under sections 498 (2) or (3) of the Companies Act
2006.
This Half-yearly report was approved by the Board of Directors on 13 September
2023.
Alternative Performance Measures
In reporting financial information, the Company presents alternative
performance measures, ("APMs"), which are not defined or specified under the
requirements of IFRS. The Company believes that these APMs, which are not
considered to be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance of the
Company. The APMs presented in this report are shown below:
Premium/Discount
The amount, expressed as a percentage, by which the share price is greater or
less than the NAV per Share.
As at
30 June 2023
NAV per Share (cents) a 91.8
Share price (cents) b 60.5
Discount (b÷a)-1 34.1%
Total return
Total return is a measure of performance that includes both income and capital
returns. It takes into account capital gains and the assumed reinvestment of
dividends paid out by the Company into its Shares on the ex-dividend date. The
total return is shown below, calculated on both a share price and NAV basis.
Share price NAV per share
For the six months ended 30 June 2023 (cents) (cents)
Opening at 1 January 2023 a 83.3 94.3
Closing at 30 June 2023 b 60.5 91.8
Dividends paid during the Period c 2.8 2.8
Dividend/income adjustment factor(1) d 0.7946 0.9939
Adjusted closing e=b+(c*d) e 62.7 94.6
Total return (e÷a)-1 -24.7% 0.3%
1 The dividend adjustment factor is calculated on the assumption
that the dividends paid out by the Company are reinvested into the shares of
the Company at share price and NAV respectively at the ex-dividend date.
Ongoing charges ratio
A measure, expressed as a percentage of average NAV, of the regular, recurring
annual costs of running an investment company.
As at As at
30 June 31 December
2023 2022
Average NAV ($'000) a 127,491 129,345
Annualised expenses ($'000) b 2,307 2,332
Ongoing charges ratio (b÷a) 1.81% 1.80%
Enquiries:
Company Secretary
Apex Listed Companies Services (UK) Ltd
Tel: +44 (0) 20 3327 9720
The Half-yearly financial report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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