Connected - quarterly insight Q1 2019

Topic
John_Martin_New_Energy_SolarJohn Martin24 May 2019

Connected is a business insight from New Energy Solar (NEW) that reflects on the team’s solar portfolio growth and contribution towards renewable energy investment over the last quarter.

The first quarter of 2019 (Q1) was a steady period for New Energy Solar, underpinned by continuous growth in its portfolio of renewable energy investments and the successful execution of necessary maintenance for solar plants ahead of what we anticipate will be a productive year ahead.

Highlights

There were several highlights during the quarter for NEW, including the achievement of Commercial Operation at the Organ Church Solar Power Plant, the change in module supplier at the Beryl Solar Power Plant (resulting in an expected increase of both electricity generation and cash yield), and the payment of a 4.0 cent per stapled security distribution to investors.

Post quarter-end, New Energy Solar’s Investment Manager successfully launched the US Solar Fund (USF), a US$200 million solar investment vehicle listed on the London Stock Exchange. The successful completion of this initial public offering is a strong endorsement of NEW’s investment strategy and the renewable energy investment expertise of the Investment Manager. As a result of the economies of scale achieved by managing both NEW and USF, NEW’s base management fee was immediately reduced by 7.5 basis points per annum. Additionally, co-investment arrangements between NEW and USF will provide opportunities for NEW to expand the range of projects in which it can invest. We look forward to sharing the progress of this exciting venture in future.

"This year, Manildra will harness the latest predictive technology to self-forecast the amount of electricity needed for generation..."

Performance

During the quarter, NEW’s 14 operating plants generated approximately 152,000 megawatt hours (MWh) of electricity – producing enough energy to power roughly 19,900 US and Australian-equivalent homes and displace the equivalent of 105,000 tonnes of CO2 emissions, which is comparable to removing 27,400 cars from the road. Further growth is expected once Beryl and Mount Signal 2 are operational – increasing NEW’s generating capacity to 772 MWDC.

In Australia, Manildra experienced lower-than-expected generation due to weather conditions and post-commissioning activities, producing 30,000 MWh of electricity. This year, the plant will harness the latest predictive technology to self-forecast the amount of electricity needed for generation.1 This could not only help decrease frequency control costs and optimise the use of dispatchable generation and energy storage in the National Electricity Market, but could also improve system reliability and, eventually, electricity prices.2 Meanwhile, the construction of Beryl advanced significantly during the quarter, with 470 contractors present on site at the peak of activity. A change to modules at Beryl has allowed for a site redesign, which could increase the project’s capacity from 108 megawatts (MWDC) to 111 MWDC and subsequently bolster both annual electricity generation and cash yields once the plant becomes operational midway through 2019.

Despite the performance of some plants across the US being impacted by adverse weather conditions and/or post-commissioning and maintenance activities, NEW’s US portfolio generated 122,000 MWh of electricity during Q1. In particular, plants across Oregon, California and Nevada performed above the team’s weather-adjusted forecasts for the quarter, with Boulder Solar I recording a particularly strong operating performance during March. In Q1, Organ Church Solar Plant and eight of the solar power plants acquired from Cypress Creek Renewables began generating revenue under their respective long-term power purchase agreements, while construction at Mount Signal 2 was underway and remains on track to become operational by mid-2019.

Looking ahead, we retain a positive outlook for the ongoing transition towards renewable energy in Australia and beyond, and look forward to sharing another successful year of growth and expansion with our investors in future editions of the Connected series.

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