Last checked at 20 Dec 2022 07:00
20 December 2022
Aquila Energy Efficiency Trust PLC
(the "Company")
Trading Update
Material Commitment and Deployment Progress
The Company is pleased to announce an update on the continued progress in the commitment and deployment of capital since the last update published on 15 September 2022.
Commitments increased materially to £87.3m as at 19 December 2022 (31 August 2022: £55.5m). Total income-generating, deployed capital has increased to £54.4m (31 August 2022: £32.1m). The Company is expected to achieve an average gross unlevered project yield of 8.0% over all investments made to date.
The Board has approved commitments totalling a further £8.7m, which are awaiting financial close. These commitments would be in addition to the £87.3m commitments made. The Investment Adviser currently expects that by the end of Q1 2023 approximately 80% of the capital available for investment will have been deployed. Further deployment from existing and new commitments will be made in the course of 2023.
The Company's portfolio now comprises 30 diverse investments in Germany, Italy, Spain and the United Kingdom with 19 different ESCO partners, across a wide range of technologies including Solar PV, Combined Heat & Power, Biogas, Sub-metering, Wind and Water Management together with the suite of building energy efficiency technologies deployed in Italian Superbonus projects. It is noteworthy that there has been a significant increase in investments in Germany with the completion of two large investments with commitments of £18.7m and deployment to date of £15.0m with £3.7m remaining to be deployed.
Investments since 31 August 2022 include:
· £10.7m investment to acquire receivables due under water management service agreements for condominiums and multi-family homes in Germany, mainly managed by large property managers.
· £8.0m commitment to fund the acquisition of a biogas plant and investment in liquefaction equipment by one of Germany's leading biogas development companies with more than 20 years' experience in the sector.
· £5.8m commitment to fund the refurbishment of condominiums in Spain under the "Programa de Rehabilitacion Energetica de Edificios" ("PREE") incentive scheme. The investment is based on the purchase of receivables generated by energy saving contracts.
· £3.5m commitment to fund Solar PV plants in self-consumption for residential properties located around Madrid, Barcelona and Valencia originated by Solarnub, a fast-growing trading management platform for solar companies; this is the second investment with Solarnub.
· £0.9m commitment to fund a Solar PV project for self-consumption for a leading Spanish ceramic tiles manufacturer, developed by a Valencia based ESCO.
· £0.8m commitment to fund a Solar PV project for self-consumption for an Italian manufacturing business.
· £0.6m commitment to invest in a cluster of Solar PV projects in self-consumption located in Cordoba and Granada marking the start of a new relationship with a Spanish developer based in Córdoba
· £0.5m of other commitments including the fourth Solar PV project with an Italian developer and a second Solar PV project with another Spanish developer based in Barcelona; and
· £0.4m investment in operational small wind farms in the UK which benefit from feed-in and export tariffs and provide onsite power for self-consumption.
The CHP project being developed by Ega Energy for Vale of Mowbray Limited, referred to in the Half Yearly Financial Report for the six months ended 30 June 2022, is on hold due to this company having entered into administration. The amount of £0.9m has been invested in the project with the majority of the capital applied to acquire the CHP equipment, which is not yet onsite. Ega Energy is identifying other clients who may use the equipment if the Vale of Mowbray site is not acquired by a business with a sufficiently strong credit rating. The Investment Adviser believes that its contractual arrangements with Ega Energy protect the value of the investment made to date and so no impairment has been made at this point.
The Board and the Investment Adviser believe that the market outlook for energy efficiency investments remains positive and that energy savings should be considered the "first fuel". Investments to reduce primary energy consumption and to generate on-site energy, the focus of the Company's investment strategy, address critical concerns for businesses seeking to reduce their exposure to high energy prices and transition to "net zero". Notwithstanding this environment, the Investment Adviser has experienced delays to decision making by corporates, which it attributes to significant volatility in wholesale electricity prices and uncertainties over the impact of new energy policies designed to address this issue, for example, energy price caps. Nevertheless, energy policies have become clearer, including in the United Kingdom, and the Board and Investment Adviser expect opportunities for long term energy efficiency contracts will continue to accelerate and that it is well placed to secure attractive investment opportunities through the growing number of partnerships that have been forged with European energy services companies.
The next semi-annual NAV, as at 31 December 2022, will be published in early February 2023.
For further information please contact:
Aquila Capital (Investment Adviser) Via Buchanan
Buchanan (Financial PR) 020 7466 5000
Charles Ryland, Henry Wilson, George Beale
Peel Hunt (Broker) 020 7418 8900
Luke Simpson, Huw Jeremy (Investment Banking)
LEI: 213800AJ3TY3OJCQQC53