Greencoat UK Wind (UKW ) has put cash in the bank after striking wind farm sales deals worth £181m, allowing it to continue its buybacks and pay down debt.

The £3.3bn portfolio of wind projects has entered into agreements to sell part of three wind farms as it continues its disposal efforts this year.

It has confirmed the sale of a 32.6% stake in each of the Andershaw and Bishopthorpe onshore wind farms for a total of £42.6m, which is equal to the net asset value (NAV) at 30 June, to a private buyer.

It will also sell a 1% interest in Hornsea 1 offshore wind farm for £69m to another fund run by its manager Schroder Greencoat.

The fund has made total disposals of £222m and plans to allocate the fresh cash to decrease debt, moving the gearing from 41.5% at end of June to 39.5%, as well as supporting its £100m extended share buyback programme, which was announced in February.

Lucinda Riches, chair of the trust, said: ‘Prudent balance sheet management and disciplined capital allocation remain central to our efforts to improve the company’s overall attractiveness against the market backdrop.’

Interim results from the group prove the backdrop has been an unforgiving one, as low winds saw generation in the six months to end of June come in 14% below budget across its 40 assets.

Managers Stephen Packwood and Matt Ridley were also forced to reduce their P50 estimates at the end of 2024, which is a forecast on the most likely annual energy production, with a 50% chance of being exceeded and a 50% chance of not being met.

However, despite the low winds affecting generation, UKW still managed to bag £163.3m in net cash and achieve 1.4 times dividend cover on an increased dividend target of 10.35p per share for 2025, marking 12 consecutive years of above-inflation dividend increases since listing in 2013.

‘This makes it one of only a small number of FTSE 250 companies to have increased its dividend every year for the past 10 years,’ said Riches.

One sticking point for the fund has been its discount, which continues to sit near 20%, and earlier this year prompted the board to extend its buyback scheme by £100m, having already completed a buyback programme of the same amount.

The fund has the ability to allocate another £69m of shares to buy backs but Riches said ‘in the medium term, we can see the significant need for capital in the sector and expect that this should provide investment opportunities that surpass the returns afforded by share buybacks and de-gearing, especially when viewed over a longer-term horizon’. 

Over the longer term, the fund should benefit from the government’s decision to rule out zonal pricing, which would see energy prices determined by location.

Riches said the manager was one of many parties expressing concerns to the government that ‘the introduction of zonal pricing could dampen the investment case for renewable energy assets in the UK and serve to undermine its 2030 Clean Power Action Plan’.

Instead, the government has set out a timetable to develop ‘reformed national pricing arrangements’, and the manager will continue to engage with the aim of ‘ensuring an equitable outcome for existing renewable energy asset owners, and the maintenance of an attractive investment climate for new renewable energy assets’.

Packwood and Ridley said policymakers support ‘the expansion of the wind industry’ and the Clean Power 2030 Action Plan sets out the delivery of an increase in offshore wind capacity to between 43GW and 50GW by 2030.

‘These key policies are expected to create an investment opportunity of around £40bn per annum,’ they added.

‘Alongside the recycling of operating projects, the creation of new assets is expected to generate attractive investment opportunities for the company over the coming years.’