The Aquila European Renewables Income Fund said its unaudited net asset value (NAV) is €192.3m or 99.6 euro cents per ordinary share as of 31 March 2020.
The company’s NAV per ordinary share declined by 3% compared to the last quarter, largely due to a reduction in near-term forecast power prices, it said in a statement.
However, electricity production generated by the company’s assets in the first quarter of the year exceeded forecast by 22.7% and so will make a positive contribution to the company’s income in 2020.
“Aquila’s portfolio benefits from over 70% of its forecasted revenue over the next five years being contracted – in the form of government subsidies or fixed price power purchase agreements), which not only improves earnings visibility but also provides a partial hedge towards movements in short-term power prices,” it said.
All other core valuation assumptions have remained unchanged with the NAV reported by the company for the period ending 31 December 2019.
The company said its valuation policy means power price forecasts are updated quarterly.
The valuation methodology currently applied takes into account two years of market forward pricing, followed by independently sourced, long-term power price forecasts.
Following the company’s power price forecast update, the portfolio’s forecasted merchant power prices reduced by 36% to €26.1/MW on average over the next two years.
“Power prices have come under extreme pressure in the near term due to lower than expected demand, largely related to lock-down measures in response to Covid-19,” Aquila said in a statement.
“Power markets have also been further affected by commodity specific events, foremost the significant oil and gas oversupplies, as well as mild winter conditions experienced in Europe.”