Greencoat UK Wind (UKW)

30/01/2026

Flash update from Kepler Trust Intelligence

The UK government has announced the result of its consultation into changes to the inflation indexation used in the Renewables Obligation (RO) scheme. The RO scheme will, from 01/04/2026, be indexed at the consumer price index (CPI), instead of the retail price index (RPI).

Greencoat UK Wind (UKW) had released its factsheet for 31/12/2025 on the day of the announcement and made some changes to its NAV and dividend policy as a result of the news.

UKW's unaudited NAV per share had been announced as 136.1p before the RO consultation announcement, as of 31/12/2025. That was updated solely for the changes to the RO scheme the next day to 133.5p, a reduction of 2.6p, in line with November's guidance.

The dividend policy has also been updated to reflect the RO scheme changes. UKW's board has decided that its new dividend policy will be to aim to provide shareholders with an annual dividend that increases in line with CPI inflation.

In its most recent factsheet, UKW noted also that it had seen a return to normalised wind speeds in Q4 (1.6% below budget), with Q4 dividend cover of 1.8×. Overall generation in 2025 was 8.5% below budget, primarily owing to low H1 wind speeds.

Net cash generation in 2025 was robust, at £291m, producing a dividend cover of 1.3×. Gross disposals proceeds through 2025 were £181m which, alongside free cash generation, was allocated to share buybacks and debt reduction.

Kepler View

While neither of the two possible changes to the RO scheme that were being consulted on were ideal, this is clearly the least-worst outcome and removes a key piece of uncertainty that had been hanging over renewable energy infrastructure investment companies.

Considering the result of the consultation, it makes sense to us that UKW would change the inflation linkage in its dividend policy from RPI to CPI to ensure that dividend cover remains strong and does not compromise future dividend growth nor dividend cover.

Indeed, UKW has increased its dividend by RPI or better for each of the 12 years it has been a listed company.

The company's forward-looking dividend cover and cashflow generation expectations remain robust and the former is substantially unchanged. This leaves UKW with one of the most robust dividends in the sector and unique in that the dividend is still linked to inflation.

With shares trading at 98p at the time of writing (on 29/01/2026), the forecast yield based on UKW's 2026 dividend target is 10.9%. In addition, UKW's structurally higher dividend cover means that it still has options to deploy surplus cashflows towards new investments, buybacks or reducing debt.

The fundamentals of the renewable energy sector appear to remain as strong as ever, and UKW has delivered impressive NAV total returns of 185% since launch 12 years ago, yet shares currently trade below their IPO price, suggesting, on a discount of c. 27%, there remains latent value, in our view.

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