It is shaping up to be a "low wind" year for the UK, analysts at Stifel signalled, with wind speeds in the first nine months of the year short of the 20-year average.
In a note entitled 'Wind Watch', the investment bank said the impact for renewables funds is being offset by higher power prices and hopefully suggested that "perhaps a windy end to the year will make up for some of the generation shortfall".
So far in 2023, July has been the only month that has seen wind speeds above the 20-year mean average, with analysts noting the preponderance of high pressure during the early summer.
These low wind speeds were reflected in the electricity generation reported by a number of the renewables funds for the first six months of the year.
The Renewables Infrastructure Group Limited (LSE:TRIG) (TRIG) said first-half electricity generation was 9.3% below forecast due to low wind speeds, but revenues remained strong thanks to relatively high power prices.
Greencoat UK Wind PLC (LSE:UKW) reported that generation was impacted by low wind speeds, 18% below budget, but the dividend was hiked as cash generation was relatively strong, reflecting favourable power prices with net cash of £204 million generated, prior to deducting £95.5 million for the cost of the dividend, with dividend cover of more than two times.
Most of the renewables funds have now reported their NAVs to the end of September, the analysts noted, with a number flagging low wind speeds again.
Greencoat Renewables PLC (LSE:GRP), with a focus on Ireland, said that generation was 8% below budget, Greencoat UK also said production was below budget, while TRIG's significant exposure to Scottish projects saw it a bit more positive, saying below-budget German offshore wind generation was offset by above-budget UK wind generation.
Back in September, Stifel said renewables were one of the attractive sectors for a wave of potential acquisitions due to discounts to net asset value that continue to widen, with industry body AIC flagging the average discount stretching to almost 17% recently.