30 May 2023

Aquila European Renewables plc

Business Update and Shareholder Proposal Ahead of Continuation Vote

Aquila European Renewables plc ("AER" or "the Company"), the London-listed investment company advised by Aquila Capital Investmentgesellschaft mbH (the "Investment Adviser" or "Aquila Capital") is providing an update to shareholders ahead of its inaugural shareholder continuation vote, which is due to take place at the Company's annual general meeting (the "AGM") on 14 June 2023 (the "Continuation Vote").

Under the Company's articles of association (the "Articles"), shareholders have the opportunity to vote on an ordinary resolution on the continuation of AER at the 2023 AGM (and at every fourth annual general meeting thereafter). Following consultation with shareholders and given the positive measures outlined below, the Board is proposing that, in addition to the Continuation Vote being held at the AGM this year, shareholders should have a further opportunity to vote on the continuation of the Company during the course of the financial year ending 31 December 2024, expected to be around September 2024.

Business Update

Following completion of the solar project Guillena (part of the Greco portfolio) in Spain, as announced on 12 May 2023, AER's portfolio is now fully operational with total operating capacity of 464 MW.

The Board strongly believes that there remains an attractive and sizeable opportunity to deploy incremental capital to help fund the build-out of the very substantial construction pipeline (over 10 GW in European geographies) developed by Aquila Capital. It is the ambition of the Board to build a larger-scale portfolio to further enhance the investment proposition for our current and future shareholders.

Key to this ambition is the Continuation Vote, which the Board is unanimously recommending that shareholders support and vote in favour of.

The Company provides the following update on key initiatives:

·    Asset life extensions: following the conclusion of technical and legal due diligence, the Investment Adviser implemented asset life extensions for the Company's 180 MW of Spanish solar PV assets (from 30 to 40 years) in line with the peer group, resulting in an increase to NAV of 2.1 cents per ordinary share. The Board and Investment Adviser intend to roll out asset life extensions progressively across the remainder of the portfolio totaling 284 MW, subject to due diligence, which is currently ongoing.

·    Share buyback: as of 26 May 2023, the Company has purchased 18.9 ordinary shares representing approximately EUR 18.1 million of its EUR 20 million share buyback programme which was announced in February 2023. So far, this has resulted in a reduction in shares on issue of 4.6% with the shares acquired at an accretive price of EUR 0.96 per ordinary share.

·    Debt financing: the Company's gearing level is approximately 31.5% as at 31 March 2023. The Company is in discussions with lenders to borrow against its unlevered solar PV portfolio, which has a fair value of approximately EUR 250 million as at 31 March 2023. Capital raised from this process may be used to repay or partially repay the Company's existing revolving credit facility (currently drawn to EUR 76.6 million with EUR 23million in undrawn capacity), fund further investment opportunities and/or return additional capital to shareholders. Whilst discussions with lenders are ongoing, any such transaction remains subject to negotiation of satisfactory terms and due diligence.

·    Secondary listing: the Company and its advisers are currently in discussions with regards to a secondary listing on a European stock exchange, given its EUR denomination, to further enhance the Company's marketability and appeal in Europe thereby also potentially enhancing liquidity of the underlying shares and providing opportunities for further growth.

·    Pipeline: the Board and the Investment Adviser continue to monitor a number of attractive investment opportunities, primarily in hydropower, battery storage and solar PV with a total capacity of 0.4 GW[1].

Shareholder Proposal

Accordingly, the Board and Investment Adviser believe that the Company is very well positioned with a fully invested balance sheet and a resilient and diversified portfolio which is significantly more valuable than implied by the recent share price and resulting discount to NAV.

Following consultation with shareholders, the Board is pleased with the level of support for the portfolio and the Investment Adviser, however the concerns of some shareholders regarding liquidity and immediate growth prospects are recognised. The Board believes that the discounts to NAV affecting the Company, the renewables sector and other similar investments are driven by the current global economic climate. The assets themselves are long term in nature but the stock market is not necessarily so. The capacity for a rerating has been seen before and the Investment Adviser expects that once economic conditions improve that the rating of the Company's shares will return to a premium. As a result, the Board is proposing that, in addition to the Continuation Vote being held at the AGM this year, shareholders should have a further opportunity to vote on the continuation of the Company during the course of the financial year ending 31 December 2024, expected to be around September 2024.

This provides the Company with a further period to deliver upon the initiatives outlined above and for the market to reevaluate these asset types, whilst also providing shareholders with a further opportunity to review the situation in 2024, rather than 2027, as currently set out in the Articles.

The Board therefore recommends that shareholders vote in favour of the Continuation Vote and the Board intends to vote their shareholdings in favour. Aquila Capital, which holds approximately 2.1% of the issued share capital of the Company, will abstain from voting, reflecting their views on good corporate governance. Aquila Capital has been receiving all of its investment adviser fees in AER shares since the IPO.

As outlined in the Chairman's Letter in the 2022 Annual Report, the Board and its advisers will, over the coming year, continue to explore a number of different initiatives to help secure recognition in the share price of the real underlying value of the portfolio. This includes a commitment to continue the buyback programme subject to applicable laws. The Board will update shareholders on the progress of its key initiatives as set out in this announcement.

Ends

For further details contact:

Media Contacts

Edelman Smithfield

Ged Brumby 07540 412301

Kanayo Agwunobi 07581 010560

Sponsor, Broker and Placing Agent

Numis Securities 020 7260 1000

Tod Davis

David Benda

Vicki Paine

NOTES

The objective of Aquila European Renewables plc is to provide investors with an attractive long-term, income-based return in EUR through a diversified portfolio of wind, solar PV and hydropower investments across continental Europe and Ireland. Through the diversification of generation technologies, the seasonal production patterns of these asset types complement each other to balance the cash flow, while the geographic diversification serves to reduce exposure to one single energy market. In addition, a balance is maintained between government supported revenues, fixed price power purchase agreements and market power price risk.

www.aquila-european-renewables.com

LEI Number: 213800UKH1TZIC9ZRP41