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Greencoat UK Wind PLC

Greencoat UK Wind builds up warchest as institutions clamour for renewables

Snapshot

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

wind farms

Quick facts: Greencoat UK Wind PLC

Price: £1.40

Market: LSE
Market Cap: £2.12 billion
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  • Generating capacity within the portfolio has risen to 980Mw net

  • Portfolio value is £2.3bn spread across 35 operating wind farms

  • Shares stand at big premium to NAV

  • Dividend yield of 5%

 

What it does 

Since it listed in 2013, UK Wind 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 980Mw from 127Mw with a value of £2.3bn spread across 35 operating wind farms.

The company recently completed three major new deals: Tom nan Clach, Stronelairg and Dunmaglass.

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 1389p, 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

The solid performance and cash generative nature of our portfolio has enabled us once more to increase our dividend in line with RPI whilst maintaining strong dividend cover.

"During the period we made three high quality investments, including a £452 million investment in Stronelairg and Dunmaglass wind farms and £145 million in Tom nan Clach, which have grown our generating capacity to 979MW.

“We were also pleased to raise over £500 million from existing and new shareholders, and we are grateful for their continued support.

 

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Inflexion points 

Completion of latest placing at 133p 

Tom nan Clach comes onstream 

More acqusitions to grow the portfolio further

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Watch

Greencoat UK Wind close to powering 1 mln UK homes as size of portfolio surges

Greencoat UK Wind’s (LON:UKW) manager Stephen Lilley was happy with the first half performance even though wind speeds were slightly lower than expected. The group bought four assets over the first half of the year worth £611mln, including its first deal for an asset without a ROC...

on 29/7/19

3 min read