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Greencoat UK Wind: DEEP DIVE
OVERVIEW

Greencoat UK Wind builds up warchest as institutions clamour for renewables

Shares just below an all-time high with a prospective dividend yield of 5%
wind farms
OVERVIEW: UKW The Big Picture
Renewable energy is growing in importance

 

 

  • Generating capacity within the portfolio has risen to 950Mw with a value of £2.3bn spread across 34 operating wind farms.

  • Greencoat has also just arranged a facility to issue up to 500mln new shares over the next 12 months for other acquisitions.

  • Shares just below an all-time high with a prospective dividend yield of 5%

  • UK has £50bn worth of ROC- certificated assets

 

What it does 

Investors in Greencoat UK Wind PLC (LON:UKW) have reaped the rewards of a sensible approach to building a  portfolio of UK-based renewable energy assets.

Since it listed in 2013, the group has paid out inflation -linked dividends worth 38.2p (£261mln) while net asset value has grown to 123.2p.

Over that period, generating capacity within the portfolio has risen to 950Mw from 127Mw with a value of £2.3bn spread across 34 operating wind farms.

Another leg of expansion is in train with the company recently completing three new deals: Tom nan Clach, Stronelairg and Dunmaglass.

Greencoat has also just arranged a facility to issue up to 500mln new shares over the next 12 months for other acquisitions.

The initial tranche of these will be at 133p per share and as they are being sold at a premium to net asset value of about 8%, this will immediately boost NAV as well.

Demand for Greencoat shares is high currently.  The previous share issue was in February at 127p since when the share price has jumped to a new high of just over 143p.

Greencoat has already forecast a 6.94p payout for 2019 underpinned by the majority of its windfarm investments having ROC (Renewable obligation certificates) certification.

At 138p, the yield is 5%.

 

ROC-solid support

Renewable industry fundamentals, meanwhile, remain very supportive.

Under the grandfathering arrangements for renewable ROCs, getting on for half of the firm’s revenue is “fixed” until a 2037 cut off, with the other half linked to wholesale electricity prices.

Although ROCs dominate the portfolio, Greencoat latest is already preparing for life without subsidies.

The 75% stake in Tom Nan Clach cost £126mln with the development set to be handed over to Greencoat in July.

What was different with this deal was that rather than ROCs, a 15-year contract for difference (CFD) fixes the power price received.

Stephen Lilley, Greencoat’s investment manager, says it effectively mirrors the ROC arrangement where half of price is fixed by the ROC while the other half is variable.

 “We are starting to see attractive CFD and subsidy-free investment opportunities, of which Tom nan Clach is our first.

These opportunities will complement our core ROC investments and simple, low risk fund structure,” said Lilley at the time.

In December, Greencoat also acquired the unbuilt Douglas West wind farm near Lanark in Scotland with a planned capacity of 45Mw.

Douglas West will be subsidy free and cost £45mln to construct.

“Reflecting the overall shape of the market, we expect the majority of future investments will continue to be made from the £50bn pool of UK wind farms accredited under the ROC regime," said Lilley.

 

What the boss says:  Tim Ingram, chairman

"Following our investment in the high quality Stronelairg and Dunmaglass wind farms, and the imminent purchase of the Tom nan Clach wind farm, the share issuance programme launched today will enable the Company to pay down debt and continue to capitalise on the strong pipeline of acquisition opportunities in the UK wind farm secondary market."

 

Video 

 

 

Inflexion points 

Completion of latest placing at 133p 

Tom nan Clach comes onstream 

More acqusitions to grow the portfolio further

View full UKW profile View Profile

Greencoat UK Wind Timeline

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