Exposure to variable pricing decreases Octopus Renewable Infrastructure Trust’s NAV

According to Octopus Renewables Infrastructure Trust plc’s (ORITs) Q1 2023 financial results, lower forecast wholesale power prices across Europe were the biggest contributor to the company’s Net Asset Value (NAV) decrease.

Overall, ORIT’s unaudited NAV at 31 March 2023 was 107.7 pence per Ordinary Share – down from 109.4 pence per Ordinary Share at 31 December 2022.  

ORIT attributed “significant reductions” to power market forward prices applied to forecasts between 2023 and 2025. 25% of this decrease is related to the company’s UK sites due to the nation’s higher exposure to variable pricing.  

ORIT currently has eight solar photovoltaic (PV) assets in the UK with a total capacity of 123MW.

Variable pricing also caused ORIT’s sites in Sweden and Finland to contribute 56% and 29% respectively to its net NAV reduction.

ORIT noted that this decrease would have been “significantly higher” had it not been for fixed power sales contracts within its portfolio.

As of 31 March 2023, ORIT estimated that 78% of its forecast revenue over the 24-month period to 31 March 2025 is fixed and therefore insulated from near-term power price fluctuations.

ORIT also reported “significant levels of inflation protection” for revenues through government support schemes in the UK, France and Poland.

“Market conditions across the UK and Europe continue to be challenging driven by power price and inflation fluctuations,” said Phil Austin, chairman at ORIT.

“The investment manager continues to demonstrate its expertise, strength and depth of experience, minimising the impact through hedging the portfolio with fixed power price contracts; with some jurisdictions benefiting from 100% fixed pricing.

“It means greater certainty for ORIT as it isn’t as exposed to short-term peaks and troughs, causing limited impact to the NAV.”

ORIT confirmed that Breach Solar Farm is “progressing well” and is expected to go live during Q4 this year.