REG - Ecofin US Renewables - Final Results
25/04/2025 07:00
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RNS Number : 1377G Ecofin US Renewables Infrastr.Trust 25 April 2025
LEI: 2138004JUQUL9VKQWD21
25 April 2025
Ecofin U.S. Renewables Infrastructure Trust PLC
Annual Financial Report for the year ended 31 December 2024
Ecofin U.S. Renewables Infrastructure Trust plc ("RNEW" or the "Company") is
pleased to announce its audited results for the year ended 31 December 2024
("Year").
Objective
Ecofin U.S. Renewables Infrastructure Trust PLC (the Company, and together
with its subsidiaries and subsidiary undertakings from time to time, the
Group) will be managed, either by an external third party investment manager
or internally by the Company's Board of Directors, with the intention of
realising all the assets in the Group's portfolio, in an orderly manner with a
view to ultimately returning cash to the Company's shareholders following
repayment of any outstanding borrowings of the Group from the proceeds of the
assets realised pursuant to the Investment Policy (the Managed Wind-Down).
Highlights
Financial
As at 31 December 2024
Net Asset Value ("NAV") per share NAV Share price
44.7 cents $61.7 million 30.5 cents(2)
35.7 pence(1) £49.3 million(1) 24.4 pence(2)
Leverage
63%(3)
Year ended 31 December 2024 ("Year")
NAV total return Share price total return Dividends per share declared
(46.5)%(4) (44.6)%(4) 0.7 cents
Operational
Weighted average remaining term of revenue contracts Assets Clean energy generated in 2024
12.5 years(6) 65 279 GWh(5)
Portfolio generating capacity
177 MW(5)
Figures reported either as at the referenced date or over the year ended 31
December 2024. All references to cents and dollars ($) are to the currency of
the U.S., unless stated otherwise.
1. 31 December 2024 exchange rate of £0.79898 = $1.00
2. RNEW & RNEP LSE closing price as at 31 December 2024
3. Calculated based on Gross Asset Value ("GAV") and aggregate
debt. Additional information can be found in the financing section of the
Investment Manager's Report.
4. These are alternative performance measures. ("APMs").
Definitions of how these APMs and other performance measures used by the
Company have been calculated can be found in the Annual Financial Report
5. Represents the Company's share of portfolio generating
capacity.
6. Includes the DG Solar assets which were sold post year end.
The remaining contract terms for the non-DG solar assets is 18 years for
Beacon 2 and 5 and 3 years for Whirlwind.
Portfolio
Investment Name Sector Capacity (MW)(1) Number of assets State Ownership(2) Phase Acquisition Status Remaining revenue contract term (years)(3)
SED Solar Portfolio(4) Commercial Solar 11.3 52 Massachusetts, Connecticut 100% Operational Completed Dec. 2020 11.6
Ellis Road Solar(4) Commercial Solar 7.1 1 Massachusetts 100% Operational Completed Dec. 2020 16.5
Oliver Solar(4) Commercial Solar 4.8 1 California 100% Operational Completed Dec. 2020 10.9
Beacon 2 Utility-Scale Solar 29.5 1 California 49.5% Operational Completed Feb. 2021 18.0
Beacon 5 Utility-Scale Solar 23.9 1 California 49.5% Operational Completed Feb. 2021 18.0
Skillman Solar(4) Commercial Solar 2.6 1 New Jersey 100% Operational Completed Sept. 2021 12.6
Delran Solar(4) Commercial Solar 2.0 1 New Jersey 100% Operational Completed Oct. 2021 10.5
Whirlwind Wind 59.8 1 Texas 100% Operational Completed Oct. 2021 3.0
Echo Solar - MN(4) Commercial Solar 13.7 1 Minnesota 100% Operational Completed Oct. 2021 23.0
Echo Solar - VA 1(4) Commercial Solar 2.7 1 Virginia 100% Operational Completed Jun. 2022 23.0
Echo Solar - VA 2(4) Commercial Solar 4.2 1 Virginia 100% Construction Completed Jun. 2022 24.0
Echo Solar - VA 3(4) Commercial Solar 6.5 1 Virginia 100% Operational Completed Aug. 2022 23.7
Echo Solar - VA 4(4) Commercial Solar 2.9 1 Virginia 100% Operational Completed Aug. 2022 24.0
Echo Solar - DE 1(4) Commercial Solar 5.9 1 Delaware 100% Operational Completed Aug. 2022 24.0
Total(3) 176.9 65 12.7(3)
1.( ) Capacity reflects RNEW's proportionate ownership
interest in the assets.
2.( ) Cash equity ownership.
3.( ) Average remaining revenue contract term (years).
4.( ) Sold post year end.
Our Business Model
Investment Objective
On 14 January 2025, shareholders approved the following new Investment
Objective to facilitate the Managed Wind-Down of the Company. The newly
adopted Investment Objective is set out below:
Ecofin U.S. Renewables Infrastructure Trust PLC (the Company, and together
with its subsidiaries and subsidiary undertakings from time to time, the
Group) will be managed, either by an external third party investment manager
or internally by the Company's Board of Directors, with the intention of
realising all the assets in the Group's portfolio, in an orderly manner with a
view to ultimately returning cash to the Company's shareholders following
repayment of any outstanding borrowings of the Group from the proceeds of the
assets realised pursuant to the Investment Policy (the Managed Wind-Down).
Structure
The Company's business model follows that of an externally managed investment
trust. As such, the Company does not have any employees and outsources its
activities to third party service providers, including the Investment Manager
and Administrator who are the principal service providers.
The Company made its investments through a wholly-owned U.S. holding company,
RNEW Holdco LLC ("Holdco"), other intermediate holding companies and
underlying special purpose vehicles ("SPVs", organised as U.S. limited
liability companies or LLCs) that hold the Renewable Assets. The Group has the
ability to use short-term debt for liquidity and working capital purposes. Net
proceeds of the sale of the Company's assets will be used to repay the
Company's debt and since the year end, following the closing of the DG Solar
sale, the Company's Revolving Credit Facility was fully repaid.
The Company, through a wholly-owned U.S. subsidiary, RNEW Capital, LLC, had a
$32.5 million secured Revolving Credit Facility ("RCF") with KeyBank which as
noted above has been repaid after the year end leaving a surplus of US$10
million in cash.
The Company has a 31 December financial year end and announces half-year
results in September and full-year results in April.
Management of the
Company
The Company has a board of three non-executive Directors, all of whom are
considered independent (details of each can be found in the Directors'
Experience and Contribution section of the Corporate Governance Statement).
The Board's role is to manage the governance of the Company in the interests
of Shareholders and other stakeholders. In particular, the Board monitors
adherence to the Investment Policy and gearing policy limits, determines the
risk appetite, sets Company policies and monitors the performance of the
Investment Manager and other key service providers. The Board meets a minimum
of six times a year for regular Board meetings, with additional ad hoc
meetings taking place dependent upon the requirements of the business. The
Board reviews the performance of all key service providers on an annual basis
through its Management Engagement Committee.
The Company has appointed Ecofin as its AIFM and Investment Manager to provide
portfolio and risk management services to the Company. The Board takes advice
from the Investment Manager on matters concerning the market and the
portfolio. Day-to-day management of the Company's portfolio is delegated to
the Investment Manager. Further information on the Investment Manager is
provided in the Investment Manager's Report. On 6 February 2025, the
Investment Manager served notice on the Company to terminate the Investment
Management Agreement. In accordance with the Company's Investment Management
Agreement, the Investment Manager has 12 months' notice to serve. The Board
are considering their options with regard to finding alternative management
arrangements.
As an investment trust, the Company does not have any employees and is reliant
on third party service providers for its operational requirements. Likewise,
the SPVs which hold the portfolio assets do not have any employees and
services are provided through third party providers. The Board has delegated
administration, fund accounting and company secretarial services to Apex
Listed Companies Services (UK) Limited.
Investment Manager
· Manages the portfolio of Renewable Assets to achieve the
Company's Investment Objective.
· Monitors financial performance against Company targets
and forecasts.
· Monitors the Company's desired target returns within the
agreed risk appetite.
· Manages the process and analysis for semi-annual
valuations and coordinates the process with the Independent Valuer
(June/December).
· Ensures good financial and cash management of the Company
and its assets having regard to accounting, tax and debt usage and covenants.
Chair's Statement
Introduction
I am pleased to provide shareholders with my first annual chair's statement,
covering the year from 1 January 2024 to 31 December 2024 (the "Year"),
together with information on some notable subsequent events. The Year under
review has been disappointing and we are cognisant of the loss of shareholder
value that has occurred.
The strategic review, which had commenced in September 2023 was finally
concluded. The Company appointed Marathon Capital ("Marathon"), as financial
adviser, to undertake a process focused on a sale of all the Company's assets
in late 2023. An extensive marketing exercise was undertaken by Marathon but
unfortunately no buyer was identified for the Company's entire portfolio on
acceptable terms. Accordingly, following careful consideration of the options
available to the Company, and on advice from Marathon and taking into account
feedback from shareholders, the Board decided it would be in the best
interests of shareholders to implement a managed wind down of the Company (the
"Managed Wind Down") and this was announced on 9 September 2024 with the
formal adoption of the new investment policy being approved by shareholders
post the year end on 14 January 2025.
Under the Managed Wind Down, the Board is seeking to implement an incremental
sales programme of the Company's assets in an orderly manner with a view to
repaying borrowings and subsequently making returns of capital to shareholders
while aiming to obtain the best available value for the Company's assets at
the time of their realisations. The first sale of assets, which was announced
on 13 December, 2024 comprises the sale of the distributed solar assets of the
Company ("the DG Solar Sale"), further details of which are below.
Investment manager
The ability of the Investment Manager to continue managing the Company has
been impacted by the uncertainty and time to implement a transaction under the
strategic review. As announced at the half year, the Investment Manager had
informed the Company that there is a refocusing of the strategy of the wider
Tortoise-Ecofin group, of which the Investment Manager is part, away from the
renewable energy sector. Since then and post the year end, the Investment
Manager has also served notice to terminate the Investment Management
Agreement. The Investment Manager has a 12 month notice period expiring in
February 2026 but meanwhile is committed to working with the Board to
implement alternative management arrangements. This is no easy task, with only
2 assets remaining (post the DG Solar Sale) and the subscale size of the
Company but the Board and Investment Manager are in discussions with a number
of parties who have indicated interest and have the requisite skill set and
resource to assist the Company. It also remains an option to engage one or
more of the current employees of the Investment Manager to work directly for
the Company or for such employee(s) to be hired by a newly appointed manager.
All options are currently under consideration. I joined the Board in July to
assist with this process and was appointed as Chair following shareholder
feedback and Board discussion after the announcement of the DG Solar Sale.
Operational update
During 2024, RNEW's portfolio, which comprises 65 solar and wind assets with a
combined capacity of 177 MW across eight states, generated 279 GWh of clean
electricity (31 December 2023: 248 GWh). While the capacity increased due to
the remainder of the Echo assets coming online, the portfolio faced a number
of operational hurdles. As previously reported, the Whirlwind wind farm was
hit by a tornado in June 2023 and the Matador sub-station, to which the wind
farm was connected, was required to be rebuilt. Whirlwind was reconnected in
December 2024 to the Matador substation. However, because of previous
oscillation issues, ERCOT, the grid operator in Texas, has curtailed Whirlwind
to 30MW. The wind farm should return to its full generating capacity of 59MW
once it receives approval from ERCOT. Approval is expected to be in Q2 2025.
The Echo Solar portfolio which comprises six solar projects in Minnesota,
Virginia and Delaware, are now in service and are fully operational, following
a number of delays. WestSide, the Echo Minnesota asset, experienced a wind
storm in Summer 2024 which damaged a small percent of panels and
infrastructure. Repairs are underway and are expected to be completed during
Q2 2025. Other operational issues contributing to the decreased output in
specific assets included inverter faults at both the Beacon 2 and Beacon 5
solar assets in California. The Asset Management team is working closely with
the O&M provider and major manufacturer to secure a spare parts inventory
that would reduce future outage timeframes.
Performance, NAV and Valuation:
The NAV total return per Ordinary Share was (46.5)% for the year ended 31
December 2024. Other key metrics were:
For the year ended 31 December 2024, the Group has reported a combined loss
after tax of US$53.97 million, compared to a combined loss after tax of
US$6.72 million for the year ended 31 December 2023.
The NAV as at 31 December 2024 was US$61.7 million (equating to 44.7 cents per
Ordinary Share) (31 December 2023: US$117.7 million equating to 85.2 cents per
Ordinary Share), a decrease of 47.5%, principally as the result of the
following factors:
· a 1.0% increase in discount rate year over year, from
7.4% to 8.4%.
· The sale of the DG Solar assets which were sold for
US$37.1 million
· Decrease in the value of Whirlwind due to a number of
factors including:
1. Decrease in production based on historical variance by quarter;
and
2. Increase in insurance cost based on actuals for the next 5 years
· Decrease in the value of Beacon due to a number of
factors including a decrease in production based on historical variance by a
quarter and an increase in O&M, due to a thermal event that caused
inverter failures, based on 2024 actuals.
In sterling terms, the Ordinary Share NAV at 31 December 2024 was £49.3
million (35.7p per Ordinary Share) compared to £92.2 million (66.8p per
Ordinary Share) as at 31 December 2023.
The portfolio valuation of the DG Solar assets is based on its sales price.
The portfolio valuation of the remaining assets after the sale of the DG Solar
assets as at 31 December 2024 was provided by an independent valuation firm,
Kroll, LLC, independent provider of financial and risk advisory solutions.
Fair value of the Beacon and Whirlwind assets was derived using a combined
income approach (DCF methodology) and market approach based on recent bid
prices from third parties, which follows IPEV Guidelines. A 50% weighting is
applied to both the income approach and market approach when concluding on
fair value. Typically, DCF is deemed the most appropriate methodology when
detailed projection of future cash flows is possible. Under the income
approach, the fair value of each asset is derived by projecting the future
cash flows of an asset, based on a range of operating assumptions for revenues
and expenses, and discounting those future cash flows to the present day with
a pre-tax discount rate appropriately calibrated to the risk profile of the
asset and market dynamics. Due to the asset class and available market data
over the forecast horizon, a DCF valuation is typically the basis upon which
renewable assets, are traded in the market, however, given recent market data
received by way of bids from third parties, a market approach was also used in
combination to determine fair value. Fair value of the remaining portfolio
assets, the DG Portfolio, were fair valued at the agreed upon transaction
value. The blended weighted average pre-tax discount rate at 31 December 2024
was 8.4% (31 December 2023: 7.4%). The basis of valuation relies on financial
forecasts which by their very nature are uncertain. The forecasts and
projections are based upon assumptions about events and circumstances which
have not yet transpired. The Company cannot provide any assurance that the
estimates will be representative of the cash flows which will actually be
achieved during the forecast period. If these assumptions are not correct or
do not hold true, the valuations could change materially. The Investment
Manager confirmed that the information provided to Kroll for their valuation
was materially complete, fair in the manner of its portrayal and, therefore,
forms a reliable basis for the valuation. As the Company moves into Managed
Wind Down, the ultimate determinant of values will be what willing buyers are
prepared to pay for the Company's remaining investments.
Disposal of distributed solar assets ("DG Solar Assets") of the Company
The key development during H2 of 2024 was the announcement in December 2024
that the Group had entered into an agreement to sell (the Disposal) its DG
Solar Assets (the DG Portfolio) to a subsidiary of True Green Capital Fund IV,
LP (TGC Fund IV or the Buyer) for cash consideration of approximately US$38.4
million plus the assumption by the Buyer of approximately US$15.6 million of
project-level debt.
The Disposal is the first sale to be concluded as part of the Managed
Wind-Down.
Highlights and financial effects of the Disposal
· Pursuant to the Disposal, the Company agreed to sell all of the
membership interests of those wholly-owned intermediate holding companies
through which the Company holds its interests in the DG Portfolio, which
comprises the "ECHO", "SED", "Ellis Road", "Oliver", "Skillman" and "Delran"
solar assets.
· The headline enterprise value of the Disposal was US$54.5
million (which includes the assumption of approximately US$15.6 million of
debt secured on the DG Portfolio) (Headline Price). The cash payment to be
payable by the Buyer to the Company at completion of the Disposal (the
Consideration), after making certain customary adjustments and after a further
reduction equal to the Time-based Adjustment (which depended on the time taken
to complete the Disposal as described further in the section headed "Summary
of the Sale Agreement" below), was expected to be approximately US$38.4
million (assuming completion by 31 January 2025). The transaction completed on
11 March 2025 and the net closing payment received was approximately US$37.1
million.
· The value of the DG Portfolio as at 30 June 2024 of US$63.2
million reduced on 27 November 2024 by US$11.3 million to US$51.9 million
following final completion of the project-specific back-leverage bank facility
in respect of the ECHO portfolio as announced on 28 November 2024 (the ECHO
Financing). The final Consideration received therefore represents a discount
of approximately 28.5 per cent. to US$51.9 million, being the pro forma asset
value as at 30 June 2024 of the DG Portfolio after having taken account of the
additional ECHO Financing.
· The net proceeds of the Disposal (after deduction of estimated
tax liabilities and other costs expected to be paid out of the proceeds of the
Disposal) are expected to be approximately US$33.5 million. Of that, an amount
of US$400,000 is to be held in escrow for a short period post completion
period expected to be up to 4 months pending the definitive true-up on the net
working capital position at completion, as is customary for transactions of
this nature. Such net proceeds were used by the Company to pay down the
remaining balance on the Company's revolving credit facility (RCF) in full,
post year end.
Financing and gearing
The Group's total gearing at 31 December 2024 was 62.5% (31 December 2023:
38.6%) based on a Gross Asset Value ("GAV") of $146.4 million and aggregate
debt of $91.5 million. The Company had both non-recourse debt at project level
($43.5 million secured on the two Beacon projects and $15.5 million secured on
the Echo Solar portfolio) and debt at group level, consisting of $32.5 million
drawn under the Company's revolving credit facility (RCF).
As announced on 21 October 2024, the Company entered into an agreement to
amend and extend the RCF with KeyBank with effect from 18 October 2024. Both
tranches of the RCF are now set to mature on 18 October 2025. As from 18
October 2024, the total commitments of the two tranches reduced to US$32.5
million and US$10.5 million respectively. Upon completion of the Disposal of
the DG Solar assets on 11 March 2025, the total commitment of each tranche was
reduced further to US$7.5 million and US$2.5 million respectively, as the
Company was required to make a mandatory repayment of an amount equal to the
greater of the net proceeds of the Disposal of the DG Solar assets or the
amount to reach such revised borrowing limits. The revised borrowing limits
reflect the Group's lower borrowing base after the DG Portfolio was sold.
Amounts repaid above the revised borrowing limits cannot be reborrowed. As
stated above, following closing of the DG Solar Sale, the RCF was repaid in
full.
Dividends
During H1 2024, the Board declared two interim dividends of 0.7 cents per
Share each, in respect of the quarters ended 31 March 2024 and 31 December
2023. As part of the announcement on 9 September 2024, the Board stated that
it had decided not to declare a dividend for Q2 2024 so as to focus the
Company's cash-flow towards the repayment of borrowings in anticipation of
future returns of capital to shareholders in order to achieve the objectives
of the new Investment Policy. The Board's focus going forwards having now
repaid the RCF is, in due course, to return capital to shareholders. Dividends
will be restricted to such amount, if any, as required to maintain Investment
Trust status.
Board
As noted earlier, I joined the Board in July 2024, becoming Chair in January
2025 when Patrick O'Donnell Bourke stepped down. Louisa Vincent resigned from
the Board on 31 October 2024. Together with my fellow Directors, I would like
to thank both Patrick and Louisa for their contributions. The Board currently
comprises three directors who together have a good balance of sector,
investment trust and wider financial investment experience.
Key Developments Post Year End
· Following extensive consultation with key shareholders, it was
announced on 8 January 2025 that Patrick O'Donnell Bourke would step down as
Chair and as a director following the Company's General Meeting on 14 January
2025. I replaced Patrick as Chair. On behalf of the rest of the Board, I would
like to thank Patrick for his contribution during his time on the Board.
· In order to provide some comfort to shareholders to support
the adoption of a Managed Wind Down, the Board also announced that it would
not sell any of the remaining assets (beyond the DG Portfolio) at a
significant discount to their carrying values as included in the Company's
balance sheet as at 30 June 2024, without prior consultation with major
shareholders.
· At the General Meeting held on 14 January 2025, shareholders
overwhelmingly approved the adoption of the new investment policy, being one
of a Managed Wind Down.
· On 21 January 2025, it was announced that a successful
re-negotiation of the management fee the Company pays to Ecofin Advisers, LLC
("Ecofin") under the Investment Management Agreement dated 11 November 2020
had been concluded, with the object of the changes being to better align the
interests of Ecofin with shareholders' interests. Under the terms of the
investment management agreement Ecofin is entitled to 1 per cent. per annum
of the Net Asset Value ("NAV") up to and equal to US$500 million, payable
quarterly in arrears. In respect of any quarter beginning 1 January 2025
onwards, the fee will be determined by the lower of the Company's market
capitalisation or NAV. In addition, management fees for Q3 2024 will be based
on the NAV as adjusted downwards so as to take into account the price realised
for the sale of the DG Solar assets as per the RNS dated 13 December 2024.
· On 7 February 2025, it was announced Ecofin had given notice of
termination of the Investment Management Agreement. Ecofin will work with the
Board towards an orderly transition during its 12 month notice period. The
Board is in discussions on alternative management arrangements whilst also
cogniscant of the fact that if the objectives of the managed wind down are
achieved within 12 months that none may be needed. The Board will monitor
developments and at this stage keep all options open.
· On 11 March 2025, it was announced that the DG Solar Sale had
closed. The net closing payment received was approximately US$37.1 million.
This amount was calculated after making certain adjustments as set out in the
Sale Agreement and as described in the circular to shareholders dated 23
December 2024 (the Circular). This includes adjustments for the amount of
project-level debt secured on assets in the DG Portfolio assumed by the Buyer,
the Time-based Adjustment and as a result of an approximately US$1.0 million
shortfall in the estimated level of net working capital below the target set
out in the SPA. The net proceeds of the Disposal (after deduction of estimated
tax liabilities and other costs expected to be paid out of the proceeds of the
Disposal) are expected to be approximately US$33.5 million. Of that, an amount
of US$400,000 is to be held in escrow for a short post completion period
expected to be up to 4 months pending the definitive true-up on the net
working capital position at completion, as is customary for transactions of
this nature. The net proceeds of the Disposal have been used in part to make a
mandatory prepayment of approximately US$22.9 million in respect of the RCF.
After giving effect to such prepayment, the amount drawn on the RCF was
reduced to nil. The total available commitment of the two RCF tranches has
also been reduced following such prepayment to a total of US$10 million,
reflecting the Company's lower borrowing base after the sale of the DG
Portfolio.
Outlook
The focus of the Company, the Board and the Investment Adviser over several
months has been on signing and then completing the DG Solar Sale. Following
the closing of the DG Solar Sale, the Company owns two assets: Whirlwind and
49.5% of Beacon 2 and 5. The Board is mindful of the overall objective, to
wind down the Company, which will require the sale of the two remaining
assets. However the Company is not a forced seller at any price in the short
term and the Board will review over the next few months the two assets in
detail to understand what if anything needs to be carried out before any sale
to improve the likelihood of receiving a fair price for shareholders and, in
so far as it is possible, the appropriate timing of any sale, recognising also
that there may need to be a period of time before there is greater clarity of
the environment for selling renewable assets. This includes the impact the
economic policies of the new US Administration may have on the Company's
ability to operate these assets whilst at the same time seeking a fair price
for shareholders for these assets as part of a Managed Wind down. However
the Board does not expect the Company to retain the assets for any length of
time and will keep shareholders informed as its thinking progresses. The Board
will also continue to consult with the Company's key shareholders to make sure
that it is fully aware of shareholders' feedback at all times, particularly
with regard to the Managed Wind-Down process.
This has not been an easy time for the Company and shareholders. The Board is
committed to achieving the best outcome for shareholders in as short a time as
possible.
Annual General Meeting
We look forward to welcoming Shareholders at the Company's Annual General
Meeting ("AGM") to be held on 26 June 2025. For more information, please see
the enclosed AGM notice.
Brett Miller
Chair
24 April 2025
Investment Manager's Report
for the twelve months ended 31 December 2024
During the twelve months ended 31 December 2024, the portfolio generated 279.0
GWh of clean energy, 5.1% below budget.
Of the total, solar assets generated 183.6 GWh, 11.9% below budget and wind
assets generated 95.4 GWh, 11.4% above budget. As at 31 December 2024, RNEW's
portfolio had 100% of its revenue contracted with a weighted average remaining
term of 12.5 years. Approximately 99% of the portfolio benefits from
fixed-price revenues, many with annual escalators of 1-2%, through PPAs,
contracted solar renewable energy credits ("SREC"), and fixed rents under
leases. These fixed price contracts mitigate market price risk for the term of
the contracts. Less than 1% of the portfolio has a variable form of revenue,
which is set at a fixed discount to a defined Massachusetts utility electric
rate.
Cash flows were below budget primarily due to the previously reported
situation with the Matador substation at Whirlwind following the tornado in
summer 2023, the ongoing delays in bringing the Echo portfolio of projects
online, and operational issues at several other projects.
Whirlwind
The Whirlwind wind farm has faced continuing challenges this year, operating
at reduced capacity of 25-30 MW due to the tornado in 2023. Due to that
impact, the forecast has been updated to more closely align with historical
production prior to the event as well as to reflect the curtailment
restrictions. Actual production over performed by 11.4% compared to the
updated budgeted production in 2024. The site continues to pass power through
a neighboring substation in Paducah TX while final touches are nearing
completion at the Matador substation, which is expected in the coming weeks.
Whirlwind continues to work with NAES (Balance of Plant manager) and Siemens
Gamesa (turbine O&M manager) to integrate a data feed into the production
database, which will help analyze production drivers and performance more
effectively.
Beacon 2 and Beacon 5
The Beacon 2 and Beacon 5 solar assets also faced issues during early 2024.
Beacon 2 underperformed by 15.5%, mainly due to issues with inverters, with a
thermal event in March 2024 causing an oil leak in an inverter. Beacon 5
underperformed by 9.3%, with inverters also experiencing faults in early May.
Repairs for these inverters are pending; an insurance claim was successfully
filed for lost production and property damage at Beacon 2. In a related
initiative, Ecofin together with the projects' co-owner, S&B Energy, are
exploring a Battery Energy Storage Solution (BESS) at the Beacon site to
enhance value. There are also proposals to extend the PPA, and attract new tax
equity from Production Tax Credits (PTCs). A feasibility study, conducted by
consultants DNV in December 2023 is currently under evaluation.
DG Solar Portfolio
Further to the Result of General Meeting announcement made on 14 January 2025,
the Board of the Company announced that the sale of the DG Portfolio completed
on 10 March 2025. The Disposal is the first sale to be signed and completed as
part of the Managed Wind-Down.
The net closing payment payable to RNEW Capital, LLC (an indirect wholly-owned
subsidiary of the Company) (the Seller) was approximately US$37.1 million.
This amount was calculated after making certain adjustments as set out in the
Sale Agreement and as described in the circular to shareholders dated 23
December 2024 (the Circular). This includes adjustments for the amount of
project-level debt secured on assets in the DG Portfolio assumed by the Buyer,
the Time-based Adjustment and as a result of an approximately US$1.0 million
shortfall in the estimated level of net working capital below the target set
out in the SPA.
The net proceeds of the Disposal (after deduction of estimated tax liabilities
and other costs expected to be paid out of the proceeds of the Disposal) are
expected to be approximately US$33.5 million. Of that, an amount of US$400,000
is to be held in escrow for a short post completion period expected to be up
to 4 months pending the definitive true-up on the net working capital position
at completion, as is customary for transactions of this nature.
As explained in the Circular, the net proceeds of the Disposal have been used
in part to make a mandatory prepayment of approximately US$22.9 million in
respect of the Seller's revolving credit facility (the RCF). After giving
effect to such prepayment, the amount drawn on the RCF was reduced to nil. The
total available commitment of the two RCF tranches has also been reduced
following such prepayment to a total of US$10 million, reflecting the Seller's
lower borrowing base after the sale of the DG Portfolio.
Accordingly, after prepayment of the RCF and the payment of expenses and other
liabilities relating to the Disposal, the retained Group is expected to have
estimated cash balances of approximately US$10.7 million.
Investment Name Sector State Actual (GWh) Budget GWh Above (Below) Budget % Above (Below) Budget
(GWh)
Beacon 2 Utility-Scale Solar California 54.4 64.4 (10.0) (15.5%)
Beacon 5 Utility-Scale Solar California 46.0 50.7 (4.7) (9.3%)
SED Solar Portfolio* Commercial Solar Massachusetts, Connecticut 12.0 12.2 (0.2) (1.6%)
Ellis Road Solar* Commercial Solar Massachusetts 7.2 8.5 (1.3) (15.3%)
Oliver Solar* Commercial Solar California 7.1 7.4 (0.3) (4.1%)
Delran Solar* Commercial Solar New Jersey 2.3 2.4 (0.1) (4.2%)
Skillman Solar* Commercial Solar New Jersey 3.3 3.4 (0.1) (2.9%)
Echo Solar - MN* Commercial Solar Minnesota 17.0 21.6 (4.6) (21.3%)
Echo Solar - VA1* Commercial Solar Virginia 4.7 4.9 (2.7) (9.7%)
Echo Solar - DE* Commercial Solar Delaware 9.2 10.0 (0.2) (4.1%)
Echo Solar - VA2* Commercial Solar Virginia 6.3 7.0 (0.7) (10.0%)
Echo Solar - VA3* Commercial Solar Virginia 10.3 11.1 (0.8) (7.2%)
Echo Solar - VA4* Commercial Solar Virginia 3.8 4.8 (1.0) (20.8%)
Solar Subtotal 183.6 208.4 (24.8) (11.9%)
Whirlwind Wind Texas 95.4 85.6 9.8 11.4%
Wind Subtotal 95.4 85.6 9.8 11.4%
Total 279.0 294.0 (15.0) (5.1%)
· Sold post year end
2024 NAV Bridge ($M)
NAV 31 Dec 2023 $117.7
Change in ProjectCo DCF Rollforward ($14.2)
Change in ProjectCo DCF - Discount Rates ($3.2)
Change in ProjectCo valuation methodology and approach ($32.4)
Distributions from ProjectCos to RNEW $3.2
Dividends to Shareholders ($1.9)
Expenses Paid ($2.0)
Changes in Working Capital Balances ($7.4)
Changes in Deferred Tax $2.0
NAV 31 Dec 2022 $61.7
Change in project company DCF rollforward: Represents the impact on NAV from
changes to DCF quarterly cashflow roll-forward and change in project-level
debt outstanding balances, including principal amortisation.
Change in project company DCF Discount Rates:
Represents the impact on NAV from changes to the discount rates applied to the
DCF models of each project company. As at 31 December 2024, the weighted
average unlevered pre-tax discount rate was 8.4% (31 December 2023: 7.4%),
which reflects a decrease from 31 December 2023 due to the effect of a 1.00%
increase in discount rates.
Change in project company methodology and approach:
Primarily represents the impact on NAV from changes to the valuation approach
to include a market approach in combination with income approach to account
for recent market data gathered during the Managed Wind-Down. A further
decrease occurred to value the DG Solar assets at their agreed upon sale
price. Fair value of the Beacon and Whirlwind is derived using a combined
income approach (DCF methodology) and market approach based on recent bid
prices from third parties, which follows IPEV Guidelines. A 50% weighting is
applied to both the income approach and market approach when concluding on
fair value. Typically, DCF is deemed the most appropriate methodology when
detailed projection of future cash flows is possible. Under the income
approach, the fair value of each asset is derived by projecting the future
cash flows of an asset, based on a range of operating assumptions for revenues
and expenses, and discounting those future cash flows to the present day with
a pre-tax discount rate appropriately calibrated to the risk profile of the
asset and market dynamics. Due to the asset class and available market data
over the forecast horizon, a DCF valuation is typically the basis upon which
renewable assets, are traded in the market, however, given recent market data
received by way of bids from third parties, a market approach was also used in
combination to determine fair value.
Distributions from project companies to RNEW: Represents cash generated by
project companies, which was distributed up to RNEW during the Year.
Dividends to Shareholders: Dividends for Q4 2023 and Q1 2024 of $1.9 million
were paid during the Year.
Expenses paid: Represents the impact on RNEW NAV due to management fees and
expenses paid during the Year.
Change in financial assets: Represents the impact on RNEW NAV due to increases
or decreases in cash, receivables, payables and other net working capital
account balances.
Deferred tax liability: Represents the impact on RNEW NAV due to accruals
arising from operations in the year at RNEW Holdco, LLC, the Company's
wholly-owned U.S. subsidiary, which is subject to U.S. income taxes.
ESG Integration and Impact
The Company was established to offer investors direct exposure to renewable
energy and sustainable infrastructure assets including solar, wind, and
battery storage that reduce greenhouse gas ("GHG") emissions and promote a
positive environmental impact. The Investment Manager integrates analysis of
ESG issues throughout the lifecycle of its investment activities spanning due
diligence, investment approval, and ongoing portfolio management.
Environmental criteria analysis considers how an investment performs as a
steward of nature; social criteria analysis examines its impact and
relationships with employees, suppliers, customers and the communities in
which it operates; and governance criteria analysis examines internal
controls, business ethics, compliance and regulatory status associated with
each investment.
Ecofin has developed a proprietary ESG due diligence risk assessment framework
("ESG Risk Assessment") that combines both qualitative and quantitative data.
This ESG Risk Assessment is embedded in Ecofin's investment memoranda and
systematically applied by the investment team to all opportunities prior to
investment authorisation by Ecofin's Investment Committee. Each of the
Company's closed and committed investments spanning 65 assets was analysed
using Ecofin's ESG Risk Assessment prior to investment commitment. Ecofin
believes this approach to assessing ESG issues serves to mitigate risk and
enhance RNEW's impact.
Environmental factors affecting climate risk are reviewed to determine an
investment's impact and ability to reduce GHG emissions, air pollution and
water consumption.
Analysis of environmental issues may also consider the impact that the
investment will have on land use and considers mitigation plans when issues
are identified. Analysis of social issues may encompass an investment's impact
on the local community and consider health and safety together with the
counterparties to be engaged to construct and operate the assets. Governance
is reviewed in partnership with qualified third-party legal counsel to ensure
compliance with all laws and regulations, strong ongoing corporate governance
through strict reporting protocols with qualified operators, project asset
managers and annual independent financial statement audits.
Ecofin applies a systematic approach to ESG monitoring once acquisitions are
closed. Through Ecofin's engagement with third party O&M and asset
management service providers, Ecofin reviews asset level reporting on health
and safety metrics, environmental matters and compliance. Issues identified
are reviewed and addressed with service providers through periodic meetings
such as monthly operations meetings.
Importantly, ESG factors are analysed then reported in a transparent manner so
that investors and key stakeholders can measure their impact.
Impact
RNEW's portfolio produced approximately 279 GWh of clean electricity during
2024. RNEW focuses on investments that have a positive environmental impact by
reducing GHG emissions, air pollution and water consumption. Ecofin seeks to
analyse and report on ESG factors on a consistent basis to maximise the impact
of its investment activities. To assess environmental impact, Ecofin goes
beyond measuring CO2 emissions avoided and quantifies other GHG emissions,
such as methane and nitrous oxide, and also measures the contribution that
investments make to save water consumption. Water is consumed by
thermoelectric (i.e. coal and gas) power plants in the cooling process
associated with steam turbine generators. Water savings occur in the same way
that renewable energy generation offsets CO2 emissions from thermoelectric
generators. Ecofin calculates estimated water savings by reference to the EIA
thermoelectric cooling water data by location and applies it to the production
from RNEW's portfolio.
Ecofin's methodology for calculating the environmental impact of investments
relies on trusted data sources including the U.S. EPA and the EIA.
Investment Objective and Investment Policy
At a General Meeting held on 14 January 2025 the following new investment
objective and investment policy were adopted:
Investment objective
The Company's investment objective is to realise all the assets in the Group's
portfolio, in an orderly manner with a view to ultimately returning cash to
the Company's shareholders following repayment of any outstanding borrowings
of the Group from the proceeds of the assets realised pursuant to the
Investment Policy. (the "Managed Wind-Down)
Investment policy and strategy
The assets of the Group will be realised in an orderly manner, returning cash
to the Company's shareholders at such times and in such manner as the Board of
directors of the Company from time to time (the Board) may, in its absolute
discretion, determine. The Board will endeavour to realise all of the Group's
assets in a manner that achieves a balance between maximising the net value
received from those assets and making timely returns to the Company's
shareholders.
The Company will cease to make any new investments (including any follow-on
investments) or to undertake any capital expenditure, except with the prior
written approval of the Board and where, in the opinion of the Board, in its
absolute discretion:
a. failure to make the investment or undertake the capital
expenditure would result in a breach of contract or applicable law or
regulation by the Company, any member of its Group or any vehicle through
which it holds its investments; or
b. the investment or capital expenditure is considered necessary to
protect or enhance the value of any existing investment or to facilitate an
orderly disposal,
any such investment or capital expenditure being a "Permitted Investment".
Subject to the ability of the Company to make Permitted Investments, any cash
received by the Group during the Managed Wind-Down that has not been used to
repay borrowings prior to its distribution to the Company's shareholders will
be held by the Group as cash in Sterling or U.S. Dollar on deposit and/or as
cash equivalent securities, including short-dated corporate bonds or other
cash equivalents, cash funds or bank cash deposits (and/or funds holding such
investments).
The net proceeds from realisations will be used to repay borrowings and make
timely returns of capital to the Company's shareholders (net of provisions for
the Company's costs and expenses) in such manner as the Board considers
appropriate.
Investment restrictions
The Company will continue to comply with the requirements imposed by the UK
Listing Rules made by the Financial Conduct Authority in force from time to
time, notwithstanding that the concentration of the value of the Company's
portfolio in fewer holdings will reduce diversification and the spread of
investment risk.
Gearing policy
The Group may utilise borrowings for short-term liquidity and working capital
purposes.
Gearing represented by borrowings shall not exceed 25 per cent. of net asset
value, measured at the point of entry into or acquiring such debt.
Currency and hedging policy
The Group may use derivatives for the purposes of hedging, partially or fully:
a) electricity price risk relating to any electricity or other
benefit including renewable energy credits or incentives, generated from its
renewable energy assets not sold under a power purchase agreement (PPA), as
further described below;
b) currency risk in relation to any Sterling (or other non - U.S.
Dollar) denominated operational expenses of the Company;
c) other project risks that can be cost-effectively managed through
derivatives (including, without limitation, weather risk); and
d) interest rate risk associated with the Company's debt facilities.
In order to hedge electricity price risk, the Company may enter into
specialised derivatives, such as contracts for difference or other hedging
arrangements, which may be part of a tripartite or other PPA arrangement in
certain wholesale markets where such arrangements are required to provide an
effective fixed price under the PPA.
Members of the Group will only enter into hedging or other derivative
contracts when they reasonably expect to have an exposure to a price or rate
risk that is the subject of the hedge.
Amendments to the investment objective, policy and investment restrictions
If the Board considers it appropriate to amend materially the investment
objective, investment policy or investment restrictions of the Company,
shareholder approval to any such amendment will be sought by way of an
ordinary resolution proposed at an annual or other general meeting of the
Company.
Risk Management
Principal Risks
The Board is responsible for the ongoing identification, evaluation and
management of the principal risks faced by the Company. On behalf of the
Board, the Risk Committee has established a process for the regular review of
these risks and their mitigation. This process principally involves a
semi-annual review of the Company's risk matrix and accords with the UK
Corporate Governance Code (the "UK Code") and the Financial Reporting
Council's ("FRC") Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting. The Directors have carried out a robust
assessment of the principal risks facing the Company, including those that
would threaten its business model, future performance, solvency and liquidity.
The following sections detail the risks the Board considers to be the most
significant to the Company:
Risk Possible Consequences Change in risk assessment during the year Risk Mitigation and Controls Current Year Risk Scores
Electricity Price Lower electricity prices in the U.S. could negatively impact the Company's No change The Company aims to sell output under long-term offtake arrangements with Medium
returns and/or the value of its investments. credit worthy counterparties. As at the date of this report, the portfolio
benefited from a weighted average revenue contract term of 12.5 years
(comprising 18 years each for Beacon 2 and 5 and 3 years for Whirlwind). In
its asset valuations, the Company uses long-term electricity price forecasts
prepared by an independent third party.
Interest Rate, Currency and Inflation The Company may be adversely affected by changes in interest, currency No change Interest, currency and inflation rates are monitored regularly by the Company. Medium
exchange and inflation rates. Rising interest rates may lead to higher The Company may implement interest and currency rate hedging by fixing a
discount rates. portion of the Company's exposure to any floating rate obligation using
interest or currency rate swaps or other means.
Where possible, the Company enters into medium to long term contracts to fix
costs. Inflation risk can also be partly mitigated where projects' revenue
offtake arrangements are subject to indexation.
Discount rates are reviewed regularly by the Investment Manager, and on a
semi-annual basis by the Independent Valuer.
Managed Wind-Down With effect from 14 January 2025 the Company revised its Investment Policy Increased On 11 March 2025, the Company announced the completion of its sale of its DG High
and is now in a Managed Wind Down. The Company may not be able to sell its Solar assets. The Board have appointed Marathon as the Company's financial
assets at attractive prices and in a timely manner. advisers to help with the Managed Wind-Down Process.
Inability to identify a new Investment Manager and AIFM On 6 February 2025, Ecofin Advisors, LLC served notice on the Company as Increased The Board, together with their advisers, are considering their options and are High
Investment Manager and AIFM. In accordance with the Company's IMA, the confident that they will be able to find a replacement Investment Manager and
Investment Manager has a 12 month notice period to serve. AIFM prior to the deadline. Ecofin will work with the Board towards an orderly
transition during its 12 month notice period.
Operational Performance Renewable Assets may encounter operational difficulties that cause them to No change Ecofin appoints experienced O&M contractors and monitors their ongoing Medium
perform at lower levels than expected. performance. Ecofin also provides in-house asset management for each asset.
Additionally, insurance programmes are in place for each asset.
Investment Valuation The valuation of assets are inherently subjective and uncertain. No change Ecofin has significant experience in the valuation of Renewable Assets. The Medium
Board and Ecofin review asset valuations quarterly. An Independent Valuer
Projections are based on the Independent Valuer's and the Investment Manager's conducts a valuation of the Company's assets, including a review of discount
assessment at the date of valuation and are only estimates of future results. rates, on a semi-annual basis.
The valuation of the DG solar assets was based on the sales price, with other
assets valued based on a 50% weighting applied to both an income and market
approach. Actual results may vary significantly from projected amounts.
Political and Regulatory The value of existing investments may be impacted by changes in government Increased Due diligence is undertaken at purchase with support from legal advisers and Medium
policy (e.g. implications following the recent change in US administration, monitoring of political and regulatory risks is ongoing. When incentive
particularly increased property taxes, tariffs, lower tax credits), in programs are changed, the changes typically affect projects that have yet to
government policy incentives or in U.S. tax laws. be built. Existing projects are usually grandfathered and retain the benefits
associated with the incentive scheme in place when they were constructed.
Ecofin seeks to reduce exposure to political and regulatory risk by entering
into long term contracts to fix both revenue streams associated with
incentives and costs (e.g. property taxes).
Ecofin also monitors potential changes in policy that could affect RNEW's
portfolio.
Cyber Ecofin's information and technology systems and those of other service No change The Company relies on the systems of its service providers. Cyber security Medium
providers to the Company may be vulnerable to cyber security breaches and policies and procedures are maintained by key service providers and are
identity theft which could adversely impact the Company's ability to continue reported to the Board periodically. Ecofin, the Administrator and the Board
to operate without interruption. include cyber risk in their reviews of counterparties.
Service Provider Reliance The Company has no employees and is reliant on the performance of third-party Increased The Board meets with Ecofin and the Administrator on at least a quarterly High
service providers. basis to review their work and monitor their performance and more often as
needed.
Service Providers may be unable to complete their role or may not perform
well, which could lead to a deterioration in shareholder value. The Investment Manager has now given notice of termination of the Investment
Management Agreement. Ecofin will work with the Board towards an orderly
transition during its 12 month notice period.
Through its Management Engagement Committee, the Board conducts a formal
assessment of each key service provider's performance once a year. To assist
its ability to properly oversee the Company's service providers, the Board
requires them to notify it as soon as reasonably practicable following any
material breach of their contracts with the Company.
Counterparty There is the potential for losses to be incurred due to default by an offtaker No change A fundamental part of the Investment Manager's due diligence process involves Medium
or other counterparty. reviewing the most recent credit rating of the offtaker provided by a third
party credit rating agency or performing an independent credit review of the
offtaker's credit status.
The credit status of other counterparties (e.g. banks) is also assessed and
monitored.
Climate The Company is exposed to the impacts of climate change i.e. risks relating to No change The Investment Manager considers the potential impact the weather may have on Medium
weather conditions and performance of equipment. electricity production. Ecofin also considers the impact of storms and other
weather conditions when determining the appropriate level of insurance
coverage for an asset. Investing in diverse projects spread across the U.S.
mitigates the impact of any localised, potentially unfavourable weather
conditions.
ESG Risks such as health and safety, respect for human rights, bribery, No change ESG is embedded in Ecofin's investment process via a formal ESG rating matrix. Medium
corruption, environmental management practices, duty of care and compliance The Company monitors the portfolio and quantifies the ESG impact of its
with relevant laws and regulations, may also arise. investments.
Each service provider has, and is responsible for, its own health and safety
policies and procedures.
Risks are managed and mitigated by the Board through continual review, policy
setting, and regular reviews of the Company's risk matrix by the Risk
Committee to ensure that procedures are in place with the intention of
minimising the impact of the above-mentioned risks.
Members of the Risk Committee bring a diversity of external knowledge,
including of the renewable energy and investment trust (and financial services
generally) marketplaces, trends, threats etc. as well as macro/strategic
insight. The Risk Committee carries out a formal risk assessment at each of
its meetings (minimum twice a year).
The Investment Manager advises the Board at quarterly Board meetings on
industry trends, providing insight on the political and regulatory environment
in which the Company's assets operate, and future challenges in these markets.
The Company's Broker regularly reports to the Board on markets, the investment
company sector and the Company's peer group. The Investment Manager works with
reputable EPC firms to reduce the risk that any materials sourced from vendors
employing the use of forced labour end up in the Company's projects and
actively monitors developments on this issue. The Company is not aware of any
such materials having been used in the Company's projects.
The Company Secretary briefs the Board on forthcoming legislation/regulatory
change in the UK that might impact the Company. The Auditor also provides an
annual update on regulatory changes relevant to the Company.
The Company is a member of the Association of Investment Companies ("AIC"),
which provides regular technical updates as well as drawing members' attention
to forthcoming industry/ regulatory issues and advising on compliance
obligations.
When required, experts are employed to provide information and technical
advice, including legal and tax.
Business Review
The Strategic Report in the Annual Financial Report has been prepared to
provide information to Shareholders to assess how the Directors have performed
their duty to promote the success of the Company.
The Strategic Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the time of their approval of this report and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
The Company is an alternative investment fund ("AIF") under the European
Union's alternative investment fund managers' directive ("AIFMD") and has
appointed Ecofin Advisors, LLC as its AIFM.
The Directors are responsible for managing the business affairs of the Company
in accordance with the Articles and have overall responsibility for the
Company's activities including the review of investment activity and
performance and the overall supervision of the Company. The Directors may
delegate certain functions to other parties such as the Investment Manager,
the Administrator and the Registrar. In particular, the Directors have
delegated responsibility for managing the portfolio to the Investment Manager.
All the Directors are non-executive. All the Directors were considered by the
Board to be independent of the Investment Manager upon and since appointment.
A description of the role of the Board can be found in the Corporate
Governance Statement.
Key Performance Indicators
The Company's Board of Directors meets regularly and at each meeting reviews
performance against a number of key performance indicators which include the
following:
· Efficient Return of Capital
· Dividends;
· Premium/discount of share price to NAV per Share; and
· Ongoing charges ratio.
Efficient Return of Capital
In line with the Managed Wind-down status of the Company, the Board is focused
on the disposal of the Company's assets, the repayment of the Company's
Revolving Credit Facility ("RCF") and the efficient return of capital to
Shareholders. On 11 March 2025, the Company announced that it had concluded on
the sale of its investment in US distributed solar assets (the DG Portfolio)
to a subsidiary of True Green Capital Fund IV, LP. The sales proceeds were
partly used to repay the Company's RCF.
Dividends
Since the commencement of the managed wind-down process, the Company will pay
dividends as interim dividends only as required to maintain investment trust
status. As the Company's portfolio reduces in size its operating costs will
become a greater proportion of its income. The Company intends to maintain its
investment trust status and listing during this managed realisation process
prior to the Company's eventual liquidation. Maintaining the listing would
allow Shareholders to continue to trade Shares during the managed winddown of
the Company.
The Company declared one interim dividend in respect of the Year of 0.7 cents
per Share in respect of the period from 1 January 2024 to 31 March 2024.Since
that date the Board has decided to focus the Company's cash-flow towards the
repayment of borrowings in anticipation of future returns of capital to
shareholders.
Premium/discount of share price to NAV per Share
The Board monitors the price of the Company's Shares in relation to NAV and
the premium/discount at which the Shares trade. The Company has Shareholder
authority to issue and buy back Shares, which could assist short term
management of premium and discount respectively. However, the level of
discount or premium is mostly a function of investor sentiment and associated
demand for the Shares, over which the Board may have limited influence. The
share price stood at a 31.8% discount to NAV as at 31 December 2024
Ongoing charges ratio
The expenses of managing the Company are carefully monitored by the Board. The
standard performance measure of these is the ongoing charges ratio ("OCR"),
which is calculated by dividing the sum of such expenses over the course of
the year, including those charged to capital, by the average NAV over the
year.
This ratio provides a guide to the effect on performance of annual operating
costs. The Company's OCR for the year to 31 December 2024 was 2.31% (year
ended 31 December 2023: 1.78%).
Statement of Directors' Responsibilities in Respect of the Financial
Statements
Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with international accounting standards in
conformity with the requirements of the Act and applicable law and
regulations.
Company law requires the Directors to prepare financial statements for each
financial year and the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss for the Company for that
period. The Directors are also required to prepare financial statements in
accordance with UK adopted international accounting standards.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are
reasonable and prudent;
· state whether they have been prepared in accordance with
UK adopted international accounting standards, subject to any material
departures disclosed and explained in the financial statements;
· prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Company will continue in
business. As stated in note 2 the Directors do not consider the company to be
a going concern and have prepared the financial statements on a basis other
than that of a going concern; and
· prepare a Directors' Report, a Strategic Report and
Directors' Remuneration Report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Act and,
as regards the financial statements, Article 4 of the IAS Regulation.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring that the
Annual Report and financial statements, taken as a whole, are fair, balanced,
and understandable and provide the information necessary for Shareholders to
assess the Company's performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and the financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the Company's website is the responsibility of the Investment Manager and the
Directors. The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
· The financial statements have been prepared in accordance
with the applicable set of accounting standards and Article 4 of the IAS
Regulation and give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Company; and
· The Annual Report includes a fair review of the
development and performance of the business and the financial position of the
Company, together with a description of the principal risks and uncertainties
that it faces.
Brett Miller
Chair of the Board
24 April 2025
Financial Statements
Statement of Comprehensive Income
Year ended 31 December 2024
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Losses on investments 4 - (55,204) (55,204) - (10,577) (10,577)
Net foreign exchange gains/(losses) - 4 4 - (5) (5)
Income 5 3,246 - 3,246 6,284 - 6,284
Investment management fees 6 (879) - (879) (1,246) - (1,246)
Other expenses 7 (1,138) - (1,138) (1,184) - (1,184)
Profit/(loss) on ordinary activities before
taxation 1,229 (55,200) (53,971) 3,854 (10,582) (6,728)
Taxation 9 - - - - - -
Profit/(loss) on ordinary activities after
taxation 1,229 (55,200) (53,971) 3,854 (10,582) (6,728)
Earnings/(losses) per Share - basic and diluted 8 0.88c (39.97c) (39.09c) 2.79c (7.66c) (4.87c)
The total column of the Statement of Comprehensive Income is the profit and
loss account of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
Profit/(loss) on ordinary activities after taxation is also the total
comprehensive Profit/(loss) for the Year. The notes contained in the Annual
Financial Report form part of these financial statements.
Statement of Financial Position
As at 31 December 2024
As at As at
31 December 31 December
2024 2023
Notes $'000 $'000
Non-current assets
Investments at fair value through profit or loss 4 61,594 116,798
Current assets
Cash and cash equivalents 828 1,648
Trade and other receivables 10 57 8
885 1,656
Current liabilities: amounts falling due within one year
Trade and other payables 11 (723) (795)
Net current assets 162 861
Net assets 61,756 117,659
Capital and reserves: equity
Share capital 12 1,381 1,381
Share premium 14 12,732 12,732
Special distributable reserve 14 120,548 121,250
Capital reserve 14 (72,905) (17,705)
Revenue reserve 14 - 1
Total Shareholders' funds 61,756 117,659
Net assets per Share (cents) 15 44.7c 85.2c
Approved and authorised by the Board of directors for issue on 25 April 2024.
Brett Miller
Chair of the Board
Statement of Changes in Equity
Year ended 31 December 2024
Special
Share Share distributable Capital Revenue
capital premium reserve reserve reserve Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Opening equity as at
1 January 2024 1,381 12,732 121,250 (17,705) 1 117,659
Transactions with Shareholders
Dividend distribution 13 - - (702) - (1,230) (1,932)
Total transactions with Shareholders - - (702) - (1,230) (1,932)
(Loss)/profit and total comprehensive income for the Year - - - (55,200) 1,229 (53,971)
Closing equity as at 1,381 12,732 120,548 (72,905) - 61,756
31 December 2024
Year ended 31 December 2023
Special
Share Share distributable Capital Revenue
capital premium reserve reserve reserve Total
Notes $'000 $'000 $'000 $'000 $'000 $'000
Opening equity as at
1 January 2023 1,381 12,732 121,250 (7,123) 1,947 130,187
Transactions with Shareholders
Dividend distribution 13 - - - - (5,800) (5,800)
Total transactions with
Shareholders - - - - (5,800) (5,800)
(Loss)/profit and total comprehensive income for the Year - - - (10,582) 3,854 (6,728)
Closing equity as at 31 December 2023 1,381 12,732 121,250 (17,705) 1 117,659
Statement of Cash Flows
Year ended 31 December 2024
Year ended Year ended
31 December 2024 31 December 2023
Notes $'000 $'000
Operating activities
Loss on ordinary activities before taxation (53,971) (6,728)
Adjustment for unrealised losses on investments 55,204 10,577
(Increase)/decrease in trade and other receivables (49) 3
(Decrease)/increase in trade and other payables (72) 202
Net cash flow from operating activities 1,112 4,054
Investing activities
Purchase of investments 4 - -
Net cash flow used in investing activities - -
Financing activities
Dividends paid 13 (1,932) (5,800)
Net cash flow used in financing activities (1,932) (5,800)
Decrease in cash (820) (1,746)
Cash and cash equivalents at start of the Year 1,648 3,394
Cash and cash equivalents at end of the Year 828 1,648
As at As at
31 December 2024 31 December 2023
$'000 $'000
Cash and cash equivalents
Money market cash deposits 828 1,648
Total cash and cash equivalents at end of the Year 828 1,648
Notes to the Financial Statements
For the year ended 31 December 2024
1. General Information
Ecofin U.S. Renewables Infrastructure Trust PLC ("RNEW" or the "Company") is a
public company limited by shares incorporated in England and Wales on 12
August 2020 with registered number 12809472. The Company is a closed-ended
investment company with an indefinite life. The Company commenced operations
on 22 December 2020 when its Shares were admitted to trading on the LSE. The
Directors intend, at all times, to conduct the affairs of the Company so as to
enable it to qualify as an investment trust for the purposes of section 1158
of the Corporation Tax Act 2010, as amended.
The registered office and principal place of business of the Company is 4th
Floor, 140 Aldersgate St, London, EC1A4HY.
The Company's investment objective is to realise all the assets in the Group's
portfolio, in an orderly manner with a view to ultimately returning cash to
the Company's shareholders following repayment of any outstanding borrowings
of the Group from the proceeds of the assets realised pursuant to the
Investment Policy. (the "Managed Wind-Down).
The financial statements comprise only the results of the Company, as its
investment in RNEW Holdco, LLC ("Holdco") is included at fair value through
profit or loss ("FVTPL") as detailed in the key accounting policies below.
The Company's AIFM and Investment Manager is Ecofin Advisors, LLC. On 6
February 2025, the Investment Manager served notice on the Company. In
accordance with the Investment Manager's agreement, they are required to serve
12-month notice, which would expire on 5 February 2026.
Apex Listed Companies Services (UK) Limited, provides administrative and
company secretarial services to the Company under the terms of an
administration agreement between the Company and the Administrator.
2. Basis of Preparation
The financial statements have been prepared in accordance with applicable law
and UK-adopted international accounting standards. The financial statements
have been prepared on the historical cost basis, as modified for the
measurement of certain financial instruments at FVTPL.
The financial statements have also been prepared as far as is relevant and
applicable to the Company in accordance with the Statement of Recommended
Practice ("SORP") issued by the AIC in July 2022.
The functional currency of the Company is U.S. dollars as this is the currency
of the primary economic environment in which the Company operates and where
its investments are located. The Company's investment in Holdco is denominated
in U.S. dollars and a substantial majority of its income is receivable, and of
its expenses is payable, in U.S. dollars. Also, a majority of the Company's
cash and cash equivalent balances is retained in U.S. dollars. Accordingly,
the financial statements are presented in U.S. dollars rounded to the nearest
thousand dollars. The financial statements are prepared on the basis other
than going concern.
Basis of consolidation
The Company has adopted the amendments to IFRS 10 which state that investment
entities should measure all of their subsidiaries that are themselves
investment entities at fair value.
The Company owns 100% of its subsidiary Holdco and invests in SPVs through its
investment in Holdco. The Company and Holdco meet the definition of an
investment entity as described by IFRS 10. Under IFRS 10, investment entities
measure subsidiaries at fair value rather than consolidate them on a
line-by-line basis, meaning Holdco's cash, debt and working capital balances
are included in investments held at fair value rather than in the Company's
current assets and liabilities. Holdco has one investor, which is the Company.
In substance, Holdco is investing the funds of the investors in the Company on
its behalf and is effectively performing investment management services on
behalf of such unrelated beneficiary investors.
Going concern
Following the General Meeting held on 14 January 2025 at which Shareholders
unanimously voted in favour of a change in the Company's Objective and
Investment Policy in order to facilitate a managed wind-down, the process for
an orderly realisation of the Company's assets and a return of capital to
Shareholders has begun. The Company is therefore preparing its financial
statements on a basis other than going concern due to the Company being in a
managed wind-down.
The Directors will endeavour to realise all of the Company's investments in a
manner that achieves a balance between maximising the net value received from
those investments and making timely returns to Shareholders. On 11 March
2025, the Company announced the completion of the sale of the DG Solar assets,
which resulted in the repayment of the RCF, leaving cash resources of $10
million. Total expenses of the Company for the year ended 31 December 2024
were US$2.0 million. No new investments are to be made under the new
Investment Policy and therefore at the date of approval of these Financial
Statements the Company has significant operating expenses cover. Once the
Managed Wind-Down has been completed, the Directors intend to liquate the
Company.
The Directors are satisfied that the Company has adequate resources to
continue in operation throughout the winding down period and to meet all its
liabilities as they fall due. Therefore, the Directors do not consider it to
be appropriate to adopt the going concern basis of accounting in preparing the
financial statements. On this basis, the Directors have prepared the financial
statements on a basis other than going concern. All of the balance sheet items
have been recognized on a realization basis, which is not materially different
from the carrying amount. The Directors have also made appropriate provisions
in order to bring about the orderly wind-down of the Company and its
operations.
No additional adjustments to accounting policies or the valuation basis have
arisen as a result of ceasing to apply the going concern basis.
Characteristics of an investment entity
Under the definition of an investment entity, the Company should satisfy all
three of the following tests:
● Company obtains funds from one or more investors for the
purpose of providing those investors with investment management services;
● Company commits to its investors that its business purpose is
to invest funds solely for returns from capital appreciation, investment
income, or both; and
● Company measures and evaluates the performance of
substantially all of its investments on a fair value basis.
In assessing whether the Company meets the definition of an investment entity
set out in IFRS 10, the Directors note that:
● the Company has multiple investors and obtains funds from a
diverse group of Shareholders who would otherwise not have access individually
to investing in renewable energy and sustainable infrastructure investments
("Renewable Assets") due to high barriers to entry and capital requirements;
and
● the Company measures and evaluates the performance of all of
its investments on a fair value basis which is the most relevant for investors
in the Company. Management uses fair value information as a primary
measurement to evaluate the performance of all of the Company's investments
and in decision making.
The Directors are of the opinion that the Company meets all the
characteristics of an investment entity and therefore meets the definition set
out in IFRS 10. The Directors are satisfied that investment entity accounting
treatment appropriately reflects the Company's activities as an investment
trust.
Critical accounting judgements, estimates and assumptions
Preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amount of assets, liabilities, income and
expenses. Estimates are, by their nature, based on judgement and available
information, hence actual results may differ from these judgements, estimates
and assumptions. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and liabilities
are those used to determine the fair value of the investments as disclosed in
note 4 to the financial statement.
Key judgements
As disclosed above, the Directors have concluded that both the Company and
Holdco meet the definition of an investment entity as defined in IFRS 10. This
conclusion involved a degree of judgement and assessment.
Key estimation and uncertainty: Investments at fair value through profit or
loss
The Company's investments in unquoted investments are valued by reference to
valuation techniques approved by the Directors and in accordance with the
International Private Equity and Venture Capital Valuation (IPEV) Guidelines.
Fair value of the Beacon 2 and 5 and Whirlwind assets ("Beacon and Whirlwind
assets") is derived using a combined income approach (discounted cash flow -
the "DCF methodology") and market approach based on recent bid prices from
third parties, which follows IPEV Guidelines. A 50% weighting is applied to
both the income approach and market approach when concluding on fair value.
The DCF methodology of the Beacon and Whirlwind assets is derived by
projecting its future cash flows, based on a range of operating assumptions
for revenues and expenses, and discounting those future cash flows to the
present value using a discount rate which is appropriately calibrated to the
risk profile of the asset and market dynamics. The key estimates and
assumptions used within the DCF methodology include discount rates, annual
energy production, curtailment, merchant power prices, useful life of the
assets, and various operating expenses and associated annual escalation rates
often tied to inflation, including O&M, asset management, balance of
plant, land leases, insurance, property and other taxes and decommissioning
bonds, among other items. An increase/(decrease) in the key valuation
assumptions would lead to a corresponding decrease/(increase) in the DCF
methodology. Due to the asset class and available market data over the
forecast horizon, a DCF valuation is typically the basis upon which renewable
assets, are traded in the market, however, given recent market data received
by way of bids from third parties, a market approach was also used in
combination to determine fair value.
The estimates and assumptions used to determine the DCF methodology of the
Beacon and Whirlwind assets are disclosed in note 4 to the financial
statements. The DG Solar assets were valued at the sales price.
Segmental reporting
The Chief Operating Decision Maker ("CODM"), which is the Board, is of the
opinion that the Company is engaged in a single segment of business, being
investment in renewable energy infrastructure assets to generate investment
returns whilst preserving capital. The financial information used by the CODM
to manage the Company presents the business as a single segment.
All of the Company's income is generated within the U.S. All of the Group's
non-current assets are located in the U.S.
New and amended standards and interpretations applied
The following new standards or interpretations were effective for the first
time for periods beginning on or after 1 January 2024 and where relevant were
applied in the preparation of the Company's financial statements:
● Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1 "Presentation of Financial Statements");
● Non-current Liabilities with Covenants (Amendments to IAS 1
"Presentation of Financial Statements"); and
● Supplier Finance Arrangements (Amendments to IAS 7 "Statement
of Cash Flows" and IFRS 7 "Financial Instruments: Disclosures")
● New and amended standards and interpretations not applied
At the date of authorisation of these financial statements, the following new
standards had been published and will be effective in future accounting
periods.
Effective for accounting periods beginning on or after 1 January 2027:
● IFRS 18 "Presentation and Disclosures in Financial
Statements".
● IFRS 19 "Subsidiaries without Public Accountability:
Disclosures".
At the date of authorisation of these financial statements, the following
amendments had been published and will be effective in future accounting
periods.
Effective for accounting periods beginning on or after 1 January 2025:
● Lack of Exchangeability (Amendments to IAS 21 "The Effects of
Changes in Foreign Exchange Rates")
● Effective for accounting periods beginning on or after 1
January 2026:
● Classification and measurement of financial instruments
(Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial
Instruments: Disclosures").
The impact of these new and amended standards is not expected to be material
to the reported results and financial position of the Group.
3. Material Accounting Policies
Financial Instruments
Financial assets
The Company's financial assets principally comprise an investment held at
FVTPL (investment in Holdco) and trade and other receivables.
The Company's investment in Holdco, being classified as an investment entity
under IFRS 10, is held at FVTPL in accordance with IFRS 9. Gains or losses
resulting from movements in fair value are recognised in the Company's
Statement of Comprehensive Income at each valuation point.
Trade and other receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective interest rate
method.
Financial liabilities
The Company's financial liabilities include trade and other payables and other
short term monetary liabilities which are initially recognised at fair value
and subsequently measured at amortised cost using the effective interest rate
method.
Recognition, derecognition and measurement
Financial assets and financial liabilities are recognised in the Company's
Statement of Financial Position when the Company becomes a party to the
contractual provisions of the instrument. Financial assets and financial
liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue
of financial assets and financial liabilities (other than financial assets and
financial liabilities at FVTPL) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at FVTPL are recognised immediately
in profit or loss.
Financial assets are derecognised when the rights to receive cash flows from
the investments have expired or the Company has transferred substantially all
risks and rewards of ownership.
A financial liability (in whole or in part) is derecognised when the Company
has extinguished its contractual obligations, or when it expires or is
cancelled.
Subsequent to initial recognition, financial assets at FVTPL are measured at
fair value. Gains and losses resulting from movements in fair value are
recognised in the Statement of Comprehensive Income.
Financial liabilities are subsequently measured at amortised cost using the
effective interest rate method.
Taxation
The following accounting policies for taxation and deferred tax are in respect
of UK tax and deferred taxation.
Investment trusts which have approval under Section 1158 of the Corporation
Tax Act 2010 are not liable for taxation on capital gains. Shortly after
listing the Company received approval as an investment trust by HMRC. Current
tax is the expected tax payable on the taxable income for the Year, using tax
rates that have been enacted or substantively enacted at the date of the
Statement of Financial Position.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the statement of financial position
liability method. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited to the Statement of Comprehensive Income except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset tax assets against tax liabilities and when they
relate to income taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a net basis.
Income
Income includes investment income from financial assets at FVTPL and finance
income.
Dividend income is recognised when received and is reflected in the Statement
of Comprehensive Income as Investment Income. Bank deposit interest income is
earned on bank deposits on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the Statement of
Comprehensive Income, all expenses, including the Investment Management fee,
are presented in the revenue column of the Statement of Comprehensive income
as they are directly attributable to the operations of the Company.
Details of the Company's fee payments to the Investment Manager are disclosed
in note 6 to the financial statements.
Foreign currency
Transactions denominated in foreign currencies are translated into U.S.
dollars at actual exchange rates as at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the Year
end are reported at the rates of exchange prevailing at the Year end. Any gain
or loss arising from a change in exchange rates subsequent to the date of the
transaction is included as an exchange gain or loss to capital or revenue in
the Statement of Comprehensive Income as appropriate. Foreign exchange
movements on investments are included in the Statement of Comprehensive Income
within gains on investments.
Cash and cash equivalents
Cash and cash equivalents include deposits held at call with banks and other
short-term deposits with original maturities of three months or less.
Share capital and share premium
Shares are classified as equity. Costs directly attributable to the issue of
new Shares (that would have been avoided if there had not been an issue of new
Shares) are recognised against the value of the Share premium account.
Repurchases of the Company's own Shares are recognised and deducted directly
in equity. No gain or loss is recognised in profit or loss on the purchase,
sale, issue or cancellation of the Company's own equity instruments.
Nature and purpose of equity and reserves:
Share capital represents the nominal value (1 cent per share) of the issued
share capital. The Share premium account arose from the net proceeds of new
Shares.
The Special distributable reserve, which can be utilised to fund distributions
to the Company's Shareholders, was created following confirmation of the
Court, through the cancellation and transfer of $121.3 million in January 2021
from the Share premium account.
The capital reserve reflects any:
● gains or losses on the disposal of investments;
● exchange movements of a capital nature;
● the increases and decreases in the fair value of investments
which have been recognised in the capital column of the Statement of
Comprehensive Income; and
● expenses which are capital in nature.
The revenue reserve reflects all income and expenditure recognised in the
revenue column of the Statement of Comprehensive Income and is distributable
by way of dividend.
The Company's distributable reserves consist of the Special distributable
reserve, the Capital reserve attributable to realised profits and the Revenue
reserve.
Dividend payable
Dividends payable are recognised as distributions in the financial statements
when the Company's obligation to make payment has been established.
4. Investments at Fair Value Through Profit and Loss
As at 31 December 2024, the Company had one investment, being Holdco. The cost
of the investment in Holdco was US$134,065,000 (31 December 2023:
US$134,065,000).
As at As at
31 December 31 December
2024 2023
$'000 $'000
(a) Summary of valuation
Analysis of closing balance:
Investments at fair value through profit or loss* 61,594 116,798
Total investments as at 31 December 61,594 116,798
(b) Movements during the Year:
Opening balance of investments, at cost 134,065 134,065
Additions, at cost - -
Cost of investments as at 31 December 134,065 134,065
Revaluation of investments to fair value:
Unrealised movement in fair value of investments (72,471) (17,267)
Fair value of investments as at 31 December 61,594 116,798
(c) Losses on investment in the Year
Unrealised movement in fair value of investments brought forward (17,267) (6,690)
Unrealised movement in fair value of investments during the year (55,204) (10,577)
Losses on Investments (72,471) (17,267)
*The DG portfolio which was eventually sold for $37.14million, has been
recorded at fair value of $35.3million at 31 December 2024. The difference
reflects working capital adjustments
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level. The level of
fair value hierarchy within the financial assets or financial liabilities is
determined on the basis of the lowest level input that is significant to the
fair value measurement. Financial assets and financial liabilities are
classified in their entirety into only one of the following 3 levels:
Level 1
The unadjusted quoted price in an active market for identical assets or
liabilities that the entity can access at the measurement date.
Level 2
Inputs other than quoted prices included within Level 1 that are observable
(i.e. developed using market data) for the asset or liability, either directly
or indirectly.
Level 3
Inputs are unobservable (i.e. for which market data is unavailable) for the
asset or liability.
The classification of the Company's investments held at fair value is detailed
in the table below:
As at 31 December 2024
Level 1 Level 2 Level 3 Total
$'000 $'000 $'000 $'000
Investments at fair value through profit and loss
Equity investments in Holdco - - 61,594 61,594
Total investments as at 31 December 2024 - - 61,594 61,594
As at 31 December 2023
Level 1 Level 2 Level 3 Total
$'000 $'000 $'000 $'000
Investments at fair value through profit and loss
Equity investments in Holdco - - 116,798 116,798
Total investments as at 31 December 2023 - - 116,798 116,798
Due to the nature of the underlying investments held by Holdco, the Company's
investment in Holdco is always expected to be classified as Level 3. There
have been no transfers between levels during the year ended 31 December 2024
(2023: none).
The movement on the Level 3 unquoted investments during the year is shown
below:
As at As at
31 December 31 December
2024 2023
$'000 $'000
Opening balance 116,798 127,375
Additions during the year - -
Unrealised losses on investment (55,204) (10,577)
Closing balance 61,594 116,798
Valuation methodology
The Company owns 100% of its subsidiary Holdco through which the Company holds
all its underlying investments in SPVs.
As discussed in Note 2, the Company meets the definition of an investment
entity as described by IFRS 10, and as such the Company's investment in Holdco
is valued at fair value. In accordance with Company policy, the Investment
Manager has engaged an independent valuation firm to carry out fair market
valuations of the underlying investments as at 31 December 2024.
Fair value of the Beacon and Whirlwind is derived using a combined income
approach (DCF methodology) and market approach based on recent non-binding bid
prices from third parties, which follows IPEV Guidelines. A 50% weighting is
applied to both the income approach and market approach when concluding on
fair value. Typically, DCF is deemed the most appropriate methodology when
detailed projection of future cash flows is possible. Under the income
approach, the fair value of each asset is derived by projecting the future
cash flows of an asset, based on a range of operating assumptions for revenues
and expenses, and discounting those future cash flows to the present day with
a pre-tax discount rate appropriately calibrated to the risk profile of the
asset and market dynamics. Due to the asset class and available market data
over the forecast horizon, a DCF valuation is typically the basis upon which
renewable assets, are traded in the market, however, given recent market data
received by way of non-binding bids from third parties, a market approach was
also used in combination to determine fair value.
Fair value of the remaining portfolio assets, the DG Portfolio, were fair
valued at the agreed upon transaction value, as further detailed in the
Chair's Statement.
The Company measures the total fair value of Holdco by its net asset value,
which is made up of cash, working capital balances and the aforementioned fair
value of the underlying investments as determined using the methodologies
described above.
The Directors have considered all relevant information and have satisfied
themselves as to the methodology, the discount rates used, and key assumptions
applied and the valuation.
Valuation Sensitivities
A sensitivity analysis is carried out to show the impact on NAV of changes to
key assumptions. For each of the sensitivities, it is assumed that potential
changes occur independently of each other with no effect on any other key
assumption, and that the number of investments in the portfolio remains static
throughout the modelled life. The overall impact of each respective
sensitivity is calculated and then averaged against the market approach value
to determine the resulting NAV per share impacts as discussed below. The
sensitivities below were performed only on the Whirlwind and Beacon assets
given the DG Solar assets were fair valued at their agreed upon sale price.
(i) Discount rates
Pre-tax discount rates applied in the DCF valuations are determined by the
Independent Valuer using a multitude of factors, including pre-tax discount
rates disclosed by the Company's global peers and comparable infrastructure
asset classes as well as the internal rate of return inherent in the original
purchase price when underwriting the asset. The DCF valuations utilise two
classes of pre-tax discount rates:
a) contracted discount rate applied to the contracted cash flows of each
asset; and
b) uncontracted discount rate (higher) applied to the uncontracted (or
"merchant") cash flows of each investment which will occur after the initial
PPA and/or other contract term.
The pre-tax discount rates used in the DCF valuation of the investments are
considered the most significant observable input through which an increase or
decrease would have a material impact on the fair value of the investments at
FVTPL. As of 31 December 2024, the blended pre-tax discount rates (i.e., the
implied discount rate of both the contracted and uncontracted discount rates
of each investment) applied to the portfolio ranged from 8.3% to 8.4% (31
December 2023: 6.2% to 8.4%) with an overall weighted average of 8.4% (31
December 2023: 7.4%).
An increase or decrease of 0.5% in the discount rates would have the following
impact on NAV:
Discount Rate +50 bps -50 bps
(Decrease)/increase in NAV ($'000) (1,850) 1,950
NAV per Share 43.4c 46.1c
NAV per Share Change (1.3c) 1.4c
Change (%) (3.0%) 3.2%
(ii) Energy Production
Solar and wind assets are subject to variation in energy production over time.
An assumed "P75" level of energy yield (i.e. a level of energy production that
is below "P50", with a 75% probability of being exceeded) would cause a
decrease in the total portfolio valuation, while an assumed "P25" level of
power output (i.e. a level of energy production that is above "P50", with a
25% probability of being achieved) would cause an increase in the total
portfolio valuation.
Energy production, as measured in MWh per annum, assumed in the DCF valuations
is based on a "P50" energy yield profile, representing a 50% probability that
the energy production estimate will be met or exceeded over time. An
independent engineer has derived this energy yield estimate for each asset by
taking into account a range of irradiation, weather data, ground-based
measurements and design/site-specific loss factors including module
performance, module mismatch, inverter losses, and transformer losses, among
others. The "P50" energy yield case includes a 0.5% annual degradation for
solar assets and 1.0% annual degradation for wind assets through the entirety
of the useful life. In addition, the P50 energy yield case includes an
assumption of availability, which ranges from 98.5% to 99% for solar assets
and 96.0% for wind assets, as determined reasonable by an independent engineer
at the time of underwriting the asset.
The application of a P75 and a P25 energy yield case would have the following
impact on NAV:
Energy Production P75 P25
Increase/(decrease) in NAV ($'000) (2,550) 2,650
NAV per Share 42.9c 46.6c
NAV per Share change (1.8c) 1.9c
Change (%) (4.1%) 4.3%
(iii) Curtailment
Curtailment is the deliberate reduction (by the transmission operator) in
energy output of an asset below what could have been produced, in order to
balance energy supply and demand or due to transmission constraints. Due to
the contracted nature of energy production of its renewable energy investments
held by Holdco and with a substantial share of its solar assets being
behind-the-meter and directly connected to the energy consumer, the Company's
NAV is subject to a low overall level of curtailment, which has been factored
into NAV.
An increase or decrease of 50% from the assumed level of curtailment would
have the following impact on NAV:
Curtailment -50% +50%
Increase/(decrease) in NAV ($'000) (1,700) 1,750
NAV per Share 43.5c 46.0c
NAV per Share change (1.2c) 1.3c
Change (%) (2.8%) 2.8%
(iv) Merchant Power Prices
All of the Company's assets have long-term PPAs and incentive contracts in
place with creditworthy energy purchasers, and thus are not impacted by
fluctuations in regional market energy prices during the contract period.
Future power price forecasts used in the DCF valuations are derived from
regional market forward prices provided by the EIA and Leidos, with a 10-50%
discount applied based on the characteristics of the asset as reasonably
determined by the Independent Valuer. Inflationary pressures over the
long-term could present a circumstance of variability and increase merchant
power prices from previous forecasts.
An increase or decrease of 10% in future merchant power price assumptions
would have the following impact on NAV:
Merchant Power Prices -10% +10%
(Decrease)/increase in NAV ($'000) (3,250) 3,200
NAV per Share 42.4c 47.0c
NAV per Share change (2.4c) 2.3c
Change (%) (5.3%) 5.2%
(v) Operating Expenses
Operating expenses include O&M, balance of plant, asset management, site
leases and easements, insurance, property taxes, equipment reserves,
decommissioning bonds and other costs. Most operating expenses for solar and
wind assets are contracted with annual escalation rates, which typically range
from 2-3% to account for normalised inflation. As such, there is typically
little variation in annual operating expenses. However, there may be occasions
when certain expenses may be recontracted. Inflationary pressures over the
long term could also affect future operating expenses.
An increase or decrease of 10% in operating expenses would have the following
impact on NAV:
Operating Expenses +10% -10%
(Decrease)/increase in NAV ($'000) (2,300) 2,300
NAV per Share 43.1c 46.4c
NAV per Share change (1.7c) 1.7c
Change (%) (3.7%) 3.7%
(vi) Market vs Income Approach Weighting
Based on the third-party valuation service provider's assessment, the
concluded fair values were derived using a 50% weighting towards the concluded
market approach value and a 50% weighting towards the concluded income
approach value.
An increase or decrease of 25% in the assigned weighting towards the market
approach would have the following impact on NAV:
Operating Expenses +25% -25%
(Decrease)/increase in NAV ($'000) (3,975) 3,975
NAV per Share 41.8c 47.6c
NAV per Share change (2.9c) 2.9c
Change (%) (6.4%) 6.4%
(vii) Overall Impact
The overall impact of the combined downside and upside sensitivities to each
key assumption as noted above would have the following impact on NAV:
Overall Impact +10% -10%
(Decrease)/increase in NAV ($'000) 15,625 15,625
NAV per Share 33.4c 56.2c
NAV per Share change (11.3c) 11.5c
Change (%) (25.3%) 25.6%
5. Income
Year ended Year ended
31 December 31 December
2024 2023
Income from investments $'000 $'000
Dividends from Holdco 3,174 6,200
Deposit interest 72 84
Total Income 3,246 6,284
6. Investment Management Fees
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Investment management fees 879 - 879 1,246 - 1,246
The basis for calculating the Investment Management Fee is as follows:
Up until 1 January 2025, in accordance with the Company's Investment
Management Agreement, the Investment Manager was entitled to a management fee
as set out below:
● 1% per annum of NAV up to and equal to US$500 million;
● 0.9% per annum of NAV between US$500m and US$1 billion; and
● 0.8% per annum of NAV in excess of US$1billion.
On 21 January 2025, the Board announced that they had successfully
re-negotiated the management fee the Company pays to Ecofin under the
Investment Management Agreement dated 11 November 2020. The changes are aimed
at better aligning the interests of Ecofin with shareholders' interests. In
respect of any quarter beginning 1 January 2025 onwards, the fee will be
determined by the lower of the Company's market capitalisation or NAV. In
addition, management fees for Q3 2024 will be based on the NAV as adjusted
downwards so as to take into account the price realised for the sale of the DG
Solar assets as per the announcement to the London Stock Exchange. Management
fees for Q4 2024 remain unchanged.
Year ended 31 December 2024:
Shares purchased Investment Purchase price Number of Date of purchase
management (cents) Shares
fee
($)
Nil - - - Not applicable
Year ended 31 December 2023:
Shares purchased Investment Purchase price Number of Date of purchase
management (cents) Shares
fee
($)
1 January 2023 to 31 March 2023 48,095 79.0 60,879 10 May 2023
7. Other Operating Expenses
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Secretary and Administrator fees 228 - 228 197 - 197
Directors' fees 239 - 239 235 - 235
Directors' other employment costs 43 - 43 28 - 28
Broker retainer 82 - 82 141 - 141
Auditor's fees payable to the Company's
auditor for statutory audit services(1) 126 - 126 183 - 183
FCA and listing fees 49 - 49 41 - 41
Research fees - - - 39 - 39
Depository and custody fees 6 - 6 6 - 6
Registrar's fees 20 - 20 18 - 18
Marketing fees 13 - 13 10 - 10
Public relations fees 8 - 8 107 - 107
Printing and postage costs 30 - 30 26 - 26
Legal fees 23 - 23 128 - 128
Miscellaneous expenses 271 - 271 25 - 25
Total other operating expenses 1,138 - 1,138 1,184 - 1,184
1 The Auditor's fee for the Year is $126,000 including VAT
of $21,000 (2023: $183,000 including VAT of $30,600).
8. Earnings Per Share
Earnings per Share is based on the loss for the Year of $53,971,000 (2023:
$6,728,000) loss) and the weighted average number of shares in issue of
138,078,496 (2023 138,078,496) during the Year. Revenue profit for the Year
was $1,229,000 (2023: $3,854,000 profit) and capital loss for the Year was
$55,200,000 (2023: $10,582,000 loss).
9. Taxation
(a) Analysis of charge in the Year
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Corporation tax - - - - - -
Taxation for the Year - - - - - -
(b) Factors affecting total tax charge for the Year:
The effective UK corporation tax rate applicable to the Company for the Year
was 25% (2023: 23.5%). The tax charge differs from the charge resulting from
applying the standard rate of UK corporation tax for an investment trust
company.
The differences are explained below:
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Profit/(loss) on ordinary activities before taxation 1,229 (55,200) (53,971) 3,854 (10,582) 6,728
Corporation tax at 25% (2023: 23.5%) 307 (13,800) (13,493) 906 (2,487) (1,581)
Effects of:
Dividends received (not subject to tax) (812) - (812) (1,477) - (1,477)
Loss on investments held at fair value not allowable - 13,800 13,800 - 2,487 2,487
Unutilised management expenses 505 - 505 571 - 571
Total tax charge for the Year - - - - - -
Investment companies which have been approved by HMRC under section 1158 of
the Corporation Tax Act 2010 are exempt from tax on capital gains. Due to the
Company's status as an Investment Trust, and the intention to continue meeting
the conditions required to obtain approval in the foreseeable future, the
Company has not provided for deferred tax on any capital gains or losses
arising on the revaluation of investments.
As at 31 December 2024, a deferred tax liability of $740,000 (2023:
$2,870,000) representing U.S. Federal income taxes deferred had been accrued
and reflected in the valuation of the Company's subsidiary, Holdco.
The Company has excess management expenses of $8,525,000 (2023: $6,504,000)
that are available for offset against future profits. A deferred tax asset of
$2,131,000 (2023: $1,626,000) has not been recognised in respect of these
losses as they will be recoverable only to the extent that the Company has
sufficient future taxable profits.
10. Trade and Other Receivables
As at 31 As at 31
December December
2024 2023
$'000 $'000
Other receivables 54 5
Bank interest receivables 3 3
Total 57 8
11. Trade and Other Payables
As at 31 As at 31
December December
2024 2023
$'000 $'000
Accrued expenses 723 795
Total 723 795
12. Share Capital
Year ended 31 December 2024 Year ended 31 December 2023
Nominal value Nominal value
Allotted, issued and fully paid: No. of Shares $ No. of Shares $
Opening balance 138,078,496 1,380,784.96 138,078,496 1,380,784.96
Closing balance 138,078,496 1,380,784.96 138,078,496 1,380,784.96
The Shares have attached to them full voting, dividend and capital
distribution (including on winding-up) rights. They confer rights of
redemption.
The Company's issued share capital at 31 December 2024 comprised 138,078,496
(31 December 2023: 138,078,496) Shares and this is the total number of Shares
with voting rights in the Company.
13. Dividends
(a) Dividends paid in the Year
The Company paid the following interim dividends during the year
Year ended 31 December 2024
Special
Cents per distributable Revenue
Share reserve reserve Total
$'000 $'000 $'000
Quarter ended 31 December 2023 0.70c - 966 966
Quarter ended 31 March 2024 0.70c 702 264 966
Quarter ended 30 June 2024 - - - -
Quarter ended 30 September 2024 - - - -
Total 1.40c 702 1,230 1,932
The above dividends were partly paid out of special distributable reserves, in
the amount of $702,000.
Year ended 31 December 2023
Special
Cents per distributable Revenue
Share reserve reserve Total
$'000 $'000 $'000
Quarter ended 31 December 2022 1.40c - 1,933 1,933
Quarter ended 31 March 2023 1.40c - 1,933 1,933
Quarter ended 30 June 2023 0.70c - 967 967
Quarter ended 30 September 2023 0.70c - 967 967
Total 4.20c - 5,800 5,800
The above dividends were all paid out of revenue reserves.
(b) Dividends paid and payable in respect of the financial year
The dividends paid and payable in respect of the financial years are the basis
on which the requirements of s1158‑s1159 of the Corporation Tax Act 2010 are
considered.
Year ended 31 December 2024
Special
Cents per distributable Revenue
Share reserve reserve Total
$'000 $'000 $'000
Quarter ended 31 March 2024 0.70c 702 264 966
Quarter ended 30 June 2024 - - - -
Quarter ended 30 September 2024 - - - -
Quarter ended 31 December 2024 - - - -
Total 0.70c 702 264 966
Year ended 31 December 2023
Special
Cents per distributable Revenue
Share reserve reserve Total
$'000 $'000 $'000
Quarter ended 31 March 2023 1.40c - 1,933 1,933
Quarter ended 30 June 2023 0.70c - 967 967
Quarter ended 30 September 2023 0.70c - 967 967
Quarter ended 31 December 2023 0.70c - 967 967
Total 3.50c - 4,834 4,834
14. Reserves
The Company's Articles of Association permit dividend distributions out of
realised profits.
Share premium is a non distributable reserve and represents the amount by
which the fair value of the consideration received from shares issued exceeds
the nominal value of the shares issued.
The special distributable reserve arose following the cancellation of the
balance on the share premium account in 2021. As a result, this became a
distributable reserve and may be used to repurchase the Company's own Shares
or distributed as dividends.
The capital reserve comprises realised and unrealised gains and losses on
investments and foreign currency. As a result of the disposal of the DG
portfolio in March, this proportion of the fair value movement is considered
realised and non-distributable.
The revenue reserve may be distributed as dividends or used to repurchase the
Company's own shares.
15. Net Assets Per Share
Net assets per Share are based on $61,746,000 (2023: $117,659,000) of net
assets of the Company as at 31 December 2024 attributable to the 138,078,496
Shares in issue as at the same date (2023: 138,078,496).
16. Related Party Transactions
Investment Manager
Fees payable to the Investment Manager by the Company under the IMA are shown
in the Statement of Comprehensive Income. As at 31 December 2024, the fee
outstanding but not yet paid to the Investment Manager was $380,000(2023:
$297,000).
As at 31 December 2024, the Investment Manager's total holding of Shares in
the Company was 8,780,378 (31 December 2023: 8,780,378).
Directors
The Company is governed by a Board of Directors, all of whom are
non-executive, and it has no employees. During the year Louisa Vincent left
the Company on 31 October 2024 and Brett Miller joined on 11 July 2024.
Subsequent to year end Patrick O'Donnell Bourke left the Company on 14 January
2025 and Brett Miller was appointed the Chair on the same date.
Each of the Directors is entitled to receive a fee from the Company at such
rate as may be determined in accordance with the Articles. During the year
under review, each Director received a fee payable by the Company at the rate
of £40,000 per annum.
The Chairman of the Board receives an additional £10,000 per annum. The Chair
of the Audit Committee, the Chair of the Management Engagement Committee and
the Chair of the Risk Committee each receive an additional £6,000 per annum.
Since 12 August 2024, Mr Miller has received additional consultancy fees of
£12,500 per month to compensate him for the time he has spent expediting and
negotiating the sale of the Company's assets, liaising with shareholders and
researching and liaising with others on a change in the Investment Manager.
The aggregate remuneration and benefits in kind of the Directors in respect of
the Company's accounting year ended 31 December 2024 which were paid out of
the assets of the Company were $239,000 (2023: $235,150). The Directors are
also entitled to the reimbursement of out-of-pocket expenses incurred in the
proper performance of their duties.
The Directors had the following shareholdings in the Company, all of which
were beneficially owned.
There are no outstanding Directors' fees at year end (2023: nil).
Directors' holdings
Fees for the Fees for the
year ended year ended
31 December 2024 31 December 2023
Brett Miller(1) nil n/a
Patrick O'Donnell Bourke 104,436 104,436
David Fletcher 64,553 62,894
Tammy Richards 25,000 25,000
Louisa Vincent(2) n/a 36,076
1 Brett Miller was appointed to the Board on 11 July 2024.
2 Louisa Vincent resigned from the Board on 31 October 2024.
17. Financial Risk Management
The Investment Manager, AIFM and the Administrator report to the Board on a
quarterly basis and provide information to the Board which allows it to
monitor and manage financial risks relating to the Company's operations. The
Company's activities expose it to a variety of financial risks: market risk
(including price risk, interest rate risk and foreign currency risk), credit
risk and liquidity risk. These risks are monitored and managed by the AIFM.
Each risk and its management is summarised below.
(i) Currency Risk
Foreign currency risk is defined as the risk that the fair values of future
cash flows will fluctuate because of changes in foreign exchange rates. Based
on current operations, the Company's financial assets and liabilities are
denominated in U.S. dollars and substantially all of its revenues and expenses
are in U.S. dollars, the Directors do not expect frequent transactions in
foreign currencies and therefore currency risk is considered to be low and no
sensitivity to currency risk is presented.
(ii) Interest Rate Risk
The Company's interest rate risk on interest bearing financial assets is
limited to interest earned on money market cash deposits. The Board considers
that, as project level debt bears interest at fixed rates, they do not carry
any interest rate risk.
The Company's interest and non-interest bearing assets and liabilities as at
31 December 2024 are summarised below:
31 December 2024
Non-interest
Interest bearing bearing Total
$'000 $'000 $'000
Assets
Cash and cash equivalents 828 - 828
Trade and other receivables - 57 57
Investments at fair value through profit or loss - 61,594 61,594
Total assets 828 61,651 62,479
Liabilities
Trade and other payables - (723) (723)
Total liabilities - (723) (723)
31 December 2023
Non-interest
Interest bearing bearing Total
$'000 $'000 $'000
Assets
Cash and cash equivalents 1,648 - 1,648
Trade and other receivables - 8 8
Investments at fair value through profit or loss - 116,798 116,798
Total assets 1,648 116,806 118,454
Liabilities
Trade and other payables - (795) (795)
Total liabilities - (795) (795)
The money market cash deposits and bank accounts included within cash and cash
equivalents bear interest at low or zero interest rates and therefore
movements in interest rates will not materially affect the Company's income
and as such a sensitivity analysis is not necessary.
The Company's subsidiary, Holdco, has interest rate risk through the RCF and
through certain SPVs' project level loans which are priced by reference to
SOFR plus a margin. The total exposure to debt through Holdco at 31 December
2024 was $91.5 million (2023: $75.8 million). An increase or decrease in
interest rates of 0.5% would impact the net asset value of Holdco and the
Company by $457,500 (2023: $379,000) negatively or positively respectively.
The Company's RCF was repaid post year-end following the sale of the DG Solar
assets.
Changes in interest rates can affect the discount rates used. The sensitivity
of the investment valuation to changes in discount rate is disclosed in note
4.
(iii) Price Risk
Price risk is defined as the risk that the fair value of a financial
instrument held by the Company will fluctuate. As at 31 December 2024, the
Company held one investment, being its shareholding in Holdco, which is
measured at fair value. The value of the underlying renewable energy
investments held by Holdco varies according to a number of factors, including
discount rate, asset performance, solar irradiation, wind speeds, operating
expenses and forecast power prices. The sensitivity of the investment
valuation, due to changes to key assumptions valued on an asset by asset
basis, is shown in note 4. The sensitivity shows the impact on the NAV,
however, the impact on the profit and loss is the same. This does not consider
price risk associated with the valuation of the portfolio as a whole. A 30%
(decrease)/increase in the valuation of the investment portfolio as a whole
would have a $18.5m (2023: $35.3 million) negative or positive impact on the
NAV respectively.
As the Company moved into Managed Wind Down, the ultimate determinant of
values will be what willing buyers are prepared to pay for the Company's
remaining assets.
(iv) Credit Risk
Credit risk is the risk of loss due to the failure of a borrower or
counterparty to fulfil its contractual obligations. The Company is exposed to
credit risk in respect of trade and other receivables and cash at bank.
The Company's credit risk exposure as at 31 December is summarised below:
As at As at
31 December 2024 31 December 2023
$'000 $'000
Cash and cash equivalents 828 1,648
Trade and other receivables 57 8
Total 885 1,656
Cash and cash equivalents are held with U.S. Bank whose Standard & Poor's
credit rating is AA-. The Company's credit risk exposure is minimised by
dealing with financial institutions with investment grade credit ratings. No
balances are past due or impaired.
Liquidity Risk
Liquidity risk is the risk that the Company may not be able to meet a demand
for cash or fund an obligation when due. The Investment Manager and the Board
continuously monitor forecast and actual cashflows from operating, financing
and investing activities to consider payment of dividends, repayment of the
Company's debt or further investing activities.
The following tables detail the Company's expected maturity for its financial
assets (excluding the equity investment in Holdco) and liabilities together
with the contractual undiscounted cash flow amounts:
As at
31 December 2024
Less than 1 year Total
$'000 $'000
Assets
Cash and cash equivalents 828 828
Trade and other receivables 57 57
Liabilities
Trade and other payables (723) (723)
Net financial assets 162 162
As at
31 December 2023
Less than 1 year Total
$'000 $'000
Assets
Cash and cash equivalents 1,648 1,648
Trade and other receivables 8 8
Liabilities
Trade and other payables (795) (795)
Net financial assets 861 861
Capital management
The Company considers its capital to comprise Share capital, distributable
reserves and retained earnings. The Company is not subject to any externally
imposed capital requirements. The Company's share capital and reserves are
shown in the Statement of Financial Position at a total of $61,746,000 (2023:
$117,659,000).
The Company's primary capital management objectives are to ensure the
sustainability of its capital to support continuing operations, meet its
financial obligations and allow for growth opportunities. Generally,
acquisitions are anticipated to be funded with a combination of current cash,
borrowings and equity.
18. Unconsolidated Subsidiaries and Associates
The following table shows subsidiaries and associates of the Company. As the
Company is regarded as an Investment Entity as referred to in note 2, these
subsidiaries and associates have not been consolidated in the preparation of
the financial statements. The ultimate parent undertaking is Ecofin U.S.
Renewables Infrastructure Trust PLC.
Name Ownership Interest Investment Category Country of incorporation Registered address
RNEW Holdco, LLC 100% Holdco Subsidiary entity, owns RNEW Blocker, LLC United States 1209 Orange Street, Wilmington, DE 19801
RNEW Blocker, LLC 100% Holdco Subsidiary entity, owns RNEW Capital, LLC United States 1209 Orange Street, Wilmington, DE 19801
RNEW Capital, LLC 100% Holdco Subsidiary entity, owns underlying SPV Entities United States 1209 Orange Street, Wilmington, DE 19801
TC Renewable Holdco I, LLC 100% Holdco Subsidiary entity, owns CD Global Solar CA Beacon 2 Borrower, LLC and United States 1209 Orange Street, Wilmington, DE 19801
CD Global Solar CA Beacon 5 Borrower, LLC
TC Renewable Holdco II, LLC 100% Holdco Subsidiary entity, owns TCA IBKR 2020 Holdco, LLC and TCA IBKR 2021 United States 1209 Orange Street, Wilmington, DE 19801
Holdco
TC Renewable Holdco III, LLC 100% Holdco Subsidiary entity, owns UCCT Solar Group, LLC, Milford Industrial United States 1209 Orange Street, Wilmington, DE 19801
Solar, LLC, SED Three, LLC, SED Four, LLC, and Solar Energy Partners 1, LLC
TC Renewable Holdco IV, LLC 100% Subsidiary entity United States 1209 Orange Street, Wilmington, DE 19801
TC Renewable Holdco V, LLC 100% Holdco Subsidiary entity, owns Echo Solar 2022 Holdco, LLC United States 1209 Orange Street, Wilmington, DE 19801
TC Renewable Holdco VI, LLC 100% Holdco Subsidiary entity, owns ESNJ‑CB-DELRAN, LLC United States 1209 Orange Street, Wilmington, DE 19801
Name Ownership Interest Investment Category Country of incorporation Registered address
TC Renewable Holdco VII, LLC 100% Holdco Subsidiary entity, owns Whirlwind Energy, LLC United States 1209 Orange Street, Wilmington, DE 19801
TCA IBKR 2020 Holdco, LLC 100%(1) Holdco Subsidiary entity, owns Ellis Road Solar, LLC and Oliver Solar 1, LLC United States 1209 Orange Street, Wilmington, DE 19801
TCA IBKR 2021 Holdco, LLC 100%(1) Holdco Subsidiary entity, owns ESNJ‑BL-SKILLMAN, LLC United States 1209 Orange Street, Wilmington, DE 19801
Echo Solar 2022 Holdco, LLC 100%(1) Holdco Subsidiary entity, owns Westside Solar Partners, LLC, Monroe Solar United States 1209 Orange Street, Wilmington, DE 19801
Partners, LLC, Heimlich Solar Partners, LLC, Small Mouth Bass Solar Partners,
LLC, Hemings Solar Partners, LLC and Randolf Solar Partners, LLC
CD Global Solar CA Beacon 2 Borrower, LLC 49.5%(1) Subsidiary entity, owns investment in Beacon 2 United States 1209 Orange Street, Wilmington, DE 19801
CD Global Solar CA Beacon 5 Borrower, LLC 49.5%(1) Subsidiary entity, owns investment in Beacon 5 United States 1209 Orange Street, Wilmington, DE 19801
Ellis Road Solar, LLC 100%(1) Subsidiary entity, owns investment in Ellis Road Solar United States 1209 Orange Street, Wilmington, DE 19801
Oliver Solar 1, LLC 100%(1) Subsidiary entity, owns investment in Oliver Solar United States 1209 Orange Street, Wilmington, DE 19801
UCCT Solar, LLC 100% Subsidiary entity, owns one of the 52 solar investments in the SED Solar United States 155 Federal Street, Suite 700, Boston, MA 02110
Portfolio owned by TC Renewable Holdco III, LLC
Milford Industrial Solar, LLC 100% Subsidiary entity, owns two of the 52 solar investments in the SED Solar United States 155 Federal Street, Suite 700, Boston, MA 02110
Portfolio owned by TC Renewable Holdco III, LLC
SED Three, LLC 100% Subsidiary entity, owns 30 of the 52 solar investments in the SED Solar United States 155 Federal Street, Suite 700, Boston, MA 02110
Portfolio owned by TC Renewable Holdco III, LLC
SED Four, LLC 100% Subsidiary entity, owns six of the 52 solar investments in the SED Solar United States 155 Federal St, Suite 700, Boston, MA 02110
Portfolio owned by TC Renewable Holdco III, LLC
Solar Energy Partners 1, LLC 100% Subsidiary entity, owns 13 of the 52 solar investments in the SED Solar United States 155 Federal Street, Suite 700, Boston, MA 02110
Portfolio owned by TC Renewable Holdco III, LLC
ESNJ-BL-SKILLMAN, LLC 100%(1) Subsidiary entity, owns investment in Skillman Solar United States 100 Charles Ewing Blvd., Suite 160, Ewing, NJ 08628
Heimlich Solar Partners, LLC 100% Subsidiary entity, owns investment in Heimlich Solar United States 251 Little Falls Drive, Wilmington, DE 19808
Small Mouth Bass Solar Partners, LLC 100% Subsidiary entity, owns investment in Small Mouth Bass Solar United States 251 Little Falls Drive, Wilmington, DE 19808
Hemings Solar Partners, LLC 100% Subsidiary entity, owns investment in Hemings Solar United States 251 Little Falls Drive, Wilmington, DE 19808
Randolf Solar Partners, LLC 100% Subsidiary entity, owns investment in Randolf Solar United States 251 Little Falls Drive, Wilmington, DE 19808
Westside Solar Partners, LLC 100%(1) Subsidiary entity, owns investment in Westside Solar United States 251 Little Falls Drive, Wilmington, DE 19808
Monroe Solar Partners, LLC 100%(1) Subsidiary entity, owns investment in Monroe Solar United States 251 Little Falls Drive, Wilmington, DE 19808
ESNJ-CB-DELRAN, LLC 100% Subsidiary entity, owns investment in Delran Solar United States 100 Charles Ewing Blvd., Suite 160, Ewing, NJ 08628
Whirlwind Energy LLC 100% Subsidiary entity, owns investment in Whirlwind United States 615 South Dupont Highway, Dover, KY 19901(1)
1 Represents percentage ownership of class B membership
interest in the tax equity partnership.
19. Post Balance Sheet Events
Managed Wind down
On 14 January 2025, shareholders approved the Managed Wind-Down of the
Company.
Change in Investment Management Agreement
On 21 January 2025, the Company announced that it had successfully
renegotiated the management fee the Company pays to Ecofin Advisers, LLC
("Ecofin") under the Investment Management Agreement dated 11 November 2020.
The changes are aimed at better aligning the interests of Ecofin with
shareholders' interests. In respect of any quarter beginning 1 January 2025
onwards, the management fee will be determined by the lower of the Company's
market capitalization or net asset value.
Investment Manager Served Notice
On 6 February 2025, the Investment Manager served notice on the Company. In
accordance with the Investment Manager's agreement, they are required to serve
12-month notice, which would expire on 5 February 2026. The Board are
considering their options with regard to finding alternative management
arrangements.
Sale of DG Solar Assets
On 11 March 2025, the Company completed on the sale of the Company's DG Solar
assets for approximately US$37.1 million, US$22.9 million of that amount was
used to repay the Company's RCF.
Other Information
Alternative Performance Measures
In reporting financial information, the Company presents alternative
performance measures, ("APMs"), which are not defined or specified under the
requirements of IFRS. The Company believes that these APMs, which are not
considered to be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance of the
Company. The APMs presented in this report are shown below:
Discount
The amount, expressed as a percentage, by which the Share price is less than
NAV per Share.
As at As at
31 December 31 December
2024 2023
NAV per Share (cents) a 44.7 85.2
Share price (cents) b 30.5 56.5
Discount (b÷a)-1 31.8% 33.7%
Total return
Total return is a measure of performance that includes both income and capital
returns. It takes into account capital gains and the assumed reinvestment of
dividends paid out by the Company into its Shares on the ex-dividend date. The
total return is shown below, calculated on both a share price and NAV basis.
Year ended 31 December 2024 Share price (cents) NAV (cents)
Opening at 1 January 2024 a 56.5 85.2
Closing at 31 December 2024 b 30.5 44.7
Dividends paid during the Year c 0.7 0.7
Dividend/income adjustment factor(1) d 1.0032 1.004
Adjusted closing e = (b +c) x d e 31.3 45.6
Total return (e÷a)-1 -44.6% -46.5%
1 The dividend adjustment factor is calculated on the
assumption that the dividends paid out by the Company are reinvested into the
shares of the Company at share price and NAV at the ex-dividend date.
Year ended 31 December 2023 (cents) NAV (cents)
Opening at 1 January 2023 a 83.3 94.3
Closing at 31 December 2023 b 56.5 85.2
Dividends paid during the Year c 4.2 4.2
Dividend/income adjustment factor(1) d 0.9875 0.9968
Adjusted closing e = (b +c) x d e 59.9 89.1
Total return (e÷a)-1 -28.0% -5.5%
Ongoing charges ratio
A measure, expressed as a percentage of average NAV, of the regular, recurring
annual costs of running an investment company.
Year ended Year ended
31 December 2024 31 December 2023
Average NAV ($'000) a 87,694 124,293
Annualised expenses ($'000) b 2,027 2,209
Ongoing charges (b÷a) 2.3% 1.78%
ANNUAL REPORT
The Annual Report for the year ended 31 December 2024 was approved on 24
April 2025. The full Annual Report can be accessed via the Company's website
at: https://rnewfund.com/
The Annual Report will be submitted to the National Storage Mechanism and will
shortly be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
This announcement contains regulated information under the Disclosure Guidance
and Transparency Rules of the FCA.
ANNUAL GENERAL MEETING ("AGM")
The AGM of Ecofin U.S. Renewables Infrastructure Trust plc will be held at 140
Aldersgate Street, London, EC1A 4HY, on Thursday 26 June 2025 at 2:00pm.
Even if shareholders intend to attend the AGM, all shareholders are encouraged
to cast their vote by proxy and to appoint the "Chair of the Meeting" as their
proxy. Details of how to vote, either electronically, by proxy form or through
CREST, can be found in the Notes to the Notice of AGM in the Annual Report.
Enquiries:
Jennifer Thompson 0203 327 9720
Apex Listed Companies Services (UK) Limited
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