Octopus Renewables Infrastructure (ORIT) is a renewable energy infrastructure specialist, diversified by geography, technology and stage, and investing in projects from development stage to operational. Although predominantly invested in operational assets, ORIT owns equity stakes in developers, giving it access to projects at an early stage, with the potential to generate higher returns. ORIT’s Manager, OEGEN, is one of the largest, most experienced and well-resourced managers of renewables assets in Europe, with assets under management of £8.8bn.

In the first half of ORIT’s current financial year, to 30/06/2026, net assets declined from £495m to £455m, or approximately 8%. The main factor in this was a reduction in the value of ORIT’s onshore wind assets following a review of the long-term energy yield assumptions. In simple terms, the onshore wind assets, which are relatively new, were previously valued using technical assumptions and forecasts which, now that a meaningful set of actual operational data has been collected, have been updated to reflect that. Clearly this is a disappointing outcome, but it means that the vast majority of ORIT’s assets are now valued against operational data.

Despite this, ORIT remains on track to increase its annual dividend once again, with dividend cover in the first half slightly higher than for the same period last year at 1.38x. If ORIT meets its full-year target, that will represent a 4.3% annualised dividend growth rate since 2021. With ORIT currently trading at a near-30% discount, the dividend yield is 10%, which is a significant premium to government bond yields, although the gap has narrowed more recently as government bond yields in the UK and Europe have risen.

ORIT’s weighted average discount rate is now 8.3%, an increase from 7.8% at the beginning of 2026, but one that the team believes is rooted in growing transaction evidence in private markets, where it sees a stronger pickup in investor interest than in public markets. Factor in ORIT’s holdings in developers and the figure rises to 8.9%, which means that ORIT is well on track to reposition the portfolio to achieve the revised return targets it set in 2025 of 9-11%.

Analyst’s View

In our view one of the conundrums of 2026 is that, on the one hand, energy prices have risen, but on the other hand discounts on renewable energy infrastructure trusts have remained stubbornly wide. It’s true that the sector, and ORIT, have faced strong headwinds, but ultimately they are selling a product, electricity, where demand appears to be entering a secular growth trend. The factors that have contributed to ORIT’s wide discount such as higher interest rates, power price forecasts, the changes to the RoC regime’s inflation linkages and gearing, as well as the well-documented investment trust sector issues like cost disclosures and wealth manager consolidation, are all very well-rehearsed. And yes, a trust like ORIT, with fixed prices across much of the portfolio, cannot immediately capture a short-term spike in prices. Pile on political risk, which we take a brief look at in the Portfolio section, and the discount might seem explicable. Our view though is that all of those are well-known factors that have been running for a while and we come back to the conundrum: fund managers across regions and asset classes are very focused on the ‘electrification’ of the global economy and yet the investment trusts that pump the electrons into that trend remain overlooked. That’s starting to change though, with ORIT’s discount starting 2026 close to 40% and now trading at just under 30%.

In response to changing market conditions and a changing opportunity set in renewables, ORIT has set out a clear plan to boost its target returns by gradually increasing its allocation to construction assets to 20%, while retaining a target 5% allocation to developers. It will fund this from a mixture of excess cashflows (dividend cover was 1.38x at the half year), temporary use of debt and through gradual disposals of more mature assets. As the team notes, the revised portfolio discount rate is based on an increasing number of actual transactions in the private markets, and a number of disposals are at various stages of negotiation, with progress expected in the coming months. A successful implementation of ORIT’s plan could make the current discount seem excessively wide in time.

Bull

  • A near-30% discount and 10% yield on a diversified portfolio of renewable energy generation assets
  • A clear strategy to increase returns and grow the company
  • Jurisdictions ORIT operates in remain supportive of renewable energy generators

Bear

  • ORIT’s gearing is relatively high, and will amplify losses as well as gains
  • M&A activity in the renewables sector has been slow to take off. ORIT will need to execute an M&A transaction to achieve its 2030 goal of £1bn of net assets
  • A more negative political environment for renewables is emerging more broadly

Kepler