Octopus Renewables Infrastructure Trust (ORIT) announced its results for the year ended 31 December 2022. The company saw solid growth for the second year running with NAV up 12.3% after returning 9.3% the year prior, with NAV up 25.9% since the IPO in December 2019. The performance of its shares has been less impressive, however, falling 4.8% through 2022 after growing just 1.6% in 2021. The discount has also continued to slide since year-end, closing at almost 20%.
The company did see strong momentum on the acquisition front as it builds towards being fully invested. It completed eight transactions during the period, including into a new country, Germany, committing over £350 million of capital on a GAV basis, across onshore and offshore wind, solar and battery storage, in both construction and operational assets, in addition to two developer investments. Once fully invested, the portfolio has the potential to power the equivalent of 522,000 homes with clean energy, an estimated 580,000 tonnes of carbon emissions avoided, up from 337,000 homes and 364,000 tonnes of carbon in 2021, respectively.
Chairman, Phil Austin, commented:
“ORIT has achieved another strong performance with double digit NAV growth and delivering a 1.77x covered dividend, despite 2022 being a turbulent year in the energy sector, against a challenging macroeconomic backdrop.
“We are delighted with the company’s operational performance this year, driven by our investment manager, whose over 100 strong team actively manage the portfolio, including successfully bringing a number of high-quality renewable energy assets through construction into operation and negotiating optimal energy pricing strategies, as well as developing our ongoing pipeline.
“During the period, the company made an investment in a new country in Europe, added a new technology to the portfolio and completed eight significant transactions, increasing ORIT’s contribution to the green energy transition.
“In a world where energy security and decarbonisation continue to rise to the top of the agenda globally, ORIT’s fundamental objective is to help companies and countries transition to net zero whilst ensuring an attractive level of returns for our shareholders. We remain well positioned to take advantage of opportunities that will create a genuinely positive impact and deliver an attractive, growing dividend.”
Regarding the outlook, he added;
“Within the investment trust universe, most renewable infrastructure companies are now trading at discounts to NAV, restricting the ability of the Company and its peers to fund acquisitions through new equity issuance. However the Company’s Investment Strategy includes a focus on funding assets at the construction ready stage to allow the opportunity for capital growth, and this is also core to our Impact Strategy. In order to ensure we can continue to access such opportunities, the Board and the Investment Manager will therefore consider opportunistic disposals where appropriate to recycle the capital into new construction projects.
“This aligns with the drive from governments across the Company’s target geographies to accelerate the deployment of new renewable generation and related energy transition projects. Russia’s aggression in Ukraine is continuing, reinforcing the need for Europe and the UK to reduce reliance on fossil fuels to preserve energy security. Energy prices remain high and are forecast to do so for several years, even though prices have now fallen from the peaks of 2022. Decarbonisation remains an urgent priority, as extreme weather events continue to increase in frequency.
“Wind and solar generation represent a key part of the solution to all three of energy security, energy affordability and decarbonisation. Furthermore, the strong support for renewable and energy transition investments in the US as part of the Inflation Reduction Act is leading to a response from Europe to increase their backing for new clean infrastructure, in order to ensure the industry remains competitive. The tailwinds behind the sector therefore remain as strong as ever, and the Company is well positioned to play a significant part in capturing those opportunities, creating positive impact whilst delivering an attractive growing dividend to investors, alongside continued capital growth.”
ORIT : Octopus Renewables continues solid start but still work to be done.