The Renewables Infrastructure Group: March 2025 Update

• InfraRed Capital Partners, the trust’s manager, has over three decades of experience in the industry

• The trust aims to provide investors with long-term, stable dividends whilst preserving the capital value of its investment portfolio.

• TRIG has increased its dividend target for 2025 to 7.55p per share (from 7.47p per share in 2024).

• Compared to 2023 the trust’s net asset value (NAV) per share has fallen by 9.2% to 115.9p per share and the discount to NAV has widened quite substantially.

How it fits in a portfolio

The Renewables Infrastructure Group Ltd (TRIG) aims to provide investors with long-term, stable dividends whilst preserving the capital value of its investment portfolio. It invests in a diversified mix of renewables infrastructure assets that contribute towards a net zero future. This includes onshore and offshore wind farms and solar parks in the UK and Europe.

The trust could diversify an income-focused investment portfolio, as well as provide some shelter against inflation. Investors in investment trusts should be aware the trust can trade at a discount or a premium to its net asset value (NAV).

Investors should remember that investing in a single sector like wind farms or renewable infrastructure is a higher-risk approach compared to a more diversified one. We think investment trusts investing in a specific sector should usually only form a small part of a well-diversified investment portfolio.

Manager

InfraRed Capital Partners, or InfraRed, is the investment manager for TRIG and responsible for the day-to-day management of the trust. InfraRed is an international infrastructure asset manager with over 25 years experience of investing in the asset class. They have a team of more than 190 professionals operating worldwide from offices in London, New York, Sydney, Seoul and Madrid.

Day-to-day monitoring and oversight of operations for the infrastructure in the trust is carried out by TRIG’s operations manager, Renewable Energy Systems (RES). RES is the world’s largest independent renewable energy company, working across 24 countries and active in wind, solar, energy storage, biomass, hydro, green hydrogen, transmission, and distribution.

As with any investment trust, there’s also a board that oversees the company management for its shareholders. With five members it has a broad range of financial and investment experience which should ensure it’s able to hold the trust managers to account.

Process

In line with TRIG’s aim to generate sustainable returns from a diversified portfolio of renewables infrastructure that contributes towards a net zero carbon future, the trust focuses on three types of assets: onshore wind farms, offshore wind farms and solar parks. Onshore wind farms make up 48% of the trust, offshore wind 32% and solar parks 14%. The rest (6%) is invested in flexible capacity technologies which are those that can store energy and release it back to the grid when needed. This will be largely battery storage parks, but could also include hydrogen in the future.

Whilst most of the trust invests in assets which generate renewable energy, the managers are excited about the flexible capacity technologies in the trust and their potential for the future. Renewable energy generation is less consistent than burning fossil fuels. Employing technologies such as batteries that can buy and store electricity from the grid when there is excess capacity (for example when the wind is blowing strongly) and sell it back to the grid when there’s a shortage of energy not only helps to balance out supply and demand but can also generate good profits for the trust. This is because these storage facilities can buy electricity when it’s cheap and sell it back to the grid when prices are higher.

In terms of geographical location, the bulk of the trust’s assets (61%) are invested in the UK, with the remainder invested across the rest of Europe, including Spain, France, Germany and Sweden. The trust’s top ten holdings make up around half of its assets, which means these investments can contribute significantly to overall returns, but it can increase risk.

Some of the highlights in the trust over the last year include commissioning of the Ranasjö and Salsjö onshore wind farms in Sweden, adding 121MW of net operational capacity to the trust. In addition, a new battery storage project, Ryton, in the UK, entered construction and is now expected to be commissioned in the second half of 2025.

The fund uses gearing (borrowing to invest) and derivatives which may increase risk. The current level of gearing in the fund is 37%.

Culture

TRIG was one of the first investment companies investing in renewable energy infrastructure to be listed on the London Stock Exchange. It launched in 2013, growing from £300mn then to £2.9bn today. It’s now part of the FTSE 250 index of shares. TRIG delegates the day-to-day running of the investment company to InfraRed, and the operation of the assets to Renewable Energy Systems (RES).

InfraRed is part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. InfraRed represents the infrastructure equity arm of SLC Management, which also incorporates a global real estate investment management adviser and a global alternative credit investment asset manager.

RES is the world’s largest independent renewable energy company, active in 24 countries in wind, solar, energy storage, biomass, hydro, green hydrogen, transmission and distribution technologies.

ESG

Renewable energy generation and storage is an asset class which is naturally compatible with sustainability objectives. Generating electricity from renewable sources is an integral part of the transition to net zero, and energy storage helps to balance the electricity grid when renewables are not generating electricity. Both of these should help us to move away from generating electricity from fossil fuels.

TRIG has four sustainability goals which they look to achieve with every investment they make. These are mitigating climate change, preserving the natural environment, positively impacting the communities in which they work and maintaining ethics and integrity in governance.

TRIG publishes an annual sustainability report which can be found on their website.

Cost

The ongoing annual charge over the trust’s financial year to 31 December 2024 was 1.04%, which is the same as the figure for the previous year. Investors should refer to the latest annual reports and accounts, and Key Investor Information Document for details of the risks and charging structure.

If held in a SIPP or ISA the HL platform fee of 0.45% (capped at £200 p.a. for a SIPP and £45 for an ISA) per annum also applies. Our platform fee doesn't apply if held in a Fund and Share Account or a Junior ISA. As investment trusts trade like shares, both a buy and sell instruction will be subject to our share dealing charges within any HL account except online deals in a Junior ISA.

Performance

Since the trust’s launch in July 2013 it’s returned 50.70%* for shareholders.

A lot of this return has come in the form of dividends, with the trust having a good track record of paying out a reliable income. Remember that income is variable and not guaranteed and past performance is not a guide to the future.

In the trust’s last financial year to 31 December 2024, the performance was a little weaker and it fell 17.14%. However, it was ahead of the AIC Investment Trust – Renewable Energy Infrastructure peer group which fell 19.20%. Much of this fall was driven by macroeconomic and political factors, with higher interest rates impacting valuations of renewable energy assets. The discount (the difference between the fund’s price and net asset value) also widened over the year.

Over the year the managers sold £185mn of assets and repaid £206m of debt. Both of these things helped performance by offsetting some of the weakness from macroeconomic factors. Over the last 24 months the disposals that have been made were at an average premium of 11% to the value on TRIG’s balance sheet.

The fund paid out £184mn of dividends over the year. This equates to a dividend per share of 7.47p and a dividend yield at the end of 2024 of 8.70%. For the financial year ending 31 December 2025 the board have increased the dividend target to 7.55p per share.

Over 2024 the trust bought back £21mn of shares. The board also announced they plan to increase the scale and pace of the trust’s share buyback programme to £150mn in the next financial year.