Member Info for bunsenburner123

UKW’s 11% discount rate is for equity after gearing. The unlevered rate is ~7.5–8%, the same as TRIG. UKW simply reports both, while others only report the unlevered one

The reason UKW’s discount rate looks higher than TRIG or the solar funds is simply because UKW discloses a levered discount rate (11%).

The unlevered discount rate — which is the fair comparison — is lower.

Other renewables almost always quote unlevered discount rates only, and do not publish a levered number. That’s why TRIG’s 8–9% looks lower.

UKW explicitly shows both in Note 9:

• Unlevered discount rate is ~8–9%

• Levered becomes ~11% after applying ~35% gearing

So the funds are using similar underlying discount rates — UKW just discloses more detail, which makes its headline number look artificially high compared to peers

The NAV DCF uses an 11% discount rate, not 8%.

That’s why NAV has fallen: they increased the discount rate sharply over the last 18 months to reflect higher gilt yields and power-price uncertainty.

The 11% IRR you’re seeing is the same rate they use for the NAV DCF — so you’ve already found the correct number

Good points, but you’re overstating the risk.

NAV already includes turbine ageing, opex, capex, and discount-rate stress-testing. An 11% discount rate is extremely conservative — higher than almost any peer — which already builds in the ‘depreciation’ you’re talking about.

Dividend sustainability comes from actual cash flow, not theoretical depreciation. UKW’s cash flow is backed by 20+ years of contracted or semi-contracted revenues, and buybacks below NAV materially improve long-term dividend safety.

Yes, margin of safety is thinner at current assumptions, but that’s exactly why the discount exists. If assumptions stabilise (interest rates, ROC reform), NAV recovers and dividend cover rises naturally

Yes but can’t be bothered to watch it. Switching off now

£448k invested at 99p

Wouldn’t mind a takeover now at 140p please 🙏

Yes no sell off here

i know a fair few people hoping to buy many more at 2.5p

endeavour just bought £1.8m at 2.3p i think 2.5p is pretty damn decent lol

Just remember - 1.3x covers do bad wind

Over 2x covered in good wind

Incredible opportunity down here

Option 2 v unlikely now and the sp is pricing in option 2

We will likely move back to 110p in the coming weeks and months

Unbelievable news guys well done all

One of the worlds top mining companies just bought £1.8m at 2.3p

I think a 90% chance of a bag within two weeks

And a 99% chance of 10 bags within 1 year

Good points, but a few clarifications:

1. Amortising debt isn’t automatically better

Amortising debt reduces risk for the lender, but it reduces equity cash flow. That is why many solar trusts struggle with dividend cover.

UKW’s structure is designed to maximise equity cash returns rather than repay debt early. It is a different business model, not a weaker one.

2. ROC/FIT reform – Option 2 is essentially impossible

Option 2 would destroy investment economics and contradict Labour’s requirement for £40bn a year of private capital.

The market has priced in fear, but realistically Option 1 is the only viable outcome.

When confirmed, most of the discount should unwind.

3. Solar’s longer leases do not automatically mean higher NAV

Solar panels degrade by around 0.5% per year and inverters fail regularly. Replacement cycles are expensive and frequent.

Wind assets now have longer economic lives due to repowering and design improvements, often moving to 30+ years. Solar is not automatically more durable.

4. Hybrid solar plus battery is promising but not yet a NAV driver

It may eventually add value, but at present battery returns are falling, grid limitations still exist, and the capex required is large.

This is still a future narrative rather than a reliable NAV enhancement today.

5. UKW’s discount rate is conservative, not optimistic

UKW uses an 11 percent discount rate. Many peers use 8–9 percent.

This makes UKW’s NAV more conservative and less vulnerable to downward revisions.

Solar may produce higher NAV growth if everything goes right, but it also carries higher operational and subsidy risk.

Wind has more predictable cash flows, lower degradation, and smaller ROC/FIT exposure.

This is why UKW is still seen as the most reliable income vehicle in the sector.

Consistent cash flow is ultimately more important than theoretical NAV uplift.

1. “Not amortising debt” isn’t a weakness for UKW

It’s a choice. They use corporate-level, long-dated debt because it maximises free cashflow, which is why UKW consistently has the highest dividend cover in the entire sector. TRIG amortises because its assets sit in separate SPVs — different structure, not automatically safer.

2. Wind vs solar isn’t a quality question — it’s a subsidy exposure mix

UKW’s ROC exposure is actually lower risk than FiTs right now. And with half their revenues fixed or hedged, the CPI/RPI consultation hits solar-heavy trusts far harder than UKW (as you noted). UKW’s estimated NAV hit is tiny compared to BSIF, FSFL, NESF.

3. Solar “longer life” is true, but wind has higher cash yield and faster payback

UKW throws off more cash per £ invested than any solar trust — which is why its 10-year NAV total return is top of the sector.

4. Batteries won’t be a free lunch

Everyone assumes storage is a cash machine. It isn’t — capex is high, degradation is real, and revenues are volatile. TRIG’s recent battery ROIs are nowhere near wind ROIs.

5. The sector is bombed-out everywhere

TRIG, UKW, BSIF, NESF — they’re all down because of the discount rate reset + policy noise. UKW just has the cleaner portfolio and the strongest cash cover, so it’s the simplest to analyse.

Wind generation has been weaker than expected in some recent years, and the market doesn’t fully trust renewable NAVs right now. That’s exactly why UKW and the whole sector trade on big discounts — higher discount rates, political noise over subsidies, and retail fear. But none of this changes the core fact that UKW’s cashflow remains solid. Even in the worst wind years, dividend cover stayed around 1.3×, subsidies are still contracted for a decade or more, debt is mostly long-dated and cheap, and about half the power is hedged. NAV moves with valuation assumptions; dividends come from actual cash generation — those are different things.

At 99p the market is pricing in a worst-case future that is far more severe than reality: permanently weak wind, no rate cuts, and political damage that doesn’t align with current policy. Meanwhile investors today are being paid nearly 10% a year from contracted income streams while buybacks reduce the share count. That’s why the discount is extreme — it reflects sentiment rather than collapsing fundamentals. So yes, the NAV was revised down sensibly, but the cash engine is still strong, and the sell-off is far more about fear than any real threat to the dividend.

Noooo!!!

Go and ChatGPT the difference if you compound at 90p vs 110p and you bought at 100p

After 10 years you’re capital is up more when the SP is at 90p

No worries SB

I’m fairly new here so excuse my optimism, I’m sure it’ll wane

Meanwhile, I’ve collect £10k of divi’s today

Thanks Mr UKW

Only two things matter if investing for the long term

Number 1 The ability to pay the dividend (income)

Number 2 Interest rates (share price)

Lol that’s probs why you know so much about Vodafone and Carillion no doubt

13 not 30

My point is, it’s not impossible, but it’s very very unlikely that the dividend will be cut

There would need to be a significant black Swan event and even then it would only be cut a small amount.

As inflation rises the dividend increases and as interest rates will come down nav will increase

What lol

80% of their cash flow is contracted

They increased the dividend every year for 30 years since they launched

The dividend is covered 1.3x, even in a bad wind year

Avg about 105p

Assuming two things:

1 - you’re in it for the long term

2 - the dividend doesn’t get cut

Then the lower the price goes, the more money you make

Best case scenario, price drops for 9 years then rerates back to NAV year 10 and then sell

Worst case scenario price stays high, then when you want to sell, price drops

The lower the SP the higher the dividends

I won’t be reinvesting my dividends today. Hoping it drops in the coming days or weeks

Really hoping we can slip to 96p when the divi’s land tomorrow

£10k of divis for me to invest

Might even have another £200k in the coming months. Praying sub 100p remains in place by then