Greencoat UK Wind (UKW)

Greencoat UK Wind (UKW) remains a leader in the renewable energy sector, not least in its low management fees, attitude to buybacks, and now its ability to achieve material disposals. The renewables sector has had a challenging time over the past couple of years, and NAV returns have been disappointing, but the interim results announcement from the company covering the first six months of 2025 was encouraging in other ways.

Firstly, valuations which support the NAV have been proven through the significant disposals announced by the team, which we discuss in the Portfolio section. Secondly, despite the twin challenges in terms of lower power prices and lower wind resource, UKW’s dividend remains robust, covered 1.4x for the first six months of the year (see Dividend section).

Thirdly, the grey cloud hanging over the sector seems to be shifting, with the government ruling out the possibility of zonal pricing. Finally, the oversupply of shares across the renewables sector, leading to Discounts, is being addressed through corporate activity as well as continuing buybacks, which should allow UKW’s clear proposition and resilient model to stand out as one of the leading trusts in the sector.

Being partial disposals, the overall shape of the portfolio will not change significantly. However, it is noteworthy that these divestments will reduce UKW’s dominant exposure to Hornsea one, as well as reduce gearing, which in our view are both positives. As we discuss in the Gearing section, disposals will see gearing falling to 39.5%, below the board’s target maximum of 40%, should all disposal proceeds be used to repay debt.