Power prices have fallen sharply in recent months, spelling relief on many different fronts. But, as always, such a shift raises fresh questions about how the renewable energy trusts, already under some pressure in recent times, might get on.
The effects could be significant, and other factors could also come into play. Stifel analysts note that a halving of the power price achieved, to £40 megawatts per hour from £80, would typically reduce dividend cover on a fund from 1.4 times to around 1.15.
"In addition, a number of funds have fixed-rate debt expiring in the next couple of years," they note. "If we assume this is replaced with debt at current market interest rates, it will typically reduce dividend cover by around 10 to 15 basis points. Putting these two scenarios of lower power prices and higher debt costs together means that dividend covers will typically fall from around 1.4 to 1.0 times over the next couple of years, assuming the current lower power price environment is sustained."