Greencoat UK Wind PLC (LSE:UKW, FRA:3GC) has flagged a potential hit to net asset value after the UK government said it will legislate to remove Carbon Price Support from April 2028, with the company’s preliminary assessment pointing to a 3p to 5p per share reduction.
The renewable infrastructure investor said initial analysis by its investment manager suggests electricity prices used in its NAV could fall by around £4 to £5 per megawatt hour from April 2028 into the early 2030s, and by £2 to £3 per megawatt hour thereafter.
Greencoat said its valuation assumptions had already allowed for CPS rates to decline significantly over time, and that the mechanism was expected to become less important as renewable capacity expands and fossil-fuel plants set marginal prices less often.
The company will publish further detail in its Q1 factsheet on 27 April.
Carbon Price Support is a tax on fossil fuels used in electricity generation and sits alongside the UK Emissions Trading Scheme, topping up the carbon price by £18 per tonne of CO2.
Because it feeds into power prices when a carbon-emitting plant such as a gas generator sets the marginal price, removing it earlier than expected weakens the long-term price backdrop for generators, Greencoat noted.