(Alliance News) - Renewables Infrastructure Group Ltd on Wednesday said it is expecting an approximately 5 pence per share drop in net asset value as a consequence of reduced power prices in the wake of the Covid-19 pandemic.
As power price forecasts have reduced, due to the virus and its associated containment measures, the renewable energy infrastructure investor said it expects a 5p reduction in net asset value per share "excluding value enhancements". As at December 31, its NAV per share was 115p.
Wholesale power prices have suffered as Covid-19 lockdown measures restricted movement, causing a global reduction in electricity demand, with gas and carbon prices suffering.
"These impacts are expected to continue over the near-term, impacting all power generators. In addition, expectations for gas prices in the medium-term have continued to ease, due to expected softer demand and increased supply," said Renewables Infrastructure.
Consequently, power price forecasts used to calculate the firm's portfolio valuation indicate "a material reduction in forecast prices in the near term" as well as a lesser long-term reduction due to falling gas prices. Wholesale power prices for the company's markets on a blended basis are down 17% on average for the next five years, including a 25% drop over 2020 and 2021, followed by a 5% reduction between 2025 and 2050.
Around 74% of Renewables Infrastructure revenue through to December 2024 is fixed, giving good cashflow visibility in the near-to-medium term.
At present, the investor's operating portfolio is performing well, with first quarter generation 22% above budget overall.
Renewables Infrastructure reaffirmed its 6.76p per share dividend guidance for 2020.
Shares in Renewables Infrastructure were down 2.1% at 122.20 pence in London in morning trading.
By Anna Farley; annafarley@alliancenews.com
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Renewables Infrastructure Group (TRIG)