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Greencoat UK Wind builds up warchest as institutions clamour for renewables

Snapshot

  • Generating capacity has risen to 980Mw net
  • Portfolio value of £2.3bn across 35 operating wind farms
  • Shares stand at big premium to NAV
  • Dividend yield of 4.8%
wind farms

Quick facts: Greencoat UK Wind PLC

Price: 145.6 GBX

LSE:UKW
Market: LSE
Market Cap: £22.09 m
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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.

ROC-solid support

Renewable industry fundamentals 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 is already preparing for life without subsidies.

The 75% stake in Tom Nan Clach cost £126mln with the development 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.

In December, UKW entered an agreement to build a subsidy-free wind farm near Inverness with developer Innogy Renewables for £57.5mln.

The transaction will be completed in October 2021, once the Glen Kyllachy farm is fully operational, although the first export of electricity is targeted for July of that year.

The farm, designed to have a capacity of 48.5Mw.

What the boss says: Tim Ingram, chairman

“This brings our commitments to subsidy-free wind farms to just over £100mln.

“We are delighted to partner again with Innogy, who have the expertise and resources to deliver a high-quality operational wind farm.”

Video 

Inflexion points 

  • NAV at end June of 123.2p
  • Tom nan Clach comes onstream 
  • More acquisitions to grow the portfolio further

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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

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