Renewable Infrastructure Funds Threading the needle on growth and income - u/g UKW, d/g FSFL & NESF

Research evidence excerpt

Renewable Infrastructure Funds Threading the needle on growth and income - u/g UKW, d/g FSFL & NESF

Barclays | Renewable Infrastructure Funds

Investment Summary

The renewable infrastructure fund sector has experienced a partial recovery in 2026 (+17% YTD

vs +8% for FTSE All Share and +16% for Stoxx Europe 600 Utilities Index in GBP). Over the past 12

months, corporate activity, strategic reviews and capital allocation resets have accelerated as

boards seek to improve shareholder returns in a higher cost-of-capital environment. Investor

appetite has shifted toward companies capable of delivering both sustainable income and

credible long-term growth. We believe capital flexibility is a significant differentiator as funds

with strong cash generation, flexible debt structures and genuine reinvestment opportunities

are best positioned to adapt to changing market conditions and capture value from growing

power demand, electrification and hybridisation opportunities.

Looking ahead, regulatory reforms will play an increasingly important role in shaping sector

returns. While recent policy changes have weighed on sentiment and reduced valuations, the

proposed introduction of wholesale CfDs could improve revenue visibility and financing

flexibility across the industry. However, possible lower long-term pricing assumptions would

also place greater emphasis on operational efficiency and cost discipline. We continue to see

selective opportunities within the sector, but believe a sustained re-rating will require evidence

of improved operational delivery, successful capital recycling and disciplined capital allocation

rather than valuation support alone.

Recommendation changes - Upgrades

• We upgrade Greencoat UK Wind to Overweight from Equal Weight as it offers the strongest