|
Greencoat UK Wind PLC on Tuesday warned UK government changes to renewables obligation indexation could reduce its net asset value per share by up to 10.6 pence. The London-based investment company focused on acquiring and managing wind farms operating in the UK said the renewables obligation consultation has led to two possible options. The first is to switch the indexation on the renewables obligation buy-out price from the retail price index to the consumer price index from March 2026. Greencoat UK Wind said initial calculations indicate that this option would reduce its latest reported NAV per share by 2.4p. The firm said its NAV per share was 143.4p at the end of June. The second option from the consultation is to freeze the current renewables obligation buy-out price until CPI catches up with RPI. After this, CPI would apply. The government estimates that the catch-up would occur around 2034 to 2035, and so the renewables obligation buy-out price would remain frozen until then. Greencoat UK Wind estimates that this option would reduce NAV per share by 10.6p, or 7.4%. The firm noted that by the government’s own calculations, the first option would save around £3 per year for an average UK household in the 2031 financial year. Greencoat UK Wind warned that retrospective revision to the renewables obligation will ‘inevitably erode investor confidence’ as investors have made ‘good faith investments’ into UK renewable energy projects based on ‘stable, government-backed, inflation-linked support’. ‘The listed renewables market is a bellwether for investor sentiment and, in the five trading days that followed the government’s announcement, the six largest UK listed renewable funds saw their combined market cap fall by circa £400 million/5%,’ Greencoat UK Wind noted. The firm said it expects that investors will demand a higher return on new investments to compensate for the risk of further government intervention. ‘A small increase in the cost of capital would substantially increase the cost to consumers of new renewable energy projects and can reasonably be expected to outweigh the purported savings to consumers and so serve to increase, rather than decrease, bills,’ it said. The company noted that the review of electricity market arrangements consultation discussed a voluntary contract for difference, where existing generators could agree to a fixed electricity price below the prevailing wholesale price. Depending on take-up, Greencoat UK Wind estimated that it could reduce consumer bills by £30 per year for an average UK household, which is more than the proposed changes to renewables obligation indexation. ‘We will continue to engage with government on this, and other ways, so that the sector and government can work together to reduce bills whilst maintaining investor confidence,’ it said. The board and investment manager said they are ‘fully engaged’ and actively working to improve the firm’s attractiveness for shareholders. ‘The board and the investment manager recognise the complexity of the market and are committed to enhancing the company’s long-term attractiveness for our shareholders,’ said Chair Lucinda Riches. ‘We will continue to navigate this market backdrop through strong sector leadership and disciplined capital allocation. Our attractive proposition and track record since IPO positions us well and we are resolutely focused on doing the right thing for shareholders.’ Shares in Greencoat UK Wind were up 0.6% at 100.90 pence in London on Tuesday morning. Copyright 2025 Alliance News Ltd. All Rights Reserved.
|
