Renewables Infrastructure Group Regulatory News (TRIG)

18 February 2022

The Renewables Infrastructure Group Limited

("TRIG" or "the Company", a London-listed investment company advised by InfraRed Capital Partners ("InfraRed") as Investment Manager and RES ("Renewable Energy Systems") as Operations Manager)

Annual Results for the 12 months ended 31 December 2021

2021 Highlights - Strong earnings and NAV growth

§ NAV per ordinary share of 119.3p[1] as at 31 December 2021 (December 2020: 115.3p). Growth driven by high near-term power prices, increased near-term inflation and active portfolio management

§ NAV total return of 9.5% for the year and 8.3% since IPO (annualised)[2] 

§ Earnings per ordinary share of 10.0p (2020: 5.9p) and profit before tax of £210m (2020: £100m)

§ 2021 dividend target of 6.76p/share delivered and 2022 dividend target4 set at 6.84p/share

§ Directors' portfolio valuation[3] of £2,726m as at 31 December 2021 (2020: £2,213m) following four diversification-enhancing acquisitions, including TRIG's first investment in Spain

§ Portfolio generated 4,125GWh of electricity in the year (2020: 3,953GWh)

§ The Company is consulting on increasing TRIG's Construction & Development Investment Policy Limit from 15% to 25% of portfolio value

§ Responsible investment and sustainability at the core of the business:

o Generated enough clean energy in 2021 to avoid 1.4m tonnes of CO2 emissions and power 1.1m homes[4] 

o Supported 38 community funds with £1.2m of contributions

o Maintained a strong health and safety environment with 0.21 reportable lost time accidents per 100,000 hours worked[5]

Helen Mahy, CBE, Chairman of TRIG, said:

"Active portfolio management by InfraRed and RES has delivered robust financial performance from TRIG in a year characterised by the ongoing Covid-19 pandemic, volatile commodity markets and the lowest wind resource in the Company's history.

As the Company approaches the ninth anniversary of its IPO, we have progressed the Board's succession planning with the appointments of Erna-Maria Trixl and John Whittle. Shelagh Mason will be retiring from the TRIG Board at the end of February 2022 - on behalf of my fellow Directors, I thank her for her service to the Company. As the Board goes through this transition, my fellow Directors and I are grateful for another year of strong support from of TRIG's shareholders as they continue to support the Company's diversification strategy.

The decarbonisation agenda remains central to public policy across Europe. Renewables play an essential role in providing affordable and clean electricity. This backdrop continues to ensure a bright outlook for the Company."

Richard Crawford, Director, Infrastructure, InfraRed Capital Partners said:

"The Company's geographical and technological diversification strategy continues to benefit the portfolio, with the Nordic wind and UK solar elements of the portfolio seeing considerably better weather resource than the wind levels experienced in the UK and Ireland.

The Company's first investment in a Spanish solar project is a major milestone in supporting our diversification strategy further, representing a new geography and a TRIG's first investment in solar PV since 2016. We also increased the Company's presence in Sweden, where we will almost double TRIG's generation capacity in the Nordics region once in-construction assets become operational.

To capture opportunities within these and other established markets, we will be consulting with shareholders on increasing the Construction & Development Investment Policy Limit from 15% to 25% of portfolio value. Both InfraRed and RES have deep expertise in managing construction and development activities across many decades and are well placed to ensure TRIG continues to invest in attractive projects across the Company's key markets."

Webcast details

TRIG will be presenting its results at 09:00 UK time today. The presentation will be broadcast live and an archive version of the presentation will be made available on the Group's website. The link for the broadcast is https://brrmedia.news/TRIG_FY21

Enquiries

InfraRed Capital Partners Limited +44 (0) 20 7484 1800Richard CrawfordPhil George

Minesh Shah

Mohammed Zaheer

Maitland/AMO +44 (0) 20 7379 5151Rhys Jones

Charles WIthey 

Notes

The Company

The Renewables Infrastructure Group ("TRIG" or the "Company") is a leading London-listed renewable energy infrastructure investment company. The Company seeks to provide shareholders with an attractive long-term, income-based return with a positive correlation to inflation by focusing on strong cash generation across a diversified portfolio of predominantly operating projects.

TRIG is invested in a portfolio of wind, solar and battery storage projects across six European countries with aggregate net generating capacity of over 2.2GW, enough renewable power for over one million homes and displacing over 1.3 million tonnes of carbon emissions per annum. TRIG is seeking further suitable investment opportunities which fit its stated Investment Policy.

Further details can be found on TRIG's website at www.trig-ltd.com.

Investment Manager

TRIG's Investment Manager is InfraRed Capital Partners Limited ("InfraRed"), an international infrastructure investment manager, investing in real assets which contribute positively to society and support the transition to a net zero future. It operates worldwide from offices in London, New York, Sydney and Seoul. With around 165 professionals, it manages US$10bn+ of equity capital in multiple private and listed funds, primarily for institutional investors across the globe.

At InfraRed, a long-term, sustainability-led mindset is essential to delivering lasting success, and this mindset directs its assessment and management of the Environmental, Social and Governance ("ESG") aspects of its business. InfraRed has been a signatory of the Principles of Responsible Investment since 2011 and has been awarded triple A+ score in the 2020 review (relating to the 2019 assessment period). It is also a member of the Net Zero Asset Manager's Initiative, a certified CarbonNeutral® company and is a TCFD supporter.

InfraRed is a part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. Over the past 30 years, InfraRed has established itself as a highly successful developer and custodian of core infrastructure, renewable energy and real estate assets that play a vital role in supporting sustainable communities.

Operations Manager

TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's largest independent renewable energy company.

RES has been at the forefront of wind energy development for over 39 years, with the expertise to develop, engineer, construct, finance and operate projects around the globe. RES has developed or constructed onshore and offshore wind, solar, energy storage and transmission projects totalling more than 21GW in capacity. RES supports over 7.5GW of operational assets worldwide for a large client base. Headquartered in Hertfordshire, UK, RES is active in 10 countries and has over 3,000 employees engaged in renewables globally.

RES is an expert at optimising energy yields, with a strong focus on safety and sustainability. Further details can be found on the website at www.res-group.com.

1 Chairman's Statement

I am pleased to present the 2021 Annual Report & Financial Statements for The Renewables Infrastructure Group Limited ("TRIG" or the "Company"). The NAV as at 31 December 2021 was 119.3p per share and earnings for 2021 were 10.0p/share. TRIG's NAV total return from IPO to 31 December 2021 has been 8.3%, including dividends paid.

NAV total return for 2021 of 9.5% represents solid performance and reflects the Managers' continuing work to enhance our portfolio (organically and through acquisitions), the sustained market demand for renewable energy generating assets, and an increase in current and near-term forward power prices. The impact of these factors was dampened by reductions in medium- to long-term power price forecasts, expected cuts to older solar feed-in tariffs in France and the increase in future corporation tax rates in the UK.

Climate change continued to dominate the political agenda, culminating in November 2021 with the 26th United Nations Climate Change conference (COP26). Whilst the main achievements of COP26 were to focus on reducing coal-powered generation and to raise the profile of methane emissions, increasing renewables generation as an alternative to fossil fuels remains core to public policy. TRIG makes a significant contribution to this agenda[6]. We are proud that TRIG's current operational portfolio of 1.7GW is capable of powering 1.3 million homes and avoiding approximately 1.6 million tonnes of carbon emissions per annum[7]. Once our projects in construction become operational, TRIG's generation capacity will grow to 2.2GW[8].

There is increasing discussion of accelerating electrification; however, action needs to be faster and greater in areas such as flexible capacity, space and water heating, and industrial processes. InfraRed and RES (the Company's Investment Manager and Operations Manager, respectively) continue to engage actively in the policy debate. InfraRed attended the pre-COP26 Global Investment Summit, RES participated in the Energy Transition Hub at COP26, and TRIG and its Managers made submissions to the UK Government's Enabling a High Renewable, Net Zero Electricity System: Call for Evidence.

The Company's portfolio has been further diversified through acquisitions during the year and this was enabled by the support of our shareholders. The Company conducted two successful fundraises in 2021 that raised £440m, in aggregate, from existing and new, institutional and retail investors. These fundraises were accretive to existing shareholders at an average issuance price of 7.7% premium to the NAVs prevailing at the time, and together with their related acquisitions provide further portfolio diversification and economies of scale (TRIG's Ongoing Charges Ratio for 2021 was 0.97%).

Dividends

Wind resource in 2021 has been unusually weak and was an outlier in TRIG's nearly nine-year history. In the UK and similar European latitudes (Ireland and Germany), wind levels have been at their lowest since 2010. Against this backdrop, we are pleased that dividend cover for the year was 1.06x, which with the benefit of scrip dividends rose to 1.12x cash cover, and is after the repayment of £145m project-level debt, reflecting the strength of the Company's business model. If the Company adopted the alternative business model of not repaying debt on a systematic basis over each project's subsidy life, then, for comparison purposes, dividend cash cover could have been 2.1x.

I am pleased to report a dividend target[9] for 2022 of 6.84p/share, an increase of 1.2% on the 2021 dividend. In setting the 2022 dividend target the Board considered positive factors including elevated near-term power prices and inflation, and was mindful of medium term political and regulatory headwinds, such as the increase in UK corporation tax rates, and the uncertainties in medium and longer-term power price forecasts relating to the rate of renewables deployment versus the growth rate of electricity demand. The long-term sustainability of the Company's dividend remains a priority for the Board.

Portfolio Construction and Investment Activity

Portfolio construction and the generation of attractive risk-adjusted returns are key to the assessment of acquisition opportunities, the benefits of which have been evident in 2021. Whilst wind resource has been very low by historical standards across much of the portfolio, generation in the Nordics has been above budget for the second successive year and solar resource has once again been in line with budget.

The investments made in 2021 will increase the proportion of portfolio generation in the Nordics when the Grönhult and Twin Peaks (Ranasjö and Salsjö) projects commence operations in late 2022 and early 2024 respectively. These sites will increase our generation capacity[10] in the Nordics by nearly 90%. In addition, TRIG's first investment on the Iberian Peninsula in a portfolio of four ready-to-build solar projects will more than double TRIG's solar generation capacity when they become operational at the end of 2022.

TRIG's largest investment in 2021 was in the Beatrice offshore wind farm in the UK, which receives a Contract for Difference subsidy. The project commenced full operations in 2019 and its 84 Siemens Gamesa 7MW turbines are able to power c. 450,000 homes. InfraRed maintains its prudent approach to assessing opportunities, which is particularly important in sectors with subsidy tariffs where competition for assets is high, with a focus on yield and limiting single asset concentration.

Creating off-market, bilateral opportunities through well-established relationships, and leveraging TRIG's reputation for deliverability, is central to InfraRed's development of further attractive investment opportunities. TRIG's acquisition focus remains unchanged, targeting renewables and related infrastructure investments[11] in the UK and Europe[12]. The wider Nordic, Iberian and Benelux regions would be a natural fit for TRIG's portfolio. Other geographies in Europe, where there is a significant renewables deployment target, may be considered following a rigorous analysis of the legal, regulatory and operational environment.

InfraRed continues to screen flexible capacity opportunities, particularly batteries, whose financial performance is driven by intermittency of renewables and power price volatility, thereby having low correlation to wholesale power price levels and forecasts. The majority of opportunities in flexible capacity technologies relevant to TRIG are at late-stage development or the "shovel-ready" point of construction with suitable risk-reward profile for long-term asset owners.

Value Enhancement and Portfolio Performance

As the Covid-19 pandemic continues, the health, safety and welfare of the workforces of our Managers, on our sites and in our supply chains remains paramount. We have continued to operate Covid-aware practices and maintain our focus on the health and safety of contractors on our sites. The portfolio's overall asset availability was consistent with budgeted levels.

As noted, the performance of TRIG's portfolio during the period was impacted by low weather resource, particularly in Great Britain, Ireland and Germany. Overall, production for 2021 was 12.6% below budget.

Power prices captured in the period and near-term power price forwards were higher than forecast, principally driven by high global gas prices due to supply constraints in Europe and a rapid rebound of global demand following the contraction in 2020. The volatility of power prices over the past 24 months caused by external factors, including the Covid-19 pandemic and commodity price changes, underscores the need for a prudent approach to revenue risk management.

Our Managers are focused on the sustainability of shareholder returns, one component of which is to manage the overall portfolio's sensitivity to changes in power price through subsidy-supported revenues and actively applying power price fixes / hedges. This approach means that TRIG does not suffer the full impact of low prices nor gain as much as may be possible from high prices, as seen in 2020 and 2021 respectively. Over the next five years, approximately 65% of forecast portfolio revenues benefit from fixed power pricing per megawatt hour through subsidies or hedging instruments. The medium to long-term power price forecasts have reduced as greater renewables rollout is incorporated into projection models without the same level of increase in assumed flexible demand resulting from the energy transition, including from electric vehicles and domestic heating.

Projects affected by retroactive cuts to historically-set French feed-in tariffs for solar projects have exercised rights to appeal under the legislation. This commences a dialogue with the relevant authority to revisit proposed tariffs which may continue into 2023. In parallel, Syndicat des Énergies Renouvelables ("SER"), the French renewables trade association of which TRIG is a member, has initiated an action for annulment of the legislation. InfraRed and RES have also been in dialogue with officials at the Ministre de L'Economie, des Finances et de la Relance and the UK's Department of International Trade. After provisions of1.6p/share, the remaining carrying value of affected projects within TRIG's portfolio is 1.6p/share.

As reported in June 2021, following routine inspections at the Merkur offshore wind farm in Germany, generation was paused as a precautionary safety measure after cracks were identified in the emergency evacuation rear frames of some turbines. The turbine manufacturer has been monitoring the turbines and has implemented an interim welding solution that enabled 50, on average, of the 66 turbines to operate during Q4 2021 and 60, on average in January 2022. Lost revenues are due to be compensated through contractual protection mechanisms. Root cause analysis has been completed and a long-term solution is being developed, which the turbine manufacturer plans to substantially implement during 2022. The cost of remediation remains with the manufacturer. No material impact is expected on the carrying value of the project nor the financial performance of Company, though the timing of distributions from the project are expected to be delayed.

The construction of the 35MW Blary Hill project, in Scotland, was completed ahead of schedule and on-budget in early 2022. The construction of Haut Vannier (43MW in France), Grönhult (67MW in Sweden) and the four sites comprising Project Cadiz (234MW in Spain) remain on track to be completed in 2022. The construction of the Twin Peaks projects (242MW[13] in Sweden) commenced in Q3 2021 and is scheduled to complete in 2024. Projects with construction risk exposure represent 11% of TRIG's portfolio by value at 31 December 2021.

Responsible Investment and Sustainability

The Board and the Managers believe that investing responsibly and the consideration of environmental, social and governance ("ESG") factors is essential for maintaining a sustainable business model over the long term. TRIG's ESG objectives are designed to improve outcomes for shareholders and the portfolio's stakeholders. We report against these objectives in our Sustainability Report, available on the Company's website, and in Section 2.4 - Sustainability.

The £500,000 TRIG Covid-19 Community Fund has now supported over 60 community organisations. These funds are in addition to the circa £1.1m[14] that the portfolio companies contribute to their local communities each year.

In line with our commitment to the UN Sustainable Development Goal 13 Climate Action, TRIG's Managers continue to expand their assessment of the potential impact of climate change, including in respect of the physical risks associated with adverse climate change. The Company reports against all 11 recommendations of the Task Force on Climate-related Financial Disclosures in Section 2.4 - Sustainability.

Social responsibility is integral to InfraRed's investment process and our Managers' risk-based approach to due diligence. Supply chain working conditions were a key focus in the due diligence of Project Cadiz in Spain, particularly in relation to the manufacture of solar PV panels. In doing so, we look to exert influence to improve transparency and practices in the supply chain.

We continue to align the Company's financial performance with our sustainability goals, and have integrated key health & safety, decarbonisation and community support metrics into TRIG's revolving credit facility and certain hedging instruments.

Corporate Governance

Board composition is regularly discussed by the Board's Nomination Committee to ensure that the Company's non-executive Directors have a diverse range of relevant expertise and experience to apply to the oversight of the Company and to engage effectively with the Managers.

We are now approaching nine years since TRIG's IPO, and the initial three Non-executive Directors, including myself, will be retiring in 2022. Shelagh Mason and Jon Bridel will be retiring as Non-executive Directors in February and May 2022 respectively. On behalf of my fellow Directors and the Managers, I thank them for their significant contributions to the success of the Company since our IPO in 2013.

I am pleased to welcome John Whittle (appointed July 2021) and Erna-Maria Trixl (appointment as of March 2022) to the Board. John brings significant infrastructure investment and accounting experience, and will succeed Jon Bridel as Audit Committee Chairman and Shelagh Mason as Senior Independent Director. Erna-Maria is an energy, infrastructure and sustainability expert and adds to the TRIG Board's depth of energy and wider-infrastructure sector experience.

A process is underway, utilising the services of a third-party adviser, to select and appoint my successor as Chairman of the Board.

These appointments continue the Nomination Committee's recruitment and orderly succession plan which incorporates appropriate handover periods, the principles and provisions of the AIC Code[15], and the recommendations of the Hampton-Alexander and the Parker Reviews.

Principal Risks and Uncertainties

The Board and the Managers monitor and, where practicable, mitigate a range of risks to TRIG's strategy. The main risks for the Company continue to be:

▲ Regulation: government or regulatory support for renewables changing adversely;

▲ Power prices: electricity prices falling or not increasing as expected; and

▲ Production performance: portfolio electricity production falling short of expectations, including as a result of unfavourable weather and asset unavailability.

These risks are considered in the Portfolio Construction and Value Enhancement sections above and are expanded on in Section 2.10 - Risks and Risk Management.

Outlook

The climate change agenda will take another step forward in 2022 as countries attend COP27 in Egypt with promises of revised action plans to steepen the rate of decarbonisation. Our strategy is aligned with this and, increasingly, TRIG is delivering new capacity having built c. 200MW capacity across nine projects since IPO and with a further c. 450MW currently in construction across four investments comprising eight sites.

As the renewables infrastructure market continues to mature and attract more investors, an increasing proportion of relevant projects are trading to long-term hold investors earlier in their development cycle, including at or around the ready-to-build stage rather than in the early years of operations. Moreover, the Company itself is commencing developments on repowering, and further such opportunities can be expected as older sites mature.

Construction and development projects constitute 11% of TRIG's portfolio value; as compared to the investment policy limit on such activities of 15% of portfolio value, which may pose a constraint on future diversification of the portfolio. On the back of TRIG and its Managers' extensive track record, the Board is considering, subject to continuing positive feedback from shareholder discussions, asking shareholders to increase TRIG's Investment Policy development and construction limit from 15% to 25% at the next AGM in May 2022. A construction case study is provided in Section 2.5 - Portfolio that illustrates some of our Managers' deep expertise in this area.

The energy transition is being fuelled by renewable electricity generation, presenting further exciting investment opportunities for TRIG. As the investable universe expands, so too has the volume of capital seeking to invest in this sector. In that context, InfraRed's portfolio construction and investment discipline as well as RES's asset management expertise are more important than ever.

I am grateful to TRIG's shareholders for their continuing support of the Company and me as its Chairman. It has been a pleasure to serve you as Chairman of TRIG since IPO, and I remain confident that TRIG's business model, which has successfully prevailed in 2021, will enable the Company to continue to generate sustainable returns and contribute towards a net zero carbon future.

Helen Mahy CBE

Chairman

17 February 2022

02 Strategic Report

2.1 TRIG's Investment Proposition

TRIG's purpose is to generate sustainable returns from a diversified portfolio of renewables infrastructure that contribute towards a net-zero carbon future.

TRIG's diversified portfolio predominantly consists of operational wind farms and solar parks in the UK and Europe. The Company aims to provide its investors with long-term, sustainable dividends and to retain the portfolio's capital value through re-investment of surplus cash flows after payment of dividends.

TRIG's key financial objectives are to provide its shareholders with:

▲ an attractive, long-term, income-based return by focusing on strong cash generation across a portfolio of renewable energy generating assets;

▲ prudent financial management in the approach to cost control, cash management, financing arrangements and hedging; and

▲ a diversified investment portfolio at scale to spread risk, increase share liquidity and realise efficiencies.

TRIG's Board and its Managers place responsible investment practices at the heart of TRIG's business, as they are core to a sustainable business model over the long-term. Our approach is underpinned by the Company's Sustainability Objectives, which are to:

▲ mitigate climate change;

▲ preserve our natural environment;

▲ positively impact the communities TRIG works in; and

▲ maintain ethics and integrity in governance.

TRIG's investment approach is based on the following two factors:

Investment Approach

In order to achieve its investment objective to generate sustainable returns, the Company invests in infrastructure that contributes towards a net zero carbon future through the generation of electricity from renewable energy sources, with a particular focus on wind farms and solar PV parks. The Company also invests in infrastructure that supports the energy transition, such as flexible capacity.

The Group aims to achieve portfolio diversification principally through investing across Europe (including UK & Ireland) and a mix of renewable energy technologies, in order to improve the stability of shareholder returns by reducing risks of single asset concentration, power markets, regulatory frameworks and local weather patterns. The Company's portfolio extends across six countries, with the largest generating capacity of the London-listed renewables investment companies.

TRIG's Board and the Managers (InfraRed Capital Partners, as Investment Manager, and Renewable Energy Systems, as Operations Manager) adhere to an Investment Policy in pursuit of the Company's investment objective. The key investment limits below provide a summary of the parameters within which investments are made. The full wording of the Investment Policy can be found on the Company's website at the following link: www.trig-ltd.com/about-us/why-invest-with-trig/business-model/investment-policy.

Key investment limits

▲ Investments are made in the UK and other European countries where The Board and Managers believe there is a stable renewable energy framework.

▲ Up to 65% of the Portfolio Value[16] may be invested in projects that are located outside the UK.

▲ Whilst investments are predominantly made in wind farms and solar projects, the Company may also invest in infrastructure that is complimentary to renewables, such as flexible capacity, up to a limit of 20% of Portfolio Value.

▲ Up to 15%[17] of the Portfolio Value may be invested in development or construction projects (including repowering of existing assets).

▲ In order to manage single asset concentration risk, no more than 20% of Portfolio Value may be invested in any single project.

▲ Short-term debt (principally drawings on the Company's revolving credit facility) is limited to 30% of the Portfolio Value.

▲ Long-term debt (typically amortising project finance debt) is limited to 50% of the Gross Portfolio Value (being the total enterprise value of the Portfolio).

▲ Historically, the Company has often made investments in 100% or majority equity ownership of assets. As renewable energy projects increase in size, the Company is increasingly acquiring minority equity stakes. Where minority positions are taken, the Investment Manager will secure TRIG's shareholder rights (including voting rights) through shareholder agreements and other transaction documentation.

Other policies covering revenue management, hedging, cash balances, the origination of further investments, repowering and material amendments to the Investment Policy can be found in the full Investment Policy on the Company's website.

2.2 TRIG's Business Model and Strategy

Purpose

To generate sustainable returns from a diversified portfolio or renewables infrastructure that contribute towards a net zero carbon future.

Introduction

TRIG was the first geographically and technologically diversified investment company investing in renewable energy infrastructure listed on the London Stock Exchange, completing its IPO in 2013. The Company has been a member of the FTSE 250 Index since 2015, has been accredited as a Guernsey Green Fund since 2019 and retains the London Stock Exchange's Green Economy Mark. TRIG is managed by its Investment Manager, InfraRed, and its Operations Manager, RES.

With the support of shareholders, TRIG's growth since IPO has enabled the Investment Manager, InfraRed, to diversify the investment portfolio across technologies (currently onshore wind, offshore wind, solar PV and battery storage) and geographies (currently UK, Ireland, France, Germany, Sweden and Spain), with other geographies considered following a rigorous analysis of the legal, regulatory and operational environment. TRIG operates the largest diversified portfolio of renewable energy investments within the Investment Company sector.

Management

The Company has a board of independent non-executive Directors, for whom biographies can be found in Section 3 along with, as the Company is in its ninth year, details on succession planning. The Board's role is to manage the governance of the Company in the interests of shareholders and other stakeholders. In particular, the Board monitors adherence to the Investment Policy, determines the risk appetite of the Group (the Company, all of its subsidiaries, and investments), sets Group policies and monitors the performance of the Investment Manager, the Operations Manager and other key service providers.

The Board meets a minimum of four times per year for regular Board meetings and there are several ad hoc meetings dependent upon the requirements of the business. In addition, the Board has five committees covering the areas of Audit, Nominations, Remuneration, Management Engagement and Market Disclosure, chaired by respective members of the Board, which receive and consider specialist independent adviser reports and presentations. Health & safety, risk management, and sustainability each feature as dedicated agenda items in the Board's regular, quarterly meetings.

The Board takes advice from the Investment Manager, InfraRed, as well as from the Operations Manager, RES, on matters concerning the market, the portfolio and new investment opportunities. Day-to-day management of the Group's portfolio is delegated to InfraRed and RES, with investment decisions within agreed parameters delegated to an Investment Committee constituted by senior members of the Investment Manager.

Other key service providers to the TRIG Group include Aztec Financial Services (Guernsey) Limited providing Company Secretarial and Administrative services, Investec Bank PLC and Liberum Capital Limited as joint brokers, Maitland/AMO as financial public relations advisers, Carey Olsen as legal advisers as to Guernsey law, Norton Rose Fulbright LLP as legal advisers as to English law, Link Asset Services (Guernsey) Limited as registrars and Deloitte LLP as auditor. Lenders to the Group's revolving credit facility are National Australia Bank, Royal Bank of Scotland International, ING Group, Sumitomo Banking Corporation, Barclays and Santander.

Group structure

Through the group structure, the Company owns a portfolio of renewable energy infrastructure investments in the UK, Ireland, France, Germany, Sweden and Spain.

TRIG seeks to protect and enhance the income from, and value of, the existing portfolio through active management and sourcing of new investments that enhance the diversification and scale of the portfolio, utilising the expertise of the market-leading Investment and Operations Managers appointed by the Company.

The Company has a 31 December year-end, announces interim results in August and full year results in February. The Company pays dividends quarterly and is a self-managed Alternative Investment Fund under the European Union's Alternative Investment Fund Managers Directive.

TRIG is a Guernsey-registered investment company (which is not uncommon for UK-listed investment companies). Tax is paid by the portfolio companies in the markets in which they operate and by the Company's shareholders on the dividends they receive (according to the jurisdiction and taxation status of each shareholder). The structure ensures investors are not in a disadvantageous tax position compared to direct investors in infrastructure projects; in effect this emulates the structure formalised for real estate investors by the creation in the UK of Real Estate Investment Trusts ("REITs"). A similar tax treatment can be achieved by UK Investment Trust Companies located onshore by applying the UK's Investment Trust (Approved Company) (Tax) Regulations (2011) where companies deem a portion of their dividends paid to investors as interest distributions (although we note that for certain UK shareholders the tax treatment of interest income is different to dividend income).

The Board keeps the Company's residency and domicile under regular review.

InfraRed Capital Partners Limited ("InfraRed") is TRIG's Investment Manager. InfraRed has day-to-day responsibility for the investment management of TRIG.

InfraRed is a specialist infrastructure investment manager1. With over 165 members of staff across four countries, InfraRed has over 25 years of investment experience and over US$10bn of infrastructure equity under management.

At InfraRed, a long-term, sustainability-led mindset is essential to delivering lasting success, and this mindset directs its assessment and management of the Environmental, Social and Governance ("ESG") aspects of its business. InfraRed has been a signatory of the Principles of Responsible Investment since 2011 and maintains an A+ score. It is also a member of the Net Zero Asset Managers Initiative, a certified CarbonNeutral® company2 and is a TCFD supporter.

InfraRed is a part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. Over the past 25 years, InfraRed has established itself as a highly successful developer and custodian of core infrastructure and renewable energy assets that play a vital role in supporting sustainable communities. Further details can be found on their website at www.ircp.com.

InfraRed's responsibilities as Investment Manager for TRIG include:

▲ Overall day-to-day management

▲ Sourcing, transacting and approving new investments

▲ Advising the Board on strategy and dividend policy

▲ Advising on capital raising

▲ Risk management and financial administration

▲ Investor relations and investor reporting

▲ Appointing all members of the Investment Committee

▲ Assessing sustainability risks and integrating into each stage of the investment decision-making process

▲ Hedging strategies for key risks, including interest rates, inflation, FX and power prices

Renewable Energy Systems Limited ("RES") is TRIG's Operations Manager. The role of RES is to be responsible for overseeing the asset management of the portfolio. This includes oversight of operating and construction projects; operational reporting for all project companies; and designing and implementing portfolio performance optimisation plans. RES also provides support in the assessment of acquisition activities and investor relations.

RES is the world's largest independent renewable energy company having developed and/or constructed over 22GW of projects. RES also supports an operational asset portfolio of 9.1GW with operations in 10 countries and over 2,500 employees globally. RES is a pure-play renewables company with the expertise to develop, construct and operate projects around the globe across a range of technologies including onshore and offshore wind, solar, energy storage and transmission & distribution.

A large, dedicated team of RES staff provide portfolio-level operations management to the Company and its subsidiaries. RES also draws on the experience and skills of a much wider pool of expertise from within the company in order to fulfil its Operations Manager role, utilising nearly four decades of renewables experience to provide project-level services to TRIG and support the evaluation of investment opportunities for the Group. TRIG benefits from a right of first offer on RES' pipeline of assets.

RES has a strong focus on safety and ESG (Environment, Social, Governance), and provides a complete range of services for renewables projects - from development and design, through construction and engineering, to financial, technical and commercial asset management services, and operations and maintenance services. Further details can be found on their website at www.res-group.com.

RES's responsibilities as Operations Manager for TRIG include:

▲ Providing operational management services for the portfolio

▲ Implementing the strategy for electricity sales, insurance and other areas requiring portfolio level decisions

▲ Maintaining operating risk management policies and compliance

▲ Appointing senior individuals to the Advisory Committee alongside InfraRed to advise TRIG on operational and strategic matters

▲ Community engagement and implementing sustainability initiatives at an asset level

2.3 Market Development

Power prices

Current and near-term power prices

The power price environment over recent months has been remarkable. From the pandemic induced lows of Q1 2021 we have now seen wholesale power pricing rise to the highest levels since the Company's IPO in 2013. Two factors dominate this surge: high commodity prices and low weather resource for renewables generators; with other factors such as increasing geopolitical concerns, supply outages and a rapid recovery in demand also contributing.

Elevated spot power prices are flowing into season ahead forward power prices. For instance in the GB market, which has been one of the most affected, forward power prices for the coming summer and winter seasons increased by an average of 166% over the last six months of 2021; indicating an expectation from the market that elevated power prices will continue for the next year or so. There is a similar pattern across all markets where TRIG has investments.

Natural gas and carbon prices have been the principal commodity drivers of elevated power prices in GB and Europe, where gas plants often set the power price as the marginal electricity generator.

Gas prices have surged due to depleted gas storage levels which were not subsequently replaced after a cold 2020-21 winter in Europe, combined with significantly increased demand from Asia for liquified natural gas (LNG). European gas storage levels in December 2021 were 17% and 40%14 below the average seasonal minimum and maximum levels, respectively, seen in recent times. Increasing the supply of gas into Europe can also be impacted by international politics, particularly geopolitical concerns in Eastern Europe. Forward pricing of gas in Europe indicates that elevated gas prices are expected to remain into 2023.

2021 saw historically low levels of wind resource in Europe for renewable electricity generators, which resulted in upwards pressure on power prices as more gas-fired electricity generation was required to compensate for the lack of wind resource in particular. For example, in the UK, the average wind resource was the lowest it has been in over decade.

The UK and European carbon prices reached all-time highs peaking above €89 a tonne during the year, influenced by demand from coal and gas generators competing to fill the gap created by low wind resource. Higher carbon prices are consistent with policy encouraging industry to invest in cleaner technologies.

The Company's geographic diversification dampened the impact of this low weather resource on TRIG's portfolio as a whole. Electricity generation of TRIG's UK wind assets was 16% below budget, whilst TRIG's Scandinavia wind and UK solar assets performed broadly in line with budget. This diversification has reduced the budget variance for the portfolio from 16% for the UK alone to 12.6% at a portfolio level. The diversification of the portfolio will be increased by the commencement of generation at TRIG's Iberian solar projects, expected to beby the end of 2022, and the completion of TRIG's onshore wind construction projects in Sweden.

The Company is seeking to benefit from these elevated near-term forward power prices by entering into forward fixes, supplementing its longer-term fixed revenues per megawatt hour from government subsidies. This is consistent with the Company's low-risk, yield-oriented investment proposition. Over the next 12 months, 70% (2020: 84%) of revenues are fixed per unit of generation and over ten years this figure is 66% (2020: 74%). The decline in these numbers is largely driven by the elevated power prices in the near-term compared to last year's assumptions.

Longer-term power prices

The long-term outlook for power prices in Europe remains intrinsically linked to the expected roll out of renewables and demand for electricity. Market forecasts that feed into TRIG's valuation, on average, have increased both the expected supply of renewables capacity and the demand for electricity.

Forecasters are taking a cautious approach to reflecting stated government objectives on renewables deployment and electrification in their projections. Their power price forecasts do not currently reflect electricity demand levels commensurate with whole-economy decarbonisation, particularly in relation to heating, industry and heavy transport.

Policy & regulation

United Kingdom

In October 2021, the UK government published its net-zero strategy setting out how it plans to meet the country's climate goals to achieve net-zero by 2050. Their strategy covers key policies on renewable energy generation (target for the UK to be powered entirely by clean electricity by 2035), light vehicle road transportation (ban of sales of new petrol and diesel cars and vans by 2030), home heating (some funding for heat pumps) and hydrogen production (target of 5GW of low carbon hydrogen capacity by 2030) that provide a clearer framework for the UK's journey to a net-zero carbon emissions economy by 2050.

UK climate change policy has taken a significant step in the right direction through publication of the Net Zero Strategy: Build Back Greener report. However, key questions remain relating to the decarbonisation of heavy transport and aviation as well as the mechanism through which the UK's natural gas heating infrastructure will be phased out. Whilst the UK's target for 100% renewable electricity by 2035 is welcome news, a whole-economy approach needs to be taken to decarbonisation, with key investments needed in grid and flexible capacity (highlighted by 2021's poor wind resource) in order to ensure security of supply for consumers as well as incentivisation for consumers to make the fundamental lifestyle changes needed.

Beyond climate change policy, the Spring Budget of 2021 included an increase in the UK's corporation tax rate from 19% to 25% by April 2023. This has been fully reflected in the Company's valuation, with the underlying modelling assuming an increased tax rate of 25% into perpetuity from April 2023, resulting in a decrease in NAV per share of 3p, as previously reported.

Further developments relating to taxation could emerge in light of the stretched government balance sheet and elevated consumer household bills. The opposition parties in the UK have advocated a one-off windfall tax on North Sea oil and gas production companies to reduce the burden on consumers from high gas prices, whilst the UK has also seen 26 retail energy suppliers collapse since August 2021.

European Union

The European Green Deal, introduced in 2020, included the target of achieving climate neutrality by 2050. In July 2021 and in line with this initiative, the EU raised its 2030 climate ambition by committing to cut emissions by at least 55% by 2030 in its 'Fit for 55' strategy. The European Green Deal package covers policies including strengthening the EU emissions trading scheme and a carbon border adjustment mechanism, increasing member states' emissions reduction targets, increasing renewables energy share target from 32% to 40% by 2030 and increased energy efficiency targets.

This suite of policies provides significant impetus for the increased electrification and deployment of renewables across all member state economies, which we expect to broaden TRIG's addressable market, including opening up new potential technologies, such as green hydrogen, in the medium to long-term.

During December 2021, Germany's nuclear phase-out entered its penultimate phase, as the country shut down half of its six nuclear plants still operating, with the remainder due to be retired by the end of 2022. Coupled with the closure of a number of lignite plants during the year, 2021 was an important year for Germany's energy transition. Elections in Germany also brought in a new coalition government, with the Green party a significant coalition partner and co-leader Robert Habeck set to lead the Economy and Energy Ministry. The coalition agreement policy sees significant expansion in both the supply of, and demand for, renewable electricity as Germany accelerates its net-zero ambitions.

Consumers across Europe, including in the UK, face a period of high energy costs - with some analysts estimating a doubling of energy bills15, following what has been a period of decreasing wholesale prices. This increases regulatory risk as governments look to enact mechanisms to limit the impact on household bills. The government in Spain introduced temporary measures to subsidise retail prices funded by a levy on electricity generators benefiting from "windfall" power prices that reflect increased gas costs but do not use gas as an input source - therefore including renewables; dampening the benefits from current high power prices.

During the year, the French Parliament enacted its planned changes to historical solar feed-in-tariff levels, as discussed in last year's annual report. For certain assets, such as those located on the French islands/in overseas departments and those integrated into buildings or projects which are agricultural in nature, the Managers are identifying exemptions and mitigations that may apply. The Company has joined Syndicat des énergies renouvelables ("SER") which is pursuing action for the annulment of the new legislation. InfraRed and RES have also been in dialogue with officials at the Ministre de L'Economie, des Finances et de la Relance and the UK's Department of International Trade. It remains likely that this matter will take time to resolve and the final outcome to become clear. A partial provision against the affected assets has been taken and is discussed in more detail in Section 2.7 - Valuation of the Portfolio.

Portfolio construction & pipeline

The Company made four investments during the year that all contributed to improving portfolio resilience and diversification. The investments were made across three geographies, including the Company's first investment in Spain, three technologies and comprised a balance of subsidised and unsubsidised revenues. The power price sensitivity remains broadly unchanged as a result of these acquisitions, as the Managers seek to maintain the risk profile of the Company. The benefit of having a large and diversified portfolio has been especially evident this year, as the impact of regulatory and wind resource challenges on the portfolio as a whole have been reduced by geographic, technological and revenue diversification.

TRIG's construction projects have progressed well during the year, with Blary Hill commissioned in early 2022. TRIG's Swedish, Spanish and French construction projects are all proceeding well, with 340MW of capacity due to be delivered in 2022 in addition to the 200MW of construction projects delivered to date. Throughout the construction of these projects, TRIG is ensuring that sustainability considerations remain at the forefront by making efforts to reduce concrete usage work with local communities and implement habitat management plans.

Both of TRIG's Managers have strong track records in delivering renewable energy projects. InfraRed has invested in 1.7GW of renewable capacity through construction and is developing a further 8GW, whilst RES has constructed or developed 22GW of renewable capacity and is developing a further 16GW.

On the back of TRIG and its Managers' extensive track record, the Board is considering asking shareholders to increase TRIG's Investment Policy development and construction limit from 15% to 25% at the next AGM in May 2022.

The Managers continue to see construction and late-stage development projects as attractive opportunities to leverage the depth of their expertise and combined track record for the benefit of TRIG to gain early access to investment opportunities in a competitive market as well as presenting the opportunity for NAV growth as projects are de-risked through to their operational phase. As the Company's portfolio matures there will also be significant repowering opportunities that would require development activities, such as the Company's current repowering work in France. Further details on the progress of TRIG's construction projects can be found in Section 2.5 - Portfolio.

Outlook

The outlook for the Company remains strong. Whilst realised and near-term forward power prices have provided support to earnings and portfolio valuation, and have mitigated the impact of a period of low wind levels, it is the long-term and structural factors underpinning Europe's transition to a net-zero carbon economy that provides the basis for sustainable returns to shareholders. With policymakers beginning to address the greater need for electrification, flexible capacity and the demand side of the equation, complementing the significant pipeline of renewable energy projects, the opportunity set for the Company remains attractive. TRIG's diversified approach to investing in the energy transition, across geographies, technologies and revenue types, ensures it remains well placed to continue in its purpose of providing sustainable returns to shareholders whilst contributing to a net-zero carbon future for Europe.

2.4 Sustainability

TRIG's purpose is to generate sustainable returns from a diversified portfolio of renewables infrastructure that contribute towards a net zero carbon future.

Our investments, many of which have asset lives of 30 years or more, require a long-term view to be taken and sustainable business practices applied, both in the initial investment decisions and the subsequent asset management.

TRIG's core business of generating renewable electricity is central to a positive sustainability contribution. The TRIG Board and its Managers recognise that TRIG's responsibility goes beyond climate-related environmental considerations alone and seek to incorporate sustainability throughout the Company's activities.

TRIG's actions are aligned with our sustainability goals. Contributions towards the United Nations Sustainable Development Goals (SDGs) are made through our investments and our impact on the local communities around our assets. Primarily, the Company's portfolio contributes towards SDG 7 Affordable and clean energy, and SDG 13 Climate action. Our ESG commitments have a broader reach, and overall TRIG actively contributes to 11 out of the 17 SDGs.

TRIG's Core Sustainable Development Goals Contributions[18]

Affordable and Clean Energy Our business is focused on owning and operating renewable energy assets. By investing in renewables, TRIG is helping to provide clean energy across the UK and Europe, through construction funding of new greenfield infrastructure and the acquisition of operational assets from developers that then recycle capital into the build-out of more renewables assets.

The recycling of capital enabled by asset owners such as TRIG has contributed significantly to the reduction in cost of deploying renewables. TRIG's current operational portfolio is capable of powering the equivalent of 1.3 million homes with clean energy[19].

Climate Action TRIG's portfolio contributes towards a zero carbon future and is currently capable of offsetting more than 1.6 million tonnes of CO2 emissions annually, generating 4,125GWh of renewable electricity during 2021[20].

Climate change measures are integrated into TRIG's policies and planning as the Company seeks to raise awareness of how to mitigate climate change. We assess and report the climate-related risks and opportunities associated with our portfolio, as well as taking steps to reduce our carbon footprint.

Sustainability regulation

The Sustainable Finance Disclosure Regulation (SFDR)

The SFDR is an EU regulation that classifies funds by the extent to which sustainability is integrated into its objectives and investment decision making. TRIG is in the process of considering its classification under SFDR. Currently the fund adheres to the level 1 requirements of Article 8. The Board and TRIG's Managers are considering whether Article 9 classification would be appropriate for TRIG. Full disclosure is provided in the Company's Article 23 Disclosure on the website.

EU Taxonomy

TRIG is eligible to be within the EU Taxonomy regulation. The Company's investments seek to contribute substantially to the environmental objectives relating to climate change mitigation and climate change adaptation. In partnership with an external consultant, the Managers are undertaking a detailed assessment of TRIG's portfolio[21], against the technical screening criteria laid out. Pilot projects have been used to represent the sustainability contribution and risks of the wider portfolio. Full disclosure is provided in the Company's Article 23 Disclosure on the website and further progress will be reported in the 2022 Sustainability Report.

Environmental

Mitigate climate change

Our business is focussed on owning and operating renewable energy assets. TRIG's primary sustainability goal is to mitigate climate change, and all investments in the portfolio contribute towards this.

TRIG is a signatory to the Science Based Targets Initiative (SBTi), a standard for corporate emissions reduction targets, which certifies commitment and progress through third party validation. To develop a robust understanding of the Company's carbon footprint, current emissions and appropriate mitigation pathways, the Company has engaged a recognised technical adviser.

TRIG's application of SBTi will result in the establishment of appropriate data collection processes and emissions reduction pathways, through close collaboration with the Company's value chain and key stakeholders. This SBTi net-zero strategy aligns with the vision of both Managers', InfraRed and RES being signatories of the Net Zero Asset Manager initiative and SBTi respectively, and TRIG's purpose.

InfraRed and RES are both carbon neutral companies and offset their business's carbon emissions, including those associated with electricity usage and business travel. In addition, emissions are offset for the TRIG Board for business travel. Details on TRIG's greenhouse gas emissions are included in the TCFD disclosures at the end of this section.

Case study: Reducing concrete usage in Swedish construction

The Ranasjö, Salsjö and Grönhult projects, in construction in Sweden, are undertaking several environmental initiatives that complement the site specific conditions of the projects.

Given the geology of the sites, the turbines use rock anchored foundations in most locations. Compared to normal gravity foundations this will significantly reduce the carbon footprint of each foundation by around 50%, through reducing the volume of concrete needed. Out of the 51 turbine foundations across the projects, 38 will be rock anchored.

The Grönhult project will also reuse bedrock present in the area for the construction of roads and hardstands, reducing the need to bring in additional material from outside the project area.

Technical requirements have been included within contract tenders, including considerate use of rocks and road culverts. These will be carried out in conjunction with use of a special environmental permit for a local quarry in Salsjö, where the site will source base and sub base materials (reducing impact from transport of materials). The construction manager will also be measuring waste during construction as part of a data-focused approach to provide greater attention to minimising waste on site.

Building on TRIG's sector-first ESG-linked revolving credit facility, introduced during Q4 2020, InfraRed has worked to link TRIG's performance against its key sustainability measures such as the Company's FX and inflation hedging costs. The ESG key performance indicators (KPIs) that TRIG's performance will be judged on annually are consistent across TRIG's revolving credit facility, FX hedges and inflation swaps:

▲ Environmental: increase in the number of homes powered by clean energy from TRIG's portfolio

▲ Social: increase in the number of community funds supported by TRIG

▲ Governance: maintaining a low Lost Time Accident Frequency Rate (LTAFR)[22]

These agreements, and the further integration of ESG into the Company's processes, underlines TRIG's commitment in contributing to SDG 13 Climate Action and directly links TRIG's ESG performance to its financial performance for shareholders.

Preserving our natural environment

RES, as Operations Manager, works with individual project asset managers to preserve the natural environment by executing environmental management plans agreed with the authorities during the project consenting process, undertaking vegetation surveys, preventing biodiversity loss, recycling where possible and careful usage of materials.

Further opportunities for habitat improvement are being explored by asset managers to investigate and implement changes in accordance with site specific construction method statements, habitat management plans and environmental consultants where appropriate.

The offshore projects in the portfolio are subject to extensive ornithological, marine and other environmental surveys pre-construction and throughout operations. These surveys help to contribute to industry understanding of any potential impacts on species. There are high levels of biodiversity around offshore turbines with studies23 showing that the infrastructure provides fish with both shelter, and food from the organisms that grow on the turbines.

Initiatives to reduce the impact of the construction of Blary Hill onshore wind farm in Scotland, which was completed in early 2022, have included:

▲ The use of on-site borrow pits and an on-site concrete batching plant, both of which reduce the need, and subsequent environmental impact of, importing stone and concrete onto the site.

▲ A tailored surface water quality monitoring plan has also been created to manage the quality of watercourses draining the wind farm in line with best practice site management, which minimises the potential pollution during the construction phase.

A bespoke habitat management plan is now being implemented across 53 hectares together with compensatory planting on 237 hectares (both on-site and off-site).

The habitat management plan will:

▲ Improve the condition of the existing habitat, including heather.

▲ Enhance moorland bird habitats and provide a preferred nesting habitat.

▲ Improve the overall quality of the blanket bog habitat.

▲ Increase the small mammal population within the area which will increase hen harrier and short‐eared owl prey availability and provide a suitable breeding habitat.

▲ Increase the suitability for breeding curlew, providing an enhanced breeding habitat over 500m from the wind

farm.

▲ Increase the food source for black grouse.

24 Number of operational TRIG sites engaged in pro-active habitat management plans that exceed standard environmental maintenance. This number increases when new pro-active measures are put in place, and when habitat management plans commence on completion of the construction stage.

25 https://www.un.org/sustainabledevelopment

Social

Positively impact the communities in which TRIG works

We are sensitive to the impact that a renewable energy generating facility can have on its local community. TRIG's assets are often in rural areas where communities may experience limited employment options or unemployment and limited social and health facilities.

Tangible local benefits can be generated through initiatives such as:

▲ Using local employment and materials where possible.

▲ The Local Electricity Discount Scheme (LEDS), whereby properties closest to certain wind farms in the UK are eligible for a discount on their electricity bills.

▲ Educating the next generation about sustainability and renewable energy through school education days on TRIG sites, when possible and in line with Covid-related government guidelines.

▲ Supporting local good causes, often via community funds, such as donating to help fund social hubs, local healthcare, schools and entertainment.

Asset managers across TRIG's portfolio proactively engage with their local communities, meeting with the public on a regular basis and have protocols in place to govern community benefit arrangements, which are typically administered by local organisations who are best placed to understand local priorities.

TRIG has no direct employees, but actively engages with its Managers in respect of their employee engagement programmes. Alongside this, both InfraRed and RES look to give back to wider society through various social initiatives.

At the Four Burrows solar farm community fund over £24k was awarded in grants to local organisations. Successful applicants included Kenwyn Parish Council who were awarded £10.6k for the installation of solar panels and an electric car charging point at Shortlanesend Village Hall. This not only benefits local residents, but also helps further the environmental ambitions for the wider community, which directly links to the target of SDG 11 Sustainable Cities and Communities. It's also key to reaching SDG7 of reliable and sustainable energy for all.

TRIG's Managers' initiatives

Social initiatives at InfraRed are overseen and managed by the company with support from initiative owners across the business:

▲ InfraRed £1m Charitable Foundation issued its first grants, focused on improving employment opportunities for ex-offenders and reducingre-offending rates:

▲ Switchback: enables young men to find a way out of the justice system and build a stable, rewarding life they can be proud of

▲ Working chance: helps women with convictions to develop the confidence, skills and self-belief they need to overcome barriers to employment

▲ Lifecycle project: Since the start of the project, over 250 bikes have been donated to NHS staff at six hospitals within InfraRed's portfolio

▲ Creating better futures program: InfraRed collected, repurposed and donated 69 laptops/tablets to three schools during the first half of 2021

▲ Community Fridge: an initiative at Failsworth School, supported by Oldham Schools, in which food supplies are provided using a 'community fridge' to parents of the school and members of the community most in need, with the intention of providing support whilst helping break down the stigma of food banks. Launched nearly a year ago, the project received a Community Award in 2021

RES has put sustainability at the heart of its activities since commencing operations in 1981, engaging with local communities throughout the wind and solar farm development process, supported by a full-time community engagement team.

▲ Diversity and Inclusion strategy: RES' five Affinity Networks were launched in 2021, as an evolution of RES' D&I strategy. An Affinity Network is a group formed around a shared experience or concern for a given issue - RES' five groups are: race, gender, LGBTQ+, age and disability. The purpose of each group is to provide a platform across the company to raise awareness and support positive change in areas such as culture, policies and unconscious bias, to enable all employees to achieve their full potential. Affinity Networks each have their own distinct committee and executive sponsor

▲ Supporting charities: RES supports charities through a range of initiatives, including matching donations of up to £500 a year per person for staff fundraising events and personal donations. Staff are also offered up to 4 days of paid leave a year for voluntary work, to participate in charity work and non-profit initiatives

▲ Renewable World: RES has been a long-time supporter of Renewable World, a charity that aims to tackle poverty through the installation of renewable energy projects. In 2021, the charity expanded energy access for two communities in the Lake Victoria region of Kenya. For more information about their work see www.renewable-world.org

▲ Mentoring: RES operates a global mentoring programme and supports virtual learning and -development

▲ Sir Robert McAlpine Foundation: The owners of RES have operated a Foundation for over 50 years which gives grants to support small charities situated throughout the UK that fall within specific categories - namely children, youth, the elderly, social and medical research

Governance

Maintain ethics and integrity in governance

Responsible investment practices and strong ethics and integrity in governance are key to long-term success, including health & safety, managing conflicts of interest, and maintaining policies.

The Board has overall responsibility for TRIG's Sustainability Policy28 and its application, whilst the day-to-day management of the portfolio is delegated to both Managers.

Sustainability is integrated into each stage of InfraRed's investment process; from negative screening against firm and fund exclusion lists to deal screening, due diligence and investment approval. InfraRed publishes its own sustainability report and sustainability policy, including its approach to the integration of sustainability considerations into the investment cycle, on its website.29

The Operations Manager leads management of project level ESG policies and activities, whilst keeping active sight of TRIG's ESG KPIs, community outreach activities, and health and safety standards. RES works together with InfraRed to ensure that sustainability considerations are also prioritised in the ongoing management and reporting of the assets throughout the ownership period. The Project Company Boards maintain a responsibility to review and update SPV policies on an annual basis. This includes HSQE, tax, ESG, and cybersecurity.

Both Managers stress ethics and integrity in their own governance and believe it is vital to consider the needs of all stakeholders. They maintain policies on Sustainability, Modern Slavery, Diversity & Inclusion, Procurement, and Whistleblowing and publish their own Sustainability Reports available on both their respective websites. Please refer to page 44 of TRIG's 2021 Sustainability Report for more information on the policies held by TRIG and its Managers.

A core component of good governance is promoting thought leadership and best practice in the wider industry. InfraRed and RES are actively engaged in public policy debates, engaging directly with policy makers and through trade bodies such as the Global Infrastructure Investor Association (GIIA), The Infrastructure Forum and the Association of Investment Companies. During the year:

▲ The Managers made submissions to the UK government in relation to their Enabling a High Renewable, Net Zero Electricity System: Call for Evidence.

▲ InfraRed attended the Global Investment Summit.

▲ RES hosted the Energy Transition Hub during COP26 in conjunction with industry bodies EnergyUK and RenewableUK. The Hub staged a large number of sessions tackling the issues associated with the scale of the energy transition.

▲ InfraRed and RES continue to meet with stakeholders including the Department for Business, Energy and Industry Strategy (BEIS) and the Department for International Trade, and provides responses to the varying planning and policy consultations in the regions where TRIG is active.

▲ InfraRed, hosted by the GIIA, engaged with the Scottish devolved government on private capital investment in infrastructure.

▲ InfraRed engaged with the UK government and Solar Energy UK in relation to sustainability considerations in the solar industry supply chain.

▲ The Managers engaged with the French government in respect of retrospective cuts to certain historical solar feed-in-tariffs.

▲ InfraRed input to the AIC's response to the FCA consultation on board diversity.

TRIG has published its full ESG disclosures with the Association of Investment Companies (AIC). These can be found under the Company's page on the AIC website.

TRIG seeks to ensure Emergency Response Plans (ERPs) are in place at all sites to ensure teams can respond effectively to health & safety incidents and other emergencies that might occur. They are tested and evaluated proactively.

At Egmere, a TRIG solar site in the England, these plans were tested through an unannounced emergency exercise in collaboration with St. John's Ambulance. The operations & maintenance and asset management teams were tested with the simulation of an accident to a lone worker, putting the ERP into practice.

A similar scenario was tested at Altahullion, a TRIG wind farm in Northern Ireland, where a technician arriving in a turbine nacelle discovered an unconscious "casualty" (a dummy) with a simulated leg injury. The casualty was extracted from the hub and evacuated down the outside of the tower. The casualty went into a simulated cardiac arrest upon reaching the ground where the ground crew took over applying the site's defibrillator and resuscitation techniques until simulated medical assistance arrived.

Both tests were completed successfully and were useful in identifying further practical actions to take to ensure safety of personnel on site, including the development of training plans and IT systems to encourage an efficient and rapid response.

Safety of the work environment, supported by robust processes, is paramount. On commencement of construction projects, contractor engagement days are typically held to share knowledge on best practice and communicate the safety standards expected on TRIG sites. 

Across the portfolio, staff working on projects are encouraged and empowered to 'stop the job' and report whenever something is considered unsafe rather than putting themselves or others at risk. During a lifting operation at one of the offshore sites the activity was stopped due to the bag swaying uncontrollably even though the conditions were within the safe lifting limits.

Where contractors are found to breach protocol and put health & safety at risk, prompt action is taken, which may include contractor termination. During the year, it was discovered that two unrelated teams were operating on a turbine at the same time. This was in contravention of the permit to work that was in place and the second team should not have commenced their works. The team working higher in the turbine should not have done so due to the risk of falling objects that could harm the team working at the base of the turbine. The operatives involved were immediately stood down and later removed from the site.

TRIG's disclosure in relation to all eleven recommendations of the TCFD is set out below:

Climate related opportunities and risks for TRIG

Impact of different climate related scenarios

The Managers have now completed an assessment of the potential impact of a high transition risk scenario and a high physical risk scenario. This assessment covers the whole of TRIG's portfolio.

Current long-term power price forecasts do not assume that climate change is limited to 1.5-2 degrees and also do not correspond with a 4-degree temperature change scenario (as referenced in the next TCFD consideration, the high physical risk scenario).

Therefore, to assess the potential impact from climate change on power prices, net zero versions of power price forecasters were used across TRIG's portfolio to estimate the impact of a high transition risk scenario on TRIG's portfolio. Similarly for the higher physical risk scenario, the current energy mix is assumed to stay static as this is estimated to equate to a 4-degree temperature change - all else being equal.

It is important to note that these forecasts are incredibly complex, with a very large number of inputs that could be adjusted differently to arrive at either a high transition risk scenario or a high physical risk scenario. These scenarios could be arrived at through a number of different paths. It is not necessary, for instance, that in a high transition risk scenario that forecast power prices may be lower; greater than expected demand, public policy or a market "premium" on renewable electricity could result in power prices at a higher level than those we assume in the high transition risk scenario.

Equally, it is not necessary that in the high physical risk scenario that power prices would increase relative to a high transition risk scenario; for instance, electricity demand and commodity prices may be lower than forecast.

High transition risk scenario (typically associated with a 1.5-2 degrees Celsius temperature change)

Under this scenario, we assume that policy measures are put in place that accelerate the decarbonisation of energy production, including higher than expected levels of renewables deployment, and each country where TRIG invests achieving net zero carbon by 2050.

Physical risks from extreme weather events are less frequent and effective annual insurance coverage remains currently generally available. 

In a high transition risk scenario:

▲ There is downward pressure on forecast power prices for renewables generators due to greater decarbonisation of the energy mix from that assumed in the independent power price forecasts used in the Company's valuation.

▲ This is, in part, offset by an increase in electricity demand as transport, industry and heating as these sectors move away from fossil fuels.

▲ An increase in carbon prices is expected; however, this is likely to be offset by lower gas prices and greater periods of time when non-emitting generation is setting the prevailing power price.

Although these scenarios are very difficult to quantify, modelling undertaken suggests a possible impact of this scenario being an approximate 5% reduction in the Portfolio Value on a committed basis, or approximately 7p per share. This impact could be reduced as a result of industry efficiencies, such as lower operating costs arising from greater competition between sub-contractors as the sector continues to scale up, or increased generation efficiencies and performance.

One of the challenges to achieving more renewables build-out than assumed in current power price forecasts, and therefore decarbonisation, is that as long-term power price falls, a feedback loop of making fewer new projects financially viable is created, which in turn reduces the rollout rate and therefore reduces the downward pressure on forecast power prices.

Governments across TRIG's target markets are beginning to set out detailed policies in relation to both supply and demand for renewable electricity, which may address this feedback loop, provide support to the power price and achieve the levels of renewables rollout required for net zero carbon by 2050.

High physical risk scenario (typically associated with a 3-4 degrees Celsius temperature change)

This is a climate change scenario that results in a temperature change of greater than 3 degrees Celsius, resulting in extreme weather events that could threaten the successful operation of assets within the portfolio.

We assume that under this scenario, renewables build-out lags expectations, the energy system is not decarbonised to an extent consistent with a lower impact from climate change and that insurance for damages may become unavailable or very expensive.

Whilst current power price forecasts are not prepared on the basis of an overall temperature change, the underlying assumptions, particularly relating to renewables build-out, are consistent with a 3 degrees Celsius scenario. 

The Managers have undertaken analysis to consider the potential physical impact of climate change on TRIG's portfolio in a high-temperature change scenario. The IPCC's 6th Assessment Report (issued on 11 August 2021) has helped guide the assessment of the physical changes that may be seen in a high-temperature change scenario.

To assess the potential physical impact the portfolio has been segmented by region and technology, and reviewed for the risk of both chronic and acute physical changes over the expected life of each asset. Chronic changes refer to long-term and structural physical risks. Acute changes refer to the increased risk of specific, extreme short-term events. How events are categorised under these two headings is set out in the subsequent table.

The review suggests a possible adverse impact of physical risks in a high temperature change scenario of c. 1p to 3p per share. The estimated financial impact does not consider the offsetting impact of any insurance claims that may be possible.

In such a scenario, it is likely that the renewables rollout assumptions incorporated in current power price forecasts are unlikely to be met. Therefore, the Investment Manager considers that the medium to longer-term reductions seen in the power price forecasts in recent reporting periods may reverse and that there may be limited overall net impact on NAV. The estimated financial impacts are based on current views, which are likely to evolve as industry methods mature.

A key mitigant to the portfolio as a whole suffering from a material event at any one asset is the portfolio's asset diversification including the geographic spread across six European countries, which helps to reduce the impact of localised weather events.

Sustainability considerations, including those relating to climate change, are integrated throughout InfraRed's investment process. Scenario and sensitivity analysis is also undertaken as part of due diligence and examined by the Investment Committee when considering investment approval.

The Managers have also undertaken analysis to consider the impact on long-term power price forecasts of a 4 degree temperature change scenario. In such a scenario, it is likely that the renewables rollout assumptions incorporated in current power price forecasts are unlikely to be met. The current energy mix across Europe broadly equates to a 4 degree temperature change and therefore the current power price assumptions from 2024 (upon normalisation of forecast power prices from current elevated levels) is applied across the forecast period as an approximation.

This, net of the impact of the physical risk assessment, results in an increase in Portfolio Value on a committed basis by approximately 4% or approximately 6p per share. The estimated financial impacts are based on current views, which are likely to evolve as industry methods mature.

Physical risk assessment findings

The table below presents an update on the screening of TRIG's portfolio for the risk of physical damage due to climate change on a site-by-site basis, corresponding to a high physical risk scenario under the Task Force on Climate-Related Financial Disclosures (TCFD) guidance.

In addition to the mitigations set out, commercial protections are also used to mitigate such risks, such as insurance, supplier warranties or operation contractual scopes of work.

The review below suggests a possible adverse impact of physical risks in a high temperature change scenario of c. 1p to 3p per share.

During 2022, the Managers are seeking to understand and quantify the usage of other greenhouse gases, such as SF6, across the portfolio, and will provide an update in due course.

2.5 Portfolio

Portfolio diversification

The TRIG portfolio benefits from being diversified across jurisdictions, power markets and generating technologies providing multiple revenue sources, as well as a variety of geographic areas with differing meteorological conditions affecting wind speeds and solar irradiation, reducing year-on-year volatility.

Revenue profile

TRIG has the benefit of being diversified across several separate power markets: Great Britain, the Single Electricity Market (of The Republic of Ireland and Northern Ireland), France and Germany (which sit within the main continental European power market), Sweden (which sits in the Nordic electricity market) and Spain (Iberian power market).

The TRIG portfolio has substantial near-term protection in cash revenues from movements in wholesale power prices as the portfolio receives a high proportion of its revenue from selling electricity generated via Power Purchase Agreements ("PPAs") with fixed prices, and from government subsidies such as Feed-in-Tariffs ("FiTs"), Contract for Differences ("CfDs"), Renewable Obligation Certificates ("ROCs") or from other hedges.

In the longer term, based on its current portfolio, TRIG is expected to have greater exposure to future wholesale electricity prices as subsidies and contracts with pre-determined pricing run-off. As existing fixed-price contracts expire, the replacement contracts may also have fixed-price elements, and any future additions to the portfolio may have subsidies, decreasing the merchant proportion shown below.

Acquisitions and outstanding commitments

In 2021, TRIG invested £479m in new projects. Investment commitments entered into during the year are listed in the table below:

35 The main revenue type during the subsidy period. Thereafter all revenues are wholesale power market.

36 The segmentation above is on a fully committed basis and includes assets under construction at the time the investment was committed.

Current outstanding commitments

The Company has outstanding commitments of £231m relating to the Swedish onshore wind farm construction projects (Ranasjö, Salsjö and Grönhult), and the Cadiz solar projects (Arenosas, Malabrigo, El Yarte and Guita), broken down in the table below, by expected due date. The Company's acquisition facility was drawn £73m as at 31 December 2021.

Projects in construction

By acquiring assets at an earlier stage in their development, TRIG seeks to access improved returns and enhanced investment opportunities. Importantly, TRIG has the benefit of its Managers' expertise in the construction process: InfraRed as a greenfield investor for the past 25 years and RES as a developer and/or constructor of over 22GW of renewable assets globally.

Recently completed

Blary Hill, Scotland

Located on the Kintyre Peninsula in Scotland, Blary Hill is a 35MW onshore wind farm consisting of 14 Nordex 2.5MW turbines.

The project was completed early in 2022. Construction was delivered by RES under an Engineering, Procurement and was used in the construction of Solwaybank, TRIG's 30MW onshore wind farm also located in Scotland.

Both the local community and the local environment have been considered throughout the construction process.

Several local companies have been engaged for construction work, with local employment centres being utilised for the recruitment of labour operatives, and habitat management plans will be implemented along with compensatory planting, to improve the condition of the natural environment. Construction ("EPC") wrap, a management model in which a principal contractor secures each of the supply contracts and has contractual commitments to deliver the project on time and on budget. This is the same management model that was used in the construction of Solwaybank, TRIG's 30MW onshore wind farm also located in Scotland.

Both the local community and the local environment have been considered throughout the construction process. Several local companies have been engaged for construction work, with local employment centres being utilised for the recruitment of labour operatives, and habitat management plans will be implemented along with compensatory planting, to improve the condition of the natural environment.

Under construction

Located in the Haute-Marne department in France, Vannier is a 43MW onshore wind farm consisting of 17 Envision E-131 2.5MW turbines. Construction commenced in February 2020, with TRIG acquiring Vannier in October 2020. Construction is being delivered under an EPC wrap by an Envision-Velocita consortium, with RES hired as Owner's Engineer to provide independent construction monitoring.

Following permit issues at the site, construction was resumed in September 2021, with takeover scheduled for August 2022.

Hardstandings for the turbines have recently been resurfaced, pre-installation is complete for eight wind turbine generators and nacelles, hubs and blades have begun to be delivered to the site.

Grönhult, Sweden

Located in southwest Sweden, the 12 x Vestas V162 5.6MW (67.2MW) project was acquired from Vattenfall in Jan 2021; construction commenced in Q1 2021 and is scheduled for takeover in Dec 2022. Vattenfall continue to manage the project under a multi contract approach with RES hired as Owner's Engineer. Civil works are progressing well with 6 of 12 foundations complete.

Ranasjö and Salsjö, Sweden

Located in Solleftea, Vasternorrland County, Central Sweden, the two adjacent Ranasjo and Salsjo projects will consist of a total of 39 Siemens 6.2MW turbines (242 MW) with TRIG having 50% ownership share alongside another InfraRed managed fund: European Infrastructure Income Fund 4.

Construction commenced in September 2021 with initial forestry and civils works underway. The project is being managed by the developer Arise and is scheduled for take-over in February 2024. RES has been hired as Owner's Engineer on both Swedish construction projects providing additional oversight with respect to health and safety, quality and progress of works, spend against budget, compliance with consents and legislation and how activities are performed on site.

Other pre-operational

Arenosas, Malabrigo, El Yarte and Guita, Spain

Located in the province of Cadiz, Spain, the projects have a total capacity of 234MW. Construction on the projects began in September 2021 and is being delivered by Statkraft under an EPC wrap, with Statkraft also acting as Asset Manager. Ingenor have been hired as Owner's Engineer to provide independent oversight during construction. TRIG does not bear any construction risk for the Cadiz solar projects, due to a right to put any of the four projects back to Statkraft in the event that a project is not successfully commissioned by its respective long stop date.

Of the four projects, Arenosas is the most advanced, having finished site set-up and progressed well with civil and mechanical works. Both El Yarte and Malabrigo are in the earlier stages of similar works. La Guita has commenced construction following acquirement of necessary permits. Across all projects, consideration of the local community has been high, with events held to invite local contractors to understand the opportunities available.

Sustainability considerations during construction

Community Engagement

At Blary Hill, a virtual 'Meet the Buyer' event was held by RES, in which local businesses discussed their skills and experience that could be utilised in the construction of the wind farm. Interest was overwhelming, with an additional event held the following day to accommodate the interest received.

Concrete Usage

TRIG's Swedish construction projects, Ranasjo, Salsjo and Gronhult, have been implementing environmental initiatives to reduce the carbon footprint of their foundations. By using rock anchored foundations and reusing bedrock local to the site, the volume of concrete needed is reduced along with the need to bring in additional materials.

Local Economy

TRIG's construction activities in the UK alone are estimated to have provided c. ￡10m of local investment over the last 4 years.

Supply Chain

During TRIG's acquisition of four solar sites in Spain, the Managers' assessment of the investment considered the challenges associated with the supply chain of solar panel manufacturing. On-site tracing of components and confirmation of the practical application of codes of conduct is being undertaken during the manufacture of the panels to be used.

Natural Habitat

Following construction at Solwaybank, compensatory planting has meant that more than 90,000 trees of varying varieties have been planted, including 14,000 native noncommercial broadleaf trees.

Ten Largest Investments

Set out below are the ten largest investments in the portfolio. As at 31 December 2021, the largest investment (Beatrice) accounted for approximately 10% of the portfolio by invested value. In total, the 10 largest projects accounted for approximately 54% of the project portfolio by value (2020: 55%).

38 This column does not cast due to rounding differences.

The table below sets out the top ten largest investments in the portfolio, including investment commitments

Investment Portfolio

The TRIG portfolio as at 31 December 2021, includes 83 equity investments in the UK, Republic of Ireland, France, Sweden, Germany and Spain, comprising 50 wind projects, 32 solar PV projects and one battery storage project. Additionally, the portfolio includes one mezzanine debt investment in a mixed portfolio.

Notes

1. SEM refers to the Irish Single Electricity Market.

2. This is TRIG's equity share of the nominal capacity of the asset.

3. Where a project has been commissioned in stages, this refers to the earliest commissioning date. For construction assets, this refers to expected completion date.

4. Ranasjö, Salsjö, Grönhult, Haut Vannier and the Cadiz solar projects are under construction. Due to contractual measures in place, TRIG does not retain any construction risk for the Cadiz solar projects.

5. This is the investment commitment to acquire the Cadiz solar projects.

6. This investment is in the form of mezzanine level bonds where the Company does not have an equity stake. The portfolio comprises five onshore wind farms in Northern France with a combined capacity of 74MW and four operational solar parks with battery storage located on the islands of Corsica and La Réunion with a combined capacity of 29MW ("the Portfolio"). All the Portfolio assets are backed by the French government's Feed-in-Tariff subsidy and have an average year of commission of 2015.

2.6 Operational Review

Operational metrics

The Company sets out below its key metrics which it utilises to track its performance over time against its objectives.

TRIG portfolio update

Portfolio production for the year was 12.6% below budget. The shortfall in generation was primarily due to poor wind resource in all quarters, particularly during January, and through April to September in the UK and Ireland. The wind speeds seen in the UK region and the North Sea (also impacting the German offshore sites) were the lowest since 2010. Overall production for the portfolio was below the long-term budget P90 expectation (on a 10-year basis) but in line with the budget P90 assumption for a single year in isolation.

Within the portfolio, the poorest performing regions were Germany Offshore and Ireland. In addition to the low wind resource affecting both regions, Germany was also impacted by grid outages at Gode Wind 1 in addition to the ongoing turbine rear frame issue at Merkur which led to lower availability (Shortfalls resulting from the issue at Merkur are due to be compensated as described in the regional commentary below). Ireland experienced grid constraints and curtailment which were prevalent for all operators within the region.

With the exception of Merkur, regional availability has been close to budget, with target levels exceeded in Scandinavia and Ireland.

Recent GB wholesale electricity prices have risen significantly during the last quarter of 2021. The increase in Average Revenue / MWh in 2021 shown within the above table, reflects this increase in wholesale prices, along with a change in the composition of the portfolio, most notably the East Anglia 1 and Beatrice acquisitions. Changes to the portfolio compositions in the year equate to £7 of the £25 increase.

Regional commentary

The table below shows the TRIG share of production by region against budget across the year.

GB wind onshore

Generation was 16% below budget, almost entirely due to low wind resource during January, April to September, and December. Operational performance was good, and availability remained close to budget except for Little Raith and Crystal Rig 1 which have both had historic issues.

Little Raith has continued to underperform with further claims under the availability warranty to be made. RES, as Asset Manager for the project, have met with the O&M provider and an 18-month improvement plan is now in place. Crystal Rig 1 availability was lower than other sites for 2021 but improved as the year progressed with targeted works undertaken to address long running causes of downtime.

An extensive O&M tender was concluded in the latter part of the year with new O&M contract for 7 sites to be entered on expiry of the existing contracts through 2022 and 2023. This tender took advantage of TRIG's scale and technology diversification to achieve competitive pricing from four different suppliers. Ongoing maintenance works through the year were typical for a wind portfolio including blade repairs, main bearing replacements & foundation inspections.

Construction at the Blary Hill site in Scotland completed early in 2022, ahead of schedule. Turbine tests on completion are underway.

GB wind offshore

With the addition of the two offshore assets East Anglia 1 (EA1), acquired in late 2020, and Beatrice, acquired in January 2021, as operational assets, TRIG now considers GB offshore and German offshore as two separate regions.

GB offshore generation was 12% below budget, with low wind resource responsible for most of this shortfall and other key drivers including a grid constraint early in the year at Beatrice combined with inter array cabling issues at the site, with remediation works due to complete in Q1 2022.

There were some uncompensated grid outages at EA1 during Q3 due to OFTO snagging works. At Sheringham, Covid-19 related delays to servicing led to some minor faults with turbines and lower availability in the second half of the year. A new alternative O&M strategy in combination with the adjacent Dudgeon wind farm has now been implemented.

Germany offshore

German generation was 13% below budget due to low wind and some uncompensated grid outages. There was poor availability at Merkur, as a consequence of the turbine rear frame issue. Downtime associated with the Merkur issue is not included in the generation variance above as this is to be compensated under the service agreement availability warranty with the turbine supplier.

As reported in June 2021, following routine inspections at the Merkur offshore wind farm in Germany, generation was paused as a precautionary safety measure after cracks were identified in the emergency evacuation rear frames of some turbines. The turbine manufacturer has been monitoring the turbines and has implemented an interim welding solution that enabled 50, on average, of the 66 turbines to operate during Q4 2021 and 60 in January 2022. Root cause analysis has been completed and a long-term solution is being developed, which the turbine manufacturer plans to substantially implement during 2022. Compensation for lost revenues and the cost of remediation remains with the manufacturer. No material impact is expected on the carrying value of the project or the financial performance of Company though the timing of distributions from the project are expected to be delayed.

Gode Wind 1 suffered from grid outages in May and December, for which downtime is not compensated as the outage timeframes fell within the allowable number of days that the grid operator is permitted for undertaking scheduled and unscheduled maintenance.

France wind

French production was 12% below budget for the year, impacted by poor wind in the second half of the year and lower availability at two sites in the south due to maintenance campaigns and component replacement works. These works were required due to the age of the assets and the turbulent wind conditions these sites have experienced.

Progress is being made on the repowering of these projects with permission to bid for feed-in-tariffs granted by authorities.

Construction resumed at Vannier following the courts' dismissal of a technical challenge to the environmental permit in July 2021. Turbine deliveries and installation are underway with the site due to reach commercial operations in August 2022.

Scandinavia wind

Until completion of the Ranasjö, Salsjö and Grönhult construction projects, this region consists of the single large, wholly owned, site Jädraås. The project performed well in 2021 with availability above the budgeted level.

Both Swedish construction projects are progressing well and remain on programme. Ground works including cable laying are underway at the 67MW Grönhult project with completion on target for end of 2022. Forestry and civil works commenced at the Ranasjö and Salsjö sites, with the projects due to complete until early 2024.

Ireland (NI & ROI) wind

The region suffered from poor wind resource throughout the year which, combined with some ongoing grid constraints and curtailment at some sites, resulted in a large negative variance to budget of 26%. Budget production values do not reflect the high levels of constraint seen in recent years as the long-term picture is anticipated to improve as grid infrastructure improvements are made. Lost production was already lower in 2021 compared to 2020.

Site-based availability is running close to budget, due to the pro-active repairs, spares and maintenance approach taken by the asset management teams, particularly on older assets.

Solar

Solar generation saw a 2% negative variance to budget for the year, primarily driven by lower availability at some GB solar sites than budgeted due to EPC rectification works undertaken towards the end of the year. These works will ultimately lead to improved performance of these sites in the future. Three solar sites in Cornwall have benefited from inverter reconfiguration works which have resulted in production well above budget.

There have been some electrical failure events involving inverters or string combiner boxes across the solar portfolio temporarily impacting parts of the sites. Whilst the plants remained operational, given that sections of the sites were offline for over 24 hours, these incidents were considered reportable events and notified to the HSE. Root causes for these failures include damage due to rodents and minor component failures.

Long-term portfolio performance against budget

2021 has been a low resource year with most regions in the portfolio impacted. Whilst total generation in the year was below long-term average expectations, it was within the variance we would expect to see on an annual basis i.e. for a single year in isolation. TRIG's geographical and technological diversity serves to mitigate against varying weather conditions.

Enhancements

As Operations Manager, RES is dedicated to enhancing the value of the portfolio through both commercial and technical initiatives. RES has a structured enhancements framework that fosters a culture of innovation, with opportunities regularly identified and assessed both at individual site level and portfolio level.

Examples of some of the commercial and technical value enhancements secured in 2021 include:

▲ Optimised Operations & Maintenance strategy implemented at Sheringham Shoal offshore wind farm, securing reduced annual operating costs and improved turbine access (expected to reduce downtime), through:

o Relocating the O&M base to reduce tidal restrictions and technician travel time

o Securing shared access to a Service Operation Vessel - this large vessel is offshore for weeks at a time and so facilitates better turbine access during poor sea conditions

▲ Retrofit turbine controllers installed at Altahullion to enable wake steering pilot project, seeking to increase overall site generation while also minimise turbine loading by operating turbines collaboratively to minimise wake impact on neighbouring turbines

▲ Blade enhancements installed at two trial turbines at Hill of Towie and Green Hill, with yield impact being assessed to inform potential rollout to wider portfolio

▲ Turbine software upgrade implemented at Epine to increase energy yield, following completion of required acoustic testing and substation modifications, with results to be independently verified

▲ Improved PPA terms secured within existing contracts, including optimised market index, improved offtake discounts and increased REGO value

▲ Material cost reductions negotiated across a number of operational contracts while maintaining scope and quality of service

Life extensions for TRIG projects continue to progress well, utilising RES' specialist land, technical and commercial expertise. Extended project life is considered as part of investment decisions for upgrades, supported by detailed monitoring of site performance.

Health and Safety

A strong focus on Health and Safety ("H&S") has always been adhered to in TRIG's operations. The following provides an update of H&S items of note during 2021:

▲ There were 11 lost time accidents across the portfolio during the year, mostly minor incidents where the injured party was able to return to their normal duties within 7 days. These events were primarily related to slips and trips. The increased ownership of minority interests in larger offshore projects results in a higher number of incidents being captured within our reporting. All subcontractor incidents are also included within these values.

▲ In addition to internal audits carried out by the asset managers across the portfolio, independent HSQE Assurance audits were undertaken at multiple representative sites in the onshore wind and solar portfolios, with findings considered across the wider TRIG portfolio. The Operations Manager also regularly undertook safety walks across the portfolio.

▲ The TRIG safety working group, a forum for safety representatives of asset management service providers, continues to pro-actively share best practice and enable collaborative relationships across the portfolio.

▲ Relevant industry safety alerts were shared and discussed throughout the year and industry involvement continues. RES and other asset managers have been contributing to the work of industry bodies such as 'SafetyOn' and maintaining relationship with country specific government bodies e.g. UK HSE.

▲ Operations & maintenance and construction activities have progressed well despite the impact of Covid-19, though some availability impacts were seen due to delayed maintenance at the offshore sites. Some restrictions on the movement of people across borders at the outbreak of the Omicron variant also led to occasional delays in scheduled maintenance being commenced.

▲ A number of the asset managers have continued to focus on mental health within their organisations. RES as Operations Manager held 'Wellbeing week' in 2021 hosting a variety of activities and webinars focused around the four pillars of wellbeing: social, physical, mental and financial.

2.7 Valuation of the Portfolio

Introduction

The Investment Manager is responsible for carrying out the fair market valuation of the Group's investments which is presented to the Directors for their approval and adoption. A valuation is carried out on a six-monthly basis as at 30 June and 31 December each year.

For non-market traded investments (being all the investments in the current portfolio), the valuation is based on a discounted cash flow methodology and adjusted in accordance with the European Venture Capital Association's valuation guidelines where appropriate to comply with IFRS 13 and IFRS 10, given the special nature of infrastructure investments. Where an investment is traded, a market quote is used.

The valuation for each investment in the portfolio is derived from the application of an appropriate discount rate to reflect the perceived risk to the investment's future cash flows to give the present value of those cash flows. The Investment Manager exercises its judgement in assessing the expected future cash flows from each investment based on the project's expected life and the financial model produced by each project entity. In determining the appropriate discount rate to apply to a given investment the Investment Manager takes into account the relative risks associated with the revenues which include fixed price per MWh income (lower risk) or merchant power sales income (higher risk). Where a project has both income types a theoretical split of future receipts has been applied, with a different (higher) discount rate used for an investment's return deriving from the merchant income compared to the fixed price income, equivalent to using an appropriate blended rate for the investment.

The Directors' Valuation of the portfolio as at 31 December 2021 was £2,725.8m. This valuation compares to £2,213.0m as at 31 December 2020 and £2,491.0m as at 30 June 2021.[23]

Valuation movements

A breakdown of the movement in the Directors' valuation set out in the table below.

Valuation movement in the year to 31 December 2021 

* Foreign exchange movement is stated before the offsetting effect of hedges which are held at the Company level. Foreign exchange losses reduce to £21.1m after the impact of foreign exchange hedges.

* Foreign exchange movement is stated before the offsetting effect of hedges which are held at the Company level. Foreign exchange losses reduce to £21.1m after the impact of foreign exchange hedges.

The opening valuation at 31 December 2020 was £2,213.0m. Allowing for net cash investments of £478.9m and cash receipts from investments of £169.4m, the rebased valuation as at 31 December 2021 was £2,522.5m.

Cash investments of £478.9m during the year is predominantly comprised of the following investments:

Further detail on each investment is included in section 2.5.

Each movement between the rebased valuation of £2,522.5m and the 31 December 2021 valuation of £2,725.8m is considered in turn below:

(i) Forecast power prices

The valuation at 31 December 2021 is based on current updated power price forecasts for each of the markets in which TRIG invests overlaid with a portion of the higher prices indicated by the forward markets over the next c.2 years. The forecasts are materially up in the short to medium term but lower over the longer term, resulting in an overall increase in valuation of the portfolio from a year ago by a net £117.1m.

2021 has seen significant increases in forecasts for wholesale power prices over the short and medium term across most of the regions in which TRIG invests driving the material increase in the blended curves shown on the next page over the next 3-5 years, compared with a year ago.

High commodity prices, in particular gas and to a lesser extent carbon, are the principal drivers of the increase in forecasts noted above - please refer to section 2.3 for further details. The high gas prices are in part due to a general restriction in supply and this scarcity combined with an increased level of commodity demand and reduced intermittent generation supply (wind and solar) together with outages within conventional generation have result in a relatively tight and hence volatile market. These factors also impact the forwards markets but with significant variation from day-to-day. Consequently a relatively conservative approach has been adopted, partially uplifting the forecasters' assumptions for the forward prices indicated at the valuation date of 31 December (taking approximately 40% of the uplift from reflecting the full closing forward prices).

Beyond the short-term horizon covered by liquid forward markets (c. 2 years), there is a further period of modestly increased prices (compared to December 2020), while the forecasts assume gas supplies and prices normalise.

Beyond the medium term the reduced forecast power prices are driven by the increases in assumed renewable generation, as reported in the Interim Results, with limited changes in expectations in the second half of the year. Hence the resulting curve shows very high near-term prices followed by relatively lower prices in the medium and long term.

Power prices are one of the key risks faced by the Company: a number of factors go into power price forecasting to estimate electricity demand including the mix of generation technology meeting this demand and for each technology their associated costs of supply. As such, it is inherently difficult to estimate and then apply these factors to accurately forecast the outcome of this dynamic market. Please refer to Section 2.10 Risk and Risk Management for further analysis.

The weighted average power price used to determine the Directors' valuation is shown below in real terms - this is comprised of the blend of forecasts for each of the power markets in which TRIG is invested after applying expected PPA power sales discounts and reflecting cannibalisation[25] and, where it is believed appropriate, overlaying shorter term forwards to reflect current market pricing.

Illustrative blended power price curve (real prices) for TRIG's portfolio[26]

* France, SEM, Germany, Sweden (SE2 and SE3) and Spain

Cannibalisation is assumed within the adopted power price forecasts across each jurisdiction. The reduction in captured wholesale electricity power prices is forecast to be further impacted in each geography over time as the proportion of production coming from renewables in each market increases.

(ii) Movement in valuation discount rates

The weighted average portfolio valuation discount rate as at 31 December 2021 was 6.6% (31 December 2020: 6.7%). The discount rates used for valuing each investment represent an assessment of the rate of return at which infrastructure investments with similar risk profiles would trade on the open market.

During the year we have observed continuing strong competition for renewables infrastructure, which remains a sought-after asset class, and we continued to see new entrants to the market seeking to buy assets. This has resulted in a continued reduction in the prevailing discount rates applied to renewables investments. Overall the Investment Manager, based on its experience of bidding and transacting in the secondary market for renewable infrastructure assets, has applied an average reduction of 0.3% to discount rates across the portfolio compared to 31 December 2020.

In addition, the mix of investments made in the period have increased the discount rate by approximately 0.2%.

During the year, the Company engaged an independent valuation of the portfolio and a further review of the discount rates adopted for the December 2021 valuation, which confirmed that the rates used were appropriate. This change in assumption has led to an increase in the valuation of the investments of £60.4m.

(iii) Changes to inflation assumptions

Over 2021 as the initial depressing impacts of the pandemic fall out of the inflation figures (the "base effect"), and supply constraints have taken hold, actual inflation has increased. This has accelerated markedly during the second half of the year with forecast expectations over the short to medium term materially exceeding the previously assumed inflation forecast. Given the quantum of increase, consensus amongst forecasters and broad increases in prices across multiple sectors, a short-term increase has been made to the assumption for inflation in the UK of 1.0% for 2022 and 0.75% for 2023. This has resulted in a positive valuation impact of £37.5m.

(iv) Foreign Exchange Movement

Over the year, sterling has appreciated by 6% versus the euro, leading to a £58.7m valuation loss on foreign exchange in relation to the euro-denominated investments located in Germany, Sweden[27], France, the Republic of Ireland and Spain, which reduces to a net £21.1m loss after the impact of foreign exchange hedges held outside the portfolio at company level.

At 31 December 2021, euro-denominated investments comprised 37% of the portfolio. On a committed basis, the proportion of euro denominated investments based on the current portfolio will increase to 42%.

The Group enters into forward hedging contracts (selling euros, buying sterling) for an amount equivalent to its expected income from euro-denominated investments over the short term, currently approximately the next 48 months. In addition, the Group has entered into further forward hedging contracts such that, when combined with the "income hedges", the overall level of hedge achieved in relation to the euro-denominated assets value is currently approximately 80%. Hedging is also achieved when making investments using the revolving credit facility by drawing in euros for euro-based acquisitions. The Investment Manager keeps under review the level of euro exposure and utilises hedges, with the objective of minimising variability in shorter term cash flows with a balance between managing the sterling value of cash flow receipts and potential mark-to-market cash outflows.

(v) Change in corporation tax rate

As enacted in the Finance Act 2021, the forecast UK corporation tax rate has been increased to 25% (from 19%) commencing April 2023. This change is assumed from this date throughout the lives of all UK companies (i.e. for the full duration of the projects' economic lives). This has resulted in a negative valuation impact of £67.6m. This impact is unchanged to that reported in the June 2021 Interim Results.

(vi) French solar provision

As noted in Section 2.3 - Market Development, further detail has been received in the year in respect of retrospective changes to feed-in tariffs in France. This indicates that many of the older French solar projects in the portfolio face proposed cuts to the historical tariffs which are high relative to levels awarded today. A provision of approximately £28.7m (1.4p/share) has been made in the year, and the remaining valuation of the affected assets is 1.3% of Portfolio Value, as at 31 December 2021. The final outcome still remains unclear and, taking into account the possibility of appeals, may take some time to resolve. This impact is unchanged to that reported in the June 2021 Interim Results.

(vii) Balance of portfolio return

This refers to the balance of valuation movements in the year (excluding above) and represents an uplift of £143.3m, equivalent to an 5.7% increase over the rebased value of the portfolio. The balance of portfolio return comprises the expected return, reflecting the net present value of the cash flows brought forward by a year at the average prevailing portfolio discount rate.

Taking the opening average portfolio discount rate (6.7%) and accounting for the fact that the acquisitions during the period occurred partway through the period and consequently these cash flows were brought forward by less than 12 months, gives an expected increase over the year of 5.9%.

The main cause of lower portfolio return than the expected level is the overall generation for the year being below budget with lower wind speeds across geographies being partially offset by higher actual power prices in the period, resulting in a net downside of circa 2 pence per share.

Portfolio enhancement activities have benefitted portfolio valuation and include new power purchase agreements with lower costs to sell electricity than previously forecast. Several of the power purchase agreements across the portfolio include optionality to fix prices for a given period (typically three or six months, up to twelve months in advance) - these options can be used to secure prices when the markets are relatively high and reduce the risks to short-term cash flows, actively managing the short-term power price risk.

Small changes have been made to future assumed interest and deposit rate assumptions in the year. However, the portfolio remains relatively insensitive to the changes in interest rates, which is an advantage to TRIG's approach of favouring long-term structured project financing, rather than short-term corporate debt. Structured project financing is secured against the underlying assets, with the substantial majority benefitting from long-term interest rate swaps which fix the interest costs to the projects. As such, the overall impact of interest rate changes is small.

Investment obligations

At the balance sheet date, the Company had outstanding investment commitments in relation to the construction of the Ranasjö, Salsjö and Grönhult onshore wind farms, and Cadiz solar projects (Arenosas, Malabrigo, El Yarte and Guita).

* Expressed as a percentage of fully committed valuation of £2,957.0m.

** TRIG does not bear construction risk on the Cadiz solar projects. TRIG has a right to put any of the four projects back to the developer of the projects in the event that a project is not successfully commissioned by its long stop date.

The timeline of outstanding commitments is presented below:

Fully invested portfolio valuation

The valuation of the portfolio on a fully invested basis can be derived by adding the valuation at 31 December 2021 and the expected outstanding commitments as follows:

Impact of sensitivity on portfolio value

For each of the sensitivities, it is assumed that potential changes occur independently of each other with no effect on any other base case assumption, and that the number of investments in the portfolio remains static throughout the modelled life.

The sensitivities assume the portfolio is fully invested and hence the Portfolio Value for the sensitivity analysis is £2,957.0m. Accordingly, the NAV per share impacts shown above assumes the issue of further shares to fund the balance of these commitments.

All of TRIG's sensitivities above are stated after taking into account the impact of project level gearing on returns.

The output sensitivity above incorporates an updated calculation of the portfolio effect which reduces the variability as a result of the diversification of the portfolio. The increased diversification of the portfolio has increased this effect and consequently reduced the sensitivity of the portfolio.

As an investment entity for IFRS reporting purposes, the Company carries its investments in renewables infrastructure projects at fair value. The results below are shown on a statutory and on an "expanded" basis as we have done in previous years. See the box below for further explanation.

2.8 Analysis of Financial Results

Basis of preparation

In accordance with IFRS 10 the Group carries investments at fair value as the Company meets the conditions of being an Investment Entity. In addition, IFRS 10 states that investment entities should measure their subsidiaries that are themselves investment entities at fair value. Being investment entities, The Renewables Infrastructure Group (UK) Limited ("TRIG UK") and The Renewables Infrastructure Group (UK) Investments Limited ("TRIG UK I"), the Company's subsidiaries, through which investments are purchased, are measured at fair value as opposed to being consolidated on a line-by-line basis, meaning their cash, debt and working capital balances are included as an aggregate number in the fair value of investments rather than the Group's current assets. In order to provide shareholders with more transparency into the Group's capacity for investment, ability to make distributions, operating costs and gearing levels, adjusted results have been reported in the pro forma tables below.

The pro forma tables that follow show the Group's results for the year ended 31 December 2021 and the prior year on a non-statutory "Expanded basis", where TRIG UK and TRIG UK I are consolidated on a line-by-line basis, compared to the Statutory IFRS financial statements (the "Statutory IFRS basis").

The Directors have provided the non-statutory Expanded basis to assist users of the accounts in understanding the performance and position of the Company, by including the cash and debt balances carried in TRIG UK and TRIG UK I and expenses incurred in TRIG UK and TRIG UK I.

The necessary adjustments to get from the Statutory IFRS basis to the non-statutory Expanded basis are shown for the primary financial statements. The commentary provided on the primary statements of TRIG is on the Expanded Basis.

Income Statement

The Statutory IFRS basis nets off TRIG UK and TRIG UK I's costs, including overheads, management fees and acquisition costs against income. The Expanded basis includes the expenses incurred within TRIG UK and TRIG UK I to enable users of the accounts to fully understand the Group's costs. There is no difference in profit before tax or earnings per share between the two bases.

Balance Sheet

The Statutory IFRS basis includes TRIG UK and TRIG UK I's cash, debt and working capital balances as part of portfolio value. The Expanded basis shows these balances gross. There is no difference in net assets between the Statutory IFRS basis and the Expanded basis.

The majority of cash generated from investments had been passed up from TRIG UK and TRIG UK I to the Company by 31 December 2021.

At 31 December 2021, TRIG UK I was £72.8m drawn on its revolving credit facility (2020: £40m drawn) being the majority of the difference between the Statutory IFRS basis and the Expanded basis.

Cash Flow Statement

The Statutory basis shows cash movements for the top company only (TRIG Limited). The Expanded basis shows the consolidated cash movements above the investment portfolio which are relevant to users of the accounts. Differences include income received by TRIG UK and TRIG UK I applied to reinvestment and expenses incurred by TRIG UK and TRIG UK I that are excluded under the Statutory IFRS basis.

The purchase of investments on the Expanded basis is funded by both the company's revolving credit facility and amounts passed down after capital raises. The remaining balance is that of reinvestment.

Income statement

1. The following were incurred within TRIG UK and TRIG UK I; acquisition costs, the majority of expenses and acquisition facility fees and interest. The income adjustment offsets these cost adjustments.

2. Calculated based on the weighted average number of shares during the year being approximately 2,103.9 million shares for 2021 and 1,712.0 million shares for 2020.

Analysis of Expanded Basis financial results

Profit before tax for the year to 31 December 2021 was £210.5 million, generating earnings per share of 10.0p, which compares to £100.2 million and earnings per share of 5.9p for the year to 31 December 2020.

The EPS of 10.0p reflects significant valuation growth in the year versus a weaker period of valuation growth in the comparative period. During 2021 whilst there have been reductions in medium to long term power price forecasts (mostly attributable to assumed greater and faster build out of renewables across geographies) the most significant factor has been significant growth in achieved and forecast near term power prices. Increases in near power prices have been mostly driven by increasing gas and carbon prices as economies recover from the recession caused by the pandemic. Factors driving higher gas prices include: 2021 starting with a long cold winter that depleted European gas storage levels, some gas supply sources into Europe have been disrupted and reduced and demand for gas has increased significantly across the world. Elevated gas and hence wholesale power prices are expected to take some time to normalise. Carbon prices have reached all-time highs during the year also pushing up power prices.

Other areas contributing to valuation growth have been higher levels of actual and forecast inflation in the UK and reductions in valuation discount rates, reflecting continued strong competition for the asset class. Efficient portfolio management alongside other valuation enhancements have also benefitted portfolio value.

These increases are partially offset by foreign exchange movements as sterling appreciated, the impact of an increase in future UK corporation tax rates and provisions made for expected reductions to French feed-in tariffs being proposed by the French Government to apply to certain older solar projects with historically high feed-in tariff levels. The latter two adverse items were reported at the half year results and the impact is unchanged.

Generation in the year was below budget with below average wind speeds across many of the geographies TRIG operates in. This was partially offset by higher than budgeted achieved power prices. This net adverse variance is also recognised in Portfolio Value and Operating Income.

Operating Income reflects the portfolio value movement in the year and is more fully described in Section 2.7.

Acquisition costs relate to investments in the year, mostly attributable to the investments in Beatrice, Grönhult, Ranasjö, Salsjö, and the Cadiz solar projects (Arenosas, Malabrigo, El Yarte and Guita).

An increase in fund expenses in 2021 as compared to 2020 reflects the increase in the size of the portfolio.

Fund expenses of £23.8 million (2020: £20.0 million) includes all operating expenses and £21.5 million (2020: £16.9 million) fees paid to the Investment and Operations Managers. Management fees are charged at 1% of Adjusted Portfolio Value up to £1 billion, 0.8% of Adjusted Portfolio Value between £1 billion and £2 billion and 0.75% of Adjusted Portfolio Value in excess of £2 billion as set out in more detail in the Related Party and Key Adviser Transactions note, Note 18 to the financial statements.

During the year sterling strengthened against the euro resulting in a negative foreign exchange valuation movement for existing euro denominated assets resulting in a loss of £58.7 million (2020: £42.6 million gain), partially offset by gains on foreign exchange hedges and cash and debt balances held at Company level of £37.6 million (2020: £20.9 million loss) recorded in the Income Statement. The net foreign exchange loss in the period is hence £21.1 million (2020: £21.7 million gain).

Finance costs relate to the interest and fees incurred relating to the Group's revolving credit facility. The finance costs in the period are higher than the comparative period reflecting the increased facility size and a higher average level of drawings in the year.

Ongoing charges

1. Total expenses excludes £0.1m (2020: £1.1m) of lost bid costs incurred during the year.

The Ongoing Charges Percentage is 0.97% (2020: 0.94%). The ongoing charges have been calculated in accordance with AIC guidance and are defined as annualised ongoing charges (i.e. excluding acquisition costs and other non-recurring items) divided by the average published undiluted net asset value in the year. The Ongoing Charges Percentage has been calculated on the Expanded Basis and therefore takes into consideration the expenses of TRIG UK and TRIG UK I as well as the Company's.

The increase in OCP level reflects higher amounts being drawn on the revolving credit facility in the period resulting in a lower NAV compared to Portfolio Value.

Balance sheet

Analysis of Expanded Basis financial results

Portfolio value grew by £512.8 million in the year to £2,725.8 million, primarily as a result of the investments made as described more fully in the "Valuation Movements" section of this Strategic Report.

Hedging assets and liabilities represent the value of outstanding foreign exchange derivatives used to manage the Company's risk to movements in the foreign exchange rate between Sterling and Euro. Working capital amounts include debtors, liabilities and capitalised financing costs.

Group cash at 31 December 2021 was £28.5 million (December 2020: £23.9 million) and acquisition facility debt drawn at 31 December 2021 was £72.8 million (December 2020: £40m).

Net assets grew by £511.3 million in the year to £2,706.2 million. The Company raised £433.9 million (after issue expenses) of new equity and produced a £210.5 million profit in the year, with net assets being stated after accounting for dividends paid in the year (net of scrip take up) of £134.1 million. Other movements in net assets totalled £1.0 million, being the Managers' shares accrued at 31 December 2021 and to be issued on or around 30 March 2022.

Net asset value ("NAV") and Earnings per share ("EPS") reconciliation

Net asset value ("NAV") per share as at 31 December 2021 was 119.3p compared to 115.3p at 31 December 2020.

1. Calculated based on the weighted average number of shares during the year being 2,103.9 million shares.

2. Includes shares issued to managers (less costs) during the year.

3 The increase in net assets per share of 0.8p was the result of accretive share issues where shares were issued above the Company's net asset value per share.

4. Scrip dividend take-up comprises 5.8 million shares issued during the year.

5. Balance does not cast due to rounding.

Cash flow statement

Analysis of Expanded Basis financial results

Cash received from investments in the year was £175.9 million (2020: £148.1 million). The increase in cash received compared with the previous year reflects the increase in the size of the portfolio. The adjustment reflects working capital movements and cashflow available for reinvestment and proceeds in the year.

Dividends paid in the year totalled £134.1 million (net of £7.5m scrip dividends). Dividends paid in the prior year totalled £107.0 million (net of £6.6 million scrip dividends).

Cash flow from operations in the year was £150.4 million (2020: £128.8 million) and covers dividends paid of £134.1 million in the year (2020: £107.0 million) by 1.12 times (or 1.06 times without the benefit of scrip take up), or 2.08 times before factoring in amounts invested in the repayment in project-level debt. The Group repaid £145 million of project-level debt (pro-rata to the Company's equity interest) in the year.

Share issue proceeds (net of costs) totalled £432.9 million (2020: £316.4 million) reflecting the net proceeds of the 356.3 million shares issued during the year through the proceeds of two equity fund raises under the share issuance programme.

In the year, £480.9 million of investments were made, including acquisition costs. These were funded through the March and September equity fund raises (net proceeds of £432.9 million), drawings on the Company's acquisition facility of £32.8 million, as well as the reinvestment of surplus cashflows.

Cash balances increased in the period by £4.6 million reflecting cash flows generated exceeding distributions paid.

The company has future commitments relating to Ranasjö, Salsjö and Grönhult, and the Cadiz solar projects (Arenosas, Malabrigo, El Yarte and Guita) as follows.

Going Concern

The Group has the necessary financial resources to meet its obligations. The Group benefits from a range of long-term contracts with various major UK and European utilities and well-established suppliers across a range of infrastructure projects. In addition, it maintains a working capital component of £30m as part of its revolving credit facility (sized at £500m and limited to 30% of Portfolio Value). The Group's project-level external debt is non-recourse to the Company and is limited to 50% of Gross Portfolio Value. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The directors do not believe that there is a significant risk to the business as a result of the Covid-19 pandemic but will continue to monitor any future developments. Thus they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

Related Parties

Related party transactions are disclosed in note 18 to the condensed set of financial statements.

2.9 Financial KPIs and Review of the Year

1 Total Shareholder Return ("TSR") measures the internal rate of return based on the share price at the beginning and end of the financial year together with dividends per share reinvested in the Company.

Financing

The Group's £500m revolving credit facility is with a banking group comprising Royal Bank of Scotland International, National Australia Bank, ING Bank NV, Sumitomo Mitsui Banking Corporation, Santander and Barclays. The facility expiry date is 31 December 2023, with options to extend for up to an additional 24 months. Margins on the facility when drawn are 1.85%, the facility can be drawn in Sterling or Euros.

The revolving credit facility enables the Group to fund new acquisitions and to provide letters of credit should they be required. The facility includes a £30m working capital element.

The short-term financing provided by the revolving credit facility is limited to 30% of the portfolio value. It is intended that any drawings used to finance acquisitions are repaid, in normal market conditions, within a year through equity fundraisings.

The acquisition facility was drawn down in the year to fund investments and subsequently repaid following capital raises. The balance at the year end is £73m having been drawn in the final quarter of the year to fund projects in construction.

In addition to the revolving credit facility, the projects may have underlying project level debt. There is an additional gearing limit in respect of such debt, which is typically non-recourse to TRIG, of 50% of the Gross Portfolio Value (being the total enterprise value of such portfolio companies), measured at the time the debt is drawn down or acquired as part of an investment. The Company may, in order to secure advantageous borrowing terms, secure a project finance facility over a group of portfolio companies.

The project-level gearing at 31 December 2021 across the portfolio was 40% (2020: 43%). Principal repayments in the year totalled £145m, as the debt is retired over the project's subsidy periods. Gearing has reduced during 2021 partially due to the scheduled repayment of debt in the year, some of which introduced new debt in projects and some of which were acquired without project debt.

The vast majority of the project debt is fixed and has an average cost of 3.4% (including margin). The project level debt is fully amortising and repaid in each case over the period of the subsidy term. The portfolio weighted average subsidy life remaining is 11 years.

Foreign Exchange Hedging

At the year-end, 37% of the portfolio was located within France, the Republic of Ireland, Sweden44, Germany and Spain and hence is invested in euro-denominated assets. Once the committed investments at the Ranasjö, Salsjö and Grönhult wind farm projects in Sweden and the four solar projects in Cadiz, Spain, which are in construction, are fully subscribed the proportion of euro-denominated investments based on the current portfolio and valuation will increase to 42%.[28]

The Group enters into forward hedging contracts against expected income from the euro-denominated investments' distributions up to four years ahead. In addition, the Group aims to enter into further forward hedging contracts such that, when combined with the "income hedges", the overall level of hedge achieved in relation to the euro-denominated assets is at least 50% of their aggregate value. The group may also make drawings under the revolving credit facility in euros which provides further foreign exchange hedging.

During the majority of 2021 the Group targeted hedging of approximately 60% to 80% of the overall euro portfolio value. The Group has been maintaining this increased hedging level since 2019 in light of increased Euro/ Sterling exchange rate volatility risk related to Brexit.

The Investment Manager keeps under review the level of euros hedged, with the objective of minimising variability in shorter-term cash flows and reducing NAV volatility. It seeks to maintain a balance between managing the sterling value of cash flow receipts and mark-to-market cash outflows.

As well as addressing foreign exchange uncertainty on the conversion of the expected euro distributions from investments, the hedge also provides a partial offset to foreign exchange movements in the portion of the portfolio value relating to the euro-denominated assets.

The impact on NAV per share of a 10% movement in the euro exchange rate after the impact of hedges held by the Group outside of the investment portfolio is 1.8p assuming an effective euro foreign exchange hedge of 60% - this is explained in more detail in Section 2.7 and Note 4 in the Notes to the Financial Statements (Valuation Sensitivities - euro/sterling exchange rate).

2.10 Risks and Risk Management

Risk Management

The Company has a risk management framework in place covering all aspects of the Group's business. Given the nature of the Company (being an Investment Company where the Company outsources key services to the Investment Manager, Operations Manager and other service providers), reliance is placed on the Group service providers' own systems and controls.

The identification, assessment and management of risk are integral elements of the Investment Manager's and the Operations Manager's work in both managing the existing portfolio and in transacting new investment opportunities.

The Managers and Board discuss and consider what emerging risks there are to the Company at the board meetings. The Company has a range of advisers in addition to its Managers. These advisers report on key topics and potential events which may present potential risks that the Board and the Manager need to monitor and, where possible, mitigate. In addition, the Company and its Managers are registered with various industry bodies which alert both the Board and the Managers of emerging risks as key events and news items unfold.

The inherent risk of each existing and emerging risk is assessed based on their likelihood of occurring and their potential impact should they manifest. Where necessary and possible, mitigation plans are developed to reduce the residual risk.

The Managers utilise their systems, their policies, oversight of the supply chain and third-party input to manage these risks. The strength of mitigants and controls is applied to the inherent risk to determine the residual risk, which is classified as 'high', 'medium', 'low' or 'insignificant'. If a new risk arises or the likelihood of a risk occurring increases, a mitigation strategy is, where appropriate, developed and implemented together with enhanced monitoring by the Investment Manager and / or Operations Manager.

The Managers review and consider the Group's key and emerging risks with the Board on a quarterly basis. Given the stability of the Company's investment policy and focus of its strategy (i.e. investments in renewable energy infrastructure projects in the UK or Europe), the risks in the Group are not expected to change materially from quarter to quarter.

The Board's Management Engagement Committee also reviews the performance of the Investment Manager and Operations Manager (as well as all key service providers) annually, which includes a consideration of the Managers' internal controls and their effectiveness and the maintenance of a risk control matrix.

Risks and Uncertainties

The Board and the Managers have considered and reviewed the key risks. Risks relating to the Covid-19 pandemic have emerged in the year and risks relating to the UK's exit from the EU ("Brexit") have reduced during the year. Both have had ongoing impacts through 2021 and into 2022, with Covid-19 risks likely to remain elevated. In addition, it is considered that regulatory and political risk has increased during the year. The Company has been faced with substantial increases in corporation tax rates in the UK and adverse regulatory change on subsidies in France. The risk of increases in taxes remains as sovereign balance sheets are stretched due to Covid-19 related stimuli, and with gas and electricity prices placing greater pressure on household bills. We consider this has increased the regulatory risk across TRIG's markets.

The risks arising from these three elements are embedded in risk factors already identified by the Board and the Managers. As such, the Board and the Managers have concluded that there has been no material change to the key risks or their residual risk classifications in the year, including risks resulting from climate change factors, other than the regulatory and political risks as noted above.

Risks relating to the Covid-19 pandemic

Risks relating to Brexit

Risks relating to significantly increased consumer bills

Risks identified in the Company's risk management framework

This section sets out the key risks faced by the Group categorised by their residual risk rating.

The table below sets out the risks with a 'high' residual risk categorisation. They relate to macro factors driven by externalities where the common mitigant is the diversification within TRIG's portfolio.

Counterparty Exposures

Given the importance of state subsidies for investment in renewables, TRIG has exposure to the creditworthiness of and policy commitments by national governments and is reliant on the consistency of government policy, for example "grandfathering" within the UK whereby renewables generators continue to receive the same level of subsidy, set upon commissioning, for the duration of the incentive. In addition, each project company enters into a commercial PPA48 with a utility or energy trading company to enable them to sell the electricity generated and to receive the FiT49 or ROC50 subsidy payments.

The project companies have entered into PPA's with a range of providers. Each project company enters into a contract for the maintenance of the plant. This is often, but not always, with the original equipment manufacturer, in recent years there has been an increase in the number of alternative providers in an expanding renewables equipment maintenance market. There are also contracts with equipment and/or EPC providers who may be building or maintaining plant and/or have defect guarantees for past works. For both wind and solar sectors, projects may also benefit from equipment provider warranties. Failure of any of these counterparties represents a risk for the group.

There are significant exposures to counterparties, for example, Statkraft and Scottish Power (as PPA providers), and Vestas, Siemens and RES (as equipment and maintenance providers). In the event that a counterparty or guarantor enters insolvency, then there is a risk of disruption while counterparties are replaced and a risk of distribution lock-up for the assets that are project financed.

Given the Covid-19 global pandemic, and financial difficulties faced by some other turbine suppliers, there is concern around the future of turbine suppliers in the sector. Whilst TRIG has the largest exposures to Siemen and Vestas, the largest turbine suppliers in Europe, the Company does use a wide range of suppliers to help mitigate concentration risk. The fundamentals behind the industry, policies supporting wind energy globally, remain in place and we believe that although certain turbine suppliers may be facing difficulty, the risk is not systemic.

Recent elevated wholesale power prices may present challenges to retail electricity suppliers with unhedged positions, some of whom may also be PPA providers to the Group. The Company regularly monitors the credit worthiness of all PPA counterparties and has not identified any significant financial issues with any of the Group's PPA providers.

Some project companies have more than one counterparty in each category - where that is the case, the relative valuation of the associated project in the illustration below has been apportioned between counterparties.

2.11 Stakeholders and Corporate Culture

Stakeholder Management

The Board believes in conducting business responsibly, which means behaving ethically, respecting people and the environment.

TRIG maintains high standards of business conduct and stakeholder engagement to ensure a positive impact on the communities and environment in which the Company operates. This requires consideration of stakeholders by building strong relationships with suppliers, customers, communities and authorities among others.

TRIG's relationships with its stakeholders and its dedication to maintaining a responsible approach to investment, is essential to position TRIG well for the longer term - and is expected by its shareholders.

Illustration of principle stakeholders

TRIG and its appointees work with many stakeholders in the management of the business in the following categories:

Shareholders & the Board:

The Board of Directors is ultimately accountable to the Shareholders for the running of the business, the making of key strategic decisions, and all key appointments of service providers. The Board is non-executive and delegates certain activities, including day-to-day investment management and operations management, and works closely with all key service providers. Shareholder interaction is regarded as a critical component of the management of TRIG and the Board works closely with the Managers, InfraRed and RES, with the Company Secretary, Aztec, and with the Company's brokers, Investec and Liberum, to keep abreast of the needs and concerns of shareholders

Corporate-level suppliers:

As well as the critical day-to-day oversight of the portfolio provided by InfraRed and RES, TRIG has a set of corporate providers which ensure the smooth running of the Company. In administration, Aztec provides consistent support for corporate and company secretarial activities, while Investec and Liberum act as key intermediaries between the Company and its shareholder base, working with the Managers to arrange meetings with current and prospective investors, monitoring equity market conditions and advising on capital raising activities.

TRIG benefits from the commitment and flexibility of six corporate lenders for the Company's revolving credit facility, namely National Australia Bank, Royal Bank of Scotland International, ING Group, Sumitomo Mitsui Banking Corporation, Barclays and Santander. Carey Olsen and Norton Rose Fulbright provide corporate legal support for the business in Guernsey and London respectively and tax services are provided by KPMG. Our registrar, Link Market Services maintains the shareholder register and manages the processing of shareholder communications with our other advisers. Regarding public relations, TRIG receives advice and practical coordination from Maitland/AMO Strategic Advisers. TRIG also accesses a number of key data providers, including technical reports in relation to acquisitions and regular power price forecasts and commentary from several specialised providers. The Company's auditor is Deloitte. Additional valuation services are provided by independent valuers from time to time. The Company also receives a range of other services including shareholder list analysis, webhosting, design and remuneration consulting.

Operational partners:

TRIG benefits from co-investing alongside several joint venture partners, some being developers and vendors, such as Equinor, Orsted, SSE and Akuo Energy and others being financial co-investment partners, for example APG and Equitix. In each case, the Managers build on the relationship with the co-investor, providing representatives to attend project board meetings to coordinate and monitor the investment, with the additional potential to share best practices.

Vendors:

TRIG's reputation for reliability and efficiency in transaction management with a variety of vendor counterparties (having now transacted with 19 counterparties) helps the Company to continue to derive value in origination by accessing projects off-market (including from RES itself under the right of first offer agreement).

Portfolio Customers:

As an energy provider, TRIG's key customers are PPA counterparties. These offtakers pay for and receive TRIG's portfolio companies' output - with revenues being payments for the renewables benefits as well as commercial power for those projects permitted to receive power market revenues.

Portfolio Suppliers:

TRIG's key operational suppliers include Original Equipment Manufacturers ("OEMs"), spare part O&M providers and increasingly Independent Service Providers ("ISPs"). On construction projects the key suppliers are the EPC Contractors, turbine suppliers and balance of plant contractors. Utilities also provide certain site-specific services such as meter readings. The operations teams maintain relationships with the site landowners who receive rental payments. Lenders to the project companies include many leading domestic and international banking groups, TRIG's Managers maintain discussions with key lenders as there are opportunities to refinance projects as market conditions allow and this has been done selectively within the portfolio to date.

Local Communities:

TRIG is conscious of its role in the local communities in which its projects operate. Close consultation with local planning authorities is an important feature of renewables whether in construction, during operations or preparing for the potential repowering or dismantling of a project. Socially, TRIG seeks to provide educational events at its larger sites, while also contributing via community funds to local projects ranging from playgroups to cultural events.

Economic activities around the sites provide additional demand for local goods and services as well as local employment opportunities for example in the maintenance of the sites and access. These are particularly valued in areas where a long-term urbanisation trend has resulted in reduction in the local rural economies.

TRIG seeks to promote best practices across the portfolio, in areas such as noise monitoring, shadow flicker, ice throw, landscaping, the provision of community events and liaison with the local media.

Further details on how TRIG interacts with the local community can be found in Section 2.4, Sustainability.

Other External Stakeholders:

The Company maintains a close dialogue, through its Managers, with key regulators as well as with the regulated networks, such as National Grid and the relevant network operators in the UK. At a policy level, TRIG's Managers monitor requirements and engage with key government departments and regulatory bodies. At the network level, TRIG's Managers and O&M providers communicate in several areas for example on grid outage issues, on the role of renewables assets as locally embedded suppliers of energy as well as on technical or contractual issues. In the investment company space, the Association of Investment Companies (AIC) plays a key role in shaping the influence of this growing segment of the London market and TRIG seeks to apply AIC guidelines where relevant to its business and maintains an active dialogue as one of the leading companies in its sub-sector. The Managers also keep market financial analysts appraised of TRIG's strategy, performance and outlook.

Section 172(1) Statement:

The Company provides disclosure relevant to the requirements of Section 172(1) a)-f) throughout the Strategic Report. Please see the table below for a reference to where this information can be found:

Corporate Culture

The Company's approach to corporate culture, including sustainability and diversity and inclusion, includes:

▲ Considering that the risk appetite of the Company is consistent with the risk appetite of the Company on a regular basis;

▲ Embedding and improving on good practices in the day-to-day management processes - which are assessed by the Board in the course of the quarterly Board meetings as well as in a wide range of ad hoc interactions during the year;

▲ Ensuring both Managers and the Board maintain specific initiatives to promote diversity and inclusion;

▲ Promoting an appropriate culture of stewardship, responsibility, accountability and openness; and

▲ A focus by the Board and Managers on appropriate interaction with key stakeholders, including shareholders, lenders, regulators, vendors, co-investors and suppliers.

The Chairman, Helen Mahy, sets a strong example in maintaining an effective corporate culture, for example, by her active advocacy of equal opportunities. Outside of TRIG, Helen is a member of the steering committee of the Parker Review into the Ethnic Diversity of UK boards which was published in October 2017 and updated in February 2020. In addition, she is a patron of a charity, the Social Mobility Business Partnership, she is co-chair of the Employers Social Mobility Alliance, Chair of the Safety, Sustainability, Health and Environment Advisory Committee of SSE plc. and is an Equality and Human Rights Commissioner, for whom she chairs the Audit and Risk Assurance Committee.

The Board has been 50% female since launch and three of the six current Directors are female. Its members are drawn from the UK, Germany and Scandinavia, which are key markets for TRIG.

TRIG has no employees beyond its non-executive Board therefore the Directors look to the culture of TRIG's key service providers in annual review processes in addition to ongoing monitoring. The executive management of TRIG is provided by its Managers, InfraRed and RES. Both are global businesses with a broad cultural representation of employees reflecting the international nature of their activities.

The Managers support equal opportunities regardless of age, race, gender or personal beliefs and preferences, both in their recruitment and when managing existing employees. Both Managers prioritise work force engagement and implement a range of initiatives to enhance employee wellbeing, including fitness and mental health schemes, mentorship programs, promotion of charity work and organising social activities. HR systems are in place to allow employees to raise any concerns in confidence. InfraRed and RES recognise that when their employees are engaged, they will benefit from elevated productivity and increased employee loyalty.

InfraRed employs over 150 professionals, representing a range of nationalities, ages and cultural backgrounds. To support diverse recruitment of candidates on merit and not on background, race or gender, InfraRed staff may undergo "unconscious bias" training and new staff are often recruited via a carefully considered process which is "name blind".

The Board interacts regularly with staff of the Managers both at senior and operational levels, in both formal and informal settings. This promotes greater openness and trust between the key individuals engaged in delivering against the Company's objectives and ensures the Managers remain fully aligned with the Company's corporate culture and approach to sustainability. The Board also engages closely throughout the year with the Company's administrator, brokers, and legal and public relations advisers to gauge the broader positioning and direction of the business.

In addition to the Board Meetings being attended by the core senior InfraRed and RES teams, other more junior members from InfraRed and RES are encouraged to join. Not only does this aid their development, but it also allows the Board to gain insight into how senior management are supported and how prepared the Managers are in relation to key person risk and long-term succession planning.

InfraRed

InfraRed has a strong and clear set of values which it promotes and monitors both at a company and individual level through assessments. These values focus on the principles of Passion, Curiosity, Trust, Partnership and Fulfilment.

InfraRed also adopts and implements the Principles for Responsible Investment ("PRI")[29] which are widely recognised and highly regarded around the world. In the assessments by PRI, InfraRed maintains an A+ rating, standing well above industry standards. The PRI can be summarised as follows:

▲ to showcase leadership in responsible investment;

▲ to incorporate sustainability issues into investment analysis and decision-making;

▲ to be active owners and incorporate sustainability issues into ownership policies and practices;

▲ to seek appropriate disclosures on sustainability issues by the entities in which the investments are made;

▲ to promote acceptance and implementation of PRI within the investment industry; and

▲ to report on activities and progress towards implementing the PRI.

RES

Culture is very important for RES, from both a business perspective and to RES' employees. The RES culture is what enables its strategy to succeed and what motivates its people to perform. RES' senior leadership are of the view that empowering employees and promoting a strong safety culture is necessary to generate a positive impact in the communities it works in.

RES' leadership maintains that, as the organisation grows and adapts, it remains true to its culture, heritage and vision to create a future where everyone has access to affordable low carbon energy. RES' core values are reflected in their values of Passion, Accountability, Collaboration and Excellence.

RES supervises a range of activities at a corporate level, to support staff in their own volunteering and charitable fundraising endeavours. At a portfolio level, activities are designed to enhance interactions with local communities and make a difference to the amenities available in the, often remote, locations where TRIG's projects are sited.

Anti-Bribery and Corruption

Although TRIG has no employees, TRIG is committed to respecting human rights in its broader relationships.

TRIG does not tolerate corruption, fraud, the receiving of bribes or breaches in human rights. Both InfraRed and RES have anti-corruption and bribery policies in place to maintain high standards of business integrity, a commitment to truth and fair dealing and a commitment to complying with all applicable laws and regulations.

Both Managers have training for anti-bribery and corruption which all employees are required to complete annually.

All counterparties undergo processes to mitigate against bribery and corruption. When InfraRed completes acquisitions on behalf of TRIG, vendor due diligence is performed, and all sales and purchase agreements are required to have anti bribery and corruption protection clauses.

Disclosure

On the basis of the Managers' recommendations, the Directors have considered existing sustainability and corporate culture policies, relative to good industry practice for an infrastructure investment company, believing them to be current and appropriate.

The Board remains committed to high standards of corporate governance and keeps the Company's practices under review with respect to current best practice. Further details of how the Company complies with the various corporate governance standards are set out in section 6 Corporate Governance Statement.

The Board wishes to be at the forefront of disclosure and reporting of the Company's performance and strategic intentions. The Board believes this is achieved by the communications as follows:

▲ Annual report and accounts;

▲ Interim statement and accounts;

▲ Detailed presentations to accompany the results;

▲ Announcements of all material acquisitions; and

▲ Meetings with shareholders held by the Investment Manager and the Operations Manager.

Climate action is core to TRIG and its Managers' ethos. InfraRed is a member of the Net-Zero Asset Managers initiative and the impact of adverse climate change is integrated in its investment cycle, and RES is an SBTi signatory. TRIG has committed to the Science Based Targets Initiative (SBTi), the leading standard for corporate emissions reduction targets, and is a supporter of the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). Disclosure aligned to TCFD guidance is consistent with the Company's approach to promoting best practice disclosure. Climate change is a live topic and expertise on the subject continues to evolve. Section 2.4 Sustainability covers TRIG's TCFD disclosures.

The Company's website (www.TRIG-Ltd.com) which includes the Company's prospectuses, financial disclosures and other announcements since launch provides further information on TRIG and its investments.

Disclosure of key sensitivities and risks has been developed by the Board working with the Managers. The level and type of disclosure has been developed and refined to assist in a full and fair analysis of the Company and its investments.

This Strategic Report is approved by the Board of Directors of The Renewables Infrastructure Group Limited.

17 February 2022

Registered Office:East Wind, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3PP

3.0 Board of Directors

Helen Mahy CBE Chairman

Appointed 14 June 2013, Helen is an experienced chairman and non-executive Director. In addition to being Chairman of the Company, Helen serves as a non-executive Director for SSE plc, where she chairs the Safety, Sustainability, Health and Environment Advisory Committee, and Gowling WLG (UK) LLP and is also an Equality and Human Rights Commissioner. Previous Directorships include SVG Capital plc, Stagecoach Group plc, Aga Rangemaster Group plc, Primary Health Properties plc, Bonheur ASA and she was also Chairman of MedicX Fund Ltd. Helen was Group Company Secretary and General Counsel of National Grid plc and was a member of its Executive Committee from September 2003 to January 2013 when she retired from National Grid plc. Helen qualified as a barrister and was an Associate of the Chartered Insurance Institute. In 2015 she was awarded a CBE for services to business, particularly relating to diversity in the workplace. Helen is a resident of the UK.

Relevant skills that support TRIG's long-term success:

▲ Extensive energy and regulatory experience and a comprehensive understanding of the listed investment company space including applicable legal, governance, compliance, risk management, and health & safety frameworks and best practice.

▲ Broad experience from external Board interests, providing an insight into different stakeholder perspectives that enables wider discussion and debate.

▲ An advocate for strong health & safety, inclusion & diversity and employee wellbeing culture with extensive knowledge of people matters and a focus on sustainability.

Shelagh Mason Director and Senior Independent Director

Appointed 14 June 2013, Shelagh is an English property solicitor. She was Senior Partner of Spicer and Partners Guernsey LLP until November 2014 and retired at the end of October 2020 as a consultant with Collas Crill LLP, specialising in English commercial property. She is also non-executive Chairman of the Channel Islands Property Fund Limited which is listed on The International Stock Exchange Authority Limited and Chairman of Riverside Capital PCC. She sits on the Board of Skipton International Limited, and Shelagh is also on the Board of Starwood European Real Estate Finance Limited and Ruffer Investment Company, both London listed. Previously, Shelagh was a member of the board of Directors of Standard Life Investments Property Income Trust, a property fund listed on the London Stock Exchange for 10 years until December 2014. She retired from the board of MedicX Fund Limited, a main market listed investment company investing in primary healthcare facilities in 2017 after 10 years on the board. She is a past Chairman of the Guernsey Branch of the Institute of Directors and a member of the Chamber of Commerce, the Guernsey International Legal Association and she also holds the IOD Company Direction Certificate and Diploma with distinction. Shelagh is a resident of Guernsey.

Relevant skills that support TRIG's long-term success:

▲ Extensive listed investment company experience having sat on such boards since 2003 in a number of different sectors.

▲ 40-year career as a solicitor in senior roles with commercial and management experience.

▲ Thorough understanding and keen interest in good corporate governance and former Chairman of the Guernsey branch of the Institute Of Directors.

▲ Able to draw from long-term experience and knowledge of listed boards and identify and bring best practice to her role.

Jon Bridel Director and Audit Committee Chair

Appointed 14 June 2013, Jon currently serves as a Director or non-executive Chairman. These include Sequoia Economic Infrastructure Income Fund Limited and SME Credit Realisation Fund Limited, as well as DP Aircraft I Limited and Fair Oaks Income Limited, which are both listed on the Specialist Fund Segment. Jon previously worked as Managing Director of Royal Bank of Canada's investment businesses in the Channel Islands and in senior management positions in the British Isles and Australia in banking, specialising in corporate finance and commercial credit and in private multi-national businesses as Chief Financial Officer. Graduating from the University of Durham with a degree of Master of Business Administration in 1988, Jon also holds qualifications from the Institute of Chartered Accountants in England and Wales where he is a Fellow, the Australian Institute of Company Directors and is a Chartered Marketer. Jon is a Member of the Chartered Institute of Marketing, a Chartered Director and Fellow of the Institute of Directors and a Chartered Fellow of the Chartered Institute for Securities and Investment. Jon is a resident of Guernsey.

Relevant skills that support TRIG's long-term success:

▲ Investment Company & Governance - 60 company years' experience on listed investment and finance companies and a qualified Chartered Director. Have developed many corporate governance structures for listed companies over the past ten years. Previously Managing Director and Investment Manager of a substantial investment group and also a Chairman or director of investment-licensed Private Equity groups.

▲ Accounting, Audit & Finance - Chartered Accountant with 34 years post qualification experience in corporate finance, banking and investment management and as CFO of a private multinational business. 40 company years' experience as Audit or Risk Chair of listed companies. Master's thesis on valuation of companies.

▲ Legal & Regulatory - 34 years' experience structuring transactions and drafting a range of legal documentation for corporate finance, corporate debt, banking, M&A and commercial law. Regulatory qualified in investments and sat on many boards subject to a wide variety of laws, regulations, rules and codes.

Klaus Hammer Director and Management Engagement Committee Chair

Appointed 1 March 2014, Klaus is a graduate of the University of Hamburg and gained an MBA at IMD Lausanne. He was previously Chief Operating Officer of the global combined-cycle gas turbine power plant business of EON, and also served on a variety of boards including E.On Värmekraft Sverige AB, Horizon Nuclear Power Ltd. and the UK Association of Electricity Producers. Prior to E.On, which he joined in 2005, he spent 20 years with Royal Dutch Shell in a variety of roles in both Europe and Africa. Among his other recent roles, he was a public member of Network Rail until mid-2014. Klaus also advises investors in energy-related businesses. In 2018, he supported the setting-up of a major defence contractor on an interim basis as Executive Finance Director in Australia. Since last year he is a non-executive Director of the Biotech company Terravesta. Klaus is a resident of Germany.

Relevant skills that support TRIG's long-term success:

▲ Power sector experience across multiple technologies - practical operational experience of generating assets across the gas, nuclear and renewable energy sectors.

▲ International operational experience - senior roles across Europe and Africa within the energy sector.

▲ Governance focused - strong track record of project oversight and HSQE implementation.

Tove Feld Director

Appointed 1 March 2020, Tove is a Danish national and has more than 25 years' experience in the renewables sector, with a focus on offshore wind. Her previous roles include the Chief Technical Officer at DONG Energy Wind Power (now Orsted) where she had a prominent role in preparing the company for IPO, as well as Head of Engineering Solutions for Offshore Wind at Siemens Wind Power. Tove currently serves as Non-Executive Director on a number of Boards supporting the Green Energy Transition including Venterra Group plc, a service provider to the wind industry; Stiesdal, an innovative technology company developing high impact solutions to overcome climate change; FORCE Technology, a leading technological service company; and CEKO Sensors ApS, an industrial monitoring and optimisation sensor technology business. She also serves on the Board of Representatives of the Danish Technical University. Tove is a UF (USA) Engineering Graduate (M.Sc.), she has a Ph.D. from Aalborg University (Denmark) and Executive MBA from IMD (Switzerland). Tove is a resident of Denmark.

Relevant skills that support TRIG's long-term success:

▲ Extensive Renewables and Energy Generation Operational experience, proving a deep understanding of Technology, Commercial, Project, Portfolio and Risk Management with a strong Health & Safety focus.

▲ Board and Governance Experience from external international boards ranging from innovation to investment companies. Combined with a deep Energy Market insight, various stakeholders' views and the Net-Zero Framework.

▲ Strong People and Business focus, extensive experience with leadership and strategic transition from energy and infrastructure business, encompassing a dedicated focus on QHSE, ESG and Sustainability.

John Whittle Director

Appointed 1 July 2021, John Whittle is a Fellow of the Institute of Chartered Accountants in England and Wales and holds the Institute of Directors Diploma in Company Direction. He is the non-executive Chairman of Starwood European Real Estate Finance Ltd (LSE), a non-executive Director of Sancus Lending Group Ltd and Audit Committee Chair of Chenavari Toro Income Fund Limited (listed on the SFS segment of the Main Market of the London Stock Exchange). Prior to these roles, John was Senior Independent Director and Audit Committee Chair at International Public Partnerships Ltd (INPP), the FTSE 250 infrastructure investment company. In his executive career, amongst other senior roles, John served as Finance Director of Close Fund Services and CEO of Hugh Symons Group PLC. John is a resident of Guernsey.

Relevant skills that support TRIG's long-term success:

▲ Investment Company & Governance; extensive experience gained over a number of years at multiple FTSE listed business, in particular during 12 years as a non-executive Director, including as Audit Committee Chair and Senior Independent Director at INPP (a FTSE 250 listed infrastructure Investment Company).

▲ Accounting, Audit & Finance; Chartered Accountant with 43 years' post qualification experience including as a Financial Director of a financial services business and CEO of a large mobile telephone business.

▲ Shareholder Engagement; through John's executive and non-executive career he has deep experience of investor engagement, particularly gained as Audit Chair and Senior Independent Director of INPP and as Chairman of Aberdeen Frontier Markets Investment Company.

Board succession

In 2022, Helen Mahy, Shelagh Mason and Jon Bridel will have served as Non-executive Directors of TRIG for nine years and, in line with good governance, they will be retiring from the Board in due course. The Nomination Committee has an active succession plan, and has appointed Erna-Maria Trixl to the Board. Her appointment will commence on 1 March 2022, and she will stand for election at the Company's 2022 Annual General Meeting. A process is underway, utilising the services of a third-party adviser, to select and appoint a successor to Helen Mahy as Chairman of the Board.

The senior officer roles of the retiring Non-executive Directors will be fulfilled by:

▲ Senior Independent Director: John Whittle

▲ Audit Committee Chairman: John Whittle

Further details on the Board and its Nomination Committee's approach to succession planning is provided in Section 6 - Corporate Governance Statement.

Erna-Maria Trixl Director (effective 1 March 2022)

Erna-Maria is to be appointed to the TRIG Board as a Non-executive Director, with effect from 1 March 2022. Erna-Maria is an energy and infrastructure expert and is currently an independent executive consultant focusing on renewables, e-mobility, decarbonisation and sustainability. Erna-Maria is also a member of the advisory board of METR Building Management Systems GmbH. She previously served as chair of the supervisory board of M-net Telekommunikations GmbH and as a member of the supervisory board of Energie Suedbayern GmbH. Erna-Maria's executive roles included membership of the executive board and chief sales officer of Stadtwerke Muenchen GmbH, a municipal utility services company owned by the City of Munich, and roles within the RWE Group and at EnBW Energie Baden-Wuerttemberg AG.

Relevant skills that support TRIG's long-term success:

▲ Extensive energy and renewables expertise and experience with renewables investment strategies and performance management

▲ Strong business and stakeholder focus, balancing short-term performance and long-term value creation

Governance and risk management skills with a focus on climate risks, sustainability and ESG

4.0 Statement of Directors' Responsibilities

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. The Companies (Guernsey) Law, 2008, as amended, requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Article 4 of the IAS Regulation and applicable law.

Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:

▲ Properly select and apply accounting policies;

▲ Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

▲ Provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

▲ Make an assessment of the company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report and Corporate Governance Statement. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Guernsey and the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' responsibility statement

We confirm that to the best of our knowledge:

▲ The financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

▲ The Chairman's Statement and Report of the Directors include a fair review of the development and performance of the business and the position of the Company and Group taken as a whole together with a description of the principal risks and uncertainties that it faces; and

▲ The annual report and financial statements when taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy.

Disclosure of information to the Auditor

The Directors who held office at the date of approval of this Directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware and that each Director has taken all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Auditor

Deloitte LLP have expressed their willingness to continue in office as auditor and a resolution proposing their re-appointment will be submitted at the Annual General Meeting.

On behalf of the Board of Directors of The Renewables Infrastructure Group Limited

Helen Mahy CBE17 February 2022

Registered Office:East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel Islands, GY1 3PP

5.0 Report of the Directors

The Directors present their report and accounts of the Company for the year to 31 December 2021.

Principal Activity

The Company is a closed-ended Guernsey incorporated investment company, investing in and managing a portfolio of investments in renewable energy infrastructure project companies. Its shares have a premium listing on the Official List of the UK Listing Authority and are traded on the main market for listed securities of the London Stock Exchange.

Results and Distributions

The results for the year are summarised in the Operational Review and Valuation of the Portfolio section of the Strategic Report (Sections 2.6 and 2.7) and set out in detail in the audited financial statements.

Distributions and Share Capital

The Company has declared four quarterly interim dividends for the year ended 31 December 2021 for an aggregate annual dividend of 6.76p (2020: 6.76p) per share as follows:

▲ 1.69p per share was declared on 6 May 2021, to shareholders on the register as at 14 May 2021, paid on 30 June 2021,

▲ 1.69p per share was declared on 3 August 2021, to shareholders on the register as at 13 August 2021, paid on 30 September 2021,

▲ 1.69p per share paid on 4 November 2021, to shareholders on the register as at 12 November 2021, paid on 31 December 2021, and

▲ 1.69p share was declared on 3 February 2022, to shareholders on the register on 11 February 2022, to be paid on 31 March 2022.

The Company had one class of share capital, Ordinary Shares, in issue as at 31 December 2021.

Shares in Issue

Ordinary Shares in issue have increased during the year from 1,903,402,338 to 2,267,246,415 as a result of further share issues, issues of shares to the Managers in lieu of fees pursuant to the Investment Management Agreement (in relation to InfraRed Capital Partners Limited) and the Operations Management Agreement (in relation to Renewable Energy Systems Limited) and take up of scrip shares in lieu of dividends.

Share Issues in the Year

Over 2021, the Company issued 356m shares over two equity issues by way of placing (excluding the issuance of Managers' shares and scrip issues). These issues raised gross proceeds of £440m at a premium to NAV.

These issues took place in March and September. The March fundraise resulted in the issue of 195m shares at 123.0p each. The September fundraise resulted in the issue of 161m shares at 124.0p each.

The net proceeds of these raisings have been used to acquire assets over the year for the TRIG portfolio and to pay down the Company's revolving credit facility. At 31 December 2021, the Company's acquisition facility was £72.8m drawn.

Shares Issued to the Managers

The Managers are paid 20% of their annual management fee (up to an adjusted portfolio value of £1bn) and advisory fees in shares. In relation to this, 885,012 shares were issued in March 2021 (575,258 to the Investment Manager and 309,754 to the Operations Manager) relating to fees for the second six months of 2020. A further 880,719 shares were issued in September 2021 (572,468 to the Investment Manager and 308,251 to the Operations Manager) relating to fees for the first six months of 2021. Shares in lieu of fees relating to the second six months of 2021 (expected to be 857,254 shares in total - comprised of 557,216 to the Investment Manager and 300,038 to the Operations Manager) are to be issued in March 2022. (See Note 18 to the financial statements for further detail).

For the calculation of Net Asset Value ("NAV") per share as at 31 December 2021, the shares earned by the Managers but not yet issued at that date have been included in the number of shares, meaning that the Net Assets are divided by 2,268,103,669 shares to arrive at the NAV per share.

For the calculation of Earnings per Share ("EPS"), the shares earned by the Managers but not yet issued have been included in the calculation of the weighted average number of shares based upon them being issued at the end of the quarter in which the management fees were earned. The resulting weighted average shares in issue used to calculate EPS is 2,103,868,882.

In addition, senior representatives and connected individuals of the Managers hold approximately two million shares.

As a result of the share issues during the year and the expected issuance to the Managers in March 2022, the number of shares in the Company held by the Investment Manager is expected to be 3,350,543 and the number of shares held by the Operations Manager is expected to be 1,230,761.

Scrip Shares

An annual ordinary resolution to authorise the Directors to offer the shareholders the right to receive further Ordinary Shares ("Scrip Shares") instead of cash in respect of all or part of any dividend that may be declared will be proposed at the forthcoming Annual General Meeting in 2022.

The Board believes that it would be in the general interest of shareholders, who may be able to treat distributions of Scrip Shares as capital for tax purposes or who may otherwise wish to roll over their dividend entitlement into further investment in the Company, to have the option of electing to receive part or all of their dividends in the form of Scrip Shares. Shareholders who elect to take Scrip Shares instead of receiving cash dividends will increase their holdings without incurring dealing costs or stamp duty. The Company benefits from the retention of cash for further investment which would otherwise be paid out as a dividend.

The scrip dividend alternative was offered to shareholders in relation to the interim dividends declared for the year ended 31 December 2021. A scrip alternative will again be offered to shareholders for the dividend to be paid on 31 March 2022 relating to the final quarter of 2021 and a scrip dividend circular will be published separately in May 2022 with details of the scrip dividend alternative for 2022. The Scrip Shares issued do not have any entitlement to the dividends paid in the same month and declared in the month before they are issued. The average take-up of scrip dividends over the year was 5.3%.

Guernsey regulatory environment

As a Guernsey-registered closed-ended investment company, TRIG is subject to certain ongoing obligations to the Guernsey Financial Services Commission.

Directors

The Directors who held office during the year to 31 December 2021 were:

Helen Mahy CBEJon BridelShelagh MasonKlaus HammerTove FeldJohn Whittle

Biographical details of each of the Directors are shown in Section 3.

Investment Manager

InfraRed Capital Partners Limited (the "Investment Manager" or "InfraRed") acts as Investment Manager to the Group. A summary of the contract between the Company, its subsidiaries and InfraRed in respect of services provided is set out in Note 18 to the accounts.

Operations Manager

Renewable Energy Systems Limited (the "Operations Manager" or "RES") acts as Operations Manager to the Group. A summary of the contract between the Company, its subsidiaries and RES in respect of services provided is set out in Note 18 to the accounts.

Further details of the Managers are provided in Section 2.2 of the Strategic Report.

Broker, Administrator and Company Secretary

The Company's joint brokers during the year to 31 December 2021 were Investec Bank PLC and Liberum Capital Limited.

The Company's Administrator during the year to 31 December 2021 is Aztec Financial Services (Guernsey) Limited.

Substantial Interests in Share Capital

As at 17 February 2022, the Company has received notification in accordance with the Financial Conduct Authority's Disclosure and Transparency Rule 5 of the following interests in 5% or more of the Company's Ordinary Shares to which voting rights are attached:

Donations

The Company made no political donations during the year or the preceding year.

Payment of Suppliers

It is the policy of the Company to settle all suppliers in accordance with the terms and conditions of the relevant market in which it operates. Although no specific code or standard is followed, suppliers of goods and services are generally paid within 30 days of the date of any invoice. The Company has no trade creditors.

Criminal Finances Act

The Board of The Renewable Infrastructure Company Limited has a zero-tolerance commitment to preventing persons associated with it from engaging in criminal facilitation of tax evasion. The Board has satisfied itself in relation to its key service providers that they have reasonable provisions in place to prevent the criminal facilitation of tax evasion by their own associated persons and will not work with service providers who do not demonstrate the same zero-tolerance commitment to preventing persons associated with it from engaging in criminal facilitation of tax evasion.

Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in Section 2.8, Analysis of Financial Results of the Strategic Report. In addition, Notes 1 to 4 to the financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The Group has the necessary financial resources to meet its obligations. The Group benefits from a range of long-term contracts with various major UK and European utilities and well-established suppliers across a range of infrastructure projects. In addition, it maintains a working capital component of £30m as part of its revolving credit facility (currently sized at £500m and limited to 30% of Portfolio Value). The Group's project-level financing is non-recourse to the Company and is limited to 50% of Gross Portfolio Value. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The Company has a number of commitments related to the construction of assets held within the portfolio and has sufficient headroom in its revolving credit facility to finance these activities.

The directors do not believe that there is a significant risk to the business as a result of the COVID-19 pandemic but will continue to monitor any future developments.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they adopt the going concern basis of accounting in preparing the annual financial statements.

This conclusion is based on a review of the Company's cash flow projections including reasonably expected downside sensitivities together with cash and committed borrowing facilities available to it.

Viability Statement

The Directors have assessed the viability of the Group over a five-year period to December 2026.

In making this statement the Directors have considered the resilience of the Group, taking account of its current position, the principal risks facing the business (being the level of electricity production, the level of future energy prices and continued government support for renewable subsidy payments), in severe but plausible downside scenarios and the effectiveness of any mitigating actions.

As part of being a self-managed Alternative Investment Fund, the Directors, together with the Managers, rigorously assess the risks facing the Group and consider sensitivity analysis against the principal risks identified.

The Directors have determined that the five-year period to December 2026 is an appropriate period over which to provide this viability statement as this period accords with the Group's business planning exercises and is appropriate for the investments owned by the Group. The Group's risk management processes (described in Section 2.10 (Risks and Risk Management)) consider the key risks during this five-year period and beyond. These include sustainability-related risks that take into account environmental, social and governance considerations, one of which is climate change (in line with the recommendations of the Task Force on Climate-related Financial Disclosures ("TCFD")).

TRIG is the owner of a portfolio of project companies whose underlying assets are predominately fully constructed and operating renewable electricity-generating facilities with economic lives well in excess of the period being considered. As a result, TRIG benefits from predictable long-term cash flows and a set of risks that can be identified and assessed. Over the next five years, 65% of portfolio revenues are fixed per MWh under government subsidies and fixed price PPAs. Forecast revenues for wholesale power prices are based upon independent forecasts. The projects are each supported by detailed financial models. The Directors believe that diversification within the portfolio of projects helps to withstand and mitigate risks it is most likely to meet.

The Investment Manager prepares and considers, and the Directors review, summary five-year cash flow projections each year as part of management reporting, business planning and dividend approval processes. The projections consider cash balances, key covenants and limits, dividend cover, investment policy compliance and other key financial indicators over the five-year period. Sensitivity analysis considers the potential impact of the Group's principal risks occurring (individually, and together). These projections are based on the Managers' expectations of future asset performance, income and costs, and are consistent with the methodology applied to produce the valuation of the investments.

The Directors review significant changes to the Company's cash projections each quarter with the Managers as part of the quarterly Board meetings. The viability assessment assumes continued government support for existing subsidy arrangements other than for early solar projects in France where subsidy levels are relatively high. Generally, subsidy payments, which comprise an important element of the Group's revenues alongside electricity sales into the wholesale market, are considered to be robust. Subsidy earnings are spread across several jurisdictions (UK, Ireland, Germany and France) where it is expected that governments will act consistently with their promises, especially in a sector which continues to need to mobilise large amounts of capital. In the case of France, the government states their adjustments are limited to the older solar projects, which were awarded tariffs under legislation from 2010 or earlier.

The Directors believe that whilst the risk to the value of the Company's investments, its ability to operate its projects and generate revenue presented by the ongoing Covid-19 pandemic is significant, there has been minor disruption to the business to date and the risk-mitigating activities have served to reduce the impact. The Directors continue to work with the Managers to ensure that the portfolio of investments are able to operate as effectively as possible. The Managers have performed downside risk scenario planning encompassing a range of potential outcomes and these demonstrate that whilst profitability may be adversely affected, the Company and its investments are expected to remain viable.

As explained in the Chairman's Statement and in Section 2.10 (Risks and Risk Management), the Directors do not consider the risks to the Company from Brexit or the Covid-19 pandemic to significantly affect the principal risks set out above. The Group's projects have continued to operate post Brexit and through the Covid-19 disruption, and the Managers and Directors believe the risks from Brexit and the pandemic disruption are reducing and continue to be manageable.

Based on this review, the Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period to December 2026.

Internal Controls Review

Taking into account the information on emerging and principal risks and uncertainties provided in Section 2.10 of the Strategic Report and the ongoing work of the Audit Committee in monitoring the risk management and internal control systems on behalf of the Board (see Section 8, the Audit Committee Report), the Directors:

▲ are satisfied that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity;

▲ are satisfied the Company has adequate safeguards and procedures in place during the Covid-19 pandemic to continue to function effectively; and

▲ have reviewed the effectiveness of the risk management and internal control systems and no significant failings were identified.

The internal controls review covers material controls including financial, operational and compliance controls.

To enable the Directors to provide this statement in relation to risks and controls, the Directors have worked with the Managers to:

▲ review the Company's risk dashboard and framework each quarter;

▲ consider each Manager's compliance with their own internal controls each quarter;

▲ receive presentations from each Manager on the effectiveness of these controls and their internal controls environment at least annually;

▲ consider the Company's risk appetite, agree this with the Managers and document this;

▲ assess the impact of the Covid-19 pandemic on the Company; and

▲ consider the risk culture of the Company and within the Managers and confirm these are appropriate and expected to support the sustainability of the company and consistent with the risk appetite.

Share repurchases

No shares have been bought back in the period. The latest authority for the Company to make market purchases of Ordinary Shares was granted to the Directors on 5 May 2021 and expires on the date of the next Annual General Meeting. The Directors are proposing that their authority to buy back shares be renewed at the forthcoming Annual General Meeting.

Treasury Shares

Section 315 of the Companies (Guernsey) Law, 2008 allows companies to hold shares acquired by market purchase as treasury shares, rather than having to cancel them. Up to 14.99% of the number of shares in issue at the date of the last AGM (5 May 2021) may be held in treasury and may be subsequently cancelled or sold for cash in the market. This gives the Company the ability to reissue shares quickly and cost efficiently, thereby improving liquidity and providing the Company with additional flexibility in the management of its capital base.

There are currently no shares held in treasury. The Board would only authorise the sale of shares from treasury at prices at or above the prevailing net asset value per share (plus costs of the relevant sale). If such a measure were to be implemented, this would result in a positive overall effect on the Company's net asset value. In the interests of all shareholders, the Board will keep the matter of treasury shares under review.

On behalf of the Board of Directors of The Renewables Infrastructure Group Limited

Helen Mahy CBE

17 February 2022

Registered Office:East Wing, Trafalgar Court, Les Banques,St Peter Port, Guernsey, Channel Islands, GY1 3PP

6.0 Corporate Governance Statement

Introduction

The Board recognises the importance of a strong corporate governance culture that meets the listing requirements. The Board has put in place a framework for corporate governance which it believes is appropriate for an investment company in line with the best practices in relation to matters affecting shareholders, communities, regulators and other stakeholders of the Company. With a range of relevant skills and experience, all Directors contribute to the Board discussions and debates on corporate governance. In particular, the Board believes in providing as much transparency for investors as is reasonably possible to ensure investors can clearly understand the prospects of the business and enhance liquidity of its shares while also preserving an appropriate level of commercial confidentiality.

AIFM Directive

The Alternative Investment Fund Managers Directive seeks to regulate alternative investment fund managers (in this paragraph, "AIFM") and imposes obligations on managers who manage alternative investment funds (in this paragraph, "AIF") in the EU or who market shares in such funds to EU investors. The Company is categorised as a self-managed Non-EEA AIF for the purposes of the AIFM Directive. In order to maintain compliance with the AIFM Directive, the Company needs to comply with various organisational, operational and transparency obligations.

AIC Code