Macquarie Infrastructure and Real Assets (MIRA)
Bright Network
Renewables Case Study Exercise
July 2021
STRICTLY CONFIDENTIAL
RENEWABLES ONE Case Study
Overview
▪
A MIRA-Owned renewables company, RENEWABLES ONE (“R1”) has been considering several avenues of expansion for its existing portfolio of
wind and solar assets. As an investment analyst you have been tasked with exploring the various opportunities presented in this management brief
and presenting your findings/opinion to the Investment Committee (“IC”) for sign off
▪
Investment rationale:
▪
‒
MIRA would like to achieve an element of geographic & technological diversification while maintaining its risk level
‒
Several of R1’s assets are due to be decommissioned (i.e. reach end of their life) over the coming 10 years and MIRA would like to begin
55MW of PV
planning for the future
North of Spain
To aid your IC discussions, you have been asked to prepare a concise 2-3 page case study covering the following key points (as well as anything else
that you feel is appropriate). You can use any public sources of information available to you, as well as the information contained within this
presentation.
‒
‒
‒
Opportunity Overview and Introduction
‒
Introduction
‒
Brief summary of the three investment options
‒
Short market overview of preferred option (e.g. country profile and why investing in renewables there makes sense)
‒
Overview of key listed competitors, including technological and geographical focus (should be the same group as trading
comparables below)
Trading comparables, including implied valuation of R1 based on these comparable companies
‒
Examples include, but are not limited to, Orsted and Iberdrola
‒
Feel free to use the template comparables slides towards the end of this presentation, or your own view on an appropriate format
Detailed risks (including how material each risk is and its likelihood) and mitigants for each of the options
‒
Examples could include country risk and technology risk
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 1
RENEWABLES ONE: Leading UK Renewables YieldCo
300MW installed wind and solar capacity, with a strong desire for expansion
Key Business Insights
▪
Overview of RENEWABLES ONE
RENEWABLES ONE (“R1”) is a pioneer since 2006, with deep
expertise in the acquisition and management of wind farms and
solar plants in the UK
▪
Diversified portfolio with projects across England, Scotland, Wales and
Northern Ireland, limiting single project risk
▪
To date, the UK Government has guaranteed the electricity price R1
will receive for each unit of electricity it produces from each wind farm
and solar plant for 15 years after the asset has been built
▪
After 15 years, R1 must sell electricity into the broader electricity market
at market prices
▪
Number of existing wind 20 (each will last for around 25 years)
farms and asset life
Average remaining asset life of 12 years
1.
North of Spain
Potential to
expand into
new markets
After its success in recent years, the team have explored expanding
into different technologies and markets
Key Operating and Financial Metrics
Existing electricity
generation capacity
300MW in operation
Plant availability
99%
Revenue 2020 (2019A)1
£110m (£80m)
EBITDA 2020 (2019A) 1
£80m (£50m)
Net Debt (2020)
£75m
Expert Asset
Management
Team
20 Operating
Assets
67MW of PV
Asset
Strong
Contracted
Revenue
Recent News
▪
South of Spain
“Yesterday, given helpful
weather
renewables accounted for almost 100%
219MW
of conditions,
PV
of total electricity generated in the UK”
▪
“Could solar be the new wind in the UK?”
▪
“The growing problem of intermittent electricity generation as more renewables
assets are built is threatening to increase strain on electricity grid operators”
▪
“Given the level of competition to build new renewables assets in the UK, the
government is reportedly considering whether to end its revenue support scheme for
new projects”
E = expected, A = Actual
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 2
RENEWABLES ONE: Potential Opportunities
We have outlined below the results of a market screening exercise carried out by R1,
highlighting the most attractive identified opportunities for the yieldco
#1: UK Solar Portfolio
#2: Taiwan Offshore Wind
#3: Greece Onshore Wind
•
100% of a portfolio of 5 solar plants in the
south of England totalling 40 MW of generating
capacity
•
25% of a single 400 MW asset in Taiwan, due
to be operational in 2021
•
100% of a 300MW portfolio of operational
onshore wind farms in Greece
•
1 of these plants is currently under
development, the rest are operational
Delayed start to construction leading to an
expected completion date in 2021, compared
to original estimate of late-2019
•
•
50% of assets were built between 2018 and
2020 and eligible for new ‘Feed in Tariffs’ (i.e.
guaranteed prices)
•
2 of the operating plants are eligible for
‘Contract for Difference’ payments (i.e.
guaranteed prices)
•
Assumed asset life of 35 years
•
•
Expected to be eligible for the Taiwanese
‘Feed in Tariff’ in 2021 (i.e. guaranteed prices)
The other 50% of the portfolio impacted by
retroactive ‘Feed in Tariff’ cuts in 2014 as the
Greek government cut guaranteed prices to
reduce its renewables account deficit
•
3 Co-Investors (60% Local energy company,
10% Infrastructure fund, 5% large European
utility company)
•
Assumed asset life of 30 years for each wind
farm
•
The local energy company will be providing
ongoing operations and maintenance services
to the wind farm
•
Availability in the region of 97% across the
portfolio
•
Seller is a major Greek renewables developer
•
•
•
Availability of operating plants to date has been
in the region of 95%, with one plant (15 MW)
consistently 15 percentage points below this
figure
The 4 operating plants are now c.10 years old
with an expectation that each asset will run for
40 years in total
•
Seller is a small family office
Seller is another infrastructure fund
Metric
#
Metric
#
Metric
#
# Assets
5
# Assets
1
# Assets
30
Capacity
40 MW
Capacity
100MW
Capacity
300MW
Average age of assets
8 years
Average age of assets
Average age of assets
10 years
-
Contracted revenue
Yes, for two assets
Contracted revenue
No
Contracted revenue
Development risk
Yes, for one asset
Development risk
No
Development risk
No
Construction risk
Yes, for one asset
Construction risk
Yes
Construction risk
No
STRICTLY CONFIDENTIAL  MACQUARIE
Yes, for all assets
PAGE 3
RENEWABLES ONE: Listed Market Comparables Template
[]
Financial Metrics
Listed
Comparable
2020
EBITDA
(£m)
2019
EBITDA
(£m)
Valuation Metrics
Shares
Outstanding
(m)
Share Price
(£)
Equity
Value
(£m)
Multiples
Net Debt
(£m)
Enterprise
Value
(£m)
EV / EBITDA
2020
(x)
EV / EBITDA
2019
(x)
Yield
Dividend
Yield
Comp A
Comp B
Comp C
Comp D
Comp E
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 4
RENEWABLES ONE: Listed Market Comparables Template
Ørsted example
Financial Metrics
Listed
Comparable
2020
EBITDA
(£m)
1
Ørsted
3
Valuation Metrics
2019
EBITDA
(£m)
2
3
Shares
Outstanding
(m)
Share Price
(£)
4
5
Equity
Value
(£m)
3
2,091.3
2,017.4
420.4
103.3
D
E
A
B
Multiples
Net Debt
(£m)
6
43,427.3
A
B
Enterprise
Value
(£m)
EV / EBITDA
2020
(x)
Yield
EV / EBITDA
2019
(x)
3
+ 1,424.2
Dividend
Yield
7
44,851.5
C
22.4x
22.2x
C
C
D
1.31%
E
3
4
1
2
5
7
6
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 5