REG - Renew Infra Grp Ld - Announcement of Interim Results

Renewables InfrastructureAnnouncement

09/08/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240809:nRSI8089Za&default-theme=true

RNS Number : 8089Z  Renewables Infrastructure Grp (The)  09 August 2024

 

 

9 August 2024

The Renewables Infrastructure Group Limited

"TRIG" or "the Company", a London-listed investment company advised by
InfraRed Capital Partners ("InfraRed") as Investment Manager and Renewable
Energy Systems ("RES") as Operations Manager.

Announcement of Interim Results for the six months to 30 June 2024

Cash generation in line with expectations; and modest valuation decline:

·      Dividend cover of 1.1x in the period (30 June 2023: 1.7x), or
2.2x before the repayment of £103m of project level debt. TRIG's dividend
guidance of 7.47p/share for FY 2024 (4% growth year-on-year) is reaffirmed by
the Board.

·      4.3p reduction in Net Asset Value per share to 123.4p as at 30
June 2024 (31 December 2023: 127.7p), predominantly due to lower near-term
power price forecasts, lower forecast inflation and below budget generation.

·      Generation in the period was 7% below budget including the
adverse impact of third-party owned cable outages at two UK offshore wind
farms, one of which has been repaired. Remedial works have been scheduled for
the second site with commercial protections in place.

·      Valuation discount rates unchanged. The weighted average
portfolio discount rate increased by 0.2% to 8.3% (31 December 2023: 8.1%),
driven by changes in portfolio composition including the acquisition of Fig
Power, a UK-based energy projects developer.

·      Good cash flow visibility comes from:

o  67% of projected portfolio revenues over the next 10 years being at a
fixed price per MWh generated,

o  57% of projected portfolio revenues over the next 10 years being directly
linked to inflation, and

o  The vast majority of debt being fixed rate and amortising.

Disciplined capital allocation:

·      Disposal agreed for four wind farms across Ireland, UK (Scotland)
and, post period-end, Germany, for a combined consideration of £189m,
representing an average premium of 10% over carrying value.

·      Revolving Credit Facility ("RCF") floating rate drawings reduced
by £30m in the period to £334m at 30 June 2024 from retained cash flows and
proceeds from completed disposals, net of investment activities. Further
proceeds of £138m due as agreed sales complete during the remainder of 2024.

·    Commencement of a £50m share buyback programme recognises both the
significant progress of disposal activities and the accretive investment
opportunity presented by acquiring TRIG's shares when they are trading at
their current discount to Net Asset Value.

A diversified 2.7GW portfolio of renewable energy assets, with significant
1GW development pipeline:

·      2.9TWh of clean energy generated during the period (30 June 2023:
2.9TWh). The portfolio is capable of displacing 2.2 million tonnes of carbon
emissions per annum and powering 1.8m homes.

·      121MW new onshore wind capacity added to the portfolio in the
period following the commissioning into operations of the Ranasjö and Salsjö
wind farms in Sweden.

·      Construction commenced of the first project from TRIG's 1GW 2030
development pipeline: Ryton 78MW battery storage project in the UK.

·      Operational and technical enhancements deliver capital growth
through improving the generation output of TRIG's existing portfolio.
Aerodynamic improvement installations progressed during the period.

·      TRIG's expert management team draws from the investment pedigree
of InfraRed and operational excellence of RES to benefit TRIG's portfolio
and enhance the Company's growth potential.

Richard Morse, Chair of TRIG, said:

"TRIG continues to offer investors scale, diversification and value. TRIG's
attractive dividend, which has been increased by 12.5% over the past five
years, is being supplemented by a £50m buyback programme in recognition of
the Company's robust cash flows, balance sheet strength and the premium to
carrying value achieved by the management team across £210m of successful
divestments signed during the past 12 months. TRIG's management team takes a
disciplined approach to implementing the Board's capital allocation priorities
and actively manages TRIG's balanced portfolio to deliver long-term value to
shareholders."

Enquiries

InfraRed Capital Partners
Limited                              +44 (0) 20
7484 1800

Minesh Shah

Phil George

Mohammed Zaheer

 

Brunswick
+44 (0) 20 7404 5959 / TRIG@brunswickgroup.com

Mara James

 

Investec Bank
Plc
+44 (0) 20 7597 4000

Lucy Lewis

Tom Skinner

 

BNP Paribas
                                                    +44
(0) 20 7595 9444

Virginia Khoo

Carwyn Evans

Notes

The Company

The Renewables Infrastructure Group ("TRIG" or the "Company") is a leading
London-listed renewable energy infrastructure investment company. The Company
seeks to provide shareholders with an attractive long-term, income-based
return with a positive correlation to inflation by focusing on strong cash
generation across a diversified portfolio of predominantly operating projects.

 

TRIG is invested in a portfolio of wind, solar and battery storage projects
across six countries in Europe with aggregate net generating capacity of
2.7GW; enough renewable power for 1.8 million homes and to avoid 2.2 million
tonnes of carbon emissions per annum. TRIG is seeking further suitable
investment opportunities which fit its stated Investment Policy.

 

Further details can be found on TRIG's website at www.trig-ltd.com
(http://www.trig-ltd.com) .

 

Investment Manager

 

InfraRed Capital Partners is an international infrastructure investment
manager, with more than 160 professionals operating worldwide from offices in
London, New York, Sydney, Seoul and Madrid. Over the past 25 years, InfraRed
has established itself as a highly successful developer and custodian of
infrastructure assets that play a vital role in supporting communities.
InfraRed manages US$13bn+ of equity capital(1) for investors around the
globe, in listed and private funds across both income and capital gain
strategies.

A long-term sustainability-led mindset is integral to how InfraRed operates as
it aims to achieve lasting, positive impacts and deliver on its vision of
Creating Better Futures. InfraRed has been a signatory of the Principles of
Responsible Investment since 2011 and has achieved the highest possible PRI
rating(2) for its infrastructure business for seven consecutive assessments,
having secured a 5-star rating for the 2023 period(3). It is also a member of
the Net Zero Asset Manager's Initiative and is a TCFD supporter.

InfraRed is part of SLC Management, the institutional alternatives and
traditional asset management business of Sun Life. InfraRed represents the
infrastructure equity arm of SLC Management, which also incorporates
BentallGreenOak, a global real estate investment management adviser, and
Crescent Capital, a global alternative credit investment asset manager.

Further details can be found on InfraRed's website at www.ircp.com
(http://www.ircp.com/)

 

(1) Uses 5-year average FX as at 31st March 2024 of GBP/USD of 1.2839; EUR/USD
1.1179. EUM is USD 12.927m.

 

(2) Principles for Responsible Investment ("PRI") ratings are based on
following a set of Principles, including incorporating ESG issues into
investment analysis, decision-making processes and ownership policies. More
information is available at https://www.unpri.org/about-the-pri

(3 (https://www.unpri.org/about-the-pri%C2%A0%0d3) ) ( )In the 2023
Principles for Responsible Investment ("PRI") assessment, InfraRed achieved a
5 star rating for the Policy Governance and Strategy and Infrastructure and a
4 star rating for the newly created Confidence Building Measures. Please find
InfraRed's report available for download on our website
here: https://www.ircp.com/sustainability/
(https://www.ircp.com/sustainability/)

Operations Manager

TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's
largest independent renewable energy company.

RES is the world's largest independent renewable energy company, working
across 24 countries and active in wind, solar, energy storage, biomass, hydro,
green hydrogen, transmission, and distribution. An industry innovator for over
40 years, RES has delivered more than 24GW of renewable energy projects across
the globe and plans to bring more than 22GW of new capacity online in the next
five years.

As a service provider, RES has the skills and experience in asset management,
operations and maintenance (O&M), and spare parts - supporting 41GW of
renewable assets across 1,300 sites. RES brings to the market a range of
purposeful, practical technology-based products and digital solutions designed
to maximise investment and deployment of renewable energy. RES is the power
behind a clean energy future where everyone has access to affordable zero
carbon energy bringing together global experience, passion, and the innovation
of its 4,500 people to transform the way energy is generated, stored and
supplied.

Further details can be found on the website at www.res-group.com
(http://www.res-group.com/) .

 

Chair's Statement

 

TRIG enters its second decade positioned for growth, underpinned by robust
cash flows from existing projects, a proprietary investment pipeline and a
disciplined capital allocation strategy.

TRIG benefits from a specialist management team that leverages the expertise
and wide-ranging capabilities of the Company's Managers: InfraRed and RES, to
drive shareholder value. The Company owns and operates a significant £3.4bn
portfolio of wind, solar and flexible capacity(1) assets. Located across the
UK and mainland Europe, these assets are capable of powering up to 1.8m homes
with clean electricity and displacing up to 2.2m tonnes of carbon annually.
The Company's 2.7GW portfolio generated 2.9TWh of renewable electricity in the
first half of 2024.

Our strategy is to deliver attractive total returns through robust income and
capital growth. Active management of TRIG's balanced electricity generation
portfolio is underpinned by responsible investment practices and operational
excellence.

The portfolio remains cash generative with £203m of operational cash flows(2)
generated in H1 2024. Divestments totalling £189m have been signed in 2024 to
date at an average 10% premium to carrying value, continuing the Managers'
active approach to portfolio and balance sheet management.

Operational cash flow(2) of £203m represents gross cash cover of 2.2x the H1
2024 dividend, or 1.1x net dividend cover after the repayment of £103m
portfolio-level debt. Materially lower power prices in 2024 compared to recent
years and cable outages at two offshore wind farms have moderated dividend
cover in H1 2024. TRIG's cash flows remain robust with 75% and 67% of revenues
fixed per unit of electricity generated for the next 12 months and 10 years,
respectively. The Board reaffirms the dividend target of 7.47p per share for
2024.

The Board and Managers' capital allocation priorities remain to reduce
floating rate debt borrowings while delivering attractive shareholder returns
and pursuing strategic investment opportunities. The commencement of a £50m
share buyback programme recognises both the significant progress of disposal
activity and the accretive investment opportunity presented by acquiring
TRIG's shares when trading at their current discount to Net Asset Value.

Based on current cash flow projections, divestments agreed to date, and
assuming that c. £25m of the buyback programme is completed in 2024, RCF
drawings would reduce from £364m at 31 December 2023 to c. £220m at 31
December 2024. The Managers are progressing further disposals as well as
portfolio-level financing opportunities. Proceeds will be applied to reducing
RCF drawings further, creating greater capacity for future investments. The
Board and Managers have a rigorous approach to capital allocation that
considers prevailing market conditions. New investments that progress the
Company's strategy are appraised against alternative uses of capital,
including buybacks. Current expectations are that disposals and financing
activities would enable the reduction of RCF drawings to c. £100m during
2025.

The downward trend in near-term power prices has been a predominant factor in
the reduction of the portfolio valuation in the period by 4.3p per share to
123.4p per share as at 30 June 2024. Base case return expectations from the
portfolio are represented by the valuation discount rate, which increased 0.2%
in the period to 8.3%, presented prior to the future incremental benefit from
new investments, construction and development activities, and operational and
portfolio enhancements.

TRIG's portfolio continues to benefit from inflation linkage, with over half
of forecast revenues across portfolio companies over the next 10 years
directly linked to inflation through government-backed contracts. TRIG also
has limited cash flow exposure to higher interest rates, with the vast
majority of TRIG's debt being fixed rate and amortising. These characteristics
continue to help insulate the Company from changes in interest rates and
inflation expectations.

During the period, the Ranasjö and Salsjö onshore wind farms in Sweden both
became operational, bringing online 242MW of gross capacity. Since IPO, TRIG's
Managers have now delivered 650MW net capacity through construction of new
projects, 310MW of which has been organically funded from retained cash.

In February, the Company acquired Fig Power, a UK energy projects developer
with a focus on battery storage. Development of the 78MW Ryton battery storage
project was completed in the period and construction commenced in April.

The 23MW Cuxac onshore wind farm in France is currently being prepared to
enable repowering works to commence. Once constructed, the project will
benefit from a new 20-year, inflation-linked feed-in-tariff and an increased
capacity of 25MW.

Looking forward, the Company has c. 1GW of development opportunities within
the portfolio that could enter construction by 2030. As the development
pipeline is progressed, it will continue to be appraised against alternative
uses of capital. Projects built from TRIG's development pipeline are expected
to be self-funded through retained cash in excess of the dividend, proceeds
from portfolio rotation or debt capacity as existing portfolio-level debt
amortises. The fixing of merchant revenues through PPAs or other medium-term
fixes could create further debt capacity within the portfolio.

TRIG continues to be uniquely positioned to benefit from RES's deep knowledge
and capabilities to optimise asset performance. Commercial and technical
enhancement works remain ongoing at selected sites, with good progress on
aerodynamic improvements and software enhancements during the period. These
operational enhancements continue to improve yield at TRIG's projects, helping
to reduce costs associated with downtime and increase revenue through
generation optimisation.

As communicated in TRIG's 2023 Annual Report, InfraRed's Richard Crawford
stepped down from leading the investment management of TRIG on 30 June 2024.
Minesh Shah has taken over these responsibilities. TRIG will continue to
benefit from Richard's experience through the TRIG Investment and Advisory
Committees.

We anticipate macro trends to continue to support the renewables sector, with
decarbonisation and energy security remaining high on the agendas across most
of the European political spectrum. TRIG's management team is engaging with
various energy sector and financial regulation consultations as policy makers
address the challenges of delivering net zero commitments.

TRIG continues to offer investors scale, diversification and value. TRIG's
attractive dividend, which has been increased by 12.5% over the past five
years, is being supplemented by a £50m buyback programme in recognition of
the Company's robust cash flows, balance sheet strength and the premium to
carrying value achieved by the management team across £210m of successful
divestments signed during the past 12 months. TRIG's management team takes a
disciplined approach to implementing the Board's capital allocation priorities
and actively manages TRIG's balanced portfolio to deliver long-term value to
shareholders.

Richard Morse

Chair

8 August 2024

1.     Flexible capacity is generation technologies that can store energy
and respond to electricity demand levels and pricing signals, such as
batteries, pumped hydro storage and green hydrogen.

2.     Operational cash flow generated is reconciled to the cash flow
statements as follows: Cash flow from investments £128m less Company
(including its immediate subsidiaries TRIG UK and TRIG UK I) expenses £28m
plus project-level debt repayments £103m.

 

Investment Report

 

Financial highlights

Financial performance and valuation

The Group's operational cash flow generation in the first half of 2024 was in
line with expectations at £231m, or £203m less fund expenses. These
operational cash flows represent 2.2x coverage of the £91m cash dividend paid
to shareholders. During the period, repayment of £103m of portfolio-level
debt (in accordance with amortisation schedules) together with operating
costs, finance costs and working capital resulted in distributable cash flow
of £100m (H1 2023: £145m), covering the cash dividend 1.1x.

Dividend cover in the period was moderated by materially lower prices than
achieved in recent years and third-party owned cable outages at two UK
offshore wind farms, Hornsea One and East Anglia 1. The outage at Hornsea One
has been fixed and remedial works have been scheduled for East Anglia 1.
Commercial protection is in place for future losses relating to this outage.
These cable outages have resulted in a combined -0.8p per share adverse impact
on TRIG's valuation, contributing to an overall -1.5p per share adverse impact
due to lower generation. Distributions were also held back from assets being
sold, as is customary. Dividend cover for the remainder of 2024 is expected to
remain c. 1.1x before returning to levels consistent with the long-term
average of 1.2x to 1.3x from 2025. Cash flows during the period were supported
by the portfolio's inflation linkage, diversification and high proportion of
fixed revenues, providing some resilience against power price declines in the
period from recent peaks.

The Company's Net Asset Value as at 30 June 2024 was 123.4p per share (31
December 2023: 127.7p per share) and the Company's Portfolio Valuation was
£3,358 million. Earnings for the period were -0.6p per share (H1 2023:
+1.1p), principally reflecting below budget generation in the period and lower
power price forecasts flowing through to a reduction in the portfolio
valuation.

TRIG's portfolio benefited from continued active financial and operational
management, including the disposal of four wind farms across Ireland, UK
(Scotland) and Germany for a combined consideration of £189m, representing an
average premium of 10% to the valuation of the wind farms as at 31 December
2023. Active management, driven by profits on disposals, reduced the impact of
lower generation by adding 0.6p per share to the portfolio valuation.

Macroeconomic movements have impacted the portfolio valuation by approximately
-3.2p per share in total, which largely reflected reductions in power price
forecasts over the next five years across the markets where TRIG has
investments and a reduced UK inflation forecast for 2024.

Accordingly, the Company's NAV per share has reduced by -4.3p in the period
reflecting adverse macroeconomic movements and below budget generation,
partially offset by active management factors.

TRIG benefits from 67% of revenues being fixed and 57% of revenues directly
linked to inflation indices over the next ten years, largely through
government-backed revenue contracts. These serve to reduce the portfolio's
sensitivity to near-term fluctuations in power price forecasts and provide
inflation linkage.

The portfolio's weighted average discount rate increased by 0.2% in the period
to 8.3% as at 30 June 2024, reflecting changes in portfolio composition as
well as the addition of higher-returning battery storage development to the
portfolio. As at 30 June 2024, there remains an implied 4.7% equity risk
premium above long-term government benchmark yields, which the Investment
Manager considers appropriate in particular with reference to the pricing of
TRIG's own disposals.

Greater detail on the valuation movements during the six months to 30 June
2024 can be found in the Valuation of the Portfolio section.

Gearing and capital allocation

The Company's Board and Managers continue to emphasise responsible management
of TRIG's balance sheet. Portfolio-level debt is fixed rate and amortising
during the period of government-backed contracts with no refinancing risk.
£103m of portfolio company level debt was repaid in the period with further
c. £100m scheduled to be repaid in H2 2024.

The primary use of retained cash flows from the portfolio and disposal
proceeds has been to finance £41m investment activity, including construction
and development expenditure in H1 2024 as well as reduce TRIG's floating rate
debt exposure under the Company's Revolving Credit Facility.

TRIG's RCF, which has a total funding capacity of £600m and matures on 31
December 2025, is being used to fund TRIG's investment activities to deliver
growth across the portfolio. The RCF total size was reduced in the period from
£750m to £600m in order to reduce expenses associated with the reserved
capacity.

At the Company's 2023 Annual Results announcement, RCF drawings were
anticipated to be reduced from £364m at 31 December 2023 to about £150m over
the following 12 months, through retained cash in excess of the dividend and
divestment proceeds, net of funding construction commitments.

Drawings under the RCF as at 30 June 2024 were £334m. Divestments proceeds
expected to be received in H2 2024 from the sales of Pallas onshore wind farm
(announced on 12 March 2024) and the 15.2% equity interest in Gode would
reduce TRIG's RCF borrowings to c. £195m.

Given the significant progress made in respect of TRIG's capital allocation
priorities, the Board has announced a 12-month share buyback programme of up
to £50m. The Board and Managers consider the acquisition of the Company's
shares to be an attractive investment opportunity, particularly whilst TRIG's
shares are trading at a significant discount to the Company's Net Asset Value
and divestments are being realised in excess of carrying value.

Based on current cash flow projections, divestments agreed to date and
assuming c. £25m of the buyback programme is completed in 2024, RCF drawings
would reduce from £364m at 31 December 2023 to c. £220m at 31 December 2024.
The Managers are progressing additional disposals as well as portfolio-level
financing opportunities to enable the reduction of RCF drawings further, and
to create greater capacity for future investment activities.

Investment highlights

TRIG continues to benefit from a large, diversified and balanced portfolio
with investments spread across different geographies, technologies, revenue
types and project stages to mitigate risk and deliver attractive long-term
returns. The Investment Manager takes a careful and considered approach to
portfolio composition. The risk-reward profile of new investments is appraised
alongside alternative uses of the Company's retained cash flows, in particular
reducing higher cost floating rate borrowings and share buybacks.

Successful delivery of development and construction projects into operation is
a key mechanism for the Managers to create additional value for shareholders.
During the period, the Ranasjö and Salsjö onshore wind farms in Sweden were
both commissioned, adding 121MW of net capacity to TRIG's portfolio, further
strengthening and diversifying the Company's revenues.

TRIG's portfolio includes development opportunities representing 1GW capacity
that could enter construction by 2030 and be financed from retained cash,
portfolio rotation or debt capacity without the need for equity issuance.
This includes over 650MW of battery storage development projects, including
that of Fig Power acquired in February 2024.

Development activities to maximise the value of TRIG's existing assets through
repowering are progressing well in France and Northern Ireland. Repowerings
can provide a route for TRIG to secure further government-backed,
inflation-linked revenues, as well as install modernised and more efficient
technology, from established sites that have local support and where the wind
conditions are well understood. As the Company's portfolio matures, we expect
to benefit from further opportunities to repower sites and crystalise
additional value.

TRIG retains the option to build or sell assets in the development pipeline,
with investment decisions being appraised against alternative uses of capital.
In April 2024, development activities were concluded and construction
commenced of the first project in the battery storage pipeline: the 78MW
2-hour Ryton project. The Board and the Managers continue to view battery
storage as a critical sector for the European energy transition as batteries
can respond to price signals and provide flexibility, while supporting grid
stability and quality.

Current outstanding commitments

As at 30 June 2024, the Company had outstanding investment commitments of
£102m relating to the construction of UK battery storage projects and the
financing of the Fig Power platform.

                     H2 2024  2025  2026  2027  Total
 Outstanding         11       41    13    37    102

commitments (£m)

 

£138m of sales receipts are expected to be received in relation to the sales
of Pallas and Gode following completion during H2 2024. The Company's £600m
RCF was drawn £334m as at 30 June 2024.

Revenue profile

TRIG benefits from diversification across several power markets, with projects
in Great Britain, the Single Electricity Market (relating to projects in
Northern Ireland), the main continental European power market (France and
Germany), the Nordic market (Sweden) and the Iberian market (Spain).

TRIG's portfolio cash revenues have good medium-term protection from movements
in power prices as the portfolio receives the majority of its revenue from
government-backed contracts, referred to as fixed revenues. These include
Feed-in-Tariffs ("FiTs"), Contracts for Difference ("CfDs"), and Renewable
Obligation Certificates ("ROCs") as well as Power Purchase Agreements ("PPAs")
in which electricity generated is sold with fixed prices or from other hedges.
The Managers continue to actively secure attractive new fixes of varying
tenors.

67% of projected revenues over the next 10 years are fixed price per MWh
generated. 57% of projected revenues are directly linked to inflation through
government-backed revenue contracts.

The Group(1) receives a portion of its revenues in Euros. 41% of the portfolio
by value is invested in Euro-denominated assets(2). The Group employs foreign
exchange hedging to significantly mitigate the cash flow and valuation
exposure to this risk, as expanded upon in the Valuation of the Portfolio
section on page 18.

The Investment Manager implements the Company's foreign exchange hedging
policy through Sterling-Euro swaps for up to four years forward. As a result
of the interest rate differential between UK and the Eurozone, forward foreign
exchange contracts over the next four years have been struck at levels better,
in Sterling terms, compared to the foreign exchange rate as at 30 June 2024
and used in the portfolio valuation.

Principal risks and uncertainties

TRIG's principal risks for H2 2024, approach to risk management and
counterparty exposures are unchanged to those set out in the Risk and Risk
Management section of the 2023 Annual Report on page 56. TRIG has three
enduring principal risks with a high residual impact (political/ regulatory
risk, power prices and production performance) and, at present, counterparty
credit remains an elevated principal risk due to the current macro
environment. Below is a commentary on the key movements in these risks in the
period.

In a macroeconomic environment where inflation and interest rates have been
elevated, the correlation of portfolio returns to inflation and the Company's
approach to long-term, fixed-rate and amortising structural debt are key risk
mitigants.

Political / regulatory

The risk of government or regulatory support for renewables changing
adversely.

Decarbonisation and energy security are recognised as being of critical
importance across most of the European political spectrum. In a year with
elections across Europe there are risks in relation to renewables rollout
rates and electrification. This may impact power price forecasts and the
financing of renewables build out.

In the UK, the new Labour Government's energy policy priorities include
establishing a state-owned energy company, increasing funding being made
available in the next Contract for Difference auction round and revising
planning policies related to the build out of onshore wind. Each of these
measures seeking to accelerate the build out of renewables. There is also a
strong recognition of the importance of increasing grid investment to support
the energy transition. The Managers are encouraging the new Labour Government
to make the CfD framework available to existing projects, particularly where
there is an opportunity to upgrade or repower such projects.

'Windfall' taxes and levies on generators were introduced in 2022 on the back
of particularly elevated power prices to help fund financial support to ease
the cost of electricity to end users. In the UK, the Electricity Generator
Levy is in place until 2028. In the EU, many of these levies expired on 30
June 2023, with the notable exception of France which extended electricity
windfall taxation into 2024. There remains a risk that further intervention
may result if electricity prices were to increase significantly again.

As detailed under Market Developments, the UK government is assessing options
to reform electricity markets, including how wholesale electricity prices are
set and long-term revenue support frameworks. TRIG's approach to diversify
political and regulatory risk across several markets and jurisdictions helps
to reduce the impact on the portfolio from individual risks at a national (or
more local) level.

Power prices

The risk of electricity prices falling or not increasing as expected.

Power prices have been particularly volatile since 2020, with periods of very
low pricing experienced during the Covid pandemic and periods of very high
prices following the outbreak of the conflict in Ukraine which have since
returned to more normalised levels.

Near-term power prices trended lower during the first three months of 2024
before recovering slightly in the second half of H1. The Electricity Generator
Levy in the UK and Inframarginal cap in France remain in place but have a
limited impact on these sensitivities. Near-term power price forwards continue
to trade below current and/or former government intervention thresholds in all
markets, with forward prices in GB close to the threshold.

There has been little change in the long-term fundamentals of power prices in
the period, leading to limited movements in long-term power price forecasts
compared to those as at 31 December 2023 in most geographies.

There remains an inherent risk of adverse movements in wholesale electricity
prices reducing revenues, which may result from higher than expected
renewables build-out, lower than expected natural gas and carbon prices, and
lower than expected electricity demand.

These risks are partially mitigated through TRIG's power price management and
portfolio diversification strategies. This includes negotiating fixed-price
PPAs or other hedges which, taken together with subsidies, results in 67% of
TRIGs revenues (per unit of electricity generated) being fixed over the next
10 years.

The valuation of the Company's portfolio considered the market derived forward
prices in the shorter term in conjunction with a blend of cannibalised(3)
power price forecast curves produced by three independent forecasters.

Production performance

The risk that portfolio electricity production falls short of expectations.

Weather resource was mixed over the period, with wind levels experienced by
TRIG's offshore projects in GB and Germany being greater than the long-term
average. Wind levels in Sweden were lower than the long-term average. This
variation between regions demonstrates the importance of geographic and
technology diversification in a balanced portfolio.

Cable outages impacted the performance of two of TRIG's GB offshore sites
limiting their ability to capture the favourable wind conditions. TRIG's
approach to low single asset concentration limits the impact of issues at any
one project on the portfolio as a whole.

Counterparty credit

The risk of a failure of a major supplier.

TRIG's portfolio is weighted towards wind-power assets, a sector that is
dominated by a small number of equipment manufacturers. Counterparty failure
could result in equipment not being supplied to construction projects or
operational and maintenance services not being provided to commissioned
projects or being disrupted. Given the challenges faced by some equipment
manufacturers due to cost escalation in the current macro environment,
counterparty credit risk increased in 2023.

Construction activities are limited by TRIG's Investment Policy cap of 25% of
portfolio value and were 5% of portfolio value at 30 June 2024. The Ranasjö
and Salsjö projects were commissioned into operations in the period, reducing
counterparty risk in the portfolio. Remaining construction projects are in the
battery storage sector where there is a wider range of equipment suppliers
compared to the wind sector.

The increase in independent operations and maintenance service suppliers
reduces dependence on the original equipment manufacturers, particularly with
respect to onshore technologies.

Market developments

UK

In March 2024, the then UK Government issued its second phase Review of
Electricity Market Arrangements ("REMA") consultation. Whilst nodal pricing,
which would see Great Britain's electricity markets divided into hundreds of
price areas, has been discounted, zonal locational marginal pricing remains a
subject of ongoing debate. Under zonal pricing, the UK could be split into
several price zones with pricing reflecting local supply and demand imbalances
in each region.

A move to locational pricing may result in merchant power revenues received by
projects closer to demand centres increasing. Conversely, in areas where
electricity supply exceeds demand, offtake prices may reduce. Should
locational pricing be adopted, it is unlikely to be beneficial for most wind
farms as such projects tend to be located in remote areas, although
transitional arrangements may be adopted that could mitigate this risk.

Several studies have been conducted to assess the potential impacts of the
REMA market reform options. Two opposing positions of the potential market
impact of locational marginal pricing have emerged: one indicating that
locational marginal pricing might result in lower costs for customers but
assuming no increase in cost of capital resulting from the market reform
uncertainty and changes in electricity price dynamics, and the other
positioning that increases to investors' cost of capital due to zonal price
uncertainty would more than offset any system benefit that could be passed on
to customers.

In both cases, studies highlight significant unquantified risks with
overhauling market structures. It is also important that any reform options
continue to appeal to renewables developers and financiers, with signs already
that wind farm development is reducing due to mounting economic and supply
chain pressures.

The extent to which the REMA process will feed into the new Government's
policy position is unclear at the time of writing. The Managers are engaging
with the Government to highlight the challenges of zonal pricing and to
encourage any changes to market arrangements to focus on evolving existing
frameworks.

EU

Discussion of electricity market reform in the EU remains ongoing. In 2019,
the EU Agency for the Cooperation of Energy Regulators and European
Transmission System Operators commenced a review of alternative bidding zone
configurations across Europe. Currently, bidding zones in Europe are mostly
defined by national borders, however the European electricity target model
requires bidding zones to be defined based on network congestion. As in the GB
electricity market, changes to electricity price areas could adversely impact
renewable generation merchant revenues located in regions with higher
proportions of supply relative to demand.

The overall implications of this review are not expected to be significant for
the TRIG portfolio if enacted. TRIG's approach to portfolio diversification
across markets, technologies, and subsidised and merchant projects help to
reduce the impact of market reform at a portfolio level.

Further public consultations are expected to be held in Q3 2024.

Outlook

Though the macroeconomic and geopolitical environment continues to be
unpredictable, TRIG remains well positioned, as evidenced by its recent
divestments at a premium to carrying value and strong cash generation. Over
the past eighteen months, the Company's self-sufficiency has been demonstrated
through disciplined capital allocation and accretive investments. This
continues to be the strategy looking forward, with a future development
pipeline of c.1GW capacity that can be developed and enter construction by
2030, and the first project from this pipeline completing development
activities and entering construction in the period.

The experience of TRIG's management team, which draws on the investment
pedigree of InfraRed and operational excellence of RES, continues to benefit
TRIG's portfolio. As markets recover, TRIG's growth strategy will not only
enhance the income delivered to shareholders, but also provide the potential
for capital growth to drive a greater proportion of total return to
shareholders

1.     The Company, TRIG UK, TRIG UK I and its portfolio of investments
are known as the "Group".

2.     Including Sweden which receives electricity revenues from Nord Pool
in Euros. The proportion of the portfolio in Euros post disposals and
commitments is 38%.

3.     Cannibalisation describes the effect that renewables (an
intermittent generator) can have on the overall power prices, whereby the
marginal cost of generation, which in turn drives the power prices, is lower
than the average which would be expected of a continuous base load generator
as a result of the additional supply when renewables are generating. Rates
differ over time and between markets but all are affected.

Operations Report

Operational performance

 Technology       Region            H1 2024 Electricity Production (GWh)(*)  Performance vs Budget
 Onshore Wind     UK & Ireland      707                                      -6%
                  France            313                                      -7%
                  Sweden            374                                      -14%
 Offshore Wind    GB                690                                      -8%
                  Germany           430                                      1%
 Solar            GB, France        80                                       -7%
                  Spain             339                                      -8%
 Total Portfolio                    2,934                                    -6.9%

*               Balance does not cast due to rounding.

Underlying generation performance was impacted by grid and cable outages,
lower weather resource in some regions, particularly in Sweden, and negative
price curtailments in Spain.

Onshore wind

UK & Ireland

Performance in the region was impacted by below budget wind resource in
January and May, with availability being reduced due to several major
component exchanges in the period. Grid faults also impacted performance
across three Scottish onshore wind sites.

A retendering of Operations and Maintenance ("O&M") contracts for projects
in Northern Ireland concluded in the period, with good value secured.

Blade enhancement installation works continued at six sites to improve the
aerodynamic properties of the blades - see the Enhancements section on page 13
for more information.

There continues to be a focus on maximising REGO value when renewing Power
Purchase Agreements ("PPAs"), and this has continued in the period through
several new and renewed PPAs.

France

At Rosières onshore wind farm, a turbine blade damaged from a lightning
strike has been returned to service following a blade replacement, with
insurance expected to provide comprehensive commercial protection for repairs
and lost generation.

The 42.5MW Vannier onshore wind farm's environmental authorisation is subject
to an ongoing legal challenge. A court ruling has required the wind farm to
temporarily suspend generation, for an assumed period of up to 12 months,
whilst updated environmental data is collected. TRIG has commercial protection
in place for this.

Proactive measures at some of the more mature sites have been undertaken to
reduce risk to related downtime.

Sweden

Sweden experienced below budget resource in the period, with grid maintenance
reducing export capacity at Jädraås.

The Ranasjö and Salsjö projects became operational in April. Located in
central Sweden, the sites consist of 39 Siemens 6.2MW turbines. TRIG has a 50%
interest in the projects representing 121MW of net generation capacity.
Construction management was led by Arise. During construction, the Arise
Construction Manager liaised regularly with the local Sami village chairperson
to understand and share information on the reindeer herding movements and
construction activities to avoid significant adverse impact on the community.

Offshore wind

GB

At Hornsea One, Power Curve 'Optipitch' upgrades have been rolled out and the
project has also achieved success in a bid for the provision of Electricity
System Response (ESR) services to National Grid ESO - see the Enhancements
section for more information.

Hornsea One suffered a cable fault in January when one of three third-party
OFTO-owned export cables failed. The remaining two other cables were
temporarily curtailed to preserve cable integrity. The first cable failure was
repaired in February, and following an initial restriction of export capacity
all curtailments were lifted in early June 2024. All repair costs were borne
by the OFTO and an insurance claim process is underway for the lost
generation.

Cable failures also occurred at East Anglia 1 in the period. A failure in one
of two OFTO-owned export cables led to a reduction in total transmission
capacity. Repair works are anticipated to commence in Q3 2024 at the cost of
the OFTO, and insurance processes are underway for some of the lost
generation.

Ofgem continues to review generators' participation in the balancing market.
It was announced on 28 May 2024, that the Beatrice project (which TRIG owns
17.5% of) had agreed with Ofgem to make a payment of c. £33m to the Ofgem
Redress Fund. The payment followed Beatrice's inadvertent breach of one of its
Electricity Generation Standard Licence Conditions relating to the price bid
into the balancing market, to reduce generation where needed by the system
operator to ensure the electricity system remained balanced. The inadvertent
breach relates to the pricing approach in periods of unusually high wholesale
power prices. The Operations Manager has reviewed the other GB wind projects
participating within the balancing market in TRIG's portfolio and does not
consider any of these other projects to have breached their licence conditions
in respect of price charged in the balancing market.

Germany

Production was on budget, with good wind resource offsetting some grid losses
and a substation outage at Merkur.

A turbine power curve upgrade was completed at Merkur. Elsewhere at the site,
blade leading edge protection works continue under warranty and are scheduled
to conclude in Q3 2024.

Solar

Spain

Generation was 8% below budget despite very high availability due to low
irradiance in Q1 and curtailments for the Cadiz projects during periods of low
pricing, stemming from the high rainfall increasing run of river hydroelectric
power generators' output in the period. New route to market agreements for the
sites have enabled participation in the ancillary services market, which
provides an additional revenue stream for the projects when curtailed at low
prices, which is already in place at Valdesolar.

In July, the Cadiz solar projects were awarded the Spanish Photovoltaic Union
(UNEF) Seal of Excellence for Sustainability, recognising the integration of
social and environmental factors following an independent audit.

GB

In the GB region, a site will shortly be moving forwards with module
replacement of a significant number of modules to improve the overall
efficiency and prolong the life of the site.

France

In France, panels were procured in the period to upgrade two sites within a
joint venture portfolio.

Development & construction

Swedish wind farms Ranasjö and Salsjö have now been fully constructed,
commissioned, and passed into operations. The project team has successfully
negotiated and placed the route to market agreement, and relevant long-term
agreements are in place with both the turbine supplier and asset manager to
support the operations of the project.

The first project in TRIG's 1GW 2030 development pipeline, the 78MW 2-hour
Ryton Battery Energy Storage System (BESS) project near Newcastle, commenced
construction in April. Ryton is progressing on schedule with enabling ground
works complete and Independent Connection Provider (ICP) and Electrical
Balance of Plant works commenced in July. The Narada BESS units will be
delivered to site in 2025 ahead of energisation in H2 2025.

Pre-construction activity on the next two battery projects is progressing. The
grid connection date for the 100MW Spennymoor project has been brought forward
from 2031 to 2026. There may be an up to two year delay to the grid connection
date for the 90MW Drakelow project. The development team is engaging with grid
companies to minimise this delay. A revised planning consent has been obtained
for the Drakelow project to reflect the final site design.

Repowering works continue to progress in France. Cuxac has secured a tariff of
€86/MWh and obtained authorization for increase in site capacity from
22.8MW to 25.2MW. The preferred turbine supplier has also been selected.
Dismantling of the site is expected to commence in H2 2025.

Health, Safety and Environment

Delivering high quality health, safety and environmental ("HSE") standards
within the portfolio continues to be the top priority. The portfolio asset
managers promote a strong safety culture through a pro-active approach,
utilising safety drills, training days and internal and external audits,
amongst other activities, which complement the core safety frameworks. The
Operations Manager continues to engage with the asset managers to share best
practice and lessons learned across the portfolio.

During the first half of 2024, across the portfolio there have been no
HSE-reportable severe accidents.

The standard of HSE reporting remains high across the portfolio with good
transparency and follow up of incidents. There has been a continued focus on
positive leading indicators such as the number of independent and internal
safety audits and assurance reviews, hazard identifications and safety walks.

TRIG continues to host a portfolio HSE coordination group twice a year to
foster relationships between the various asset managers across the portfolio,
share information and discuss matters that have arisen on the portfolio and
wider industry.

Highlights of proactive measures taken in 2024 include:

·      Project company director visits which have taken place or are
scheduled at sites across the portfolio, to ensure familiarity with the sites
and to engage with the local service providers on safety and other key themes.

·      A large number of drills and exercises conducted across the
portfolio. This includes offshore rescue training at Merkur offshore wind
farm, vessel to turbine gangway failure training at Gode offshore wind farm
and a fire incident emergency drill at the Cadiz solar projects. HSE awareness
campaigns were run on a large number of topics including livestock safety,
winter weather driving, working in hot weather and wildfire risk awareness.

·      A RES' Global Safety Focus Event which took place in May 2024
incorporating some 4,500 colleagues from 24 countries all undertaking a safety
stand down day to focus on best-in-class safety culture and performance.

·      A revised HSE assurance process launched by RES for TRIG projects
focusing on undertaking desk-based management system and site-based
inspections. The assurance process is built upon core ISO standards and is
overseen by the Operations Manager.

Enhancements

As Operations Manager, RES is dedicated to enhancing portfolio performance,
shareholder returns and stakeholder value through both commercial and
technical initiatives. RES applies a structured framework to identify,
appraise and implement enhancements at both individual and portfolio levels.
Examples of the enhancements progressed during H1 2024 include:

Increasing revenues:
Blade improvements to increase generation:

·      The installation of a package of aerodynamic improvements to
multiple turbines' blades at four sites in the GB and Northern Ireland wind
portfolio (100% owned with total site capacities of 66MW) is nearly complete,
after which the data collection period to validate the energy uplift will
commence prior to wider roll out.

·      Installation is well progressed at two further joint venture
projects, with contracting underway at another two sites within a separate
joint venture portfolio (of which 56MW represents TRIG's share), benefitting
from RES' wider understanding and associated research and development on TRIG
sites.

·      An associated suite of parameter changes to the turbine
controller are underway or under consideration to maximise the additional
energy yield from the hardware upgrades installed on a trial site in the GB
region (48MW). Once the blade aerodynamics have been altered it is beneficial
to further optimise the way in which the blades are operated. Validation of
the performance will follow thereafter.

·      Blade and associated software upgrades improved yield by up to 5%
at the initial trial site.

Wind turbine software enhancements:

·      The wake steering and collective control trial at the Altahullion
onshore wind farm in Northern Ireland has been completed with independent
energy yield uplift analysis concluded over the winter demonstrating an uplift
of up to 1.3%. This enhancement is an innovative retrofitted upgrade to
increase production and reduces turbine loads. Application across the wider
portfolio is under consideration.

·      A power curve upgrade package that optimises the pitch of the
blades at wind speeds below rated power has been deployed at Merkur offshore
wind farm following trials, expected to increase energy yield by 0.7%.
Validation has commenced to determine the final energy yield uplift, on which
payment is based. Contracting is well progressed for the same upgrade at
another offshore project.

·      Power Curve 'Optipitch' upgrades have also been rolled out at
Hornsea One with an estimated 0.7% energy yield uplift. The project was also
successful in bidding to provide Electricity System Response (ESR) services to
National Grid ESO, due to commence in November 2025.

·      A wake steering system from a turbine manufacturer continues to
be progressed at two offshore wind farms, with negotiations underway at a
third.

Minimising lost production:

·      Blary Hill shadow flicker validation is now complete, which will
reduce related curtailments.

·      Ice-phobic blade waxing trial complete at Haut Languedoc.
Build-up of ice can require turbines to automatically stop, causing production
losses in winter.

·      Additional revenue streams:

·      A new route to market agreement for the Cadiz solar sites has
enabled participation in the ancillary services market, which reduces the
likelihood of uncompensated curtailment.

·      Ancillary services for the provision of grid balancing services
have been identified, with the installation of software to facilitate the
process contracted, in order to access a new revenue stream at Ranasjö and
Salsjö.

·      Opportunities to provide grid-balancing ancillary services have
also been identified across the four southern French onshore wind sites which
are being developed for repowering, potentially offering an alternate revenue
stream for the remaining operating life of these projects.

·      Two GB solar sites are in the process of either taking part in or
finalising terms to take part in a flexibility service offered by local
Distribution Network Operators.

·      Hornsea One was successful in tendering for the provision of
Electricity System Restoration (formerly known as Black Start) "Top-up"
functionality to National Grid over a five-year contract from November 2025.

Optimising operations:

·      The recently renewed operation and maintenance contracts at
Altahullion and Lendrum's Bridge onshore wind farms will be supplemented by
pairing with a comprehensive spares strategy to mitigate ongoing challenges in
the spares market for components of these older turbines, facilitating a more
efficient procurement approach.

·      GB Solar inverter repowering studies are well progressed, which
once inverters have been replaced, will reduce operating costs, increase
availability and prolong the life of the sites.

·      GB Solar inverter software optimisation opportunities are also
currently being evaluated, to enable inverters to operate more dynamically,
particularly in hot weather, to avoid degradation and trips due to excessive
temperatures.

Directors' Statement of Responsibilities

We confirm that to the best of our knowledge:

1. The condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting; and

2. The Chairman's Statement and the Managers' Report meets the requirements of
an Interim Managers' Report, and includes a fair review of the information
required by

a. DTR 4.2.7R, being an indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year; and

b. DTR 4.2.8R, being the disclosure of related parties' transactions and
changes therein.

By order of the Board

Richard Morse

Chair

8 August 2024

Publication of documentation

The above information is an extract from TRIG's 2024 Interim Report. The
Interim Report has been submitted to the National Storage Mechanism and will
shortly be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdata.fca.org.uk%2F%23%2Fnsm%2Fnationalstoragemechanism&data=02%7C01%7Cphilippe.vuillaume%40partnersgroup.com%7C9921b2a94ca84f80abd008d83e0034f3%7C0bcc0075229d4973b0c30ef63eb9c51f%7C0%7C0%7C637327517903944751&sdata=7xdHtTc7SAh63in9nIZT0csRmMwIWJIIjmp6yNOLWDo%3D&reserved=0)
. It can also be obtained from the Company Secretary or from the Reports &
Publications section of the Company's website, at https://www.trig-ltd.com/
(https://www.trig-ltd.com/) .

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  IR PPMLTMTAMBTI