Renewables funds like Greencoat UK Wind (UKW), Octopus Renewables (ORIT) & The Renewables Infrastructure Group (TRIG) market themselves as low-risk investments. But plunging share prices and wide discounts to NAV suggest management in denial. A thread (1/11)
Labour govt changes: ROC indexation cut (RPI to CPI) & Carbon Price Support removal in 2028. Funds took NAV hits but downplayed them. New Wholesale CfDs offered as partial offset. These are minor vs. what could come from Reform & Tories. (2/11)
Bigger risks: Tories & Reform pledge to scrap Net Zero elements. Remove CPS + ETS (carbon taxes boosting wholesale prices), abolish ROC scheme early. This would slash revenues for ROC-dependent assets far more than current tweaks, further impacting NAV & share prices. (3/11)
$UKW claims "simple, transparent, low risk". Share price down >40% from peak. NAV hit 1.9% from ROC change, expects 3-5p more from CPS. Sensitivity analysis only models mild 10% power price drops – ignores full subsidy/carbon tax removal. (4/11)
$ORIT aims for "attractive income + capital growth". Share price down >48%. Green certificates ~1/3 of revenues. 10% power price cut = ~10% NAV hit. Acknowledges Reform risk but sensitivity doesn't quantify full ETS/ROC abolition impact. (5/11)
$TRIG: "Robust investment proposition". Down >52%. 65% revenues from subsidies over next decade; 19% from ROCs/FiTs in 2026. Sensitivity: 10% price drop or 1yr asset life cut = small NAV impacts. Notes potential solvency threats from retroactive subsidy withdrawal. (6/11)
Funds admit some policy risks but treat major changes (ETS removal, early ROC abolition) as low-probability. Yet ETS adds more to prices than CPS. Ending subsidies would hammer power price assumptions & asset lives. (7/11)
Performance reality: Massive discounts to NAV show market scepticism. NAVs fell in 2025 despite subsidies. Marketing talks "secure, clean electricity" & value creation – but shareholders have seen big losses. (8/11)
Boards appear in denial. Sensitivity analyses understate risks from anti-Net Zero policies. A Reform/Tory govt could devastate economics via lower prices + lost subsidies. Funds not stress-testing severe scenarios. (9/11)
Conclusion: These "low-risk" funds have delivered poor returns despite generous subsidies. As politics shifts on high energy costs, risks are rising. Investors should note the massive NAV discounts & incomplete risk evaluation. (10/11)
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