Good start for Ecofin US Renewables Infrastructure with strong pipeline on the horizon – Ecofin US Renewables Infrastructure (RNEW) has published its report for the period from its incorporation on 12 August 2020 to 30 June 2021.
Its NAV rose from 98c on its IPO date (22 December 2020) to 98.5c on 30 June 2021, reflecting the movement in the fair value of investments of approximately 0.7 cents per share principally due to value increases in the Ellis Road Solar and Oliver Solar projects. Meanwhile, the share price as at 30 June 2021 was 101c, which represented a total return of 1.4% over the period and reflected a premium to NAV of 2.5% as at 30 June 2021.
In May 2021, the board declared a maiden interim dividend in respect of the period from IPO to 31 March 2021 of 0.4c per share. This was followed in early August 2021 by a further interim dividend for the quarter ended 30 June 2021 of 0.6c per share, resulting in a total of 1c per share for the period from IPO to 30 June 2021.
RNEW remains on track to achieve its target annual dividend yield of 2-3% in respect of the extended year from admission until 31 December 2021, and of 5.25% to 5.75%, beginning in respect of the first quarter of 2022, assuming the net IPO proceeds are deployed and the assets become substantially fully operational.
Statement from the chair:
The acquisition of three of the four seed assets described in the Company’s Prospectus was completed before the end of 2020. The acquisition of the fourth seed asset was completed in February 2021.
On 4 May 2021, the Company announced further $6.2 million commitment to acquire a commercial-scale ground-mounted 2.6 MW solar project in New Jersey with contracted revenues for 30 years (Skillman Solar). Construction of this project is now at an advanced stage with all racking, modules, and inverters installed and closing is expected to occur in September.
In addition, post period end, on 22 July 2021, the Company announced it had committed approximately $25 million to acquire a 69.4 MW portfolio (Echo Solar Portfolio) comprising 12 ground-mounted solar projects across Minnesota, Virginia and Delaware which have 100% of their revenues contracted with utility offtakers for twenty five years. This transaction is expected to complete in stages over the next several months.
Once these two transactions are complete and also taking into account the existing four seed assets, RNEW will have invested approximately 75% of the net IPO proceeds of $122.5 million. This is a very pleasing result in just eight months since IPO.
In December 2020, the U.S. Congress passed a broad spending bill which included a two-year extension of the investment tax credit (ITC) for solar power (retaining throughout 2022 the 2020 rate of 26% which had been due to step down to 22% in 2021) and a one year extension of the production tax credit (PTC) for onshore wind power. The Biden Administration has ushered in a new era of enhanced federal government support for renewable energy. Shortly after being sworn into office, President Biden issued a series of executive actions aimed at tackling climate change. These included setting a goal of achieving a carbon pollution-free power sector by 2035 and having the U.S. rejoin the Paris Climate Agreement within 30 days, which was achieved on 19 February 2021. Looking ahead, President Biden’s Infrastructure Plan (which requires Congressional approval to be implemented) along with a forthcoming Congressional budget reconciliation bill, is expected to include billions of dollars of incentives for the solar and wind industries including a 10 year extension of the ITC and a national clean energy standard. These moves provide further support for growth of the renewables sector in the U.S., which has continued to be very active notwithstanding the impact of COVID-19.
The Company’s near-term pipeline of potential investment opportunities continues to be strong and exceeded $3.0 billion as at 31 August 2021. The Investment Manager is currently working on both solar and wind opportunities and RNEW remains on track to fully commit its net IPO proceeds in 2021. The Board remains very positive about the scale of opportunity for RNEW, its progress to date, the significant pipeline of investment opportunities, and its outlook for the future.
RNEW : Good start for Ecofin US Renewables Infrastructure with strong pipeline on the horizon