Good day, and thank you for standing by. Welcome to the Greencoat Renewables POC 2024 four-year results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bertrand Gauthier, Investment Manager. Please go ahead.
Good morning, everyone. Welcome to our 2024 annual result presentation. I'm here today with Paul to walk you through our key achievements and financial highlights for the year. Let's dive directly to slide five. This shows you the business as it stands today. When we IPOed GRP, we had the conviction that scale matters to unlock long-term value. After managing the business for now eight years, we believe that the thesis has just grown stronger and that the business has delivered our strategic plan, being a pan-European platform with footprints in five countries. Of course, all technology: wind onshore, offshore, solar and battery, or battery if co-located on our sites. To reach a critical mass with now 1.5 Gigawatts of net capacity, making us among the top 10 largest renewable pure-play in Europe.
For eight years, IPO sustaining a high level of contracted cash flow with 71% over the next five years, which has capitalized on the successful reconstructed strategy of our merchant revenue we have started to enact 18 months ago. We are convinced that GRP is uniquely placed to benefit some positive market dynamics, one being structural growth of the underlying market. You may have picked up the announcement by the European Commission of reaffirming a renewable plan of growth, and be the convergence between data center booming demand and green electron.
If I move to the next slide, and before diving into 2024 results in detail, we thought it was useful to recap what the business has delivered on the left column, what 2024 in a challenging equity capital market has been in the middle, and on the right, stepping back on what is a strategic need to long-term landscape, which we believe is very favorable for a business like GRP. Looking backwards on the left, the foundation of the business is its scale, diversification, and the quality of the portfolio we've built, translating into contracted revenue and our ability to dynamically manage this contracting profile at high-level returns. The business has consistently well performed financially, generating gross cash of EUR 781 million, which corresponds to EUR 0.70 per share since IPO, returning EUR 350 million in dividends and in excess of EUR 350 million reinvestment to grow NAV.
This has translated into a 7.2% annualized return on NAV, which was within IPO target. In 2024, we have fully recognized that the equity capital market has been and remains challenging, and that capital allocation had to evolve to maximize value creation for shareholders. As we discussed, we are focused on a four-dimensional framework. We will come back to this. This translated in 2024 by, one, returning capital to shareholders with over EUR 100 million of organic cash, so a mix of dividend and share buyback; two, seeking value through accretive disposal and releasing capital wisely, hence importance, being strategic about it and not compromise on the future of the business. In this context, we executed our first disposal, selling our single asset in Finland, releasing EUR 50 million of profit on an accretive basis. Three, deleveraging by reducing net debt by EUR 78 million on the back of strong dividend cover.
Over the long term, we remain strategy-focused to position the business to capitalize on what we see to be great market opportunities, what I was referring before. Underlying growth markets, renewable assets are expected to double over the next 10 years in a market where we see the return has been re-raking and offering strong cash flow profile. In today's environment, more than ever, we are capitalizing on our asset management depth to extract value from our portfolio, something that Paul will cover in much more detail. One area of opportunity with this merge, where asset management expertise will be highly valuable, is the interplay we see gaining momentum between the boom in data centers and the need for green power.
I would say more than the need for green power, the ability for those data center players to pay for green power a premium, which is the new dynamic. GRP, given its position specifically in Ireland where 32% of the electricity demand is due to come from the sector, is a great optionality for the business. Another area that Paul will cover. Turning to slide seven and focusing now on 2024 more specifically, cash generation of EUR 148 million, translating into a 2x dividend cover, well above our normalized dividend cover level. This was in spite of low wind speed, given the generation was minus 10%. The solid balance sheet, we did what we say we will do when we had our H1 results by refinancing our EUR 275 million five-year term debt, which was coming due in October 2025.
We refinanced well in advance of its maturity, extended EUR 235 million of those to 2030, and I should mention, on very attractive terms, with EUR 40 million to be paid down from organic cash to come in 2025. Portfolio return, this is the fuel of the business. The octane is the fuel in the business, remains high at 9.3% of NAV. This is close to 12% on current market price. This underpins a NAV per share of 110.5. Resilience over the last 12-24 months, in spite of challenging market conditions, certainly remains much more resilient than our pre-group. Finally, EUR 100 million of cash, organic cash return to shareholder. We are 25 million share buy and 75 million in dividend. We continue to escalate as per our dividend policy.
I'm going to turn it to Paul, who's going to give you more detail on the financial performance.
Thank you, Bertrand. Maybe over the next section, I just want to look back in terms of how the financial performance has gone over not just the last 12 months, but I guess when we look back from IPO, and I'll take you through some of the key metrics as well. If you turn to slide nine, for us, this is the bedrock of the business. We will talk a lot about the growth opportunities and how attractive we see the long-term opportunity for investing into renewable infrastructure and the ancillary opportunities that are coming from that. Ultimately, when we look at the business today, it is the robust nature of the financial performance. You can see here from 2017 to 2024, we have generated over EUR 780 million of cash.
We've paid just around EUR 350 million of dividend, and we've been able to continually either reduce our gearing or to reinvest back into the business. That continues to be the case in terms of what we've seen and what we expect to see into the future. That strong cash generation really gives us optionality in terms of what we do with the business, in terms of how we allocate capital. Turning to slide 10, just a bit of analysis in terms of where we were this year against last year. You can see revenues for the year, EUR 357 million, translating into EUR 208 million of EBITDA. As Bertrand Gauthier mentioned, just under EUR 150 million of cash, EUR 148.6 million of cash. For us, a very, very strong performance again, particularly in light of the fact that we had a low wind speed year in 2024 across almost all markets.
In addition to that, we did see lower power prices across Europe, and some of our assets, about 20% of our assets today, are exposed to merchant prices. That had some impact. Finally, we were coming from a year in 2023 where there was significant power price upside because of the inflated power prices that we had seen, and that obviously was particularly relevant on some of our Irish wind assets. In addition, you see OpEx costs increase as a result primarily of the increased level of assets that we now own, as well as some inflation. Finally, when you look at the finance costs from EUR 33 million to EUR 43 million, that is primarily because of the fact that we had a full year of assets that we had to run through from our acquisitions in 2023.
Finally, our dividend at 6.74% was a 5% increase year on year. That then, when you look through it at the end, resulted in a gross dividend cover at 2x and a net dividend cover of 1.9x. Turning to slide 11, we give a sense of the balance sheet here. Again, our GAV went slightly declined from EUR 2.62 billion to just under EUR 2.5 billion. That translated to a NAV decrease of just under from EUR 112.1 to EUR 110.5. Total return for the year on a NAV basis was 4.5%, below what we would target on a long term. On a two-year basis, that number is above 10%. We have seen a slight decline in NAV over the last year and a half, primarily as a result of slightly lower than expected power prices and some adjustments that we also made to our long-term P50 assumptions.
We will come back to that at a later stage. In that period, we were pleased to do our first buyback. We delivered that through 2024, EUR 25 million buyback. Bertrand touched upon our organic deleveraging that we delivered as well through the year. That remains a core part of our strategy, our organic ability to bring gearing down from our strong cash generation and the flexibility we have on a cash basis in terms of how we want to allocate capital. Just turning to slide 12, just a little bit more detail, I think, on how the business, how the NAV adjusted through the year and some of the drivers of that.
Again, the bedrock of the business is the strong cash generation, 12% cash yield on opening NAV, giving us that 2x dividend cover, giving us the flexibility to continue to deliver a progressive dividend and to have the flexibility to be also able to reinvest. You can see, obviously, the consistent depreciation that we have. We're really pleased about the level of transparency we have around just the high depreciation we put through our portfolio, underpinning, in our view, the conservative NAV that we have today in the market. We had a positive impact from the buyback. We had a positive impact from the accretive disposal. You can then see some of the macro assumption changes, with inflation being a positive impact and then the negative impact of adjustments such as power prices and our adjustment to the long-term energy yield as well.
Today, the portfolio is held on an equity IRO against NAV of 9.3%, which, as you know, against our share price, is clearly transitioning towards an 11-12% return on equity today. Turning to slide 13, one of the big strengths of our business is how contracted the cash flows are today. In addition to that, the visibility we have and our ability to recontract our cash flows into the future. We will do that by the fact that we can see a consistently growing corporate PPA market. We know in the markets where we operate the prices that we can achieve for those PPAs.
You see, over the five years to come, we're forecasting to generate around EUR 780 million of cash, which, when we look at the dividends growth that we'll have, translates to about an average of 1.9 times dividend cover over the five years. The business remains highly contracted in nature. Average contracted cash flow is 71% over the next five years. We have the ability from our asset management team to keep that number higher, as we will have the ability to recontract some of these assets as and when they come due out of their initial contracts. Our business plan remains unchanged. We intend to continue to deliver a progressive dividend policy. We intend to be able to have the flexibility to reinvest our cash and have the ability to have about 30% to do by 2029.
We want to continue to keep a business that remains highly contracted in nature and keeps that low-risk nature of the business that we operate. One of the big drivers that we have of that number is the weighted average capture price that you see on the right-hand side, at the bottom line. Today, our weighted average is about just under EUR 50 a megawatt-hour for our merchant price. That is due to escalate through to just over EUR 68 by 2029. There are two key drivers of that. The first is that the mix of our contracted cash flows today is more weighted towards Sweden, where power prices are very low. We see that shifting more towards Ireland over time, where the power prices are structurally higher. We will provide a bit of perspective on that when we come to the asset management section.
Bertrand, I'll hand back to you to take us through the capital allocation strategy.
Thanks, Paul. Turning to page 15, you will recognize on these slides the capital allocation framework, which I shared with you two years ago, I think, when we started to disclose this. This is our Bible to inform how we make decisions in respect of the four key use of our capital. More of a disclaimer, the order you see here does not represent the priorities. We are consistently evaluating which one is generating the most value from a shareholder perspective, why it's balancing short and long-term benefit. Starting at the top, debt repayments. The business is highly cash generative. We talked about it quite a lot, so I suspect we're hammering the point. This allows us to deliver the business organically, pointed out by Paul. In 2024, EUR 96 million of cash inflow was used to pay down debt.
This was 73 on basis, given that some cash has been drawn down on the RCF to contribute to one of the acquisitions we made. Turning to acquisition, actually, we have not done any new acquisition. We have just honored the sales forward program we entered pre-2024. Given the current market dislocation between the listed equity capital market and the M&A market, where asset prices are dictated at present by private capital, where we see opportunity to arbitrage and to sell down some of our assets and release capital, you can notice that acquisition of new assets is not on the agenda in this context, given this discount between market price, M&A, and listed, translating into discount to NAV at present. In 2024, we executed the first disposal of our single Finnish asset at a 6% acquisition to NAV.
We expect to continue releasing capital in the course of 2025, and we'll come back to this against what is our strategy in this context. Share buyback, this is opportunistic in nature. This is to support the supply-demand in the equity capital market, while this being accretive. It is a good investment. We also need to be strategic to balance buyback with the scale and the long-term liquidity of the stock. However, in this context, we've executed EUR 25 million share buyback in 2024 at a 19% discount to NAV, and this was accretive to NAV by EUR 0.005 uplift. This is an area we are closely monitoring, and we'll make decisions in light of market condition.
Dividends, on the back of high dividend cover at the 2x mark, even under stress scenario, which was 2024, we have increased the dividend by 5% in 2024, which was the top range of our policy. We have returned to a 1% target increase in 2025, which reflects the slowing down of inflation. Moving on page 16, or slide 16, this is to show specific to 2024, what we thought was interesting to look on the graph, how capital allocation compared to the cash generated by the business. You see on the blue bar chart, or blue bar, EUR 188 million of cash available to the business, EUR 148 million of it generated by cash generation, and EUR 50 million from disposal. In terms of uses, the largest allocation of this capital went to organic deleveraging with EUR 96 million or 45%.
Dividend with EUR 73 million paid of 36%, share buyback at EUR 25 million. Finally, EUR 15 million, which partially I outfunded the sales miss acquisition, the residual coming from a drawdown on the RCF. Moving to page 17 and zooming on the debt structure. The overall comment is that it's something that we have talked in the past. It's a very solid balance sheet. This has been reaffirmed by our recent refinancing, which was a key event in this segment in 2024, where we refinanced EUR 275 million of the maturity coming due in October 2025, this end of last year, at terms which were very cost-effective, spread margin 165 basis points, which is, if you benchmark it, quite competitive. It also evidences the strength of the credit of GRP. Gearing is coming down with EUR 76 million of net debt reduction, and gearing stands at 50.7%.
We expect this to continue, obviously, in 2025. Cost of debt stands at 2.9% for the year. Interestingly, it's lower than what it was in 2023, which was 3.3%. This is driven by the refinancing of RCF and the euro-based rate, which went down over the period. We mentioned here that 98% of the term debt, which is EUR 1.075 billion of the 1.3 aggregate debt. If you look at the overall EUR 1.3 billion fixed-rate debt, it is 90%. RCF is a floating debt. It is quite a secured and well-identified debt profile. On the chart, you will notice that the next maturity is due in April 2027. We are planning to run a process similar to the one we went through in respect of the October 2025 refinancing, i.e., to refinance well in advance of its maturity.
Moving to page 18 and closing this capital allocation zoom, this talk about investment and divestment. You can notice that we have not pursued any new acquisition in 2024, which is consistent with our capital allocation framework we went through. Acquisition has been restricted to closing the sales forward agreement we signed in respect of sales miss in 2024. 50% acquisition of our first solar wind farm in Ireland, which is a nice inroad and complementing our wind profile in Ireland. You might also have noticed when we released the R&S in this respect that we put our asset management strategy in practice. Also, we did not own the asset in this context. It is something we worked through. As we converted the RES tariff, which was initially providing 15-year contracted cash flow, to a 15-year corporate PPA with one of the major tech companies in Ireland at better terms.
In terms of remaining sales forward program, Endesa Spanish wind farm is due to close in H1. The Future Energy Ireland framework, not expecting to deliver any asset in 2025. Again, these deals give the right to GRP to acquire newly built wind farm in Ireland in this context, which is quite of scale. It's a pipeline of 500 megawatts to 2030. Assets are quite compelling in the sense that it will come with a 15-year contracted revenue. Again, this is an option for GRP to consider. No obligation on us. The acquisition will be evaluated in the context of our capital allocation strategy at this point in time. Finally, disposal is part of our recycling strategy. I mentioned that we sell down Coconeva, EUR 50 million, which was successful, exit to a local utility group. There is some noise going on.
Expect to continue looking at the disposal in the course of 2024. I'm going to hand it off over to Paul, which will talk to us about asset management and contracting more details.
Thank you, Bertrand. I mean, maybe just turning to slide 20, I think it's been, for us, the opportunity around owning a portfolio of renewable assets has never been more attractive. As we touched upon at the start, what we're starting to see is the benefits of active asset management around how we can trade our assets, the ability to hybridize our assets, and the opportunity to unlock value day-to-day in the portfolio. I'm going to touch a little bit on PPA and AI in a minute, and I'll come back to a little bit more on that in terms of how we see that opportunity. We talk a little bit about hybridization here. We've assessed 25 sites in our portfolio with a view to adding or improving infrastructure on those sites. We see that being anything from adding solar, adding battery, or adding data centers.
Most recently, particularly in Ireland, where we have the bulk of our portfolio, or we have a significant number of assets, we've seen the regulator move to allow hybridization of sites to happen and pushing to see grid connections used much more of the time and not just used for single technology. We see that as a significant value creation opportunity for the business as we look forward. Performance improvement projects, we've added a bit in the appendix, but with 15 initiatives with over EUR 17 million of value created. Availability improvements, the projects require us to deliver high levels of availability, and we work very hard to make sure that we're hitting those numbers. I guess where we've seen challenging in some of the projects, we've worked hand in hand with the OEMs to deliver that level of output.
Finally, in areas like ESG and health and safety, that remains the bedrock of the business and how we operate complex real assets across five different countries. Slide 21 just gives a sense of the issues that we had from an output perspective and why we were 10% below budget. In truth, wind was the primary factor. About 6.5% of that 10% was due to lower wind speeds across Europe, although we do benefit from diversification, with German assets being above average in long-term wind speeds, and then Irish wind and Sweden being below wind average. The other challenges that we had, I think this year, related to dispatch down, which really relates to being turned down by the grid more than we expect.
Particularly in the Irish case, we've seen recently with the connection of a new interconnector, we've seen signs that dispatch down is finally in a position where we should expect to see those numbers improving. Wind farm availability across Sweden and Germany, we're working very closely with the OEMs to make sure we see higher levels of availability and also making sure that we have the protections contractually enforced so that the impacts that we suffer from lower availability are essentially compensated by us. Finally, we still are seeing local grid outages causing issues, particularly in Germany. When you combine that together, it results in about a 10% reduction in output. We took steps through the year to review and continue to review all of our assets to make sure that we believe and we have confidence that the P50 is correct.
We carried out a 55% review of all of our assets, and that resulted in a 1.1% decrease on an NAV basis due to a lower long-term P50 established. Slide 22 really sets out what we think has been one of the big megatrends to emerge in the last 12 to 18 months, which essentially is the significant need that Europe has for data centers and the likelihood that those data centers are going to be located not in urban centers, but are going to be located beside large energy users and large energy generation assets across Europe. Nowhere is that more clear than in Ireland today. The policy has moved towards the taking of data centers out of urban centers and putting it back into regional areas.
We believe that provides a strategic opportunity for Greencoat Renewables, where we have fast access to the grid, we have existing grid connections, and we believe our infrastructure has the opportunity to be repurposed and potentially to support the co-location of either wind and solar assets or also co-location data centers. In addition to this, we believe the data center or the digital infrastructure sector is going to work much more closely with the energy sector over the next five years.
That provides an opportunity for companies like Greencoat Renewables, both to continue to provide power, as we have been doing through the last 12 months, to potentially partner in developing new sites, and to deal with the more complex energy needs that data centers are going to have, where it will need to be a two-way relationship between the grid and the data center, where both assets will sit behind the meter of data centers and allow them to provide stabilization services to the grid when that is required. On slide 23, we were really pleased with our first DC or data center PPA that we put in place over the last 12 months. It was on an existing site that we owned in Valley Bane.
It is the first of what we expect to see, many of these types of transactions happening, where assets that come through the first 15 years of REFIT will then begin to look at long-term recontracting opportunities. That helps to underpin the value of our asset, ensure that we continue to have low contracted cash flows moving to 25-30 years, and underpins the long-term value of our assets in multiple markets. On slides 24 and 25, we give a little bit more breakdown of what we see the output or the outlook to be in each of the energy markets that we operate. In Ireland, a lot of the assets that we own benefit from floor price PPAs, as we know, or floor price REFIT contracts.
We've seen power prices, as you can see, tick up significantly over the last 12 months, where they dropped as low as EUR 80 a megawatt hour in February 2024. Today, they're between EUR 130-EUR 150 a megawatt hour. In addition, Ireland has one of the most liquid PPA markets because of the scale of data centers that we have in the country. It gives us great confidence of our ability to recontract our assets at attractive prices. Similar story in Germany, where we've seen power prices tick up from EUR 60 to over EUR 100 in the last 12 months. That supports our ability to either enter into long-term PPAs, as we did in 2024 on Bouton Dick, or in some cases, to take advantage of those high merchant prices and to have some exposure to power prices in that market in particular.
Sweden is a slightly different story. Sweden has seen lower power prices over the last 12 months, primarily driven by the fact that there has been higher than expected hydrological output and increased wind penetration over the last 12 months. We are forecasting power prices to remain low in Sweden over the next 12-18 months or 24 months, but we do see structural reasons why that will improve, primarily because there is significant interconnection currently underway, both between Sweden and Finland and between northern Sweden and southern Sweden. In addition, we can see that there is significant data center and other large energy users locating into northern Sweden, which will provide a significant demand for the renewable power that we currently own in that market.
Finally, in Spain, where we will add our third asset shortly with Endesa, again, we have seen the structural improvement in power prices in that market, which provides a strong opportunity for us to hedge our power or to sign long-term PPAs as well. When we bring that back together on slide 2026, what you see is a business today that remains highly contracted. Between 2025 and 2027, 82% of our assets' power is all contracted out, and 18% remains merchant. Our ability to deliver value by recontracting that merchant power and taking the right decision as to when to create NAV accretion from that recontracting remains one of the big opportunities for the business as a large owner of renewable energy assets across Europe. Bertrand, I will hand back to you just to summarize and go to Q&A then.
Thanks, Paul. Twenty-eight. On the left, you can see how in 2024 we have been laser-focused on capital allocation and how to, I would say, deal with what could appear some conflicting priorities. We can leverage the high cash generation of the business, what you see on the right, to be able to create the optionality, which we have done in 2023, 2024, and what we forecast, and we have kind of flexibility to do in the period to come. The strategic market backdrop, what we highlight in the middle, and we talk about it, in our view, remains even more compelling than what it used to be two years ago. AI and data center is a new ingredient in the formula or in the recipe. This has, as an example, enabled green power to benefit from value.
Where you are equipped, as we have, to have depth of asset management, people able to commercially agree deal, commercially being geared towards creating value viabilization, et cetera, this is all about how do we unlock option value embedded in the portfolio, even in a world where we are currently not in a position to be acquisitive, even market dynamic. Let's not lose sight of what the business is for and how we can, with our existing portfolio, capitalize on those markets, strategic market opportunities. Two specific points to bring to your attention. I think the right moment to conclude on this is on the bottom left.
One is that we have an agreement between the investment manager and the board, whereby we have amended our existing fee structure, aligning 50% of it to be the lower of market cap and share price, and the 50% to remain against NAV. This is, you can see, a testimony that the investment manager do strongly believe that the stock will rebate over time, and we are putting our money where our mouth is, should I say. The second piece is around additional listing. One, and we might come back to this in the Q&A, but one of the pressures we can see on share price is imbalance in the U.K. shareholdings capital available versus demand of this kind of asset, whereas we do a business.
What we've been trying to do over the last few years is to welcome shareholders which are attractive to the specific characteristic of the financial profile. We have explored a venue for new listing, where those kind of characteristics will be recognized to unlock new demand. This is a strategy around this. Thanks for bearing with us, and let's turn to Q&A.
Thank you. As a reminder to ask a question, please press star one ine on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question will come from Ross Harvey from Davy. Your line is open.
Hi, morning, Paul and Bertrand. I have three questions, if I can. First is on the growth opportunity. I know AI proliferation has been a market theme in the past year, and you touched on this in your prepared remarks, but can you put more definition maybe on the opportunity for Greencoat as an enabler, as a driver of that industry long term, thinking in particular of the Irish market? Will we see more of those capital type deals from you in the future? Second question is on generation. You have helpfully broken down the variance against budget in 2024, maybe leaving aside the wind speed figures, which should obviously mean revert. Do you expect to see a normalization in terms of dispatch down, wind farm availability issues, grid outages? You might talk to those.
Finally, on the balance sheet, given the successful refinancing and new term debt in 2024, are you happy with the current debt funding profile? Presuming there's no significant work to do there in 2025.
Yeah, no problem. I might answer the first piece of that in terms of how we see the PPA piece, and maybe Bertrand might pick up on the final two if that's okay. We think that the strategy has changed in energy transition, where digital infrastructure and large energy users are much more interdependent with the energy transition sector than they were two to three years ago. We believe that essentially digital infrastructure is much more focused on getting early access to grid and getting very early access to renewable power than was the case two to three years ago. What that means, I guess, is two things for companies like ours.
The first is we need to think more carefully about how we can unlock grid and our sites to allow assets like data centers to be developed because the speed of getting access to the grid is fundamental to them. The second thing we need to think about is how can we provide the energy assets, be that renewable power or be that other enabling infrastructure, that will again allow them to get connected to the grid quicker. In our case, right now, we're supporting data centers by selling them renewable power on a long-term basis. That's the type of deal we've done with the likes of Keppel. We expect that to accelerate over 2025 and for us to continue to execute deals like that, which are long-term contracts, low-risk contracts, and they're power purchase agreements that essentially allow us to sell our power on a long-term basis.
We do believe that the future of renewable infrastructure will provide other opportunities to work more closely with data center companies, however. That could be in areas like storage, where data center companies will require backup storage assets. It could allow us to work with other trading companies, such as utilities, such as big trading houses, oil and gas type businesses, et cetera, who have the ability to provide shaping risk as well and have the ability to essentially provide what the technology companies are looking for, which is long-term baseload power. We think the role of being a renewable energy owner and having scale presence in six, five different countries makes us very strategic for what will be a high growth area for the technology companies in the next number of years.
Bertrand, do you want to pick up on the debt question, perhaps, and I can touch on availability at the end?
Yes. Hi Ross. Yes, thanks. We were very happy with or pleased, but no surprise, should I say, on the debt refi. We are standing on EUR 109 million of debt on the RCF, sorry, drawdown on the RCF of EUR 350 million. The RCF maturity is coming due in 2026. We are already engaged with our three RCF banks to extend the RCF. It's a pretty plain vanilla facility. We might elect to slim down the RCF from the EUR 350 million capacity to generate a bit of savings associated to commitment fees and consistent with acquisition for new assets. We don't see the need to sit on such a capacity for the time being. We'll always extend it later on. It's going to be a lighter touch activity. The other point to mention is that we have a bank syndicate of 10 banks, which have been supportive.
We are regularly in touch with them. We want to always evaluate that they are available to you when they need to, and it's a long-term relationship, and it's something we focused on. The refin of the term loan of 2025 is taking place with the same subgroup of those banks. It shows the stability of the bank behind us.
Maybe just to pick up on the final point, Ross, around how confident we are on, I guess, our overall generation numbers. I think there are three aspects or four aspects, I think, that are relevant. As you talk about the dispatch down, maybe there are grid issues, there are availability points, and then there are wind speeds. On dispatch down, as you know, we have taken a case in Ireland against the regulator to ensure that dispatch down is compensated for relevance. We are going through that process at the moment, but we have been successful so far in demonstrating that renewable assets that have firm connections should be compensated for dispatch down. In terms of availability, I think you are seeing a need to really work intensively from an asset management perspective with the OEMs for them to deliver their guaranteed availability numbers.
In certain regions, they can be stronger than others. Right now, we've spoken about areas like offshore wind in Germany and in northern Sweden. That is a key focus for the business, and we're very confident that we have control in terms of making sure that our assets perform as they should and where they don't, that we were essentially able to get compensated for that. Finally, on wind speeds, as we touched upon, we've taken the decision to reduce our NAV slightly by rerunning our long-term P50 assumptions on those assets that were appropriate to be done so that had the right level of data, which was about 55% of the overall assets.
We are confident, we remain confident that that is the case, that we have the right long-term P50 in place, but that it does require active asset management from our side to make sure we deliver that.
That's excellent. Thank you both. Very helpful.
Thank you. As a reminder to ask a question, please press star one one . Our next question will come from Alex Wheeler from RBC. Your line is open.
Morning. Two from me, please. Just firstly on how you're thinking about the balance between buybacks and degearing, given the strong cash flows coming through the portfolio, particularly given you've got a very low cost of debt both versus peers and versus your portfolio return. My second question would be on the pilot projects for hybridization. Is there a CapEx commitment that comes here? If so, what sort of numbers would we be talking about? Thank you.
All right. Let me start with the capital allocation question. Paul, you may want to take on the hybridization funding question. Hi, Alex first. It's, as you can see me trying to articulate an answer, it's not an easy arbitrage in the sense that, first of all, the way we look at the cost of debt in the context of delivery is associated to a, it's a cost of debt around 4-4.5%, or 4% actually. It's on the RCF funding. You're right, it's lower than our peers cost-wise. As you may have, I mean, you picked up the magnitude is more towards delivery for one reason. One is that it maintains a strategic optionality for the business to be in the position of strength if and when the market will turn because we don't shrink the business.
The share buyback is the most accurate investment we can make. You go back to appetite to deploy capital to invest at this point in time in the cycle. By doing share buyback, you have two negative consequences. One is that you are shrinking the business, so you are limiting the, let's say, you are limiting the liquidity on a long-term basis. Two, you are also acting against delivery. Although we are very comfortable with 50% type gearing, we acknowledge that in the market, there's a perception that because we are the highest gearing level, perception that people need to be well informed of the high contracting nature facing this gearing level for it to be for them to be comfortable.
In other words, we have indicated to market that we were engaging in organic delivery over the life of the business, which we are acting upon. On an on-passing basis, we will execute share buyback.
Maybe just to touch on the CapEx item, one of the tales, everything we're doing is creating value in terms of hybridization. By unlocking sites with the ability to either put extra batteries or to put extra solar or to potentially put a data center on it, those are creating optionality for the business and creating investable opportunities similar to what we have partnered with on Future Energy Ireland. It's not creating a day-one investment need. We would see a potential investment need, and I guess if it's possible that that investment need over time could be EUR 200 million-EUR 400 million type range is my estimation, but there's a bit to go on that yet. It's certainly not at this stage factoring into our investment strategy. What it's doing is creating optionality and value for the business.
Okay, that's clear. Thank you both.
Thank you. As a reminder to ask a question, please press star . Our last question will come from Iain Scouller from Stifel. Your line is open.
Good morning. I just wanted to ask about commitments outstanding. You mentioned the EUR 90 million to the Endesa project. I'm wondering, are there any other commitments or contractual obligations that you have on top of that? What is the expected period of drawdown for any commitments?
Hi, Ian. The answer is there is no other commitment beyond the EUR 90 million. The Future Energy Ireland framework is a one-way option for GRP to acquire when those assets become on stream with no obligation linked to this.
Okay, fine. What was the pace of drawdown on Endesa for last year?
It's this year, yes. It's imminent. We are talking one or two to three months ahead.
Okay. Thank you.
Thank you. There are no further questions from our phone lines. I would like to pass it back to Greencoat Renewables for any closing remarks or additional comments.
Everyone, thanks. Just thank you for listening to us. If you have any questions separately, we can have a call being set up. Thanks a lot, and wish you a good day.
Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.