Thrive Renewables — Empowering a positive change

Thrive Renewables (JPJ: THRV)

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Research: Industrials

Thrive Renewables — Empowering a positive change

Thrive Renewables (THRV), which trades on the JP Jenkins share-matching platform, has funded, built and operated sustainable clean energy generation projects for more than 30 years. To date, it has built, developed or funded 43 renewable energy projects across multiple technologies in the UK, the majority of which it still owns and operates or is currently financing. Thrive’s investor base has grown to more than 6,000 individuals, institutions and organisations.

Written by

Harry Kilby

Analyst

Industrials

Thrive Renewables

Empowering a positive change

Renewable energy

QuickView

28 October 2024

Price

£2.15*

Market cap

£61m

*As at end-September 2024

Share price graph

Share details

Code

THRV

Share matching platform

JP Jenkins

Shares in issue

28.4m

Business description

Since 1994, Thrive Renewables has been working alongside investors, developers, businesses and communities to fund, build and operate sustainable renewable energy projects. Thrive’s aim is to develop the future of UK energy by only investing in clean energy projects that deliver a long-term, measurable environmental impact.

Bull

Increasing demand for renewable energy generation assets.

Macro environmental shift towards renewables with net zero target.

Direct investments into assets to create a positive environmental impact regarding emission reductions.

Bear

Partial exposure to the volatility in wholesale power price market.

Risk in raising capital to fund additional projects.

Potential lag in revenue growth, over the medium term, as wholesale electricity prices begin to lower and stabilise.

Analysts

Harry Kilby

+44 (0)20 3077 5700

Andrew Keen

+44 (0)20 3077 5700

Thrive Renewables is a research client of Edison Investment Research Limited

Thrive Renewables (THRV), which trades on the JP Jenkins share-matching platform, has funded, built and operated sustainable clean energy generation projects for more than 30 years. To date, it has built, developed or funded 43 renewable energy projects across multiple technologies in the UK, the majority of which it still owns and operates or is currently financing. Thrive’s investor base has grown to more than 6,000 individuals, institutions and organisations.

Historical performance

Year
end

Revenue
(£m)

PBT
(£m)

EPS
(p)

DPS
(p)

Yield*
(%)

P/E
(x)

12/20

13.5

2.6

6.8

7.0

3.1

31.6

12/21

11.0

1.8

0.9

7.0

3.1

238.9

12/22

17.5

6.5

19.0

7.0

3.3

11.3

12/23

29.0

12.5

33.9

12.0

5.7

6.3

Source: Thrive Renewables. Note. *Based on average volume-weighted price of shares.

A diversified UK portfolio

As of October 2024, Thrive’s portfolio (assets under management at 2023: £129m) consists of 33 sustainable energy projects across the UK (141.6MW capacity), with a highly diversified technology base including onshore wind, solar photovoltaics, hydropower, battery storage and the UK’s first deep geothermal electricity generation project. Thrive is continually looking to expand its portfolio, having brought 25MW into operation and 41.5MW into development and construction in 2023. The portfolio has been built to create a sustainable, measurable long-term environmental impact, generating 136,316MWh in renewable electricity and reducing emissions by 58,620tCO2e in 2023. A project that demonstrates Thrive’s approach is its investment into the 100% community-owned onshore wind turbine in Lawrence Weston, Bristol. The turbine’s height is 150m, making it the largest onshore wind turbine in the England (4.2MW site capacity).

Innovative and flexible business strategy

Thrive aims to deliver value and growth for its shareholders via its innovative commercial approach of bringing together individuals, communities and businesses to create a diverse range of operational clean energy projects. Thrive manages its exposure to energy price volatility through a combination of maintaining short- and long-term power purchase agreements (PPAs), private wires and fixing prices up to 24 months in advance (c 70% of FY23 revenue was fixed). Further resilience is built into the portfolio through government-backed, long-term, inflation-linked stability in Thrive’s PPAs, providing a relatively secure and inflation-protected base level of income. The company also spreads risk by providing debt to other clean energy project owners, as well as owning projects through direct investments.

Directors’ valuation

Management’s current valuation stands at £2.43/share and was last reviewed in July 2024 (FY23: £2.43). To obtain this valuation, Thrive uses a discounted cash flow method and the valuation methodology has been consistent for the last 17 years.

Capital allocation

Thrive has a clear capital allocation policy, with capital raised directly invested into developing new projects in its pipeline and operational proceeds returned to investors in the form of dividends. However, its exceptional profits over the last couple years have allowed to it to reinvest some of the proceeds back into the portfolio. There is no published dividend policy. At Thrive’s annual general meeting on 28 June 2024, shareholders approved a final dividend of 12p per share for 2023, which was paid in July 2024. This represents a 5% yield, based on the current directors’ valuation of £2.43, and a historical dividend yield of c 5.5%, based on the latest available trading price on the JP Jenkins platform (the September auction price was at an 11.5% discount to the directors’ valuation).

Thrive has a share buyback policy that allows eligible shareholders who have been unsuccessful in selling their shares in the monthly auctions to apply for their shares to be bought back by Thrive twice a year at a 10% discount to the directors’ valuation (managed by Thrive). To qualify for the buyback, shareholders must have owned the shares for at least 24 months and made them available for sale at auction for at least 12 months.

Improvement in the regulatory environment

As a UK-focused renewables developer with strong community links, Thrive is well placed to benefit from an improving policy environment. The UK government announced planning reforms to make building renewable energy infrastructure easier, with amendments proposed to the existing National Planning Policy Framework. These include instructing planning officers and local authorities to consider the additional benefits of renewable energy projects, as well as an expectation that they will proactively identify potential project sites when designing plans. These changes, along with the lifting of the effective ban on onshore wind farms in England, are positive catalysts for Thrive, which is well placed given its track record in developing projects with a community focus, often bringing direct benefits to the communities in which they are developed. Thrive has also received numerous industry awards for its work with community energy groups across the UK.

Acceleration in growth

Thrive more than doubled its operating profit year-on-year in both FY23 and FY22 and the company is planning to accelerate the growth of its portfolio, having recently signed a joint venture (JV) with TopCashback Sustainability. This JV potentially brings up to £80m in collaborative capital, to be deployed over the next four years. In addition to continuing to acquire development rights to grid connected renewables, Thrive has entered into a partnership with solar developer Eden Sustainable, through which Thrive will provide up to £75m of debt funding to further accelerate the rollout of onsite private wire solar PPA projects for schools, businesses and other organisations across the UK. Through this partnership, Thrive will receive equity stakes in the projects. This will enable Thrive to benefit not only from the projects’ generation capacity, capturing any upside in power price volatility, but also from future options to either increase its stake in the projects or exit completely.

Financials

In FY23, Thrive recorded £13.6m in operating profit (FY22: £6.7m) and annualised H124 results where ahead of this rate (H124: £7.4m). This strong growth in profitability is largely due to the company locking in the high power prices seen in 2023 in its PPAs for 2024. Thrive’s ability to sustain this growth in profitability reflects its success in securing power prices above the spot price, which directly contributed to significant year-on-year revenue increases in both FY22 and FY23. Thrive continued its commitment to expand its portfolio in FY23, allocating £12.6m to developing new clean energy projects, having raised £5.1m through crowdfunding in FY23 and an additional £0.3m in early 2024 (£12m raised in two years).

General disclaimer and copyright

This report has been commissioned by Thrive Renewables and prepared and issued by Edison, in consideration of a fee payable by Thrive Renewables. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Thrive Renewables and prepared and issued by Edison, in consideration of a fee payable by Thrive Renewables. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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