Renewables investor says diverse portfolio helped balance record low wind speeds – as electricity price increases raise valuation

Wind speeds at their lowest for 20 years in some areas resulted in wind generation 32% below budget in the six months to 30 September, according to a half-year update from environmental infrastructure investor JLEN Environmental Assets Group. However, some other other renewables were above budget and the portfolio, which includes AD, thermal biomass, solar and hydro, was just 10% below budget. The group’s network of CNG refuelling stations also performed 30% above expectations in terms of gas dispensed.
JLEN said it is protected from electricity price volatility because it has several revenue streams that are not connected to the electricity price. It has also hedged against price risk by taking out short term fixed price arrangements with PPA providers, with arrangements in place for 100% of the solar portfolio by generation through March 2023. Fixed price arrangements are in place for 100% of the wind portfolio by generation to March 2022, after which the fixed volume tapers down to 40% by March 2024.
The recent rise in electricity prices driven by the Covid 19 recovery and wholesale gas price rises (up 278% over the past six months) has, however changed lifetime electricity price expectations across JLEN’s portfolio. The company said that compared with assumptions in a valuation at 31 March 2021, the average increase is expected to be 66% over the next three years and 4% per annum thereafter, giving a net increase in the electricity price assumption of 18.6% over the period to 2050.
The overall change in forecasts for future electricity and gas prices compared to forecasts at 31 March 2021 has increased the valuation of the portfolio by £21.6 million, it said.