Greencoat Uk Wind Share Discussion Threads

[masurenguy] 29/7/2023 08:50

Greencoat UK Wind continues dividend hike record into 10th year despite lower wind in first half

Greencoat UK Wind PLC (LSE:UKW) increased its first-half dividend 13.5% on a year ago, even though low wind meant generation was below target. A pay-out of 2.19p per share was declared for the second quarter, the same as the first, resulting in a 4.38p dividend per share for the first half of 2023, up from 3.86p a year earlier. From its portfolio of 46 operating UK wind farms, net cash of £204mln was generated during the half-year, the investment trust said, compared to £328.8mln at the same point last year. The portfolio generated 2,088 gigawatt hours (GWh) of energy during the period, powering 1.8mln homes and avoiding the emission of 2.1mln tonnes of CO2 per annum, the company said, although generation was 18% below budget. A further 355 megawatts (MW) of investments are due to complete in the third quarter, including investing £444mln into London Array offshore wind farm and £320mln into South Kyle wind farm, with the former deal sealed on Monday and the latter investment agreed three years ago. Along with the completion of the Kype Muir extension, 355MW of net generating capacity will be added to the portfolio, taking it to over 2GW.

Due to higher Bank of England interest rates, the company said it has continued to increase its discount rate and thus returns to investors, with a forecast 10% return to investors including reinvestment of excess cash generation in addition to the dividend yield. As a result of the increase in the discount rate and lower short-term power prices, partly offset by higher short-term inflation and valuation gains from recent and committed investments, NAV decreased in the period to 165.8p per share at the end of June from 167.1p at the end of December. Chair Lucinda Riches noted that dividends were covered 2.1 times in the period and that in the decade since its IPO, “the company has increased its dividend in line with RPI every year with excess cash generation being reinvested to drive NAV growth above RPI, now delivering returns to investors of 10%”. The outlook, she said, is “extremely encouraging”, with the trust operating in “a mature and growing asset class and with our market leading position and self funding business model, we are well placed to capitalise on NAV accretive investment opportunities and continue delivering superior returns to shareholders”.

[masurenguy] 28/7/2023 01:25

Greencoat UK Wind "in a very healthy position"

[texaspete2] 27/7/2023 15:45

With the latest global warming headlines out there, then you'd like to think this will naturally drive investment here.

[marktime1231] 27/7/2023 13:28

And there are the hard numbers to confirm it. Despite an 18% generation shortfall during H1 the dividend was covered by net income twice over, superb surplus cash flow to demonstrate that UKW will not need a diluting equity fund raise.

Having already increased gearing to 34%, borrowing £2B at a weighted average 4% interest rate, UKW have the necessary borrowed funds including nearly £500M in cash in order to complete 355MW of portfolio expansion in Q3 in time for the windy season including 240MW at South Kyle (Vattenfall/Nordex) which is already in commissioning.

Despite surplus cash flow and portfolio development lower market prices means NAV has eased slightly to 165.8p. A welcome response from the share price but why why why are we still on such a wide discount. UKW says that developments in Q3 will be "materially accretive to NAV". Under listed company rules "materially" means adding 5-10% or am I over-egging that?

Traded in my BP shares and just doubled up at 149p.

[marktime1231] 26/7/2023 12:55

Hard to disagree with fund manager Stephen Lilley. The ability of UKW to progress dividend with inflation is assured because of the index-linked price of wind energy. The discount to NAV in the current UKW share price is unreasonable, and the way to respond to that is to buy more.

He needs to convince those long-term investment institutions currently run to cash or bonds that the level of gearing is not a problem.

UKW is solid so long as the wind blows, the ESO doesn't curtail wind farm output in favour of cheaper imports, and Greencoat don't get tempted in to risky or troubled developments.

If we flirt with 140p again I will be happy to add some more.

[igoe104] 26/7/2023 09:39

Good interview with investment management.

[marktime1231] 25/7/2023 13:37

Yes but no.

If you have participated in an auction to win the rights to develop an offshore wind farm, agreeing an electricity price set for 15 years which has a built-in formula adjusting for inflation, you can't unilaterally renegotiate that price formula when your development costs are forced up by inflation! Especially if the auction mechanism linked your bid to other forms of incentivised renewable energy development.

The latest auction rounds AR4 and AR5 the most efficient yet because of their keen prices. AR4 was announced a year ago, everyone is now saying it was too cheap, so it hasn't taken long for hindsight to kick in. It was no doubt assumed by AR4 bidders that larger modern turbine installations would be more economic and that they could manage input costs. Big offshore projects in AR4 apart from Norfolk Boreas (Vattenfall/Siemens Gamesa) include Inch Cape 1 (Red Rock/Vestas), East Anglia 3 (Scottish Power/Siemens Gamesa) and Hornsea 3 (Orsted/Siemens Gamesa). AR5 is in the final allocation stages, to be announced in the next month or so.

I suspect there are wider issues in the wind turbine supply chain not just general inflation, partly but not exclusively all about Siemens. AR4 developers struggling with costs have been pitching for sweeteners from the Chancellor, and Energy UK the industry lobby group is warning that an administrative price cap on what can be bid for AR5 may mean offshore wind falls short of target. For example we might only get bids for 3GW instead of the 8GW needed. We might get more onshore wind and solar instead. We might be a few years late in delivering the 50GW by 2030 target on which UK net-zero is based.

Is Sunak obliged to deliver Boris's aggressive GW targets for offshore wind at any cost, or will he let the CfD auction process decide our fate? For sure any price cap will have to be lifted in future if AR5 doesn't get the bids.

The way out for offshore developers trapped in unviable projects is to do what Vattenfall did. Quit and pay the price. Have they relinquished their auction rights? If so then presumably those can be re-bid in the next auction round, which it follows will be settled at a viable price or not at all.

[zho] 25/7/2023 07:41

Higher prices for UK’s offshore wind can’t be avoided

Inflationary pressures on supply chains mean we must pay more, via our energy bills, for new windfarms

[marktime1231] 24/7/2023 12:52

A little confusing to headline the acquisition of a 25% stake in the 630MW London Array when UKW is actually acquiring 13.7% so 86MW for £444M. Not from cash this time even though it says it has £499M of cash at 30 June having agreed a new £640M term loan partly to clear down other debts. So what plans for that cash?

Since we don't have details of the terms of the loan nor the earning prospects (*) of the London Array stake we will have to take new chairman Lucinda Riches' word for it that this deal "generates significant shareholder value".

And hopefully London Array is not one of those supplied with problematic Siemens turbines, which I think involves its newer larger design.

I wonder what this takes gearing to?

The idea of expanding its offshore wind assets, which typically have a higher capacity factor than onshore wind but this is older tech so maybe 40%, is positive. Acquiring operational assets is also positive, given Vattenfall's recent announcement that Norfolk Boreas is no longer economic to develop taking a E480M to hit exit. Vattenfall say the impact of supply chain problems and input cost increases on top of the soaring cost of debt is affecting EVERYONE developing offshore wind farms.

In a hurry to go to press with this news ahead of H1 results on Thursday 27th, which I suspect will report below budget revenues according to SSE's warning last week but UKW will still be enjoying healthy positive cash flow.

(*) is this right - two ROCs convertible at £59 per MWh and 40% load factor translates to revenue of about £35M per year? Interest on £444M debt around £20M pa?

[tuftymatt] 24/7/2023 10:18

Positive news that's been well received this morning.
Now lets push on to back above 160.

[masurenguy] 24/7/2023 08:31

Investment in London Array offshore wind farm

Greencoat UK Wind has agreed to acquire a 25% stake in London Array offshore wind farm from Orsted. The total consideration for the 25% stake (from UKW and other funds) is GBP717m. London Array was commissioned in May 2013 and has a total capacity of 630MW, comprising 175 Siemens 3.6MW turbines (as at Rhyl Flats and Walney). Other owners are RWE (30%), CDPQ (25%) and Masdar (20%). The wind farm is operated by RWE and earns 2 ROCs per MWh. The London Array investment is scheduled to complete on 31 July 2023 and UKW's total investment is expected to be GBP444m, comprising equity investment of GBP394m (13.7% net stake) and GBP50m loan investment.

On 29 June 2023, the Company utilised GBP640m of new term loan commitments from new and existing lenders and on 30 June 2023, prepaid GBP150m of term loans maturing in November and December 2023 together with GBP200m drawn under its Revolving Credit Facility ("RCF"). Group cash balances as at 30 June 2023 were GBP499m with zero drawn under the RCF. The Company looks forward to presenting its half year results on 27 July 2023.

Lucinda Riches, Chairman of UKW, commented:"We are delighted to invest in London Array. The transaction was originated and negotiated on a bilateral basis and reflects the Company's ability to continue to generate significant shareholder value through selective off-market investments."

[riverman77] 20/7/2023 21:57

Pretty much all the infrastructure funds are on wide discounts - it's all due to higher interest rates. Nothing wrong with the underlying operations, which is all doing fine.

[marktime1231] 20/7/2023 21:38

Attempting recovery in the share price but will it kick on. I still don't understand why such a wide discount has opened up, UKW is pretty healthy, not struggling for cash flow etc.

Tipped in the FT over the weekend as a solid infrastructure play. But SSE observe another quarter where wind conditions have been around 5% below budget.

[marktime1231] 03/7/2023 13:43

The rally looking stronger, actually it makes the unreasonable kick down to 136p last week hard to rationalise. Very happy to have doubled up.

A boost from the UK enjoying better onshore wind conditions, regrettably around 25% of peak output is still being curtailled because we can't use / store / export it all.

[marktime1231] 28/6/2023 12:38

A super reaction to an unduly low share price A combination of market swing and some determined high volume supportive buying.

[texaspete2] 27/6/2023 17:15

Good rise into close on heavy volume, hopefully bodes well for return to higher sp

[marktime1231] 26/6/2023 17:03

Looking at what to offload to go again here.

[tuftymatt] 26/6/2023 13:46

And it gives you 4 dividends too over the year.

There are certain stocks right now that I would stay away from and hide in cash at close to 6% but this isn't one of them as things stand today.

Good luck all 👍🏻

[gateside] 26/6/2023 13:33

To get 5% on the High Street, you have to tie your money up for at least a year. But here your cash is accessible.

[123trev] 26/6/2023 13:22

It’s a gift

[sailorsam1] 26/6/2023 13:19

I guess with no risk savings accounts giving 5% and more ghis needs to create a yield at 7/8% so may fall more

[marktime1231] 26/6/2023 13:12

Ouch someone has just kicked a hole in the floor, down to 135p, so much for my prayer.

[marktime1231] 21/6/2023 12:13

It may be wishful thinking but actually I wonder if we are seeing a high volume seller prepared to let go at 140p or just under, but equally there are high volume buyers happy to invest including insiders.

My double up order has gone through.

Too early to decide whether there are conclusive signs that this is the new supported level, but I am content to have placed my bet in good company.

[rhubarbcrumble] 21/6/2023 10:37

Significant director buying as the price falls which shows no sign of abating.

[gbh2] 21/6/2023 08:40

My average loss on holdings is 3%

On this it's over 11% which is why I dumped it!