Good morning or good afternoon all, welcome to the Greencoat UK Wind full year results presentation. My name is Adam, I'll be your operator for today. If you'd like to ask a question at the Q&A portion of today's call, you will need to dial in and press star 1 on your telephone keypad to enter the queue. I will now hand the call over to Stephen Lilley to begin. Stephen, please go ahead when you are ready.
Thank you, Adam, and good morning, everyone. Thank you for joining this call. Appreciate you probably thought that this was a better option than Drax, so hopefully you'll enjoy the next little while. This is our tenth annual results presentation. We summarize a little bit of what's happened over the last 10 years as we get to the end. Hopefully you'll find that interesting. For the year, obviously, that's the focus of this morning predominantly. We started off with a huge cash generation in the year. 3.2 times cover is obviously significantly higher than normal.
Generation was slightly down, but the capture in the year of about GBP 180, 11% discount, or the capture discount to day-ahead price, obviously extremely strong. That leaves, you know, that's where obviously the cash generation comes from. A pretty strange year in some ways. We've gone in the year and invested GBP 340 million into new projects. We've got commitments outstanding at the moment. The year really, I guess, is, you know, a tenth increase in the RPI, a tenth increase of RPI in the dividend, I should say. 7.72 pence becomes 8.76 pence for 2023. We've had NAVs increasing by nearly 34 pence in the year.
We'll go through all the movements in that. Up to GBP 1.671. In total, the NAV growth since listing of 69% versus RPI of 45% is the sort of the other public couplet to the RPI-linked dividend. You know, we've continued during the last 10 years and through the last year to deliver on the simple low-risk provenance strategy that we had at IPO. In terms of this presentation, we're keen to highlight probably 3 things that differentiate. I think we Laurence and I don't feel as if our share price reflects these things, and therefore we are gonna talk about them again.
Forgive us if you find them tedious because you've heard them before, the RPI linkage of the dividend is fundamentally different to sector. We have conservatism in power prices that, you know, we will see as we go through, which we think is fundamentally different to sector as well. Then sort of thirdly, we've tried to describe, and we'll do so, discount rates and in an increasingly higher interest rate environment, how our return, one, stacks up to peers, but also stacks up against the market. I think those three things we wanna really sort of talk about: conservatism, RPI linkage, and high return. If we turn pages, this will be an updated simple model.
6 wind farms become 45, now 1.6 gigawatts of capacity. You can see the total cash generation dividends paid and reinvestment going around that cycle all the way through an RPI linked dividend and real NAV preservation. The simple story continues. On page 4, we have again, this is dividend cover of 3.2. Previously everything has been in the ones, 1.9 was last year, 2021, 3.2 being this year. You see on the 3rd and 2nd columns from the right, we've explicitly showed this. RPI for 2013 becomes the dividend increase of 2014. RPI for 2014 becomes the dividend increase of 2015, all the way through that.
Obviously the 13.4% RPI line for 2022 becomes the dividend growth for 2023. We carry on through onto operations performance, let me pass on to Laurence.
Hi. Picking up from slide 6, you can see the wind resource and generation mapped out there. We are 5% down in generation terms in 2022. Actually an outperformance relative to the wind speed, which was also 5% down. We'd normally expect something like a 1.7 times ratio. I wouldn't read too much into that. There's a lot of noise in these figures, geographical location, particular wind. Perhaps the best graphical representation here is to look at those green lines, which are the annual averages. They don't actually diverge very much from the 10-year average. Volatility from wind speed feeding into generation is actually pretty low.
6% standard deviation year to year in terms of wind speed, which with that 1.7x ratio translates into 10% standard deviation in terms of generation. If you divide that by the square root of 30, you'll see that the standard deviation over the useful life of a wind farm is very low indeed, below 2%. It's not something to be concerned about. Biggest risk exposure of this fund, the upside and the downside, comes from the power prices, not from the volume of generation. Giving you more detail on that volume for 2022, moving on to slide 7. This is the operational performance of each asset. You can see there the total 4.4 terawatt-hours of production in the year. That's 5% below budget, and you can see the individual assets highlighted there.
We always like to point out, the top issues, operational issues facing the portfolio. They're listed on the right. A blade failure at Windy Rig, for example, pitch motor exchanges and certain generator issues at Dunmaglass, for example. Just to say these are all very normal business as usual, operational issues that anyone would expect on operational assets such as wind farms. In sum total, they're contained within our base case availability assumptions. A normal year in terms of operational performance, particularly when you consider the conversion of that lower wind resource into generation. Turning the page to page 8, financial performance. What does this translate into in money terms? Steve's already mentioned the power price, and that's really driving this very high net cash generation number of GBP 560.1 million that you can see at the top line there on page 8.
That's divided by GBP 175.8 million of dividends paid in the year. That's the 3.2 times dividend cover ratio. Interestingly, if you take the 2.2 times, so that's the cover above the 1 time dividend, and you take that 2.2 times times the 7.7 pence dividend, that's 17 pence per share. Of the 34 pence total NAV growth over the year from 133.5 to 167.1 at the end of the year. Of that 34 pence NAV increase, half of it is cash. 17 pence is cash. The further 17 pence comes from movement in portfolio valuation. We'll go into that in a lot more detail shortly. I think it's really important to think about that 34 pence total NAV growth in the year.
Half of it is in the bank, or has been reinvested in other wind farm investments, as Steve mentioned. If we turn the page to page 9, these are two tables where we sort of give a different breakdowns and different ways of that GBP 560.1 million net cash generation. The bottom table I won't talk to in particular now. I've referred to that before as for the connoisseurs. It allows analysts and anyone else of that bent to tie the GBP 560.1, our preferred net cash generation number back to the statutory accounts. The only reason it's included. The top table is more interesting. In particular, this year, you'll see two extra lines in the top section there, SPV level debt interest and SPV level debt amortization.
This is the first year we've had these numbers in the table. That's because we've acquired a 12.5% stake in the Hornsea One offshore wind farm. It's our largest single investment as measured by its GBP 1.1 billion GAV, GBP 400 million equity investment. The GBP 700 million debt that sits on that project or our share of the debt that sits on that project, obviously has to service interest and there are periodic debt repayments. You'll see in particular in this period, a GBP 20 million and GBP 19.9 million debt repayment there on Hornsea One. To be clear, our dividend cover ratio, or the dividend cover of 3.2 times is post all SPV level or portfolio level, for want of a better word, debt servicing, interest and amortization.
Turning the page to page 10. This is now effectively moving away from P&L, moving away from cash flows, and moving on to the balance sheet. You can see there the movement in net asset value set out in terms of millions of pounds in the top table. You can see the GBP 1.2 billion of total investment in the year. Again, these are gross numbers. There are more details of that in the annual report. It's primarily the Hornsea One investment, as we've discussed. Steve perhaps will go into more detail later in this presentation as well. What I'd really like to focus on here is the movement in portfolio valuation, the GBP 383.9 million, or roughly 17 pence in pence-per-share terms. You can split this really into two parts.
One is all to do with the power price, the other is all to do with macroeconomic assumptions. If I could group the various components in those two ways and perhaps start with the macro assumptions. You'll see that an increase in inflation assumptions has delivered a GBP 0.145 increase in the NAV in the year. That's been offset, but only partially offset by an 80 basis point increase in the discount rate, so GBP 0.104. On a net basis, you've got over GBP 0.04 coming there. Yes, we've increased our discount rate, so this is entirely appropriate. That's been offset by increases in the inflation assumption. These are only increases in the short-term inflation assumptions. Those are the actual printed inflation assumptions for 2022 and also assumptions for 2023.
We've left the longer term assumptions, so from 2024 onwards, unchanged. They've been pretty constant for a long time now, 3.5% for RPI and 2.5% for CPI. Our 2023 assumptions are 8% for RPI and 5% for CPI. We still believe those are conservative, and I'd expect some upside on those. If you take the RPI assumption of 8% for 2023, for example, that's an average inflation rate for the whole year, 2023. We've already had January's number. It was 13.4%. If you start the year at 13%, and if one were to end the year at 3%, then you'd probably find that 8% is a reasonable estimate for the average over the full year.
I'd be mildly surprised if that 8% doesn't turn out to be conservative by the end of the year, but we shall see. Perhaps now moving on to power prices. Sticking on page 10 for now, and then we'll come to slide 11, the power price slide. You can see GBP 0.33 is attributed to the increase in forecast prices. However, if you look a little bit further down that table, you'll see depreciation amounts to GBP 0.13 for the year. What you should really think of is the net of those two assumptions. GBP 0.20, 33 minus 13 as being the increase in power price assumptions that's still in the NAV. Over the whole year, we've increased the power price assumptions by GBP 0.33 per share equivalent.
13 pence worth of that has already been delivered through those higher power prices in 2022. On a net basis, 20 pence is still in the numbers, and then you have to do a further netting because you have to take off 8 pence for the Electricity Generator Levy. What I would suggest to you is that still in the numbers as at 31 December 2022, on a fully netted basis, net of taxes and net of depreciation, there's a 12 pence total increase still in the numbers from increased power price assumptions, and we'll come into more detail on that very shortly. Just pausing on the Electricity Generator Levy. Struggle to use that term. Sometimes the word windfall tax comes out of my mouth, but I'm told to use the phrase Electricity Generator Levy.
Obviously, at many levels, we'd rather not be paying this. We're modeling, in our base case, GBP 200 million worth of Electricity Generator Levy payments over the next 3 years. On an NPV basis, that's GBP 176.9 million, as you can see in this table on page 10. The tax is actually in place for 5 years. Our assumptions fall below GBP 75 per megawatt hour in years 4 and 5. We're actually only modeling paying that GBP 200 million spread across the first 3 years of the tax. At 1 level, we'd rather it wasn't there. At the 2 other levels that frankly is not a bad thing. It's actually a great damper for our sensitivity to power prices.
You can look in the annual report or indeed at the back of this investor presentation at the NAV sensitivities table. You'll see that we're actually less sensitive to power price movements than we have been in previous years. That's because an effective tax rate of 70% applies to all revenues above power revenues above GBP 75 per megawatt hour. A movement of GBP 10 per megawatt hour is having the same effect in the old days as GBP 3 per megawatt hour used to have. Actually a useful damper, making us less sensitive to power prices. Then at a much sort of different level, you know, paying tax is not necessarily a bad thing. The country and consumers are facing all sorts of cost of living issues at the moment.
You know, people with money at the end of the day should expect it to pay some of that for the common good. Let's move on to slide 11, power prices. The top left I won't dwell on. That's hopefully a reminder for most of you of the components of the power price, primarily gas. I think everyone reading the newspapers has worked out that's why we've had high power prices over the last year and indeed still have higher power prices. The top right graph is the modeled power prices in 2023, real terms that we have in our model before PPA discounts. All the power prices you see on this page are before PPA discounts.
These are the discounts demanded by our off-takers to compensate them for their own costs, give them a little bit of profit perhaps, and in particular, to cover balancing costs. They might amount to something like 5% of the power price on average. None of the numbers on this page take those into account. These are all pre-PPA discounts. Not all of our peers report on the same basis in that respect. I'd point out a couple of things on that top graph, top right graph, the power prices. Firstly, the average over the first five years, 2022-2027, there is about GBP 90. Again, we think that's lower than many of our peers. Also just to point out, we've tried to highlight it with a little gray triangle on that graph. The increase over the years.
The 20p, if you like, before the EGL is taken into account. The 20p that's still in the numbers, that's really in those medium-term numbers. If you were to look at this graph that we showed you from this time last year, it starts at the same place, GBP 120, and it ends in the same place, GBP 45. It's just that it fell like a stone to GBP 45 and stayed there. The key difference in the power price forecasts from all of the reputable forecasters over the 12 months is this gray triangle. It's the fact that prices will take longer to fall back to those long-term levels of about GBP 45. As we've said, every number on this page is before PPA discounts, but what discounts are included in the numbers?
Well, firstly, there's what we call the capture discount. This is just the fact that we are an intermittent generator, just like solar is an intermittent generator, and therefore you can't expect to achieve the baseload price. The bottom left table shows you that over the last four years, we've kind of averaged 10%, roughly about 10% as our capture discount. For instance, last year, the average baseload price was GBP 203.79. We managed to capture GBP 181.76, an 11% discount to that. In the long term, we assume 20%. Those are, we think, sensible assumptions, and there's the historical data. What we've done in the short term is we've applied bigger discounts to the short-term forward curve.
At one point in September, there was an effective 70% to that forward curve that we were assuming. The graph on the bottom right is the 2023 forward curve as we advance through 2022. We started the year, last year, assuming a 30% discount to the forward curve, and we've started the year this year assuming a 30% discount to the forward curve. That's way more than our capture discount would suggest. It's just a desire to be conservative. We did not chase the forward curve up in March, June or September. We increased our discount to that forward curve. That's why as we've released some of that discount, the 70% discount is now a 30% discount.
Partly because power prices are lower, so they've got less far to fall, and partly because we now have certainty in respect of the EGL levy. As we've released that discount, that's really why our NAV increased, particularly in Q4, whereas perhaps some of our peers were flatter. Very quickly, turning the page to slide 12. This is the 10-year recap. The only thing I would point out to you is at the end here, the green line. Our NAV per share has accelerated away from the inflation line. I think it's obvious why. It's not just got inflation powering the numbers, it's also got the above-inflation increase in the power prices powering the numbers. Excuse the pun. Slide 13 is the total shareholder return. It's moving on from NAV and seeing how that translates into the share price and obviously the paid dividends.
You know, it's higher than our peers, as Steve's mentioned. That's one thing we'd like to really come across throughout this presentation. Slide 14 just compares us to potentially comparable indices. The FTSE 250 on the one hand and a corporate bond index on the other. We've outperformed the FTSE 250 significantly since listing. This is a good investment. Turning onto slide 15. Again, this is trying to make the point that we might well have a 5% or 5-point-something% dividend yield. That's good, but it's not the full story. We have a 8% unlevered discount rate that's equivalent to a 10% levered discount rate. There isn't zero leverage at fund level. Between the leverage at fund level and our pro-rata share of the Hornsea One leverage, we're 31% geared at the year end.
We aim to be 20%-30% geared on average over the medium term. Assuming 30% gearing, the 8% unlevered return is the direct equivalent of a 10% levered return. This fund, before fees and costs, is delivering a 10% return. You'll see in our annual report that our Ongoing Charges Ratio, I think is 0.93%, so lower than 1%. You take 1% off the 10% gross return, that's a 9% net return to you guys, the investors. That's a 9% return. That's pretty good. If we were paying a 5% dividend yield, and we're a 9% total return, then we should be growing at 4%. We're not just a 5% dividend yield. We're a 5% dividend yield plus 4% growth. We're a 9% return.
The 5% dividend yield inflates with or the dividend inflates with RPI, the NAV grows with RPI. At that sense, we look like an RPI index-linked gilt, just that instead of paying 0.5%, we're paying 5.5% currently. We're a 500 basis point premium to the equivalent index-linked gilt. We think that's pretty healthy. To page 16. This is more inside the fund now. This is our discount rate since listing. It started at 8%. It dipped down to 7% as interest rates fell to all-time lows. It's now increased back to 8%. That's the green line. That is significantly above the 10-year gilt.
Again, it's a circa 500 basis point gap. Hopefully I've managed to effectively explain the P&L for the year, the balance sheet, and also deliver some messages in relation to returns. I'll hand back to Steve.
Thank you, Laurence. Onto the, probably canter through the rest of this relatively quickly, but you can see the portfolio on page 18. Now 45 wind farms, 1.8 million homes that we power. Looking to 19, 6% of the U.K. wind market, about 1.6% of U.K. electricity. You see the split between onshore, offshore, and the big projects that we own, largely English offshore and Scottish onshore for kind of obvious reasons. If you carry on down, we bought from 20 different sellers now, so that independent execution credibility, really important to design of the business 10 years ago and continues to be so.
We continue with a whole range of conversations across the whole sector, and I think we calculated, as you'll see right at the end, that we bought 1 in 9 projects that we've looked at, so 11% conversion, if you like. Obviously that means that 89 have gone either elsewhere or not got sold. Onto page 21, you see the GBP 100 billion market and what we support, you better work that out. On page 21, the number of the projects that we looked at and the number we bought, one of the others, 1 in 9, you can see that. Onto the year, Twentyshilling Hill, GBP 51 million, Hornsea One, GBP 1.1 billion. You can see that.
Some investments into Clyde Extension throughout the year. The remaining bit, small amount coming shortly, or as the next few months roll through. Both of those, Clyde Extensions have South Kyle, a big onshore project with 4.8 megawatt Nordex machines, which will be quite large when you see them on land. Normally, you see those types of turbines offshore. So those will be probably worth visiting at some point. In terms of committed capital, that's GBP 33.2 million. I think Laurence has said we would imagine that we'll pay for most of that from the cash sitting on the balance sheet and from the cash that's generated between now and then.
We would unlikely to draw too much on the revolving credit facility. In terms of Twentyshilling and Hornsea, let's not say too much. It's a pretty straightforward project. Twentyshilling is, you can sort of see that on page 23. The subsidy-free project that sits, sort of, nicely with the CFD project, Hornsea One being one of those on 24. I don't know whether you watch Guy Martin on the TV, probably flew over the top of it, if you've been watching that on Sunday night. If not, go onto the iPlayer, it's worth a visit.
He actually gives them visits, Hornsea 2 next door. It'll give you some feel for 1, scale and 2, the sort of operations of an offshore wind farm. It'll also be interesting to see the size of the cable that they lay as they put it out there. It just gives you some sort of feel for the industrial scale projects like this. That, that's a project that we, that we bought into in the summer. We've probably been talking to the owner for 6, 9 months at that point, so a long, long time.
First project that we got with, and it's limited, of course, debt notes and you worked out on previous slide of how we, how discount rates work and how project debt comes off as we get from GAV to NAV, etc., as well as all the other debt that we have at the corporate level. Moving on to 25, we've got all of our ROC projects, 38, 39 of those on the left-hand side into the 45 in the middle. We then got subsidy-free projects, Twentyshilling being one of those which we complement with CFD projects, Hornsea One being one of those on the right-hand side and the cash flow profile that you see at the bottom this year, 50/50.
In terms of market activity, you can see on page 26 how we've built out, typo on the bottom of there. It's a GBP 100 billion market, not a GBP 70 billion market. Amazing what you don't pick up as you proofread these presentations. Working on through into ESG onto page 28. We have got a great story to tell, if you like. The obvious things are the number of homes that we power, 1.8 million homes and the 2 million tons of CO2 that we avoid. We have to report on TCFD, so these are our emissions for 2022. We've always said that Scope 3 sort of seems slightly arbitrary and pretty meaningless sort of figure.
We've also calculated what we think is more relevant, which is the sort of carbon payback that actually a turbine is used. The carbon that it uses to build it is done in 5 to 6 months. That's hopefully pretty decent to the fact and actually far more relevant than Scope 3, I would argue. Article 9 qualified. We published in the back of the new results the Annex V disclosures and the PAIs. You'll also see that in another website, the Annex III. We are Article 9 qualified. That photo, if you're interested, is Deeping St Nicholas, and that is what's called a cultivator on the left-hand side.
If you're watching Jeremy Clarkson's Farm, the thing that nearly took his tractor over backwards, that is one of those, but an old-style version of it. If you carry on through to 29, the sort of social health and safety aspect, GBP 4 million of local community funding into projects. Lots of different policies that we need to make sure that we are in place, investing in inclusion, those types of things that we hold dear. One thing that we've done throughout the year is try to work out how our funding can also support, and some extra funding there as well, discretion into food banks, local cost of living, et cetera. I think that's the key thing that we've been keen to make sure that we can help with a little bit.
Health and safety is obviously quite important. If you're interested, the photo there is a generator exchange at Rhyl Flats. You can see the crane lifting off several tons of generator, up on carrying on through into 33. Another thing that we're doing, we're just about to announce, I think, a final announced project that we've got for our blade recycling work, 2 universities. You won't be too surprised when you find out what they are. I don't mean Oxford and Cambridge, Laurence, by saying that. More engineering bent universities. We're going to be doing some work with those so pretty shortly. Carrying this through before we get onto summary. On page 34, you've seen the sort of Scope 1 through reporting.
We've done that last year, done it again this year. The Article 9 aspect of the SFDR with the various Annexes published as we have to. UNPRI, you know, we continue to report into that. We'll do so again. We didn't do last year because it wasn't done last year. The commitment to the Net Zero Asset Managers initiative, and then the SDGs, UN SDGs, that we adhere to if you like, and those that we pick up through the community funding quite significant ones. Obviously 7 and 13 are the obvious ones that we do by the very nature of what our business is. Coming in terms of the summary for the year.
3.2 times dividend cover, largely off extremely high power prices. We've had a high capture of those, even though we conservatively modeled a lot lower than that. We've got a tenth upgrade increase of the dividend up to GBP 8.76 for 2023. At the same time now, increased significantly in the year by GBP 0.34 and in total between listing and end of year, 69% versus 45% of RPI. That sort of model of RPI-linked dividend and real NAV preservation. In fact, growth, substantial growth is intact and will continue to be so.
We've done quite a lot of reinvesting of that excess cash, GBP 340 million into new projects and commitments to come, with some of that excess cash on the balance sheet being used alongside that. That will be produced shortly. A market cap of, as of today, about GBP 3.7 billion, up to GBP 3.5. We continue to lead the sector that we created. If you carry on to 37, we're not quite 10 years old. Give us a month of leeway, but we produced nearly 19 terawatt hours of power. Probably have produced over that by now, actually. averted, avoided, 7.5 million tons of CO2.
Generated nearly GBP 1.5 billion of cash and GBP 800 million of dividends. We've increased, as we've repeatedly said, dividend 10 times by RPI, now again from 6p to nearly 9p in 10 years. That was increased 24% above RPI inflation. We've bought 1 in 9 projects, 45 investments out of 400. TSR has been 153%, and we have a market cap that's grown significantly in that period. The chart on the right shows the projects that we started off with nearly 10 years ago. Braes of Doune and Carcant in Scotland, Bin Mountain and Tappaghan in Northern Ireland, Rhyl off the North Wales coast, and the Trinity Court down in Kent.
We've obviously got a lot more projects from them. You can see the increases in that. All the way through that, I guess we've tried to deliver and have done, an RPI that increases with a dividend that increases RPI. You've seen that 10 times. NAV preservation, done that in spades. Conservatism as a high return, a 9% return, and all those three, I think are, you know, significantly different to peers. We don't really think of ourselves as having peers. We are a company that has
Nothing in the queue at present, but as a reminder, that's star one on your telephone keypad today to ask a question. Our first question today comes from Colette Ord from Numis. Colette, please go ahead. Your line is open.
Hi, good morning, everybody. Just a quick question for me. Obviously really great disclosure, so thanks for that. Just on your debt position, we know what your commitments are, but could you talk a little bit about the outlook for refinancing? Obviously, some facilities coming up end of this year as well. You're generating lots of cash, but you've increased the base dividends. You've got a reasonable amount to be drawn on the RCF and some maturities. Could you just give us a sense for your thoughts on, you know, what the increased pricing might be or, you know, I presume you're relaxed about it, but just some color on the refinancing outlook would be helpful.
Yeah. I'll let Laurence give you a minute. Yes, I think that the cash generation is kind of helpful because it means you've got a bit of choice. You know, we are pretty relaxed about it. We've got, as most utilities, if you like, a whole series of debt that goes this year, next year, et cetera, et cetera, over an extended period. So we're reasonably comfortable with cash generation be able to do that. Also low leverage means that actually we can go and get debt fairly easily. Obviously, there's an issue of cost at the moment. Laurence, do you want to sort of pick up on that?
Yeah. We are very lightly geared, 31% at the year-end, and that's ignoring the GBP 161 million of cash. That's more net gearing. It's a gross gearing, including our pro-rata share of that Hornsea One debt. There are GBP 150 million sterling of maturities, I think, with Australia Bank and Commonwealth Bank of Australia, due in November this year. I can't speak for them, but it would be nice to think that they might want to roll those commitments into longer dated maturities. It's happened before. Obviously, with all our fixed rate term debt, fixed rate, the benchmark rates are now higher.
Just for reference, when we calculated that 10% levered equivalent discount rate, we assumed a 5% all-in interest cost, which was essentially 3.5% as a swap rate, plus 150 basis point margin, giving 5% all-in cost of debt. Our current weighted average cost of debt is 2.67% across the term debt at fund level, just for interest. The cost of debt is currently higher than it used to be, but it's not high relative to the overall gross returns of the fund.
Yeah. That's helpful clarification on the 10% bit. That's really helpful. Thanks. Saves us doing it.
Good. Glad to help.
The next question comes from Alexander Wheeler from RBC. Alex, please go ahead. Your line is open.
Morning. 2 from me, please. The first one is on power prices. Clearly you're conservative on power prices versus peers. It, you know, it may be that some peers get called out in that regard. However, given that the market is not giving you credit for the strong amount of NAV growth in the portfolio over the coming years, is there any temptation to unwind some of that discount, and crystallize it in the NAV? Then my second-
You mean, because we're being too conservative?
Yeah, just yeah, I was just curious on how you think about that.
Yeah. All right. What's the second question?
Second one is, are you seeing significant opportunity on the merchant asset side as you look to combine with CFD assets? Clearly we're getting a strong acceleration of renewables. I'm interested to understand how you're seeing that and wondering whether a lot of that is subsidy driven and or what the merchant opportunity is out in the market at the moment. Thank you.
Yeah. It's always tempting to change assumptions, so your NAV can go up. That's a rather flippant answer to the first question. Having said that, I think we have an obligation to present NAV as we think it's, you know, is fit. The fact that the capture discount is 11% for last year and, you know, similar for the years before. Does that mean that we're being, you know, overly prudent? I don't think so. You know, we've had low volatility over the last couple of months, actually. You know, the 30% we had at the beginning of the year is less than that as we sort of stand at the moment. You know, we're very relaxed now that we've got the right thing.
We've done the right thing. I think that as you go through last year, you know, we were up from 30%-70% at one point in Q3. You know, what I've referred to in some cases as nosebleed territory. We just felt very uncomfortable putting that into our NAV because we didn't think it would ever be realized. Guess what? It wasn't. I think the common sense position that we've always had, if you like, was sort of played out, and hopefully we sort of stand at the end of the year with some credit in the bank, having, hopefully sensibly walked through last... What was a very interesting year. Interesting in terms of interest rates, I'm never sure is a good combination.
You know, we went through last year and managed that pretty well. Hopefully we get to as we are at the moment and how the NAV looks and we feel comfortable with where we're at. I haven't really answered your question, Alex, but that's what we're gonna do.
No, that's clear.
Perhaps I can pick-
That makes sense.
Perhaps I can pick up the question about merchant assets in the market. We did very well in 2019 and signed 5 forward commitments stroke funded the construction in one case, subsidy-free projects. That was Douglas West, Glen Kyllachy, Twenty Shilling, Windy Rig and South Kyle. 4 of those are already in the portfolio. South Kyle is due to come in sometime in Q2 this year. They were all priced clearly when we thought, everyone thought power prices were around GBP 50 a megawatt hour. They've turned out to be good deals, let's say. The reason we were in that position is that was really the birth of the subsidy-free market. The Conservatives won an absolute majority in 2015, I think it was, and brought the ROC regime to an early end.
There was a bit of a hiatus, and no one, including utilities, really knew how the market would price merchant wind farms. We were bold. We were able to do so because we had a portfolio of 30-odd ROC and CFD assets at the time. Used a little bit of our balance sheet, very efficiently in terms of the forward commitments to lock in some merchant assets when others were unable or unwilling to do so. There was a hiatus, I would say, another hiatus, caused perhaps by the pandemic, when, if I could characterize those 2 years, 2020 and 2021, people were busy executing on stuff that had been originated before, but very new stuff was getting instigated. Very little new stuff was getting instigated.
I do expect that to unlock now, and there probably will be a new surge in onshore subsidy-free assets. I think obviously offshore, where you're committing multi-billion GBP at a time over long time periods, people are still much more comfortable with the CFD regime. I think we will, whether it be through ROC assets, there's still plenty of those that we don't own, merchant assets and CFD assets, we should be able to maintain our desired blend of fixed and merchant revenues for the time being. It may be, just because of the volumes and, you know, who knows, onshore versus offshore growth. It may be that we end up a bit more fixed over time just because of a greater supply of offshore assets, with CFDs or indeed some onshore CFD assets. You know, time will tell.
I think we're looking forward to plenty of opportunities in both segments. That's the merchant onshore and the CFD offshore over the next couple of years.
That's clear. Thank you both.
Thanks, Alex.
Just a final reminder, if you'd like to ask a question today, please press star followed by 1 on your telephone keypad to enter the queue. We have a question from Iain Scoular from Stifel. Iain, please go ahead. Your line is open. Iain from Stifel, your line is open. Please ask your question. We have no audio from Iain, we will move along. Final reminder, star 1 to enter the queue. We have no further questions, I'll hand back to Stephen for any concluding remarks.
Iain, give me a call. I'll answer your question. Be nice to chat with you as well. Thank you everyone for joining us this morning. I mean, hopefully what we've tried to demonstrate, there's obviously, you know, a very strong year and we've got lots going on and there's lots to come and we're sort of well placed for that. The one thing that we really, really been trying to do and so we put the NAV out and spoke to quite a lot of people about the NAV as well, and this is all to the second go at the same point is, you know, we are different.
We have got some of the key things that are really, really pertinent, I think at the moment with, you know, a dividend that increases with 13.4%, not 5%, but 13.4% because that is what RPI was. That's continued for 10 years. We'll continue to do that. I think that is a pretty key component to our offering. We've also got NAV growth that, you know, is particularly important as well. You know, the fact that we are up to 167p of a NAV is, you know, it could be more if we didn't take as conservative position, I guess, on power prices.
I think if you look across the sector, you will see how that is the case and how even this year we're gonna be conservative on that. The thing that drives everything, if you like, is that, you know, our return is just higher. You know, our 9% return to investors is just higher, and that drives everything. I think that those are sort of the messages that we're trying to sort of drive out to investors that actually, especially in an interest rate environment where returns are higher. We've fixed the roof while the sun's been shining. We're in good shape, and so we're well prepared, you know, for what comes next.
We sort of hope that the market understands that. Thank you for joining the call this morning. Look forward to catching up with some of you in person, either on the phone or actually physically. Good morning.
Thank you. This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.