GREENCOAT UK WIND PLC

Removal of Carbon Price Support

Yesterday the Government stated that it will legislate to remove Carbon Price Support (“CPS”) with effect from April 2028.

CPS is a tax on fossil fuels used in electricity generation and was designed to ensure a minimum carbon price for electricity generation. It sits alongside the UK Emissions Trading Scheme (“UK ETS”) and serves to top up the UK ETS price by £18/tonne of CO2.  CPS feeds into electricity prices where a carbon emitting generator, such as a gas plant, is the marginal price setter.

The forecasts in the Investment Manager’s valuation assumptions had anticipated that CPS rates would reduce significantly. Further, CPS was expected to become less meaningful to electricity prices in the longer run as UK renewable generating capacity expands and carbon emitting generators set the marginal price less frequently.  Yesterday’s announcement brings this forward.

Initial analysis by the Investment Manager indicates that electricity prices used in the Company’s NAV could fall by approximately £4 – 5/MWh from April 2028 to the early 2030s, and by £2 – 3/MWh thereafter. The Investment Manager’s preliminary assessment is that this could reduce the Company’s NAV by 3 – 5 pence per share.