LEI: 2138004JUQUL9VKQWD21

29 April 2024

 

Ecofin U.S. Renewables Infrastructure Trust PLC

Annual Financial Report for the year ended 31 December 2023

Ecofin U.S. Renewables Infrastructure Trust plc ("RNEW" or the "Company") is pleased to announce its audited results for the year ended 31 December 2023 ("Year").

Objective

The Company's investment objective is to provide Shareholders with an attractive level of current distributions by investing in a diversified portfolio of mixed renewable energy and sustainable infrastructure assets ("Renewable Assets") predominantly located in the U.S. with prospects for modest capital appreciation over the long term.

Highlights

Financial

As at 31 December 2023
Net Asset Value ("NAV") per share	NAV	Share price
85.2 cents	$117.7 million	56.5 cents²
66.8 pence¹	£92.2 million¹	44.3 pence²
Leverage
38.6%³
Year ended 31 December 2023 ("Year")
NAV total return	Share price total return	Dividends per share declared
(5.5)%⁴	(28.0)%⁴	3.5 cents
Operational
Assets	Equivalent number of households	Portfolio generating capacity
	supplied in 2023
65	~22,200	177 MW⁵
CO2e avoided in 2023	Clean energy generated in 2023
~141,800 tonnes⁶	248 GWh⁵

Figures reported either as at the referenced date or over the year ended 31 December 2023. All references to cents and dollars ($) are to the currency of the U.S., unless stated otherwise.

1.        31 December 2023 exchange rate of £0.7835 = $1.00

2.        RNEW & RNEP LSE closing price as at 31 December 2023

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 Alternative Performance Measures section.

5.        Represents the Company's share of portfolio generating capacity.

6.        CO₂e based on the Company's proportionate ownership interest in the assets. CO₂e calculations are derived using the U.S. Environmental Protection Agency's ("EPA") Emissions & Generation Resources Integrated Database.

Portfolio

 

								Remaining
								revenue
		Capacity	Number of				Acquisition	contract term
Investment Name	Sector	(MW)1	assets	State	Ownership2	Phase	Status	(years)3
SED Solar Portfolio	Commercial	11.3	52	Massachusetts,	100%	Operational	Completed	12.6
	Solar			Connecticut			Dec. 2020
Ellis Road Solar	Commercial	7.1	1	Massachusetts	100%	Operational	Completed	17.5
	Solar						Dec. 2020
Oliver Solar	Commercial	4.8	1	California	100%	Operational	Completed	11.9
	Solar						Dec. 2020
Beacon 2	Utility-Scale	29.5	1	California	49.5%	Operational	Completed	19.0
	Solar						Feb. 2021
Beacon 5	Utility-Scale	23.9	1	California	49.5%	Operational	Completed	19.0
	Solar						Feb. 2021
Skillman Solar	Commercial	2.6	1	New Jersey	100%	Operational	Completed	13.6
	Solar						Sept. 2021
Delran Solar	Commercial	2.0	1	New Jersey	100%	Operational	Completed	11.5
	Solar						Oct. 2021
Whirlwind	Wind	59.8	1	Texas	100%	Operational	Completed	4.0
							Oct. 2021
Echo Solar - MN	Commercial	13.7	1	Minnesota	100%	Operational	Completed	24.0
	Solar						Oct. 2021
Echo Solar - VA 1	Commercial	2.7	1	Virginia	100%	Operational	Completed	24.0
	Solar						Jun. 2022
Echo Solar - VA 2	Commercial	4.2	1	Virginia	100%	Operational	Completed	25.0
	Solar						Jun. 2022
Echo Solar - VA 3	Commercial	6.5	1	Virginia	100%	Operational	Completed	24.7
	Solar						Aug. 2022
Echo Solar - VA 4	Commercial	2.9	1	Virginia	100%	Operational	Completed	25.0
	Solar						Aug. 2022
Echo Solar - DE 1	Commercial	5.9	1	Delaware	100%	Operational	Completed	25.0
	Solar						Aug. 2022
Total3		176.9	65					13.73

1.        Capacity reflects RNEW's proportionate ownership interest in the assets.

2.        Cash equity ownership.

3.        Average remaining revenue contract term (years).

 

Our Business Model

Investment Objective

The Company's investment objective is to provide Shareholders with an attractive level of current distributions by investing in a diversified portfolio of Renewable Assets predominantly located in the U.S. with prospects for modest capital appreciation over the long term.

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 the Administrator who are the principal service providers. The Company's structure, including management structure and key service providers, is illustrated overleaf.

The Company makes 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 Company has the ability to use short and long-term debt at the Company, Holdco and SPV levels subject to limits defined in its gearing policy.

The Company, through a wholly-owned U.S. subsidiary, RNEW Capital, LLC, has a $65 million secured Revolving Credit Facility ("RCF") with KeyBank, one of the premier lenders to the U.S. renewable energy industry. The RCF comprises a $50 million, two-year tranche priced at Secured Overnight Financing Rate ("SOFR") plus 2.13% and a $15 million, three-year tranche priced at SOFR plus 2.38%. Both tranches were extended by 12 months in 2023 to October 2024 and October 2025, respectively. The RCF also includes an accordion option for an additional $20 million of capital which can be accessed subject to certain conditions. The RCF is structured to provide RNEW with operational flexibility and liquidity to advance its pipeline and continue to grow.

Through the Company's acquisition of a 49.5% stake in the Beacon 2 and 5 operating solar assets, it assumed its share of non-recourse amortising project term loans secured on those projects that totalled $44.7 million as at 31 December 2023. In addition, in October 2023, a wholly-owned U.S. subsidiary of RNEW, TC Renewable Holdco V, LLC, entered into a $4.3 million amortising project term loan secured on Echo Solar Portfolio projects.

The Company has a 31 December financial year end and announces half-year results in September and full-year results in April. The Company pays dividends quarterly.

Management of the Company

The Company has an independent board of four non-executive Directors (details of whom 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, the portfolio and new investment opportunities. Day-to-day management of the Company's portfolio is delegated to the Investment Manager, with investment decisions in line with the Company's Investment Policy delegated to an Investment Committee consisting of senior members of the Investment Manager. Further information on the Investment Manager is provided in the Investment Manager's Report.

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). Each service provider has an established track record and has in place suitable policies and procedures to ensure it maintains high standards of business conduct and corporate governance.

Investment Manager

·          Manages the portfolio of Renewable Assets to achieve the Company's Investment Objective

·          Sources, evaluates and implements the pipeline of new investments

·          Monitors financial performance against Company targets and forecasts

·          Advises the Board on investment strategy and portfolio composition to achieve the desired target returns within the agreed risk appetite

·          Manages the process and analysis for semi-annual valuations (March/September) 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

·          Manages the Company's investor reporting and investor relations activities

 

Chairman's Statement

Introduction

On behalf of the Board, I am pleased to present the annual report for Ecofin U.S. Renewables Infrastructure Trust PLC for the year ended 31 December 2023 (the "Annual Report").

This was a difficult year for your fund. RNEW's share price has continued to trade at a discount to Net Asset Value (NAV), in common with much of the UK investment trust sector, as I noted in the Company's interim results to 30 June 2023. The sector has been out of favour with equity investors against a background of high inflation and increased interest rates, and it remains to be seen if market expectations of lower interest rates during 2024 result in a rerating of share prices. The Company has also had to address some challenging operational issues as described further below.

Strategic review

At 31 December 2023, the share price represented a 33.7% discount to NAV. As previously mentioned, the Board is not content with this level of discount. During 2023, we considered initiating a share buy-back programme but the Board and its advisers did not believe such a programme would have a material impact on the discount and were concerned about the consequent reduction in liquidity in the Company's shares.

The last annual report noted that, consistent with good governance, the Board was open to exploring all options for the future of the Company. In line with this, approaches were made to another listed closed-ended investment company in the sector with a view to combining the Company and the other vehicle through a scheme of reconstruction to create a larger company with greater liquidity. However, the Company's proposal was not successful. The Company subsequently received interest from a different listed closed ended investment company within the wider renewable energy sector regarding a combination; however, the Board did not consider the proposal to be in the best interests of Shareholders for a variety of reasons.

The Company also interacted with Shareholders during the year, both through the Investment Manager and through the Board. As part of these interactions, and in particular, meetings held in May 2023 following the annual results, feedback was received from several major Shareholders that the Company should consider a sale of its assets.

Against this background and given the wide discount to NAV and the unfavourable short-term prospects to raise new equity, on 8 September 2023 the Board announced a review of the Company's strategy to maximise value for Shareholders. The review would focus on a sale of the Company's assets. If successful, and subject to the terms of such disposal, cash is expected to be returned to Shareholders in connection with a winding up of the Company or similar transaction and Marathon Capital ("Marathon") was appointed accordingly.

The review is ongoing and has taken longer than expected. As part of the review, Marathon has conducted a comprehensive and wide-ranging exercise to identify potential buyers', appetite for the Company's portfolio of assets. This process has resulted in specific discussions and negotiations taking place which, hopefully, will soon be drawing to a conclusion.

Given the discount to NAV, it is perhaps inevitable that, in arriving at their views on valuation of the Company's portfolio as a whole, buyers would take account of both RNEW's prevailing share price as well as its reported NAV, the latter being derived on an asset by asset basis. Assuming a satisfactory transaction can be agreed, the Board expects a proposal to be set out in a circular and put to a general meeting, at which Shareholders will have the opportunity to vote.

Portfolio management

As at 31 December 2023, RNEW's portfolio comprised 65 solar and wind assets with a combined capacity of 177MW across eight states: California, Connecticut, Delaware, Massachusetts, Minnesota, New Jersey, Texas and Virginia. As at the same date, 65 assets were in operation.

During 2023, the portfolio generated 248 GWh of clean electricity (2022: 335 GWh), equivalent to powering 22,200 households, from a fully-contracted portfolio of diversified solar and wind projects. The assets all benefit from long term PPAs with investment-grade utility, municipal or corporate off-takers with a weighted average PPA term remaining of 13.7 years (18.4 years excluding the Whirlwind windfarm). Total generation during the year was below budget as described further in the Portfolio Production Update section of the Investment Manager's Report.

Toward the end of the first half of 2023, certain of the Company's assets suffered unforeseen operational issues which had a negative impact on the overall performance and valuation of the portfolio. Principal among these were:

·          a tornado on 21 June in Matador, Texas which destroyed the substation through which the Company's Whirlwind windfarm asset (located approximately 20 miles west-northwest of Matador) transmitted its power;

·          damage to DC wiring at the Ellis Road solar project caused by a rodent infestation which forced 40% of the total system capacity to be de-energised; and

·          voltage issues on the electricity network where the Skillman project is located causing the project to be automatically tripped offline, an issue which was rectified and power restored on 7 July.

In December 2023, the Company announced that an agreement had been reached with American Electric Power ("AEP"), the owner of the Matador substation, to restore generation from Whirlwind through a new transmission line to Paducah, another substation owned by AEP. Re-energisation of Whirlwind took place on 8 December 2023 and the windfarm has been generating successfully, albeit at a reduced voltage. The first payment on the Company's business interruption insurance in respect of Whirlwind was received before year end and further payments are scheduled to follow in the first half of 2024, substantially mitigating lost revenue and expenses incurred because of the outage. In the same announcement in December, the Company also reported that the Ellis Road solar project was online.

During the year, progress continued in completing construction and financing of the Echo Solar Portfolio, a 36.0 MWdc commercial solar portfolio in Minnesota, Virginia, and Delaware, including the completion of several tax equity milestone funding and nearing completion on negotiation of a back leverage debt facility. Currently, three projects have achieved commercial operation, and the three remaining projects are mechanically complete and being commissioned for commercial operation.

Results

The NAV as at 31 December 2023 was $85.2 cents per Share (31 December 2022: $94.3 cents per Share) or $117.7 million (31 December 2022: $130.2 million). During 2023, NAV per Share decreased by 9.7% as described further in the Portfolio Valuation section of the Investment Manager's Report.

The valuation of the portfolio as at 31 December 2023 is supported by an independent valuation firm, Marshall & Stevens. The basis of valuation is discounted cash flow, assuming a willing buyer and a willing seller on an asset by asset basis, and using appropriate discount rates for each asset. The valuation as at 31 December 2023 was based on an underlying blended weighted average pre-tax discount rate of 7.4%. This reflects a small decrease from 31 December 2022 due to the net effect of a 0.25% increase in discount rates applied to the majority of the assets more than offset by the impact of bringing the Echo Solar Portfolio to a discounted cash flow fair valuation from cost.

RNEW recorded a loss before tax for the year ended 31 December 2023 of ($6.7) million (2022: $1.2 million profit) and earnings (loss) per Share was (4.9) cents (2022: 0.89 cents per Share profit).

Financing and gearing

In June 2023, the Company completed an amendment and extension to its $65 million RCF with KeyBank. The RCF, which comprises two tranches, was extended by 12 months. The $50 million tranche was extended to October 2024 and the $15 million tranche to October 2025.

The Company's total gearing at 31 December 2023 was 38.6% (31 December 2022: 33.3%) based on a Gross Asset Value ("GAV") of $196.6 million and aggregate debt of $75.8 million. The Company had non-recourse debt at project level ($44.7 million secured on the two Beacon solar projects in California, and $4.3 million secured on certain of the Echo Solar assets) and debt at group level, consisting of $26.8 million drawn under the RCF.

Dividends

The Board declared a quarterly interim dividend of 1.4 cents per Share in respect of the quarter ended 31 March 2023, and further interim dividends of 0.7 cents per Share for each of the quarters ended 30 June 2023, 30 September 2023 and 31 December 2023. The reduction in dividend during the year was explained in our announcement on 29 June 2023 and reflected a decline in cash flows resulting from the operational issues described above and certain one-off costs. The total dividend for 2023 was 3.5 cents per Share.

Board

The Board continues to work well together and with Ecofin. It comprises four directors - two women and two men. Together we have a good balance of sector, investment trust and wider financial investment experience, including significant experience in the U.S. renewable energy sector. One of the directors is a U.S. citizen and is resident in the U.S.

As previously mentioned, the Board would like to appoint a further director to enhance its ethnic diversity base, recognising the benefits of having greater diversity on the Board. At present, given the Company's size, cost base and the stage of its development, the Directors do not feel it is appropriate to increase the size of the Board.

Annual General Meeting

We look forward to welcoming Shareholders at the Company's Annual General Meeting ("AGM) to be held on 13 June 2024 at the offices of the Company Secretary located at 6^th floor, 125 London Wall, London EC2Y 5AS. For more information, please see the enclosed AGM notice.

As set out above, it is hoped that the strategic review announced on 8 September 2023 will soon be drawing to a conclusion.

Patrick O'D Bourke

Chairman of the Board

26 April 2024

 

Investment Manager's Report

About Ecofin

Ecofin Investments, LLC, the parent company of the Investment Manager, is a sustainable investment firm with roots dating to the 1990s and an international footprint with offices in the U.S. and UK. As at 31 December 2023, Ecofin Investments, LLC had assets under management of $1.9 billion across several listed U.S. and UK funds, private funds, and separately managed accounts.

Eileen Fargis joined Ecofin as the Group Lead for Ecofin's Private Equity Sustainable Infrastructure team in October 2022 and was appointed as the Ecofin group lead and portfolio manager for the Company. In her role, Eileen works closely with Ecofin's team of experienced professionals, originating and managing the firm's U.S. Renewable Assets. Eileen has over 20 years' industry experience, most recently as Head of Investments for InterEnergy Holdings (UK) Ltd, an independent developer, owner, and operator of energy generation assets and a utility in the Caribbean and Latin America.

The Finance and Asset Management team has extensive experience in the energy industry. The team works with Eileen to onboard new assets seamlessly and strives to attain operational excellence for each of the Renewable Assets to maximise profitability for Shareholders. The team interfaces with engineers and plant operators to ensure plant optimisation. Strong relationships and constant communication with our outsourced asset management and O&M service providers are key to smooth operations. Continuous process improvement is at the forefront for the team to steadily advance the effectiveness of data analytics. Additionally, the team is focused on keeping current with new accounting guidance and reporting requirements that impact the portfolio.

Ecofin is currently maintaining its focus on managing RNEW's existing assets and near-term funding obligations while assisting with the ongoing strategic review.

Ecofin Group Lead and Portfolio Manager

Eileen Fargis

Eileen has over 20 years' industry experience, most recently as Head of Investments for InterEnergy Holdings (UK) Ltd, an independent developer, owner, and operator of energy generation assets and a utility in the Caribbean and Latin America. She is the former Co-Head of the $1 billion IFC African, Latin American and Caribbean Fund LP, a private equity fund investing alongside the International Finance Corporation on behalf of the Fund's investors.

Eileen started her career in energy and infrastructure with Skadden Arps and spent nine years at GE Capital Markets, GE Energy Financial Services and GE Structured Finance with a focus on global energy and infrastructure assets. She has previously served on the boards of InterEnergy Holdings, CityExpress Hotels and SURA Asset Management. Eileen is a graduate of Hamilton College and the John Hopkins School of Advanced International Studies.

Investments - Summary of the year

During the Year, the Investment Manager continued to focus on maximising the operating activity of the portfolio and dealing with unexpected operational issues, including primarily the tornado which affected the substation through which the Company's Whirlwind asset transmits electricity. The portfolio delivered 247.98 GWh of clean electricity to its offtakers. While this was 36.2% below budget, net cash flow generated was able to cover $4.8 million of dividends, or 3.5 cents per Share. Largely due to the aforementioned tornado, the Company was unable to meet in 2023 its stated annual target¹ dividend range of 5.25% to 5.75%.

Significant funding activity took place during the Year, relating primarily to construction projects and tax equity financings.

The Investment Manager advanced on the Echo tax equity partnership, providing financing for the Echo Solar Portfolio. It is also in the final stages of completing the Oliver Solar tax equity partnership. Coinciding with these financings, the Investment Manager brought three new projects to commercial operation, Echo Solar Westside, Monroe and Hemings.

The Company successfully negotiated to extend its RCF an additional year to October 2024 and October 2025 for each respective tranche. The Company expects to be able to renew or extend on substantially similar terms in the second half of 2024, depending on the outcome of the strategic review.

Investment Activity

2023

4 April 2023 - the Company completed the first tax equity funding on the 6.5 MWdc Hemings Solar Partners, LLC in Virginia ("VA") (Echo Solar - VA 3) and the 5.9 MWdc Heimlich Solar Partners, LLC project in Delaware ("DE") (Echo Solar - DE 1).

21 June 2023 - the Company's 59.8 MW Whirlwind Energy wind farm, Whirlwind, in Floydada, Texas, ceased operations due to a tornado which damaged five project-owned transmission poles. Additionally, the American Electric Power ("AEP") owned substation in neighbouring Matador, through which Whirlwind transmits electricity, was severely damaged during the incident. The Company re-gained interconnection during the fourth quarter of 2023 via an alternate route through a substation in Paducah, Texas. This alternate transmission arrangement now allows 80% capacity throughput relative to full capacity (50 MW versus the full capacity of 59.8 MW) on an interim basis, with a corresponding reduction in forecasted cash flows. AEP intends to build a new substation at Matador as quickly as possible and return Whirlwind to full capacity, which is estimated to take approximately 18 months, at which time Whirlwind will return to its prior interconnection route and to full capacity. The Company, its insurance broker, and a claims consultant have worked together to file claims for business interruption and necessary repairs to the damaged project-owned transmission poles. Negotiation of claims and final loss amounts with the insurers is ongoing; however, several interim payments have been received. It is expected that the Company's insurance policy ultimately will provide coverage for both the damaged transmission poles and for 120 days of business interruption losses that occur from outages (following a 45-day waiting period).

26 June 2023 - the Company completed an amendment to its RCF with KeyBank, extending the facility by twelve months on competitive terms:

·          $50 million tranche extended to October 2024 at SOFR +2.00% to 18 October 2023 and SOFR + 2.125% thereafter

·          $15 million tranche extended to October 2025 at SOFR + 2.25% to 18 October 2023 and SOFR + 2.375% thereafter

As at 31 December 2023, the Company had $26.8 million drawn on the RCF and had approximately $14.2 million¹ of outstanding net commitments (net receivables) from tax equity investors on closed assets.

5 July 2023 - the Company completed the first tax equity funding on the 2.9 MWdc Small Mouth Bass Solar Partners, LLC project (Echo Solar - VA 4) and the final tax equity funding on the 2.7 MWdc Monroe Solar Partners, LLC project (Echo Solar - VA 1).

4 August 2023 - the Company completed the first tax equity funding on the 4.2 MWdc Randolf Solar Partners, LLC project (Echo Solar - VA 2).

1 September 2023 - the Company completed the final tax equity funding on the 13.7 Echo Solar - MN project, allowing for a partial repayment on the RCF which had an outstanding balance of $28.8 million as at 1 September 2023.

12 October 2023 - the Company completed the final tax equity funding on the 6.5 MWdc Hemings Solar Partners, LLC in Virginia ("VA") (Echo Solar - VA 3) which reached commercial operation on 15 September 2023.

8 December 2023 - Whirlwind repairs were completed and the plant was re-energised.

31 December 2023 - the last three of the six Echo portfolio assets were granted conditional permission to operate and were placed in service. Commercial operation should be reached and the completion of the tax equity fundings should wrap up in the first half of 2024.

As at 31 December 2023, the portfolio was heavily weighted towards operating assets with 93% of NAV invested in operating assets held at fair market value ("FMV"). The portfolio benefits from geographic diversification spanning eight U.S. states to provide risk mitigation against regulatory and resource exposures. Furthermore, RNEW's portfolio reflects diversification across three renewable energy sectors: utility scale solar (18%) commercial solar (50%) and wind (32%), to mitigate resource, regulatory, technology and market risks. As at 31 December 2023, all assets in the portfolio had been placed in service, although not all have declared their Commercial Operation Date ("COD").

Portfolio Summary¹

 

FMV by asset name

 

Asset name	Portfolio %
Beacon 2&5	18%
SED Solar Portfolio	13%
Oliver Solar	5%
Ellis Road Solar	6%
Skillman Solar	3%
Delran Solar	2%
Whirlwind	32%
Echo Solar - MN	14%
Echo Solar - VA/DE	7%

 

FMV by sector

 

Sector	Portfolio %
Utility scale solar	18%
Commercial solar	50%
Wind	32%

1.         Includes closed and committed assets based on equity exposure at FMV.

Summary of Investments

1. SED Solar Portfolio

The SED Solar Portfolio consists of 51 predominantly rooftop commercial solar projects in Massachusetts and 1 rooftop commercial solar project in Connecticut, totalling 11.3 MW. The projects' output is fully contracted to a variety of investment grade quality schools, universities, municipalities and corporations under long term fixed price PPAs. The transaction came about through a bilateral negotiation with a vendor which was considering monetising its interest in the portfolio which it had successfully developed and operated for several years. The Investment Manager represented an acquirer with the expertise to reliably execute an acquisition spanning 52 assets and dozens of counterparties. Ecofin closed the acquisition just days after completing RNEW's IPO in December 2020, after which Ecofin secured a fixed price revenue contract with an investment grade rated electric power company to hedge the price risk for 100% of SED Solar Portfolio's Solar Renewable Energy Credit ("SREC").

2. Ellis Road Solar

Ellis Road Solar is a 7.1 MW ground mount solar project in Massachusetts that commenced operations in 2021. This project sells 100% of its output to an investment grade utility on a fixed price basis for 20 years through the state of Massachusetts's renewable incentive program, Solar Massachusetts Renewable Target (SMART). Ellis Road was initially sourced bilaterally by Ecofin through its relationship with a commercial solar developer focused on Northeastern U.S. markets and became one of the four seed assets identified as part of RNEW's IPO. Following the closing of the acquisition in December 2020, Ecofin actively monitored the remaining construction process through to its successful completion and secured a tax equity investment on customary terms from a large U.S. corporate with which Ecofin has previously transacted.

3. Oliver Solar

Oliver Solar is a 4.8 MW commercial solar project in San Joaquin County, California that commenced operations in 2021. The project is strategically located on a major logistics and distribution centre owned by the world's largest global e-commerce company that also serves as the power purchaser under a long-term fixed price PPA. The project experienced construction delays due to Covid-19 related impacts and inspection delays. Shortly after energisation, the offtake/ building owner requested that the project be de-energised for further testing/ recommissioning, after they had experienced an arc event (small explosions due to disruptions on high voltage lines or equipment) and fire on another one of their facilities, leading to heightened scrutiny of their entire fleet of rooftop projects, including Oliver Solar. Re‑energisation was delayed until further inspections could be completed. Since closing the acquisition, Ecofin has secured a tax equity investment on customary terms from a large U.S. corporate with which it has previously transacted. Despite delays, Ecofin has continued with billing and collecting revenue from the offtaker on modelled P50 production as agreed under the contract. Oliver Solar was finally re-energised on 15 November 2023.

4. Beacon Solar 2

Beacon Solar 2 is a 59.6 MW utility scale solar project in Kern County, California that has been operating since December 2017. The project's location in the Mojave desert of Southern California contributes to its strong solar resource. In addition, the project has in place a fixed price PPA with an investment grade rated utility for 100% of its output on an as-generated basis to provide long-term stable revenues. RNEW obtained a 49.5% ownership interest to align with the structuring objectives of the vendor. An equivalent 49.5% ownership interest was sold to an international infrastructure company. Since closing in December 2020, Ecofin has established a strong operating relationship with its partner through monthly operations meetings and quarterly Board meetings. Both parties share a mutual objective of optimising operations and cash flow. Of note, we have expanded the use of NextTracker's TrueCapture technology designed to increase project output through real-time tracker adjustments to reduce row-to-row shading that occurs at different points of the day. We have also collaborated with the operator to assess the level of equipment spares and procure an increased level of solar module spares to reduce downtime.

5. Beacon Solar 5

Beacon Solar 5 is a 48.2 MW utility scale solar project in Kern County, California that has been operating since December 2017. The project was developed in parallel with Beacon Solar 2 and shares an almost identical project ownership structure, with the same partner, and contractual structure, including a PPA with the same offtaker. The project is located in close proximity to Beacon Solar 2 which provides operating and maintenance synergies. For additional information, see the summary above on Beacon Solar 2.

6. Skillman Solar

Skillman Solar is a 2.6 MW commercial solar project in New Jersey that completed construction in Q1 2022 and achieved COD on 25 March 2022. The project provides power under a long-term fixed-price PPA to a corporate campus of a privately held financial, software, data, and media corporation that is a global leader in its respective segments. The project also generates substantial revenues through the state of New Jersey's fixed-price feed-in-tariff style renewable incentive program for a 15-year period. This project was originated bilaterally through a longstanding relationship with a commercial solar developer with which Ecofin has transacted in the past. While this project did experience some construction delays, Ecofin actively managed the process with the construction firm through its contractual rights to ensure RNEW was not adversely impacted.

7. Echo Solar Portfolio

As at 31 December 2022, the Company had closed on six solar projects in Minnesota, Virginia and Delaware totalling 35.9 MW within the Echo Solar Portfolio. As at 31 December 2023, three of these projects had declared commercial operation. The remaining three projects are expected to complete capacity testing and begin operations in the first half of 2024. The Echo Solar Portfolio sells 100% of its output to two investment grade rated utilities under long term fixed price PPAs.

8. Delran Solar

Delran Solar is a 2.0 MW commercial rooftop solar project in New Jersey that commenced operations in 2020. The project provides power under a long-term fixed-price PPA to a logistics centre owned by a large publicly traded U.S. media corporation. The project also generates substantial revenues through the state of New Jersey's fixed-price feed-in-tariff style renewable incentive program for a remaining 12.5-year period. This project was originated bilaterally through a longstanding relationship with a commercial solar developer with whom Ecofin had transacted in the past.

9. Whirlwind

Whirlwind is an operating wind asset, placed in service in December 2007, using 26 Siemens 2.3 MW wind turbine generators operated and maintained by Siemens Gamesa under a long-term O&M agreement. It benefits from a fixed-price PPA with an investment grade electric utility, providing predictable cash flow. Whirlwind is located in Texas, which is experiencing sustained growth in electricity demand due to population growth and corporations migrating to this business-friendly state. Whirlwind demonstrates Ecofin's sourcing network breadth beyond solar and was originated bilaterally with the vendor. As part of our portfolio management strategy, Ecofin continues to evaluate the potential to repower and recontract this asset at the appropriate time and/or develop co-located battery storage as battery costs decline and/or tax credits are expanded for batteries.

Portfolio Production Update

During the twelve months ended 31 December 2023, the portfolio generated 247.8 GWh of clean energy, 36.2% below budget. Of the total, solar assets generated 163.9 GWh, 14.6% below budget (see project variances and explanations below) and the wind asset generated 83.9 GWh, 57.3% below budget principally due to the aforementioned tornado in Texas.

The performance of the underlying operating portfolio combined with its 100% contracted revenue structure generated revenues of $7.3 million for the Company. Overall, cash flows were below budget by 40.4%.

Even before the June 2023 tornado, Whirlwind experienced lower than expected energy production in H1 2023 principally due to historically low wind resource during the quarter at Whirlwind, a phenomenon that was experienced across the U.S.

While Echo Solar - MN and Echo Solar - VA 1¹ achieved commercial operation in Q4 2022, Echo Solar - DE achieved commercial operation in Q3 2023 as the portfolio continued to experienced construction delays. Hemings ("Echo - VA3") overperformed versus budget by 7.8% for its first quarter in operation. Heimlich ("Echo - DE1"), Randolf ("Echo - VA2") and Small Mouth ("Echo - VA4") were all placed in service on 29 December 2023 and continue to work through final ("punchlist" or "snaglist") items with the developer in order to declare COD.

Ellis Road experienced a rodent infestation in the first quarter of 2023 which forced ~40% of the total system capacity to be de-energised. As a result, the project's DC wiring needed to be replaced and reinsulated in H2 2023.

Voltage issues at the office building on which the Skillman project is located causing the project to be tripped offline from the end of April to June 2023; this was rectified, and power restored on 7 July 2023.

The SED Portfolio performed well versus budget largely due to higher than expected insolation throughout 2023.

Net Production Variance vs. Budget (GWh)

 

Investment Name2	Sector	State	Actual (GWh)	Budget (GWh)	GWh Above (Below) Budget	% Above (Below) Budget
Beacon 21	Utility-Scale Solar	California	59.3	65.5	(6.2)	(9.5%)a
Beacon 51	Utility-Scale Solar	California	48.1	50.9	(2.8)	(5.5%)b
SED Solar Portfolio	Commercial Solar	Massachusetts, Connecticut	11.7	12.3	(0.6)	(4.9%)c
Ellis Road Solar	Commercial Solar	Massachusetts	5.2	8.6	(3.4)	(39.5%)d
Oliver Solar2	Commercial Solar	California	7.2	7.5	(0.3)	(4.0%)
Delran Solar	Commercial Solar	New Jersey	2.4	2.4	-	-
Skillman Solar	Commercial Solar	New Jersey	2.5	3.4	(0.9)	(26.5%)e
Echo Solar - MN	Commercial Solar	Minnesota	17.4	21.8	(4.4)	(20.2%)f
Echo Solar - VA 11	Commercial Solar	Virginia	10	14.7	(4.7)	(32.0%)%f
Echo Solar - DE	Commercial Solar	Delaware	0.1	4.9	(4.8)	(98.0%)f
Solar Subtotal			163.9	192	(28.1)	(14.6%)
Whirlwind	Wind	Texas	83.9	196.4	(112.5)	(57.3%)g
Wind Subtotal			83.9	196.4	(112.5)	(57.3%)
Total			247.8	388.4	(140.6)	(36.2%)

Values and totals have been rounded to the nearest decimal.

1.        Reflects RNEW's pro forma share of production based on ownership.

2.        Oliver Solar reached COD on 29 November 2021 and had been accruing PPA revenue based on P50 modelled production since that date. Following some commissioning and testing delays initiated by the offtaker, the system was energised again on 15 November 2023.

Production variance summary:

a, b     Underperformance due to overheating fuse holders. Corrective action taken.

c         Underperformance primarily due to lower than expected insolation.

d         Underperformance due to rodent infestation that caused the site to need rewiring and new insulation.

e         Underperformance primarily due to utility outages that caused breaker trips.

f          Variances due to construction delays and timing of obtaining commercial operation.

g         Underperformance due to the tornado that struck the Matador substation on 21 June 2023. Site was offline until 8 December 2023.

Revenues

As at 31 December 2023, RNEW's portfolio had 100% of its revenue contracted with a weighted average remaining term of 13.7 years. Approximately 99% of the portfolio benefits from fixed-price revenues, many with annual escalators of 1-2%, through PPAs, contracted 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 contract. These contracts are set at a discount to a defined Massachusetts utility electricity rate, which provides an ongoing economic benefit to the customer (i.e., the offtaker/rooftop owner), as opposed to receiving the higher utility electric rate when consuming electricity from the grid. While the variable rate contract introduces an element of price volatility, it also offers the potential to hedge inflation risk.

The anticipated revenue profile below^1,2 represents a projection of RNEW's existing revenue contracts as at 31 December 2023 and does not assume any replacement revenue contracts following the expiry of these contracts. With increased adoption of renewable energy in the US, Ecofin is confident that RNEW's prospects for re-contracting individual assets at the end of revenue contract terms are positive.

Active Management

Ecofin maintains an active approach to managing RNEW's portfolio and is in the process of bringing certain previously outsourced asset management functions in-house. For operating assets, Ecofin's process involves actively monitoring production through direct, real-time system access, review of monthly O&M and asset management reports, and meeting at least monthly with project operators and asset managers to review and enhance performance. For construction stage assets, the process is appropriately structured for more frequent engagement with the relevant EPC contractor to review project milestones and troubleshooting issues, review and approve payments in accordance with contracts.

RNEW Portfolio Revenue Breakdown

 

Year	Contracted - Fixed Price Revenue	Contracted - Variable Price Revenue	Contracted - Fixed Price Incentive Revenue	Uncontracted - Market Revenue
2023	86.7%	1.0%	12.3%	0.0%
2024	89.0%	1.0%	10.0%	0.0%
2025	89.2%	2.2%	8.6%	0.0%
2026	88.9%	2.2%	8.9%	0.0%
2027	91.1%	2.3%	6.6%	0.0%
2028	51.6%	2.1%	3.1%	43.2%
2029	52.0%	2.1%	2.7%	43.2%
2030	50.7%	2.1%	2.6%	44.6%
2031	50.1%	2.1%	2.6%	45.2%
2032	50.8%	2.2%	2.6%	44.4%
2033	49.4%	2.2%	2.6%	45.8%
2034	48.3%	2.2%	2.5%	47.0%
2035	47.7%	2.1%	1.9%	48.3%
2036	44.4%	2.0%	1.2%	52.4%
2037	43.3%	1.9%	0.9%	53.9%
2038	82.9%	3.4%	0.0%	13.7%
2039	83.1%	0.3%	0.0%	16.6%
2040	83.1%	0.0%	0.0%	16.9%
2041	78.9%	0.0%	0.0%	21.1%
2042	76.6%	0.0%	0.0%	23.4%

1         The increase in uncontracted market revenue from 2028 onwards is due to the maturity of the Whirlwind PPA.

2         The decrease in uncontracted market revenue from 2038 onwards is due to Whirlwind reaching the conclusion of its technical useful life.

Financing

As at 31 December 2023, the Company's U.S. subsidiaries at a project level had debt balances of $49.0 million, with an additional $26.8 million drawn down under the RCF. This total debt balance corresponds to approximately 38.6% of GAV, well below the maximum limit of 65% in the Company's Investment Policy, as further detailed in the table below. Given that the Company's portfolio primarily comprises operating assets that have long-term fixed-price revenue contracts with investment grade counterparties, construction and term loan financing opportunities at both a project and group level are widely available on attractive terms. With that in mind, the Company's Investment Manager and Board favour a measured approach to using leverage to mitigate interest rate and default risk. The Company has proactively and successfully put in place both an RCF and non-recourse construction loans at its U.S. subsidiaries as described below:

·         On 19 October 2021, RNEW Capital, LLC, entered into a $65.0 million secured RCF with KeyBank, one of the premier lenders to the U.S. renewable energy industry. The RCF comprised a $50.0 million, two-year tranche and a $15.0 million, three-year tranche. Both tranches were extended by 12 months in 2023, wherein the two‑year tranche was priced at SOFR +2.13% and the three-year tranche was priced at SOFR +2.38%. The RCF is secured upon certain of the Company's investment assets and offers the ability to substitute reference assets. The RCF also includes an accordion option which provides access to an additional $20.0 million of capital which can be accessed subject to certain conditions. This substantial commitment with attractive pricing and terms reflects the high quality of RNEW's portfolio. Ecofin expects to be able to renew or extend on substantially similar terms in the second half of 2024, if necessary to do so considering the aforementioned strategic review focussing on a sale of the Company's assets.

·         Through the 49.5% acquisition of the Beacon 2 and 5 operating solar assets, the Company assumed its share of amortising project term loans secured on those projects that totalled $44.7 million as at 31 December 2023.

·         In addition, on 31 October 2023, a wholly-owned U.S. subsidiary of RNEW. TC Renewable Holdco V, LLC, entered into a $4.3 million amortising project term loan secured on certain Echo Solar projects.

On 31 December 2023, the Company had GAV of $196.6 million, and total recourse and non-recourse debt of $75.8 million, resulting in total leverage of 38.6%. The borrowing facilities available to the Company and its subsidiaries at 31 December 2023 are as set out in the table below:

Loan type	Provider	Borrower	Facility amount ($m)	Amount drawn ($m)	Maturity	Applicable rate (%)
Revolving credit facility	KeyBank	RNEW Capital, LLC	$50.0	$26.8	Oct-24	SOFR +2.13
Revolving credit facility	KeyBank	RNEW Capital, LLC	$15.0	$0.0	Oct-25	SOFR +2.38
Term loan	Fifth Third	TC Renewable Holdco V, LLC	$4.3	$4.3	July-31	SOFR +2.15
Term loan	KeyBank	Beacon Solar 2	$24.7	$24.7	May-26	SOFR +1.25
Term loan	KeyBank	Beacon Solar 5	$20.0	$20.0	May-26	SOFR +1.25
Total Debt			$114.0	$75.8

Portfolio Valuation

Valuation of the Company's portfolio is performed on a quarterly basis. A discounted cash flow ("DCF") valuation methodology is applied which is customary for valuing privately owned operating Renewable Assets. The valuation is performed by Ecofin at 31 March and 30 September, and by an independent third-party valuation firm at 30 June and 31 December.

Fair value for each investment is derived from the present value of the investment's expected future cash flows, using reasonable assumptions and forecasts for revenues and operating costs, and an appropriate discount rate. More specifically, such assumptions include 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.

At IPO on 22 December 2020, the Company raised $125.0 million (before costs) by issuing 125,000,000 Shares. Subsequently, on 10 May 2022, the Company announced a placing and retail offer of new ordinary shares ("New Ordinary Shares") of $0.01 each at an issue price of $1.015 per New Ordinary Share. The Company raised $13.1 million (before costs) by issuing a total of 12,927,617 New Ordinary Shares. Admission of these New Ordinary Shares to the LSE became effective on 24 May 2022.

2023 NAV Bridge ($MM)

NAV 31 Dec 2022	$130.2
Change in ProjectCo DCF Roll Forward	($2.4)
Change in ProjectCo DCF - Discount Rates	($5.7)
Change in ProjectCo DCF - Assumptions	$4.2
Distributions from ProjectCos to RNEW	$6.2
Dividends to Shareholders	($5.8)
Expenses Paid	($2.2)
Changes in Financial Assets	($7.1)
Changes in Deferred Tax	$0.3
NAV 31 Dec 2023	$117.7

Change in project company DCF: Represents the impact on NAV from changes to DCF depreciation and 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 2023, the weighted average unlevered pre-tax discount rate was 7.4% (31 December 2022: 7.5%), which reflects a small decrease from 31 December 2022 due to the effect of a 0.25% increase in discount rates applied to the majority of the assets more than offset by the impact of bringing the Echo Solar Portfolio to a discounted cash flow fair valuation from cost.

Change in project company DCF assumptions: Represents the impact on RNEW NAV from changes to the forward merchant price curves used in the DCF models of each project company. The increase was principally due to the update to convert the merchant curves used in the DCF models from the U.S. Energy Information Administration ("EIA") to an independent third party provider, Leidos.

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 2022, Q1 2023, Q2 2023, and Q3 2023 of $5.8 million (4.2 cents per Share) were paid during the Year. After the Year end, the Company declared a further dividend of 0.7 cents per Share in respect of the quarter ended 31 December 2023.

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.

Portfolio Valuation Sensitivities

The figure below shows the impact on the portfolio valuation of changes to the key input valuation assumptions ("sensitivities") with the horizontal x-axis reflecting the impact on NAV per Share. The valuation sensitivities are based on the portfolio of assets as at 31 December 2023. For each sensitivity illustrated, it is assumed that potential changes occur independently with no effect on any other assumption. It should be noted that the relatively moderate impact of a change in forecast merchant power prices reflects the long-term fixed price contracted revenues of the Company's portfolio, with a weighted average remaining contracted term of 13.7 years as at 31 December 2023. Similarly, the moderate impacts due to variations in operational expenses reflect a number of the Company's assets having fixed price, long-term operating expenses including O&M, property leases and payments in lieu of taxes.

 

Sensitivity	Impact on NAV per Share
Energy Production P75/P25	(7.4%) to 8.5%
Merchant Power Prices +/- 10.0%	(7.1%) to 8.2%
Discount Rates +/- 50 bps	(6.6%) to 8.3%
Operating Expenses +/- 10.0%	(5.4%) to 6.5%
Curtailment +/- 50%	(6.1%) to 5.5%

Impact Report

ESG Integration and Impact

The Company's and Ecofin's strategy is to allocate capital using an ESG integrated investment process to build and operate a diversified portfolio of Renewable Assets that achieves RNEW's investment objective.

RNEW is focused on allocating capital using an investment process which integrates ESG considerations and analysis to build and operate a diversified portfolio of Renewable Assets consistent with RNEW's investment objective.

Ecofin is a signatory to the Principles for Responsible Investment (PRI) and incorporates ESG analysis into its investment and reporting process. Ecofin's investment strategies related to renewables infrastructure are designed to provide investors with attractive long-term returns and a level of impact that aligns with United Nations Sustainable Development Goals:

This strategy seeks to achieve positive impacts that align with the following UN Sustainable Development Goals

·      7 Affordable and clean energy

·      8 Decent work and economic growth

·      9 Industry, innovation and infrastructure

·      11 Sustainable cities and communities

·      13 Climate action

 

The Investment Manager's sustainability and impact policy is further described in the Sustainability & Impact section of its website ecofininvest.com/sustainability-impact.

ESG integration

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 248 GWh of clean electricity during 2023, enough to power approximately 22,200 homes, offsetting approximately 141,800 tonnes of CO₂e and avoiding the consumption of approximately 29,700 million litres of water. 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.

Portfolio impact
~141,800	~29,700M
Tonnes of CO2e Reduction	Litres of water savings
~22,200	~11,900
Households supplied	Olympic size swimming pools

Task Force on Climate-related Financial Disclosures

Investment in renewables is considered an important component of climate change mitigation as replacing fossil fuel-based forms of electrical generation is key in helping the global energy sector transition to a lower carbon economy. While investment in renewables helps mitigate the effects of climate change, renewable investments are not exempt from the potential impacts of climate change. RNEW routinely identifies climate-related risks and opportunities that may have a material financial impact on the performance of its investments.

The Task Force on Climate-Related Financial Disclosures ("TCFD") was established to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders. The TCFD recommended that all organisations provide climate-related disclosures in their annual reports and accounts, providing a framework to help companies assess the risks and opportunities associated with climate change. However, concurrent with the release of its 2023 status report on 12 October 2023, the TCFD has fulfilled its remit and disbanded.

The Financial Conduct Authority ("FCA") issued a proposal at the start of 2020 that required all premium listed commercial companies with a financial year end from December 2021 to align their reporting to the TCFD framework. While RNEW, as a UK Investment Trust, is currently exempt from this reporting requirement, RNEW has decided to make specific disclosures on opportunities and risks the Company faces relating to climate change.

RNEW still plans to include TCFD-recommended disclosures and will evaluate the appropriate standards going forward. An outline of RNEW's current approach to the recommendations suggested by TCFD is included below.

TCFD Recommendation	RNEW Disclosure
Governance
Disclose the organisation's governance around climate-related risks and opportunities.	The Company has an independent board of four non-executive directors. The Board's role is to oversee the governance of the Company in the interests of Shareholders and other stakeholders. In particular, the Board monitors adherence to the Investment Policy, determines the risk appetite, sets Company policies and monitors the performance of the Investment Manager and other key service providers. The Board is responsible for the ongoing identification, evaluation and management of the principal risks (including climate-related risks and opportunities) faced by the Company and the Board has established a process for the regular review of these risks and their mitigation. The Board meets a minimum of four times a year for scheduled 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. Under their ongoing supervision, the Directors have delegated responsibility for managing the assets in the RNEW portfolio to Ecofin. In managing the RNEW portfolio to achieve its investment objective, Ecofin employs an institutional level investment process to identify and mitigate risk (including climate-rated risks) covering sourcing, underwriting, due diligence and portfolio management.
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning where such information is material.	Consideration of climate-related opportunities and risks is embedded throughout RNEW's business and investment strategies, as implemented by Ecofin. Examples of areas considered include: ●       Consideration of changing weather conditions that may positively or negatively impact renewable energy generation or cause issues related to the physical placement of assets. ●       Political conditions that may or may not make a 2.0-degree centigrade rise in temperature more likely through increasing / impairing the value and pace of investment in Renewable Assets. ●       Changes in technology or the cost of technology that could make a 2.0-degree centigrade rise in global temperature more or less likely and positively / negatively impact the value of existing and future Renewable Assets investments. ●       How the deployment of renewable energy and future technology may impact commodity prices including the future price of electricity and have a positive or negative impact on existing and future Renewable Assets investments. As these and other material or potentially material risks and opportunities are identified, Ecofin seeks to incorporate structuring mitigation (i.e. obtain insurance for those risks) and/or perform sensitivities on power price forecasts and adjust required returns on investment.
Risk Management
Disclose how the organisation identifies, assesses, and manages climate-related risks.	The Directors and Ecofin understand that climate change could impact RNEW's strategy and underlying assets and include the consideration of climate change opportunities and risks throughout the investment process. When conducting due diligence on new investment opportunities, Ecofin uses its ESG Risk Assessment framework to evaluate the impact of CO2 and other GHG emissions / pollutants, assess the impact on the site (through review of a Phase I Environmental Site Assessment), and compliance with permits and regulations. Environmental factors are considered during both the initial screening process as well as during the project-focused due diligence stage in concert with specialist environmental consultants and legal advisors, as needed. These environmental factors and risks are documented in Ecofin's investment memoranda that are reviewed by its Investment Committee prior to investments being approved. When a new asset is added to the portfolio, Ecofin establishes a monitoring plan that is aligned with mitigating the key risks and achieving RNEW's investment objective. Environmental factors are included in the ongoing analysis and reporting process for each asset in the portfolio.
Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.	Due to the nature of the Renewable Assets in the portfolio, the Scope 1 & 2 emissions for RNEW are de minimis. The power generated from the Renewable Assets displaces electricity generated from marginal fossil fuel emitting sources. As part of the investment diligence and monitoring, Ecofin attempts to quantify the negative environmental factors avoided from the actual or anticipated generation of its assets. Ecofin analyses and considers several environmental factors including GHG emissions from CO2, methane (CH4) and nitrous oxide (N2O), air pollutants such as sulphur dioxide (SO2) and nitrogen oxides (NOX) as well as the project's water consumption to provide a broad view of environmental impact. For calculating the emission reductions from Ecofin investments in Renewable Assets, non-baseload fossil fuel generation emission rates are appropriate. Non-baseload fossil fuel generation represents the generation most likely to be reduced or replaced by energy efficiency projects or renewable energy projects. Ecofin aggregates and evaluates data according to the EPA's eGrid sub-regions in the U.S. These sub-regions are defined by the EPA to establish an aggregated area where emission rates are anticipated to most accurately represent the generation and emissions from the power plants operating within that region. This allows the environmental impact from an Ecofin investment in Renewable Assets to be more accurately quantified from the asset's operation. For reporting purposes, non-CO2 GHG emissions are often converted to CO2 equivalent and reported in aggregate as CO2e.

Investment Objective and Investment Policy

The Company's investment objective and investment policy (including defined terms) below are as set out in its 2020 IPO prospectus.

Investment objective

The Company's investment objective is to provide Shareholders with an attractive level of current distributions by investing in a diversified portfolio of mixed renewable energy and sustainable infrastructure assets ("Renewable Assets") predominantly located in the United States with prospects for modest capital appreciation over the long term.

Investment policy and strategy

The Company intends to execute its investment objective by investing in a diversified portfolio of Renewable Assets predominantly in the United States, but it may also invest in other OECD countries.

Whilst the principal focus of the Company will be on investment in Renewable Assets that are solar and wind energy assets ("Solar Assets" and "Wind Assets" respectively), sectors eligible for investment by the Company will also include different types of renewable energy (including battery storage, biomass, hydroelectric and microgrids) as well as other sustainable infrastructure assets such as water and waste water.

The Company will seek to invest primarily through privately negotiated middle market acquisitions of long-life Renewable Assets which are construction-ready, in-construction and/or currently in operation with long-term PPAs or comparable offtake contracts with investment grade quality counterparties, including utilities, municipalities, universities, schools, hospitals, foundations, corporations and others. Long-life Renewable Assets are those which are typically expected by Ecofin to generate revenue from inception for at least 10 years.

The Company intends to hold the Portfolio over the long term, provided that it may dispose of individual Renewable Assets from time to time.

Investment restrictions

The Company will invest in a diversified portfolio of Renewable Assets subject to the following investment limitations which, other than as specified below shall be measured at the time of the investment:

●       once the Net Initial Proceeds are substantially fully invested, a minimum of 20 per cent. of Gross Assets will be invested in Solar Assets;

●       once the Net Initial Proceeds are substantially fully invested, a minimum of 20 per cent. of Gross Assets will be invested in Wind Assets;

●       a maximum of 10 per cent. of Gross Assets will be invested in Renewable Assets that are not Wind Assets or Solar Assets;

●       exposure to any single Renewable Asset will not exceed 25 per cent. of Gross Assets;

●       exposure to any single Offtaker will not exceed 25 per cent. of Gross Assets;

●       once the Net Initial Proceeds are substantially fully invested, investment in Renewable Assets that are in the construction phase will not exceed 50 per cent. of Gross Assets, but prior to such time investment in such Renewable Assets will not exceed 75 per cent. of Gross Assets. The Company expects that construction will be primarily focused on Solar Assets in the shorter term until the Portfolio is more substantially invested and may thereafter include Wind Assets in the construction phase;

●       exposure to Renewable Assets that are in the development (namely pre-construction) phase will not exceed 5 per cent. of Gross Assets;

●       exposure to any single developer in the development phase will not exceed 2.5 per cent. of Gross Assets;

●       the Company will not typically provide Forward Funding for development projects. Such Forward Funding will, in any event, not exceed 5 per cent. of Gross Assets in aggregate and 2.5 per cent. of Gross Assets per development project and would only be undertaken when supported by customary security;

●       Future Commitments and Developer Liquidity Payments, when aggregated with Forward Funding (if any), will not exceed 25 per cent. of Gross Assets;

●       once the Net Initial Proceeds are substantially fully invested, Renewable Assets in the United States will represent at least 85 per cent. of Gross Assets; and

●       any Renewable Assets that are located outside of the United States will only be located in other OECD countries. Such Renewable Assets will represent not more than 15 per cent. of Gross Assets.

References in the investment restrictions detailed above to "investments in" or "exposure to" shall relate to the Company's interests held through its Investment Interests.

For the purposes of the 2020 IPO Prospectus, the Net Initial Proceeds will be deemed to have been substantially fully invested when at least 75 per cent. of the Net Initial Proceeds have been invested in (or have been committed in accordance with binding agreements to investments in) Renewable Assets.

The Company will not be required to dispose of any investment or to rebalance the Portfolio as a result of a change in the respective valuations of its assets. The investment limits detailed above will apply to the Group as a whole on a look-through basis, namely, where assets are held through a Project SPV or other intermediate holding entities or special purpose vehicles, and the Company will look through the holding vehicle to the underlying assets when applying the investment limits.

Gearing policy

The Group primarily intends to use long-term debt to provide leverage for investment in Renewable Assets and may utilise short-term debt, including, but not limited to, a revolving credit facility, to assist with the acquisition of investments.

Long-term debt shall not exceed 50 per cent. of Gross Assets and short-term debt shall not exceed 25 per cent. of Gross Assets, provided that total debt of the Group shall not exceed 65 per cent. of Gross Assets, in each case, measured at the point of entry into or acquiring such debt.

The Company may employ gearing either at the level of the relevant Project SPV or at the level of any intermediate subsidiary of the Company. Gearing may also be employed at the Company level, and any limits set out in this Prospectus shall apply on a consolidated basis across the Company, the Project SPVs and any such intermediate holding entities (but will not count any intra-Group debt). The Company expects debt to be denominated primarily in U.S. dollars.

For the avoidance of doubt, financing provided by tax equity investors and any investments by the Company in its Project SPVs or intermediate holding companies which are structured as debt are not considered gearing for this purpose and are not subject to the restrictions in the Company's gearing policy.

Currency and hedging policy

The Group may use derivatives for the purposes of hedging, partially or fully:

●       electricity price risk relating to any electricity or other benefit including renewable energy credits or incentives, generated from Renewable Assets not sold under a PPA, as further described below;

●       currency risk in relation to any Sterling (or other non-U.S. Dollar) denominated operational expenses of the Company;

●       other project risks that can be cost-effectively managed through derivatives (including, without limitation, weather risk); and

●       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.

Cash management policy

Until the Company is fully invested the Company will invest in cash, cash equivalents, near cash instruments and money market instruments and treasury notes ("Near Cash Instruments"). Pending re-investment or distribution of cash receipts, the Company may also invest in Near Cash Instruments as well as Investment Grade Bonds and exchange traded funds or similar ("Liquid Securities"), provided that the Company's aggregate holding in Liquid Securities shall not exceed 10 per cent. of Gross Assets measured at the point of time of acquiring such securities.

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 2018 (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 returns and/or the value of its investments.	No change	The Company's policy is to reduce its exposure to electricity price risk by investing in Renewable Assets which sell their output under long term offtake arrangements with credit worthy counterparties. As at 31 December 2023, the portfolio benefited from a weighted average revenue contract term of 13.7 years. In its asset valuations, the Company uses long-term electricity price forecasts prepared by an independent third party.	Medium
Interest Rate, Currency and Inflation	The Company may be adversely affected by changes in interest, currency exchange and inflation rates. Rising interest rates may lead to higher discount rates.	No change	Interest, currency and inflation rates are monitored regularly by the Company. The Company may implement interest and currency rate hedging by fixing a 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.	Medium
Investment Performance	The Company may not achieve its investment objective; The Company may fail to deliver its dividend target; The Company may not be able to acquire suitable Renewable Assets consistent with its investment policy; and The Company's revenue can vary due to variations in the amount of power that can be generated and sold. *The increased risk assessment reflects the Company's negative NAV and Share price returns, and level of discount during the year.	Increased*	Ecofin has a well-defined investment strategy and processes in place which are regularly reviewed and monitored by the Board. Ecofin has significant experience originating, underwriting, and managing Renewable Assets and applies its experience to mitigate risks and achieve the Company's investment objective. The Board reviews the portfolio quarterly and discusses new investments, the investment rationale, and the performance of the Company at each Board meeting. By their nature, solar irradiation and wind speed are outside the Company's control, albeit some projects' returns are neither wholly nor directly linked to the volume of power produced.	Medium
Operational Performance	Renewable Assets may encounter operational difficulties that cause them to perform at lower levels than expected.	New	All major operating assumptions underpinning the valuation are reviewed by an independent engineer. Ecofin appoints experienced O&M contractors and monitors their ongoing performance. Ecofin also provides in-house asset management for each asset. Insurance programmes are in place for each asset.	Medium
Investment Valuation	The valuation of assets is inherently subjective and uncertain. Projections are based on the independent valuer's and the Investment Manager's assessment at the date of valuation and are only estimates of future results. Actual results may vary significantly from projected amounts.	No change	Ecofin has significant experience in the valuation of Renewable Assets and through its investment activities is continually exposed to the prices paid for Renewable Assets in the U.S. market. The Board and Ecofin review asset valuations quarterly. An independent valuer conducts a valuation of the Company's assets, including a review of discount rates, on a semi-annual basis.	Medium
Political and Regulatory	Future investment opportunities and/or the value of existing investments may be impacted by changes in government policy (e.g. increased property taxes, lower tax credits), in government policy incentives or in U.S. tax laws.	No change	Both the current U.S. Administration and individual states are supportive of renewable energy. Ecofin has significant experience investing in Renewable Assets and undertakes due diligence at purchase with support from its legal advisers and performs ongoing monitoring of political and regulatory risks. When incentive programs are changed, the changes typically affect projects that have yet to 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 actively monitors potential changes in policy that could affect RNEW's portfolio.	Low
Discount Management	The Shares have been trading at a discount to NAV, which may make it more difficult for the Company to raise new equity for future investments.	Increased	The Company's Broker monitors the market for the Company's Shares and reports at quarterly Board meetings. The Board regularly reviews the relative level of discount against the sector. The Board has authority to buy back Shares. In September 2023, the Company announced a strategy review in order to maximise value for Shareholders.	Medium
Cyber	Ecofin's information and technology systems and those of other service providers to the Company may be vulnerable to cyber security breaches and identity theft which could adversely impact the Company's ability to continue to operate without interruption.	No change	The Company relies on the systems of its service providers. Cyber security policies and procedures are maintained by key service providers and are reported to the Board periodically. Ecofin, the Administrator and the Board include cyber risk in their reviews of counterparties.	Medium
Service Provider Reliance	The Company has no employees and is reliant on the performance of third-party service providers. Service Providers may be unable to complete their role or may not perform well, which could leave to a deterioration in shareholder value.	Increased	The Board meets with Ecofin and the Administrator on a quarterly basis to review their work and monitor their performance. Following the announcement of the strategic review the Board is paying close attention to service providers to ensure that they are adequately resourced and performing in accordance with the Board's expectations and requirements. 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.	Medium
Counterparty	There is the potential for losses to be incurred due to default by an offtaker or other counterparty.	No change	A fundamental part of the Investment Manager's due diligence process involves 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.	Medium
Climate	The Company is exposed to the impacts of climate change i.e. risks relating to weather conditions and performance of equipment.	No change	When conducting due diligence on potential investments, the Investment Manager considers the potential impact the weather may have on 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.	Medium
ESG	Risks such as health and safety, respect for human rights, bribery, corruption, environmental management practices, duty of care and compliance with relevant laws and regulations, may also arise.	No change	ESG is embedded in Ecofin's investment process via a formal ESG rating matrix. The Company monitors the portfolio and quantifies the ESG impact of its investments. Each service provider has, and is responsible for, its own health and safety policies and procedures.	Medium
Financing	The Company may be unable to obtain debt financing on acceptable terms, either at a project or at a holding company level.	No change	The Company has access to a wide range of debt providers and has to date successfully raised debt finance both for asset construction and for general purposes. The Investment Manager monitors the Company's finance requirements on a regular basis. Portfolio allocations and debt limits are monitored by Ecofin and reviewed by the Board.	Medium

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.

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:

·          Performance;

·          Dividends;

·          Premium/discount of share price to NAV per Share; and

·          Ongoing charges ratio.

Performance

As the Company's objective is to seek to provide Shareholders with an attractive level of distributions with prospects of modest capital growth over the long term, performance is best measured in terms of total return. The Company's NAV and share price total returns for the Year were (5.5)% and (28.0)% respectively, these are APMs found in the Alternative Performance Measures section. There is no single index against which the Company's performance may be meaningfully assessed. Therefore, the Board refers to a variety of relevant data and this is reflected in both the Chairman's Statement and the Investment Manager's Report.

As explained in the Chairman's Statement, the Board launched a strategy review in September 2023.

The Company's NAV per Share is shown on the Statement of Financial Position.

Dividends

Dividends form a key component of the Company's investment objective. The Company declared four interim dividends in respect of the Year (total of 3.5 cents per Share), in line with the Company's revised dividend target of 3.5 cents per Share for the Year.

The Board's Dividend Payment Policy is to pay dividends on a quarterly basis in May, August, November and February in respect of each accounting year. The timing of these regular three-monthly payments means that Shareholders do not have an opportunity to vote on a final dividend. Recognising the importance of shareholder engagement, although not required by any regulation, Shareholders will be given an opportunity to vote on this policy at the forthcoming AGM.

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 38.1% discount to NAV as at 31 December 2023. Further details are provided in the Chairman's Statement. 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 2023 was 1.78% (year ended 31 December 2022: 1.80%).

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.

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 international accounting standards in conformity with the requirements of the Act, subject to any material departures disclosed and explained in the financial statements;

·         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; and

·         prepare a Directors' Report, a Strategic Report and Directors' Remuneration Report which comply with the requirements of the Act.

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.

Patrick O'D Bourke

Chairman of the Board

26 April 2024

 

Financial Statements

Statement of Comprehensive Income

Year ended 31 December 2023

		Year ended 31 December 2023			Year ended 31 December 2022
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	$'000	$'000	$'000	$'000	$'000	$'000
Losses on investments	4	-	(10,577)	(10,577)	-	(6,368)	(6,368)
Net foreign exchange (losses)/gains		-	(5)	(5)	-	4	4
Income	5	6,284	-	6,284	9,878	-	9,878
Investment management fees	6	(1,246)	-	(1,246)	(1,300)	-	(1,300)
Other expenses	7	(1,184)	-	(1,184)	(1,033)	-	(1,033)
Profit/(loss) on ordinary activities before
taxation		3,854	(10,582)	(6,728)	7,545	(6,364)	1,181
Taxation	9	-	-	-	-	-	-
Profit/(loss) on ordinary activities after
taxation		3,854	(10,582)	(6,728)	7,545	(6,364)	1,181
Earnings/(losses) per Share - basic and diluted	8	2.79c	(7.66c)	(4.87c)	5.68c	(4.79c)	0.89c

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. No operations were acquired or discontinued during the Year.

Profit/(loss) on ordinary activities after taxation is also the total comprehensive Profit/(loss) for the Year.

The notes form part of these financial statements.

 

Statement of Financial Position

As at 31 December 2023

		As at	As at
		31 December	31 December
		2023	2022
	Notes	$'000	$'000
Non-current assets
Investments at fair value through profit or loss	4	116,798	127,375
Current assets
Cash and cash equivalents		1,648	3,394
Trade and other receivables	10	8	11
		1,656	3,405
Current liabilities: amounts falling due within one year
Trade and other payables	11	(795)	(593)
Net current assets		861	2,812
Net assets		117,659	130,187
Capital and reserves: equity
Share capital	12	1,381	1,381
Share premium		12,732	12,732
Special distributable reserve	14	121,250	121,250
Capital reserve		(17,705)	(7,123)
Revenue reserve		1	1,947
Total Shareholders' funds		117,659	130,187
Net assets per Share (cents)	15	85.2c	94.3c

Approved and authorised by the Board of directors for issue on 26 April 2024.

Patrick O'D Bourke
Chairman of the Board

The notes form part of these financial statements.

Ecofin U.S. Renewables Infrastructure Trust PLC is incorporated in England and Wales with registered number 12809472.

Statement of Changes in Equity

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)
Profit/(loss) 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

Year ended 31 December 2022

				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 2022		1,251	29	121,250	(759)	1,952	123,723
Transactions with Shareholders
Shares issued during the Year	12	129	13,027	-	-	-	13,156
Shares issued to Investment Manager	12	1	94				95
Share issue costs		-	(418)	-	-	-	(418)
Dividend distribution	13	-	-	-	-	(7,550)	(7,550)
Total transactions with Shareholders		130	12,703	-	-	(7,550)	5,283
Profit/(loss) and total comprehensive income for the Year		-	-	-	(6,364)	7,545	1,181
Closing equity as at 31 December 2022		1,381	12,732	121,250	(7,123)	1,947	130,187

The notes form part of these financial statements.

Statement of Cash Flows

Year ended 31 December 2023

		Year ended	Year ended
		31 December 2023	31 December 2022
	Notes	$'000	$'000
Operating activities
(Loss)/profit on ordinary activities before taxation		(6,728)	1,181
Adjustment for unrealised losses on investments		10,577	6,368
Adjustment for non-cash investment management fee		-	95
Decrease/(increase) in trade and other receivables		3	(10)
Increase in trade and other payables		202	71
Net cash flow from operating activities		4,054	7,705
Investing activities
Purchase of investments	4	-	(14,861)
Net cash flow used in investing activities		-	(14,861)
Financing activities
Proceeds of share issues	12	-	12,897
Share issue costs		-	(159)
Dividends paid	13	(5,800)	(7,550)
Net cash flow (used in)/from financing activities		(5,800)	5,188
Decrease in cash		(1,746)	(1,968)
Cash and cash equivalents at start of the Year		3,394	5,362
Cash and cash equivalents at end of the Year		1,648	3,394
		As at	As at
		31 December 2023	31 December 2022
		$'000	$'000
Cash and cash equivalents
Money market cash deposits		1,648	3,394
Total cash and cash equivalents at end of the Year		1,648	3,394

The notes form part of these financial statements.

 

Notes to the Financial Statements

For the year ended 31 December 2023

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 6th Floor, 125 London Wall, London, EC2Y 5AS.

The Company's investment objective is to provide Shareholders with an attractive level of current distributions, by investing in a diversified portfolio of mixed renewable energy and sustainable infrastructure assets predominantly located in the U.S. with prospects for modest capital appreciation over the long term.

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.

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.

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.

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;

●       the Company intends to hold its Renewable Assets for the remainder of their useful lives for the purpose of investment income. The Renewable Assets are expected to generate renewable energy output for 25 to 30 years from their relevant COD and the Directors believe the Company is able to generate returns to investors during that period; 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.

Going concern

The Directors have adopted the going concern basis in preparing the financial statements. In reaching their conclusion, the Directors considered the Company's cash flow forecasts, cash and net debt position, and the financial covenants in its borrowing facilities. The Company's net assets as at 31 December 2023 were $117.7 million (31 December 2022: $130.2 million). As at 31 December 2023, the Company held $1.6 million in cash (31 December 2022: $3.4 million) and had borrowings of $75.8 million (31 December 2022: $64.4 million) and $38 million headroom on its RCF (31 December 2022: $46 million). Both tranches of the Company's RCF were extended by 12 months during the second half of 2023 to October 2024 and October 2025, respectively.

The Company assumes the ability to renew or extend the RCF on substantially similar terms in the second half of 2024, if necessary to do so considering the aforementioned strategic review mentioned in the Chairman's statement focussing on a sale of the Company's assets. The Directors have a reasonable expectation that the RCF would be extended as required (or that alternative lenders would be obtained), until such facilities are formally renewed there can be no certainty that the required funding will be in place within the required time frame.

The Company's holds 100% of the share capital of Holdco which in turn holds investments in renewable energy project companies through SPVs. Underlying SPV revenues are derived from the sale of electricity by project companies under PPAs in place with creditworthy utilities, municipalities, and corporations. Most of these PPAs are contracted over a long period with a weighted average remaining life as at 31 December 2023 of 13.7 years (31 December 2022: 14.6 years).

The Company continues to meet its day-to-day liquidity needs through its cash resources. Total expenses for the year ended 31 December 2023 were $2.4 million (31 December 2022: $2.3 million), which represented approximately 1.9% of average net assets during the Year (31 December 2022: 1.8%). At the date of approval of this Annual Report, based on the ability of its investments to generate cash, cash held and the headroom on its RCF, the Company had substantial cover for its operating expenses.

The major cash outflows of the Company are the acquisition of new investments and the payment of dividends. The Directors review financial reporting and forecasts at each quarterly Audit Committee meeting, which includes reporting related to indebtedness, compliance with borrowing covenants and fund investment limits. The Directors are confident that the Company has sufficient cash balances, borrowing headroom and anticipated tax equity arrangements to fund the commitments detailed in note xx to the financial statements, should they become payable.

The Directors have fully considered each of the Company's investments against the backdrop of the current macro‑economic situation. The Directors do not foresee any immediate material risk to the Company's investment portfolio and/or the income it receives from underlying SPVs. A prolonged and deep market decline could lead to falling values in the underlying investments or interruptions to cashflow, however the Company currently has sufficient liquidity available to meet its future obligations. The Directors are also satisfied that the Company would continue to remain viable under downside scenarios, including decreasing U.S. government regulated tax credits and a decline in long term power price forecasts.

As announced on 8 September 2023, the Board is undertaking a strategic review of the Company centred on a sale of the Company's assets. Marathon Capital was appointed to advise the Company, and the review is ongoing. If the disposal is successful and adheres to its terms, it is anticipated that cash will be distributed to Shareholders during the Company's dissolution or a similar event.

Accordingly, the Directors recognise that the strategic review, and the need to renew or extend a portion of the RCF in October 2024 if a sale does not occur, indicate the existence of material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. As a result, the Company might face challenges in realising its assets and settling its liabilities in the usual course of business. Based on the assessment and considerations above, the Directors have concluded that the financial statements should be prepared on a going concern basis. The financial statements do not include any adjustments which would result if the Company was unable to continue on a going concern basis.

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.

The Company uses discounted cash flow ("DCF") models and considers any other relevant information to determine the fair value of the underlying assets in Holdco. The value of Holdco includes any working capital not accounted for in the DCF models (deferred tax liabilities, cash plus any receivables or payables at the entity and not at the asset level). The fair value of each asset 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 using a discount rate appropriately calibrated to the risk profile of the asset and market dynamics. The key estimates and assumptions used within the DCF valuations 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 fair value of the investments as described in note 4 to the financial statements. The Company's investments at fair value are not traded in active markets.

The estimates and assumptions used to determine the fair value of investments are disclosed in note 4 to the financial statements.

Segmental reporting

The Chief Operating Decision Maker, 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 Chief Operating Decision Maker 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.

Adoption of new IFRS standards from 1 January 2023

A number of new standards, amendments to standards are effective for annual periods beginning after 1 January 2023. None of these have had a significant effect on the measurement of the amounts recognised in the financial statements of the Company.

New Standards and Amendments issued but not yet effective

The relevant new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company's financial statements are disclosed below. These standards are not expected to have a material impact on the entity in future reporting periods and on foreseeable future transactions.

Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current

The amendments to IAS 1 clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of 'settlement' to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments are applied retrospectively for annual periods beginning on or after 1 January 2024, with early application permitted.

Amendments to IAS 1 Presentation of Financial Statements - Non‑current Liabilities with Covenants

The amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity's right to defer settlement of a liability for at least twelve months after the reporting date (and therefore must be considered in assessing the classification of the liability as current or non-current). Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date (e.g. a covenant based on the entity's financial position at the reporting date that is assessed for compliance only after the reporting date). The amendments are applied retrospectively for annual reporting periods beginning on or after 1 January 2024. Earlier application of the amendments is permitted.

Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures - Supplier Finance Arrangements

The amendments add a disclosure objective to IAS 7 stating that an entity is required to disclose information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the entity's liabilities and cash flows. In addition, IFRS 7 has been amended to add supplier finance arrangements as an example within the requirements to disclose information about an entity's exposure to concentration of liquidity risk. The amendments, which contain specific transition reliefs for the first annual reporting period in which an entity applies the amendments, are applicable for annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted.

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 2023, the Company had one investment, being Holdco. The cost of the investment in Holdco was US$134,065,000 (31 December 2022: US$134,065,000).

	As at	As at
	31 December	31 December
	2023	2022
(a) Summary of valuation	$'000	$'000
Analysis of closing balance:
Investments at fair value through profit or loss	116,798	127,375
Total investments as at 31 December 2023	116,798	127,375
(b) Movements during the Year:
Opening balance of investments, at cost	134,065	119,204
Additions, at cost	-	14,861
Cost of investments as at 31 December 2023	134,065	134,065
Revaluation of investments to fair value:
Unrealised movement in fair value of investments	(17,267)	(6,690)
Fair value of investments as at 31 December 2023	116,798	127,375
(c) Losses on investment in the Year
Unrealised movement in fair value of investments brought forward	(6,690)	(322)
Unrealised movement in fair value of investments during the year	(10,577)	(6,368)
Losses on Investments	(17,267)	(6,690)

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 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
	As at 31 December 2022
	Level 1	Level 2	Level 3	Total
	$'000	$'000	$'000	$'000
Investments at fair value through profit and loss
Equity investments in Holdco	-	-	127,375	127,375
Total investments as at 31 December 2022	-	-	127,375	127,375

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 2023 (2022: none).

The movement on the Level 3 unquoted investments during the year is shown below:

	As at	As at
	31 December	31 December
	2023	2022
	$'000	$'000
Opening balance	127,375	118,882
Additions during the year	-	14,861
Unrealised losses on investment	(10,577)	(6,368)
Closing balance	116,798	127,375

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, Marshall & Stevens, to carry out fair market valuations of the underlying investments as at 31 December 2023.

Fair value of operating assets is derived using a DCF methodology, which follows IPEV Guidelines. DCF is deemed the most appropriate methodology when detailed projection of future cash flows is possible. 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. Assets that are not yet operational and still under construction at the time of the valuation are held at cost as an estimate of fair value, provided no significant changes to key underlying economic considerations (such as major construction impediments or natural disasters) have arisen.

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 DCF methodology.

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 resulting NAV per share impacts are discussed below.

(i) Discount rates

Pre-tax discount rates applied in the DCF valuations are determined by Marshall & Stevens 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 2023, 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 6.2% to 8.4% (31 December 2022: 6.7% to 8.0%) with an overall weighted average of 7.4% (31 December 2022: 7.5%).

An increase or decrease of 0.5% in the discount rates would have the following impact on NAV:

Discount Rate	+50 bps	-50 bps
Increase/(decrease) in NAV ($'000)	(7,824)	9,822
NAV per Share	79.5c	92.3c
NAV per Share Change	(5.7c)	7.1c
Change (%)	(6.6%)	8.3%

(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)	(8,702)	9,963
NAV per Share	78.9c	92.4c
NAV per Share change	(6.3c)	7.2c
Change (%)	(7.4%)	8.5%

(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)	(7,173)	6,416
NAV per Share	80.0c	89.9c
NAV per Share change	(5.2c)	4.6c
Change (%)	(6.1%)	5.5%

(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, with a 10-50% discount applied based on the characteristics of the asset as reasonably determined by Marshall & Stevens. 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%
Increase/(decrease) in NAV ($'000)	(8,356)	9,601
NAV per Share	79.2c	92.2c
NAV per Share change	(6.1c)	7.0c
Change (%)	(7.1%)	8.2%

(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%
Increase/(decrease) in NAV ($'000)	(6,391)	7,627
NAV per Share	80.6c	90.7c
NAV per Share change	(4.6c)	5.5c
Change (%)	(5.4%)	6.5%

(vi) 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%
Increase/(decrease) in NAV ($'000)	(38,446)	43,429
NAV per Share	57.4c	116.7c
NAV per Share change	(27.8c)	31.5c
Change (%)	(32.7%)	36.9%

5. Income

	Year ended	Year ended
	31 December	31 December
	2023	2022
Income from investments	$'000	$'000
Dividends from Holdco	6,200	9,850
Deposit interest	84	28
Total Income	6,284	9,878

6. Investment Management Fees

	Year ended 31 December 2023			Year ended 31 December 2022
	Revenue $'000	Capital $'000	Total $'000	Revenue $'000	Capital $'000	Total $'000
Investment management fees	1,246	-	1,246	1,300	-	1,300

The Investment Management Agreement ("IMA") dated 11 November 2020 between the Company and Ecofin Advisors, LLC ("the AIFM" or "Investment Manager"), appointed the AIFM to act as the Company's Investment Manager for the purposes of the AIFM Directive. Accordingly, the AIFM is responsible for providing portfolio management and risk management services to the Company.

Under the IMA, the Investment Manager receives a management fee of 1.00% per annum of NAV up to and including $500 million; 0.90% per annum of NAV in excess of $500 million up to and including $1 billion; and 0.80% per annum of NAV in excess of $1 billion, invoiced quarterly in arrears. Until such time as 90% of the Net Initial Proceeds of the Company's IPO had been committed to investments, the Investment Manager fee was only charged on the committed capital of the Company. No performance fee or asset level fees are payable to the AIFM under the IMA.

The Investment Manager reinvests 15% of its annual management fee in Shares (the "Management Fee Shares"), subject to a rolling lock-up of up to 2 years, subject to certain limited exceptions. The Management Fee Shares are issued on a quarterly basis. Where the Shares are trading at a premium to NAV, the Company issues new Shares to the Manager equivalent in value to the management fee reinvested. Where shares are trading at a discount to NAV, the Management Fee Shares are purchased by the Company's Broker at the prevailing market price.

The calculation of the number of Management Fee Shares to be issued is based upon the NAV as at the relevant quarter concerned. The Investment Manager is also entitled to be reimbursed for out-of-pocket expenses reasonably and properly incurred in respect of the Investment Manager's performance of its obligations under the IMA.

Unless otherwise agreed by the Company and the Investment Manager, the IMA may be terminated by the Company or the Investment Manager on not less than 12 months' notice to the other party, such notice not to expire earlier than 36 months from the Effective Date of the IMA (11 November 2020). The IMA may be terminated by the Company with immediate effect from the time at which notice of termination is given or, if later, the time at which such notice is expressed to take effect in accordance with the conditions set out in the IMA.

With respect to the first quarter of 2023, the Company issued or the Company's Broker purchased  Shares to settle investment management fees as below. In the remaining three quarters of the Year, cash was paid in settlement of investment fees:

Year ended 31 December 2023:

	Investment
	management
	fee	Purchase price	Number of
Shares purchased	($)	(cents)	Shares	Date of purchase
1 January 2023 to 31 March 2023	48,095	79.0	60,879	10 May 2023

Year ended 31 December 2022:

Shares issued	Investment management fee ($)	Purchase price (cents)	Number of Shares	Date of purchase
1 January 2022 to 31 March 2022	44,559	97.64	45,636	03 May 2022
1 April 2022 to 30 June 2022	50,359	97.32	51,745	28 July 2022

 

Shares purchased	Investment management fee ($)	Purchase price (cents)	Number of Shares	Date of purchase
1 July 2022 to 30 September 2022	49,916	86.50	57,705	01 November 2022
1 October 2022 to 31 December 2022	49,346	83.50	59,096	01 February 2023

7. Other Operating Expenses

	Year ended 31 December 2023			Year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
	$'000	$'000	$'000	$'000	$'000	$'000
Secretary and Administrator fees	197	-	197	175	-	175
Directors' fees	235	-	235	228	-	228
Directors' other employment costs	28	-	28	36	-	36
Broker retainer	141	-	141	115	-	115
Auditor's fees payable to the Company's
auditor for statutory audit services*	183	-	183	160	-	160
FCA and listing fees	41	-	41	56	-	56
Research fees	39	-	39	51	-	51
Depository and custody fees	6	-	6	5	-	5
Registrar's fees	18	-	18	16	-	16
Marketing fees	10	-	10	9	-	9
Public relations fees	107	-	107	102	-	102
Printing and postage costs	26	-	26	45	-	45
Legal fees	128	-	128	-	-	-
Miscellaneous expenses	25	-	25	35	-	35
Total other operating expenses	1,184	-	1,184	1,033	-	1,033

*          The Auditor's fee for the Year is $183,000 including VAT of $30,600 (2022: $160,000 including VAT of $26,800).

8. Earnings Per Share

Earnings per Share is based on the profit/(loss) in the Year ended 31 December 2023 of ($6,728,000) (2022: $1,181,000) attributable to the weighted average number of Shares in issue of 138,078,496 in the Year ended 31 December 2023 (2022: 132,933,277). Revenue and capital profit/(loss) were $3,854,000 and ($10,582,000) respectively (2022: $7,545,000 and ($6,364,000)).

9. Taxation

(a) Analysis of charge in the Year

	Year ended 31 December 2023			Year ended 31 December 2022
	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 23.5% (2022: 19%). 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 2023			Year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
	$'000	$'000	$'000	$'000	$'000	$'000
Profit/(loss) on ordinary activities before
taxation	3,854	(10,582)	(6,728)	7,545	(6,364)	1,181
Corporation tax at 23.5% (2022: 19%)	906	(2,487)	(1,581)	1,434	(1,209)	225
Effects of:
Dividends received (not subject to tax)	(1,477)	-	(1,477)	(1,877)		(1,877)
Loss on investments held at fair value not
allowable	-	2,487	2,487	-	1,209	1,209
Unutilised management expenses	571	-	571	443	-	443
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 2023, a deferred tax liability of $2,870,000 (2022: $3,149,000) 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 $6,504,000 (2022: $4,158,000) that are available for offset against future profits. A deferred tax asset of $1,626,000 (2022: $1,039,500) 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
	2023	2022
	$'000	$'000
Other receivables	5	9
Bank interest receivables	3	2
Total	8	11

11. Trade and Other Payables

	As at 31	As at 31
	December	December
	2023	2022
	$'000	$'000
Accrued expenses	795	593
Total	795	593

12. Share Capital

	Year ended 31 December 2023		Year ended 31 December 2022
		Nominal		Nominal
		value		value
Allotted, issued and fully paid:	No. of Shares	$	No. of Shares	$
Opening balance	138,078,496	1,380,784.96	125,053,498	1,250,534.98
Placing and retail offer
Shares issued	-	-	12,927,617	129,276.17
Share issue for management fee
Share issue	-	-	97,381	973.81
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.

During the Year, the Company issued no Shares (2022: 97,381 Shares) to the Company's Investment Manager, in relation to investment management fees payable for the year ended 31 December 2023. The Company's issued share capital at 31 December 2023 comprised 138,078,496 (31 December 2022: 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 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

 

	Year ended 31 December 2022
		Special
	Cents per	distributable	Revenue
	Share	reserve	reserve	Total
		$'000	$'000	$'000
Quarter ended 31 December 2021	1.40c	-	1,751	1,751
Quarter ended 31 March 2022	1.40c	-	1,933	1,933
Quarter ended 30 June 2022	1.40c	-	1,933	1,933
Quarter ended 30 September 2022	1.40c	-	1,933	1,933
Total	5.60c	-	7,550	7,550

(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 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

 

	Year ended 31 December 2022
		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	1.40c	-	1,933	1,933
Quarter ended 30 September 2023	1.40c	-	1,933	1,933
Quarter ended 31 December 2023	1.40c	-	1,933	1,933
Total	5.60c	-	7,732	7,732

After the Year end, the Company declared an interim dividend of 0.7 cents per Share for the period 1 October 2023 to 31 December 2023, which was paid on 15 March 2024 to Shareholders on the register at 23 February 2024.

14. Special Distributable Reserve

Following the admission of the Company's Shares to trading on the LSE, the Directors applied to the Court and obtained a judgement on 29 January 2021 to cancel the amount standing to the credit of the share premium account of the Company. The amount of the share premium account cancelled and credited to the Company's Special distributable reserve was $121,250,000 (2022: $121,250,000), which can be utilised to fund distributions to the Company's Shareholders.

15. Net Assets Per Share

Net assets per Share are based on $117,659,000 (2022: $130,187,000) of net assets of the Company as at 31 December 2023 attributable to the 138,078,496 Shares in issue as at the same date (2022: 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 2023, the fee outstanding but not yet paid to the Investment Manager was $297,000 (2022: $329,000).

As at 31 December 2023, the Investment Manager's total holding of Shares in the Company was 8,780,378 (31 December 2022: 8,787,792).

Directors

The Company is governed by a Board of Directors, all of whom are non-executive, and it has no employees. Each of the Directors was appointed on 22 October 2020.

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. Each Director receives 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.

The aggregate remuneration and benefits in kind of the Directors in respect of the Company's accounting year ended 31 December 2023 which were paid out of the assets of the Company were $235,150 (2022: $228,293), which is the USD equivalent of £188,000 (2022: £188,000). 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.

	Ordinary shares	Ordinary shares
	as at 31 December	as at 31 December
Director	2023	2022
Patrick O'D Bourke	104,436	104,436
Tammy Richards	25,000	25,000
Louisa Vincent	36,076	34,435
David Fletcher	62,894	59,406

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 2023 are summarised below:

	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)

 

	31 December 2022
		Non-interest
	Interest bearing	bearing	Total
	$'000	$'000	$'000
Assets
Cash and cash equivalents	3,394	-	3,394
Trade and other receivables	-	11	11
Investments at fair value through profit or loss	-	127,375	127,375
Total assets	3,394	127,386	130,780
Liabilities
Trade and other payables	-	(593)	(593)
Total liabilities	-	(593)	(593)

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 2023 was $75.8 million (2022: $64.4 million). An increase or decrease in interest rates of 0.5% would impact the net asset value of Holdco and the Company by $379,000 (2022: $322,000) negatively or positively respectively.

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 2023, 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 net asset value, 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 ($35,298,000))/$35,298,000 impact on the NAV.

As noted in the Chairman's statement a strategic review of the Company is currently ongoing. Marathon has conducted a comprehensive and wide-ranging exercise to identify potential for the Company's portfolio of assets. This process has resulted in specific discussions and negotiations taking place.

Given the discount to NAV, it is perhaps inevitable that, in arriving at a view on the valuation of the Company's portfolio as a whole, buyers would take account of both RNEW's prevailing share price as well as its reported NAV, the latter being derived on an asset by asset basis.

 (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 2023	31 December 2022
	$'000	$'000
Cash and cash equivalents	1,648	3,394
Trade and other receivables	8	11
Total	1,656	3,405

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 2023
	Less than 1 year	1-2 years	2-5 years	Total
	$'000	$'000	$'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

 

	As at 31 December 2022
	Less than 1 year	1-2 years	2-5 years	Total
	$'000	$'000	$'000	$'000
Assets
Cash and cash equivalents	3,394	-	-	3,394
Trade and other receivables	11	-	-	11
Liabilities
Trade and other payables	(593)	-	-	(593)
Net financial assets	2,812	-	-	2,812

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 $117,659,000 (2022: $130,187,000).

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 CD Global Solar CA Beacon 5 Borrower, LLC	United States	1209 Orange Street, Wilmington, DE 19801
TC Renewable Holdco II, LLC	100%	Holdco Subsidiary entity, owns TCA IBKR 2020 Holdco, LLC and TCA IBKR 2021 Holdco	United States	1209 Orange Street, Wilmington, DE 19801
TC Renewable Holdco III, LLC	100%	Holdco Subsidiary entity, owns UCCT Solar Group, LLC, Milford Industrial Solar, LLC, SED Three, LLC, SED Four, LLC, and Solar Energy Partners 1, LLC	United States	1209 Orange Street, Wilmington, DE 19801
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
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 Partners, LLC, Heimlich Solar Partners, LLC, Small Mouth Bass Solar Partners, LLC, Hemings Solar Partners, LLC and Randolf Solar Partners, LLC	United States	1209 Orange Street, Wilmington, DE 19801
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 Portfolio owned by TC Renewable Holdco III, LLC	United States	155 Federal Street, Suite 700, Boston, MA 02110
Milford Industrial Solar, LLC	100%	Subsidiary entity, owns two of the 52 solar investments in the SED Solar Portfolio owned by TC Renewable Holdco III, LLC	United States	155 Federal Street, Suite 700, Boston, MA 02110
SED Three, LLC	100%	Subsidiary entity, owns 30 of the 52 solar investments in the SED Solar Portfolio owned by TC Renewable Holdco III, LLC	United States	155 Federal Street, Suite 700, Boston, MA 02110
SED Four, LLC	100%	Subsidiary entity, owns six of the 52 solar investments in the SED Solar Portfolio owned by TC Renewable Holdco III, LLC	United States	155 Federal St, Suite 700, Boston, MA 02110
Solar Energy Partners 1, LLC	100%	Subsidiary entity, owns 13 of the 52 solar investments in the SED Solar Portfolio owned by TC Renewable Holdco III, LLC	United States	155 Federal Street, Suite 700, Boston, MA 02110
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.         Represents percentage ownership of class B membership interest in the tax equity partnership.

19. Commitments and Contingencies

As at 31 December 2023 the Company had the following future investment obligations:

The Company had a collective future unlevered net equity commitment amount of $5.0 million, which will be funded by $19.2 million of pending future financing on closed assets. This commitment figure is subject to change based on the vendor's ability to deliver on certain conditions to close, which may impact the price paid for certain projects. Additional funding required is expected to be facilitated in the short term through the RCF, and subsequently through a term debt facility as the projects become operational.

20. Post Balance Sheet Events

The strategic review announced on 8 September 2023 remains ongoing with specific discussions and negotiations taking place with potential buyers as of the date of the balance sheet and to the date of this report. Assuming a satisfactory transaction can be agreed, the Board expects a proposal to be set out in a circular and put to a general meeting at which Shareholders will have the opportunity to vote.

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
			2023	2022
NAV per Share (cents)	a		85.2	94.3
Share price (cents)	b		56.5	83.3
Discount	(b÷a)-1		33.7%	11.7%

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.

			Share price
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 factor1	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%

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.

			Share price
Year ended 31 December 2022			(cents)	NAV (cents)
Opening at 1 January 2022	a		99.0	98.0
Closing at 31 December 2022	b		83.3	94.3
Dividends paid during the Year	c		5.6	5.6
Dividend/income adjustment factor1	d		0.9939	1.0010
Adjusted closing e = (b +c) x d	e		88.3	100.0
Total return	(e÷a)-1		-10.8%	1.1%

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	31 December
			2023	2022
Average NAV ($'000)	a		124,293	129,345
Annualised expenses ($'000)	b		2,209	2,332
Ongoing charges	(b÷a)		1.78%	1.80%

 

FINANCIAL INFORMATION

Year ended 31 December 2023
	The figures and financial information for the year ended 31 December 2023 are extracted from the Company's Annual Financial Statements for that period and do not constitute statutory financial statements for that year. The Company's Annual Financial Statements for the year ended 31 December 2023 have been audited but have not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2023 Financial Statements was unqualified, did not include a reference to any matter to which the Auditors drew attention without qualifying the report, and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.
	Year ended 31 December 2022
	The figures and financial information for the period ended 31 December 2022 are extracted from the Company's Financial Statements for that period and do not constitute statutory financial statements for that year. The Company's Annual Financial Statements for the year ended 31 December 2022 have been audited and delivered to the Registrar of Companies. The Independent Auditor's Report on the 2022 Financial Statements was unqualified, did not include a reference to any matter to which the Auditors drew attention without qualifying the report, and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.

 

ANNUAL REPORT

The Annual Report for the year ended 31 December 2023 was approved on 26 April 2024.  The full Annual Report can be accessed via the Company's website at: https://uk.ecofininvest.com/funds/ecofin-us-renewables-infrastructure-trust-plc/  

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

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 6th Floor, 125 London Wall, London, EC2Y 5AS on 13 June 2024 at 3:00pm.

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.

 

26 April 2024

 

For further information contact:

Company Secretary and registered office:

Apex Listed Companies Services (UK) Limited

6th Floor, 125 London Wall, London, EC2Y 5AS