Investec view: Greencoat UK Wind (UKW) announced its Q4 NAV of 151.2p/share, which was down 7.4p/share (-4.7%) over the quarter. The reduction over 2024 was 12.9p/share (7.9%). The movement in NAV in the quarter was primarily the result of a revision to energy yield estimates (P50) across the company’s portfolio which reduced NAV by 6.5p/share. Higher near-term forward power prices were offset by a very slight reduction in the long-term curve and had a neutral impact in aggregate. Lower outturn average RPI for 2024 reduced NAV by 1.4p/share. Generation was 15% below budget in Q4, and 13% below budget over 2024, resulting in full year dividend cover of 1.3x, notably lower than in prior years. The P50 adjustment was not wholly unexpected given the focus on energy yields in recent times and we note that Greencoat Renewables revised P50s on a number of its assets at the 30 September 2024 NAV. Clearly, the NAV impact is material given the sensitivity of the portfolio valuation to changes in energy yield assumptions. UKW continues to pursue a disciplined approach to capital allocation. It has again increased its dividend in line with RPI to 10.35p/share, and completed its first disposal generating c.£40m of proceeds which were used to repay drawings on its RCF (now £270m). Despite the reduction in NAV, UKW continues to trade at a material discount and, at the current share price, the shares offer a dividend yield of 8.4% and a prospective steady-state return of over 12%. We retain our Buy. P50 updates: Given lower-than-average wind speeds in recent years, the company has made revisions to its energy yield estimates across the portfolio. As a result, the long-term generation forecast is now expected to be 2.4% lower, resulting in a NAV decrease of 6.5p/share (4.1%). We note that data from the Department for Energy Security and Net Zero outlines that since 2013 (UKW IPO’d in March 2013), UK wind speeds have, on average, been 2.1% below their 20-year mean. UKW also discloses its generation performance (see page 2) and the average annual outturn wind speed and generation experienced across the portfolio since launch has been -3.3% and -5.3% respectively. We also highlight that UKW would likely have underperformed its generation budget in recent years even if these adjusted P50s had been used as the comparator. Dividend target: The company announced that it would increase its target dividend for 2025 to 10.35p/share, in line with December RPI (+3.5%). Disposals: UKW announced that it has sold 40% interests in Dalquhandy and Douglas West onshore wind farms to Fuyo General Lease Co. Ltd, at the prevailing NAV of £41m. We understand that these assets will continue to be managed by Schroders Greencoat. The Board and Investment Manager continue to pursue selective disposals to reduce gearing further.