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Thrive Renewables plc (formerly Triodos Renewables plc)

What they do

Thrive Renewables develops and operates small to medium-scale renewable energy projects across the UK. It has invested in 19 onshore wind farms, a hydro-electric scheme, and a solar farm, with a combined capacity of 104.9 MW of clean, green power.  In 2018, generation from Thrive's owned portfolio was equivalent to satisfying the electricity demand of 42,400 UK homes. The total portfolio of projects in which Thrive has invested generated electricity equivalent to the demand of 64,200 UK homes.

Thrive's work

Thrive Renewables connects people to sustainable energy. It offers accessible opportunities for individuals and businesses to invest in clean energy projects that deliver financial, social and environmental rewards. Thrive Renewables' 6,152 shareholders – large and small – have been building and operating renewable energy projects in the UK since 1994. By investing in Thrive, you join a growing movement of people working together to create a sustainable energy system for generations to come.

Thrive Renewables’ 2018 total renewable energy capacity was 104.9MW.

2018 Highlights

2018 has been an exciting year for Thrive

During 2018, Thrive had a total of 23 investments:

• Sixteen renewable energy projects owned outright or in co-ownership

• Funds provided to build a further two renewable energy projects

• Community bridge funding to three projects

• Investments into two sustainable energy project development companies - one electricity storage and one heat

Aura Power Energy Solutions

In May 2018, Thrive established a joint venture with battery storage developer, Aura Power. The joint venture, Aura Power Energy Solutions Limited (APES), offers businesses the opportunity to share the financial and environmental benefits of hosting a battery with APES. The APES business model has two sources of income; the delivery of electricity grid balancing services and sharing cost savings achieved by the host by consuming power stored in the battery at times when the import electricity price is highest. Both the provision of balancing services and reducing peak demand on the electricity system have a positive impact on the UK’s fuel mix. Balancing services provide flexibility which allows greater use of renewable energy sources and the continued retirement of coal fired power stations. Lowering peak demand reduces the most carbon intensive emission periods.

Rendesco

In July 2018, Thrive invested £350,000 into Rendesco Holdings Limited. Rendesco designs, installs and operates heating and hot water systems using ground source heat pumps as the primary energy source and specialises in delivering such systems to new build retirement homes. Rendesco plans to deliver 100 ground source heat pump systems following a £4 million capital raise in the summer of 2018, targeting the delivery of 4,000 tCO2e emission reductions annually.

Community Energy Funding Bridge (CEFB)

The CEFB aims to facilitate the transition of ownership of renewable energy assets from corporate to community and/or co-operative ownership.

The £1.7m CEFB provided to Sheriffhales Solar Community Investment Company solar project and the £2.35m to Brockholes Community Energy Limited wind farm were repaid in November and December 2018 respectively. Sheriffhales solar project is now being managed by Community Owned Renewable Energy LLP (CORE). It is intended that under CORE’s management both community benefits and community ownership will increase.

Thrive also provided a £7.4m CEFB to facilitate the acquisition of Mean Moor wind farm by three energy co-operatives. In late 2017 and the first half of 2018, the energy co-operatives successfully raised £4 to partially replace the CEFB. The cooperative fundraising unites over 700 investors and the balance of the Mean Moor CEFB is due to be repaid in the first half of 2020.

Sale of Kessingland and Wern Ddu wind farms

Although the sale of the two wind farms completed on 13 February 2019, the majority of the work was undertaken in 2018. Having done a full strategic review in 2017, it became obvious to thrive that valuations for operational wind farms were exceptionally high. This provided an opportunity to realise the upside of some of its assets to fund new renewable capacity and contribute positively to the UK’s energy transition. The decision to sell the two projects is a departure from Thrive's buy, build and hold strategy. While Thrive does not intend to sell projects routinely, the following combination of factors drove the decision on this occasion:

Enhancing shareholder returns

While Thrive continues to grow, the level of dividend has been stable, but modest. The underlying value of the Company has steadily increased as it has added projects (and their associated long-term dividend flow) to the portfolio. Thrive has funded the acquisition and build of projects with a combination of shareholder equity and debt (from banks and bond investors). This has allowed it to grow the portfolio to a greater extent than if funded with equity alone. The relatively low cost of debt also enhances the long-term equity returns achievable from the projects. However, the use of debt limits the levels of dividend which can be paid in the first 10-15 years of each project, as the debt interest and repayments must be made. While shareholders have benefitted from regular dividends, the majority of the value created by building the portfolio is locked up in the long-term (post debt repayment) returns. By selling two of the assets, Thrive was able to pay a 40 pence per share interim dividend in April 2019, monetising the projected future revenue/dividend streams now, rather than waiting.

Proof of value

Thrive has acquired most of its projects at the consented stage of development - the project having secured planning permission, an option on the required land rights and an electricity grid connection offer. While these three elements create an asset (rather than just a good idea to build a renewable project), risks remain in the procurement, construction and proof of operation phase. Therefore, there is an increase in the value of assets between the consenting and operational phase. Part of the additional value achieved by selling the two projects reflects the successful procurement, construction and proof of operation. The sale of the projects provides the Directors with further proof of the valuation of the rest of the portfolio.

Changing market conditions for investing in new renewables

The business model of building renewable energy assets is an evolving picture. Thrive will continue to play a significant role in the transition to a cleaner energy system. The business is at the forefront of developing and implementing business models which deliver continued progress in the UK energy sector. £11m of the funds released by the sale of the two assets is being used for investment into additional sustainable energy projects. Thrive is confident that the new owner of Kessingland and Wern Ddu wind farms is committed to delivering renewable electricity and the associated community benefits. By releasing this capital from the sale and reinvesting it, Thrive is able to increase the environmental impact of its shareholders’ funds, safe in the knowledge that the existing projects will keep delivering impact under new ownership.

In March 2019, a General Meeting was held, where shareholders approved the payment of a 40p per share dividend, equivalent to 15% of share price. The Thrive team are committed to redeploying the £11m retained by the Company from the sale of the two wind farms into additional sustainable energy assets.

Future plans

Thrive is making good progress towards a 2020 growth target of contributing to 125MW of renewable projects, and uniting a community of 10,000 investors. 

Thrive Renewables are focusing on the following objectives for the coming 12 months:

  • To continue to deliver healthy returns to shareholders, both via dividends and capital appreciation. This will be achieved through improvements in operational performance, lowering the Group’s cost of debt and by continued growth of the portfolio, delivering greater impact and diversifying income.
  • To continue to improve the portfolio’s operational performance in terms of health, safety and productivity. The focus will be on increasing the availability and productivity of our 50 turbines, and enhancing the electricity sale arrangements.
  • To increase awareness of Thrive Renewables and further enhance the profile of shares on the secondary market to support future growth.

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