{"id":405686,"date":"2025-09-29T10:45:36","date_gmt":"2025-09-29T09:45:36","guid":{"rendered":"https:\/\/climatescience.press\/?p=405686"},"modified":"2025-12-30T11:49:11","modified_gmt":"2025-12-30T10:49:11","slug":"alas-poor-orit","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=405686","title":{"rendered":"Alas, Poor ORIT"},"content":{"rendered":"\n
\"A<\/figure>\n\n\n\n

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Despite harvesting massive subsidies, aggressive accounting policies may contribute to the downfall of the Octopus Renewables Infrastructure Trust.<\/strong><\/p>\n\n\n\n

By David Turver<\/a><\/p>\n\n\n\n

Introduction<\/h1>\n\n\n\n

While researching\u00a0earlier articles<\/a>\u00a0on the offshore wind decommissioning timebomb, and the recent spate of\u00a0wind operator\u2019s profit warnings<\/a>\u00a0I had occasion to dig into the accounts of some of the funds offering exposure to renewable energy to retail investors. Eigen Values<\/a> has the story.<\/em><\/strong><\/p>\n\n\n\n

There were some interesting findings from that research, so this is the first of two articles in a mini-series looking at at Octopus Renewables Infrastructure Trust (ORIT) and Greencoat UK Wind (UKW) whose share prices have been falling recently. Let\u2019s dig in.<\/p>\n\n\n\n

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Share Price Performance<\/h1>\n\n\n\n

As we can see from Figure A, the share price has been in a long down trend since peaking in August 2022.<\/p>\n\n\n

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\"Line<\/figure>\n<\/div>\n\n\n

The share price has fallen despite paying \u00a333.5m in dividends in 2024 and buying back \u00a36.8m of its own shares. Share buybacks have been continuing in 2025 too.<\/p>\n\n\n\n

According to their latest accounts<\/a>, ORIT\u2019s investment objective is to provide investors with an attractive and sustainable level of income returns with an element of capital growth. Dividends have risen from 3.18p\/share in 2020 to 6.02p\/share in 2024. But as we can see, capital growth has been lacking because the Net Asset Value (NAV) has been falling, but not as quickly as the share price.<\/p>\n\n\n\n

The dividends are paid because the renewable assets that ORIT invests in harvest subsidies. At the end of 2024, ORIT had stakes in 41 different assets across five separate technologies including solar, batteries, hydrogen, onshore and offshore wind. The company\u2019s portfolio is diversified geographically as well as across technologies.<\/p>\n\n\n\n

Subsidy Harvesting<\/h1>\n\n\n\n

ORIT has a stake in the Lincs windfarm that has received Renewables Obligation Certificates (ROCs) worth a total of over \u00a3550m up to the end of 2024. ORIT only has a 15.5% stake in Lincs, so it will have received only a portion of the subsidies. ORIT also owns nine solar farms, of which eight are subsidised under the ROC scheme and have earned certificates worth ~\u00a359m so far.<\/p>\n\n\n\n

ORIT also owns the Cumberhead and Crossdykes onshore windfarms, which operate without direct subsidy. However, they are eligible for constraint payments. In other words, they get paid to turn off the turbines when there is more wind power than the grid can handle, or when supply exceeds demand. According to data from the Renewable Energy Foundation<\/a>, these windfarms have received \u00a37.9m in payments for what the Chief Executive of Octopus Group<\/a> terms \u201cwasted wind\u201d. It does seem rather odd that Greg Jackson should be complaining about wasted wind when one of the Octopus investment companies is benefitting from the phenomenon.<\/p>\n\n\n\n

ORIT Risks<\/h1>\n\n\n\n

Despite the seemingly strong and stable revenue arising from harvesting subsidies and collecting curtailment payments, there are several risks to the ORIT business model:<\/p>\n\n\n\n