The Renewables Infrastructure Group (TRIG) is reducing its power price forecasts in response to the near-term impact of the coronavirus.
The renewables asset owner said: “COVID-19 is having a materially adverse impact on wholesale power prices as a result of reduced economic activity due to movement restrictions introduced across Europe.”
The company said it expects a reduction in net asset value (NAV) per share of approximately five pence.
The global pandemic has led to a reduction in demand for electricity and caused gas and carbon prices to fall. “These impacts are expected to continue over the near term impacting all power generators” added TRIG.
Expectations for gas prices in the mid-term have continued to ease, due to expected “softer demand” and increased supply.
The company said as a result, the most recent power price forecasts it used to arrive at the portfolio valuation, show a “material reduction” in forecast prices in the near term as a result of COVID-19, and a lesser reduction over the long term as a result of lower gas prices, compared with previous expectations.
Power price forecasts for each of the five jurisdictions across Europe where TRIG operates assets show similar reductions.
The company stated: “Based on these forecasts, the projected wholesale power prices for TRIG’s markets, on a blended basis, have reduced on average by 17% over the next five years, including a 25% reduction over 2020 and 2021, and by 5% from 2025 until 2050.
In the UK market, this corresponds to an average cannibalised capture price of £39 per megawatt- hour for the period 2020-2024 and £46/MWh for the period 2025-2050, in real prices.
Approximately 74% of the company’s revenues through to 31 December 2024 (and in excess of 80% over the next two years) are fixed, providing “strong levels of visibility” on cashflows in the near-to-medium term.
The company’s last published NAV per share was 115 pence as at 31 December 2019.
TRIG said “a formal valuation exercise” will be undertaken for the 30 June 2020 interim results that will take into account the latest available sets of power price forecast assumptions.