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- Ecofin US Renewables provides a negative quarterly update
Ecofin US Renewables Infrastructure Trust (RNEW) has provided a NAV update for the first quarter of 2024. Over these three months RNEW has reported a fall in the NAV per share, from $0.8521 at the end of December to $0.7937 at the end March. Total NAV fell from $117.7m to $109.6m.
- This fall was due to a $7.16m decrease in the fair value of investments, mainly due to updates in forecast assumptions and increase in discount rates (currently using a weighted average rate of 7.5%),
- and a $3.3m decrease in cash and accrued financial assets, primarily driven by lower than expected energy production and revenue accrual.
- These were offset by a $2.4m increase that resulted from a decrease in the deferred tax accrual, largely driven by the decrease in the fair value of RNEW’s investments.
RNEW is keeping its quarterly dividend at 0.7 cents per share. The board attributes this decision to lower than expected revenue noted above, higher than usual expenses, and slower progress than originally anticipated in bringing the Whirlwind asset back to full production following the damage last year to the Matador substation in Texas.
The delay in the Whirlwind asset can be attributed to oscillation issues on the new Paducah transmission line, ERCOT (the grid operator in Texas) has taken the decision to curtail Whirlwind to 25MW vs an expected interim capacity level of 50MW. Whirlwind will not be restored to 50MW until the source of the oscillation issue has been identified and rectified. The board believes that the Whirlwind asset should return to its full production level of 59MW when the newly rebuilt Matador substation comes online, expected to be in Q4 2024 or Q1 2025.
In respect to the strategic review announced in September 2023, the board comments that specific discussions and negotiations are ongoing but have been taking longer than anticipated. As a reminder, the review focuses on the sales of assets and return of capital in connection with a wind-up of RNEW.