Greencoat UK Wind reflects on a year of significant growth – Greencoat UK Wind (UKW) has posted its annual report for the 12 months to 31 December 2021. During the period, the NAV per share increased by 9.4%, primarily reflecting high short term power prices. Meanwhile, total shareholder return for the year was 10.7%.
2021 was another significant year of growth for the company with £570m invested and £648m of new equity raised.
During the year, portfolio generation was low, 20% below budget, at 2,933GWh. Power prices were significantly above budget, primarily reflecting high gas prices in the second half of the year. Net cash generated by the group and wind farm SPVs was £256.8m, providing cover of 1.9x on £138.8m of dividends paid in the year.
By the end of 2021, the portfolio was generating sufficient electricity to power 1.5 million homes and avoiding carbon dioxide emissions of approximately 1.7 million tonnes per annum through the displacement of thermal generation.
Declared dividends for the year total 7.18 pence per share, with the fourth and final quarterly dividend of 1.795 pence per share to be paid on 25 February 2022. UKW said it can confidently target a dividend of 7.72 pence per share with respect to 2022, increased in line with December’s RPI of 7.5%.
Manager’s outlook
There are currently over 25GW of operating UK wind farms (14GW onshore plus 11GW offshore). In monetary terms, the secondary market for operating UK wind farms is over £80 billion. The Group currently has a market share of approximately 5 per cent. As at 31 December 2021, the average age of the portfolio was 7 years (versus 5 years at listing in March 2013).
In November 2021, the UK hosted the COP26 conference in Glasgow, with the Prime Minister playing a clear role in encouraging the delivery of 2050 net zero emissions targets. A key part of that plan for the UK is a 40GW offshore wind target for 2030, supported by the CFD regime. New build onshore wind and solar are also expected to contribute, both on a subsidy free basis and supported by the CFD regime.
It is anticipated that the Group will continue to invest in ROC wind farms, with CFD wind farms and subsidy free wind farms continuing to provide further diversified pipeline opportunities. At all times, the Group will maintain a balanced portfolio, in line with the Company’s Investment Objective.
Power prices during the year were well above budget, primarily reflecting high gas prices driven by the recovery in global demand and certain supply chain constraints associated with the recovery from the COVID-19 pandemic. The average N2EX Day Ahead auction price was £117.43/MWh (2020: £35.23/MWh). Forward power prices over the period 2022-2025 remain high. High power prices drove strong cash generation in 2021 and the Group should continue to benefit from strong cash generation over the next few years through its balanced exposure to power prices.
In general, the outlook for the Group is very encouraging, with proven operational and financial performance from the existing portfolio, combined with a healthy pipeline of attractive further investment opportunities.
UKW : Greencoat UK Wind reflects on a year of significant growth