Additionality in the renewables refers to the concept of an increase in renewable energy generation that would not have occurred without the project's implementation. Investing in construction assets rather than operating assets participate to the concept of additionality. Additionality is a key consideration in evaluating the impact and effectiveness of renewable energy investments, ensuring that they result in genuine and meaningful contributions to reducing carbon emissions and advancing the transition to sustainable energy sources.

The Administrator is a specialised entity responsible for providing various administrative and operational services to ensure the smooth functioning of the fund. Administrators play an important role in supporting fund management and ensuring compliance with regulatory requirements. Examples of areas where the Administrator is involved include Fund Accounting, Investor Services, Fund Valuation, Regulatory Compliance, Reporting and Statements, Cash Management Fund Operations, Audit and Assurance etc.

Under the Sustainable Finance Disclosure Regulation (SFDR, see definition) in the European Union, Article 9 funds are a specific category of funds that have sustainable investment as their objective. These funds are designed to promote environmental or social characteristics and they must meet certain criteria outlined in the SFDR to qualify as Article 9 funds. Article 9 funds are those that have a clear and measurable sustainable investment objective and they must invest in companies that contribute to specific environmental or social goals. Investors in Article 9 funds can expect higher level of transparency and disclosure regarding the extent to which they meet their objectives.

Asset Management consists of ensuring that electricity generating assets are managed, operated and maintained in a manner that maximises their performance and financial returns, and that they operate in accordance with their contractual arrangements. Asset managers will provide a range of services across legal, technical and commercial aspects.

Assets under management (or AUM) is the total value of all investments that a company is currently managing and reflects the size and scale of the investment operations. In the case of Octopus Energy Generation, ORIT's Investment Manager, AUM is calculated as the Gross Asset Value of the investments, plus the capital committed to existing investments, but does not include the capital committed yet to be deployed.

Battery storage is a technology that allows energy to be stored and then released when desired. It can help to balance energy supply and demand, enhance grid stability and ensure continuous and reliable power supply. Batteries are sometimes located on-site with wind or solar generation, in an arrangement commonly referred to as 'co-located', with the potential to be charged directly from the generator. They can also exist stand-alone, and charge and discharge directly from the grid.

Group of elected or appointed individuals to oversee and make strategic decisions for a company (or entity). The board of directors is responsible for representing the interests of shareholders/investors and ensuring that the firm operates in a manner that aligns with its mission, objectives and values.

Commercial Operation Date is the date on which an electricity generator starts selling its electricity output.

Capacity factor refers to the actual energy output of an electricity generator over a period of time divided by the energy output that would be produced if it operated at its rated (or 'nameplate') capacity over the same period of time. It is generally expressed as a percentage.

Capital growth shows how much the value of an investment has increased over time considering only the change in its price or market value.

A community benefit fund is a financial resource established by a project/organisation or any other entity to provide financial support, resources to local communities or specific groups impacted by a project or development. The fund aims to contribute positively to the well-being and development of the community by addressing social, economic or environmental needs.

Contract for Difference (CfD) is a mechanism supporting low-carbon electricity generation, which provides guaranteed long-term revenue for each unit of energy output. In the UK, CfDs are set for 15 years and are awarded to the electricity generator by the Low Carbon Contracts Company (a government entity). The CfD is based on the difference between the market price and an agreed 'strike price'. If the strike price is higher than a market price, the CfD counterparty must pay the generator the difference between the strike price and the market price. If the market price is higher than the agreed strike price, then the renewable generator must pay back the CfD counterparty the difference between the market price and the strike price. In doing so, the CfD ensures that the generator receives a fixed price per unit of electricity produced.

ORIT considers solar and wind to be 'core technologies', on the basis that these types of projects will form the majority of renewable energy generation.

A corporate broker, also known as stockbroker is a financial intermediary that acts as an intermediary between a company and the stock market. Corporate brokers provide a range of services related to the company's shares and securities, helping facilitate trading activities, maintain investor relations and navigate regulatory requirements.

Decarbonisation is the process of reducing or eliminating the emission of carbon dioxide and other greenhouse gases into the atmosphere. It involves transitioning from activities and technologies that rely on fossil fuels to cleaner and more sustainable alternatives, with the aim of mitigating the impacts of climate change and achieving a low-carbon or carbon-neutral future.

A developer is a company specialising in creating and advancing a project to a certain stage, before typically bringing it to market. In the renewable energy sector, developers are responsible for identifying and designing renewable energy projects, usually to bring them to the 'ready to build' stage (although they may look to sell at an earlier or later stage). In order to reach ready to build, the developer needs to secure the necessary permits, land rights, grid connections and other prerequisites.

A discount rate helps factor in the time value of money ans risk associated with a project. It is used to adjust future cash flows to their present value, taking into account the idea that money available now is worth more than the same amount in the future.

Discounted cash flow (DCF) consists of a financial valuation method used to determine the present value of expected future cash flows generated by an investment, project, or business. DCF takes into account the time value of money by applying a discount rate to future cash flows, reflecting the oppotunity cost and risk of investing in the project.

A distribution network operator (DNO), also known as a distribution system operator (DSO), is the operator of the electricity power distribution system which delivers electricity to most end users. Each country may have a number of distribution network operators, each responsible for the network in a certain region. The distribution networks typically operate at lower voltages than transmission networks, which are in turn managed by transmission network operators (TNOs). In the UK there are 14 different DNO regions which are managed by six different operators.

A dividend is a payment made to the fund's shareholders from the income generated by the fund's investments. It’s a way for investors to receive a portion of the profits earned by the fund's holdings.

"Dividend cover" is a financial ratio that helps assess a company's ability to pay dividends to its shareholders. It is calculated by comparing the company's earnings (usually its profit after taxes) to the total dividends it plans to distribute. In simple terms, dividend cover tells you if and by how much a company's profits are sufficient to cover the dividend payments it intends to make.

Dividend yield measures how much income an investor receives from owning a share in the fund, expressed as a percentage of the investment's price.

ESG stands for Environmental, Social and Governance. It refers to a set of criteria used to evaluate the risks relating to the ethical and sustainability practices of a company or investment. ESG factors consider a company's impact on the environment, its treatment of employees and communities and its governance structure. Evaluating ESG helps investors identify potential risks and make decisions that align with their values and consider the broader societal and environmental impact of their investments.

An ESG scoring matrix is a tool used to assess and measure environmental, social and governance performance and practices of companies or investments. It involves assigning scores or ratings to various ESG factors based on specific criteria, allowing for a quantitative evaluation of their sustainability and responsible business practices. The matrix typically includes a set of ESG indicators (KPIs see definition) that are relevant to the sector being assessed. Each indicator is assigned a weight/importance based on its significance in reflecting ESG performance. Scores are then assigned to each indicator based on the performance against the established criteria. The scores are often aggregated to calculate an overall ESG score for the entity.

EU Taxonomy Alignment refers to the extent to which an investment or company aligns with the criteria and standards set out in the European Union's Taxonomy regulation. The EU Taxonomy regulation established a classification system for environmentally sustainable economic activities, with the goal of promoting investments that contribute to climate change mitigation and environmental objectives.

An assessment of the expected annual energy yield (see definition) of an electricity generator, usually carried out by a technical consultancy firm. Energy yield assessments for a key part of the evaluation of a project, and in setting budgets.

Energy yield is the amount of energy produced by an electricity generator, usually expressed on a per-year basis.

Engineering, Procurement and Construction refers to the tasks of designing an installation, procuring the necessary materials and constructing the project, undertaken by an engineering contractor.

The FTSE 250 is an index that tracks the performance of the largest 250 largest publicly traded companies in the United Kingdom, which are not included in the FTSE 100 index. It gives an idea of how mid-sized companies in the UK stock market are doing.

Some jurisdictions offer (or historically have offered) feed-in tariffs, whereby electricity generators receive a fixed payment for each unit of energy they generate and export (or 'feed in') to the grid, regardless of market prices. Such schemes were implemented as a way to promote the development and build-out of renewable electricity generation.

Fixed revenue in the context of renewables refers to a predictable and steady stream of income per unit of generation by renewable energy projects, typically based on fixed price contractual agreements or subsidy mechanisms. This revenue is not subject to fluctuations in market prices or demand and remains relatively stable over a specified period. Fixed revenue arrangements typically support the development of clean energy infrastructure by reducing the exposure to revenue risk.

GWh stands for gigawatt-hour (1 GWh is equal to 1000 megawatt-hours) and is a unit of energy generation or electricity usage. A 1 GW generator would produce 1 GWh over the course of one hour.

GW stands for gigawatt, a unit to express large quantities of power or capacity in the context of electricity generation. One gigawatt represents one billion watts or one thousand megawatts. Watt is the standard unit of measurement for power in the International System of Units. It measures the rate at which energy is transferred or converted. It is commonly used to describe the output or generation capacity of power plants/electricity-generating facilities.

The Green Economy Mark from the London Stock Exchange recognises London-listed companies and funds that derive more than 50% of their revenues from products and services that are contributing the environmental objectives such as climate change mitigation and adaptation, waste and pollution reduction, and the circular economy.

Green hydrogen refers to hydrogen gas (see definition) that is produced using renewable energy sources, such as solar, wind or hydroelectric power through a process called electrolysis. In electrolysis, water is split into hydrogen and oxygen using electricity and an electrolyser. The 'green' refers to the fact that the electricity used in this process comes from renewable sources.

The power lines and associated equipment for the transport of power from electricity generating stations to end users. There are geographic variations, but usually grid systems are divided into different networks, broadly categorised as transmission (higher voltage) and distribution (lower voltage). Generating projects require grid connection agreements in order to connect into grid networks.

Gross Asset Value (GAV) is the total value of all the underlyig assets the fund owns before deducting any liabilities (i.e. debt). It represents the overall worth of the fund's assets at a specific point in time. GAV helps assess the scale and financial health of the fund. GAV is used to calculate performance related metrics such as the NAV (see definition) of the fund and total return.

Guarantees of Origin (GoOs) are an instrument defined in European legislation that labels electricity from renewable sources to provide information to electricity customers on their energy source. In many cases, GoOs are used as property rights to transfer the 'green benefit' of renewable electricity production from the seller to the buyer. In the UK, REGOs are a similar instrument to GoOs.

"Hedged" is a term used in finance to describe a strategy or position taken by an investor or company to reduce or mitigate the risk of adverse price movements in an asset or investment (e.g. Interest Rates and/or FX). Hedging is a risk management technique designed to protect against potential losses and to limit exposure to unfavourable price fluctuations to create a more predictable financial outcome.

Hydrogen (typically in our context meaning the molecule H2) offers a way in which energy can be stored, as an alternative to batteries or other storage options. Hydrogen technology involves the production, storage and use of hydrogen as an energy carrier or fuel. It holds the potential to play a significant role in achieving clean and sustainable energy solutions, provided that it is produced and used efficiently with attention to sustainability and safety considerations. There are different methods to produce hydrogen as well as divers applications. Key sectors of the hydrogen economy include industrial processes, transportation, fuel cells and storage.

Impact refers to the meaningful and measurable effect that a project or initiative has on a particular outcome, situation or community. It is used to assess the effectiveness and significance of efforts aimed at creating a positive difference.

An Impact Fund is a fund that seeks to generate positive and measurable social or environmental alongside financial returns. Unlike traditional investment funds that primarily focus on financial gains, impact funds aim to address specific social or environmental challenges while delivering competitive financial performance. Impact funds also help investors to align their investment portfolios with their values and make meaningful contribution to the society and the planet.

Income return shows how much income has been earned from the investment, expressed as a percentage of the investment's initial value. It reflects the money received from dividends.

Inflation-linked revenue refers to a type of revenue that is protected against inflation fluctuations, by virtue of a contractual link to an inflation index (when inflation increases, inflation-linked revenue increases). Costs may also be inflation-linked.

An IPO (Initial Public Offering) enables a private company to become publicly traded by selling its shares on a stock exchange for the first time. It allows the company to raise capital from the public and gives investors the opportunity to buy a stake in the company.

IRR is a financial metric that calculates the annualised rate of return an investor can expect to receive from an investment over a specified holding period. It takes into account the timing and amount of cash flows (both positive and negative) generated and required by the investment. The IRR is also equal to the discount rate at which the net present value (NPV) of these cash flows equals zero. In simpler terms, it represents the rate at which an investment breaks even in terms of returns.

An inverter is a device that converts direct current (or 'dc') electricity to alternating current (or 'ac') either for stand-alone systems or to supply power to an electricity grid.

The Investment Manager is the entity responsible for managing the investment portfolio (see definition of portfolio management) and making investment proposals to the Board of Directors for their decision and ultimate approval . The Investment Manager's role is to implement the investment strategy, select and manage the underlying assets and work towards achieving the investment objectives.

An Investment Trust is a type of pooled investment vehicle that pools money from multiple investors to invest in a portfolio of assets and/or other securities. It is a publicly traded company listed on a stock exchange and managed by a professional fund management team.

KPI stands for Key Performance Indicator. It's a measurable metric used to evaluate and quantify the performance or progress of company or a project. KPIs help monitor performance against set goals and benchmarks. Examples of Impact KPIs used by ORIT include equivalent tonnes of carbon avoided, number of beneficiaries from impact initiatives, equivalent homes powered by clean energy etc.

Levered IRR is an IRR calculation that specifically takes into account the impact of debt (i.e. 'leverage') on an investment. It measures the rate of return considering both the investor's own equity investment and any borrowed funds (debt) used to finance the investment. Leverage is commonly used to amplify potential returns. Levered IRR is generally higher than the standard IRR for the same investment because it reflects the effect of using borrowed money to reduce the equity investment size. However, it's important to note that while leverage can boost potential returns, it also increases the level of risk and can lead to larger losses if the investment does not perform as expected.

The London Stock Exchange (LSE), through which ORIT is listed, is one of the most prominent stock exchanges, serving as a marketplace for buying and selling securities including stocks, bonds and other financial instruments. It plays a pivotal role in facilitating capital raising, investment and trading activities for companies, investors (including retail investors) and financial institutions.

Market capitalisation shows how much a company is worth in the stock market. It is calculated by multiplying the number of shares of a company by its current share price. It is a guide to the company's size and value relative to others..

MW stands for megawatt, a unit to quantify the power or capacity in the context of electricity generation. One megawatt represents one million watts. Watt is the standard unit of measurement for power in the International System of Units, and is equal to one Joule per second. It measures the rate at which energy is transferred or converted. It is commonly used to describe the output or generation capacity of power plants/electricity-generating facilities. For context, a typical modern onshore wind turbine would typically have a capacity of 2-5 MW.

A power price which has no publicly-guaranteed remuneration (i.e. subsidy free, and CfD-free, see definitions). A merchant plant would receive the fluctuating daily spot market price, instead of a fixed-one, for its electricity unless it reduces its merchant exposure through hedging (see definition) instruments such as PPAs (see definition).

Net Asset Value per share indicates the estimated value of each share in the fund. Investors can use this value to understand how much their investment is worth at a specific point in time. By comparing NAV per share over different periods, investors can track the fund's performance. Regular reporting of NAV per share ensures transparency and accountability to investors.

Net Asset Value (NAV) is the total value of all the assets the fund owns minus any debt. It represents the estimated worth of the fund at a specific point in time and is used to gauge its financial health and performance. By comparing the NAV at different points in time, investors can assess how well the fund's investments have performed and calculate the fund's investment returns over specific periods. An increase in the fund's NAV suggests that the value of its investments has grown, indicating positive performance. Regular reporting of NAV ensures transparency and accountability to investors.

Net zero refers to achieving a balance between the amount of greenhouse gases emitted into the atmosphere and the amount removed from it. It involves reducing emissions of carbon dioxide and other greenhouse gases to a level where any remaining emissions are offset by actions that remove an equivalent amount of these gases from the atmosphere. The goal of net zero is to mitigate the impacts of climate change my minimising the overall contribution of human activities to global warming.

A Non-Executive Director (NED) is a member of company's board of directors (see definition) who does not hold a full-time executive position within the organisation. Unlike Executive Directors who are involved in the day-to-day management and operations, Non-Executive Directors primarily focus on providing independent oversight, guidance and strategic advice to the company. Non-Executive Directors play an important role in promoting effective corporate governance, enhancing transparency, and contributing to the overall success and sustainability of the organisation.

An offshore wind farm consists of multiple large wind turbines that are installed in water such as oceans and seas. These turbines capture the energy from the wind, which turns their blades and generates electricity via a connected generator. The produced electricity is transmitted through undersea cables to the shore.

In the context of renewables, an offtaker is an entity that enters into an agreement to purchase the electricity generated by a renewable energy project. Offtakers play a crucial role in providing a market and revenue source for renewable energy producers. The arrangement between the renewable energy project owner and the offtaker is typically formalised through a power purchase agreement (PPA, see definition), outlining the terms under which the offtaker will buy the electricity generated. Offtakers can be utility companies, corporations, industrial facilities, government agencies, municipalities etc.

The Ongoing Charges Ratio (OCR), also known as the Total Expense Ratio (TCR), is a financial metric expressing the total annual costs associated with managing and operating an investment fund as a percentage of the fund's average net assets. This ratio encompasses various expenses, including management fees, administrative costs, and other operational charges. Investors use the the OCR to evaluate the overall cost efficiency of a fund, with lower ratios generally indicating more cost-effective investment options.

An onshore wind farm is a collection of large wind turbines that are built on land. These turbines use the wind's energy to generate electricity by turning their blades which are connected to a generator. The electricity produced is then fed into the power grid to provide clean and renewable energy.

An O&M (Operations and Maintenance) provider is a company that specialises in managing the ongoing operations and performance, and carrying out the maintenance of an electricity generation project. O&M providers play an important role in ensuring the efficient and reliable operation of these projects throughout their lifetime.

An ordinary share, also known as common share, is a way to own a portion of a company. Owning an ordinary share gives the right to receive a portion of the company's profits as dividends. Owning a certain number of shares accounting for a certain percentage of the company will usually provide the right to vote on certain company decisions.

These terms are often used in reference to energy yield assessments (see definition). The P50 figure represents the generation number above which there is a 50% chance of the actual output to exceed the forecast production. Similarly, the P75 number has a 75% chance of being exceeded and the P90 number a 90% chance of being exceeded. P50 represents the most likely estimate of energy production from a renewable energy project and is considered the base-case scenario. P90 represents the 90th percentile of the energy production estimate. This means there is a 90% probability that the project will produce at least the amount specified as P90. In financial and risk analysis, P90 is used to account for the uncertainty and variability in energy production. It is a more conservative estimate and provides a measure of the project's resilience to potential underperformance. P90 values are often used to assess the project's ability to meet debt service obligations and quantify production in a low wind year.

The Paris Agreement is a global treaty adopted in 2015 by nearly all countries of the world to address climate change. Its main goal is to limit global warming to well below 2 degrees celsius above pre-industrial levels. Countries that join the agreement commit to reducing their greenhouse gas emissions, enhancing their climate resilience. The agreement aims to collectively combat climate change and work together to create a sustainable and low-carbon future.

Portfolio Management is the process of strategically managing a collection of investments/assets referred to as a 'portfolio' to achieve specific financial and operational goals while considering factors such as risks, market conditions etc. The primary objective is to optimise the balance between risk and return.

Power Purchase Agreement is a contract between an electricity generator and an electricity purchaser, defining all of the commercial terms for the sale of electricity between the two parties.

Refers to a listing segment that has stricter eligibility criteria and governance requirements for companies seeking to list their shares on the exchange. It is designed to showcase companies with higher standards of corporate governance and transparency.

Price return refers to the change in the price of an investment or asset over a specified period of time. It measures the percentage increase or decrease in the asset's price without taking into account other factors, such as dividends, interest, or other income generated by the asset. Price return is often used as a simple way to gauge the capital appreciation or depreciation of an investment.

The LSE's primary market is where companies initially list their shares through initial public offerings (IPOs, see definition).

A ready-to-build renewable energy project refers to a project that has progressed through development stage and is fully prepared for construction and implementation. At this stage the necessary permits, rights, land access and grid connecton has been secured, and subject to contruction agreements being in place, the physical construction phase is ready to begin.

The remaining asset life of an asset refers to the duration for which the asset is expected to continue operating and generating revenue or value. It represents the period during which the asset is projected to remain productive, efficient and economically and commercially viable considering factors such as maintenance, land right duration, planning conditions etc. Understanding the remaining asset life is crucial for financial planning, investment decisions and strategic management.

A Renewable Energy Guarantee of Origin is an electronic certificate used in the UK to provide evidence that a unit of electricity has been produced by a renewable electricity generator. In Europe, GoOs are a similar instrument to REGOs.

Renewables Obligation Certificate is a green energy certificate issued to an accredited electricity generator for eligible renewable electricity generated within the UK. Certificates can then be sold directly or indirectly to electricity suppliers who will then redeem them against what is known as their Renewables Obligation.

A Revolving Credit Facility is a financial arrangement between a borrower and a lending institution that provides the borrower with ongoing access to a predetermined line of credit. Unlike a traditional term loan, a RCF allows the borrower to borrow, repay, and re-borrow funds within the specified credit limit over an agreed-upon period. These facilities are commonly used for managing working capital, addressing short-term financial needs, and providing flexibility in handling fluctuations in cash flow.

SFDR stands for Sustainable Finance Disclosure Regulation. It's a European Union regulation that requires financial institutions and investment firms to provide clear and standardised information about the ESG (see definition) aspects of their financial products. SFDR aims to enhance transparency and help investors make informed decisions by ensuring consistent ESG disclosure across the financial industry.

Solar PV, or solar photovoltaic is a technology that converts sunlight directly into electricity. It involves using solar panels made up of photovoltaic cells to capture sunlight and convert it into usable electrical energy. These panels can be installed on open spaces, rooftops, or other surfaces exposed to sunlight.

A subsidy-free project refers to an initiative that operates and generates revenue without relying on financial incentives, subsidies or government support.

Sustainability is the practice of using resources in a way that meets present needs without compromising the ability of future generations to meet their own needs. It involves balancing economic, social and environmental considerations to ensure long-term well-being for both people and the planet.

TCFD stands for the Task Force on Climate-related Financial Disclosures. It is an initiative established by the Financial Stability Board to promote transparency and consistent reporting of climate-related financial risks and opportunities by companies and financial institutions. The TCFD provides recommendations and guidelines for organisations to disclose information about how climate change could impact their businesses, strategies and financial performance. The goal is to help investors, lenders, insurers and other stakeholders make more informed decisions by understanding the climate-related risks and opportunities associated with their investments.

Total shareholder return shows the overall change in value of an investment including both price changes and dividends received. It gives a complete picture of how well an investment has performed.

A transformer is an equipment that is used to change the voltage of an electric current. Transformers can increase or decrease voltage.

Transmission Network Operator or 'TNO' refers to the licensed entity that owns and maintains a transmission grid.

UN PRI stands for the United Nations Principles for Responsible Investment. It is an international initiative that encourages and promotes the integration of environmental, social and governance factors into investment decision-making and ownership practices. UN PRI provides a framework for investors to incorporate sustainability considerations into their investment strategies and operations. Investors who sign up to UN PRI commit to a set of six principles that guide their approach to responsible investment: 1) Incorporating ESG considerations into investment analysis and decision-making, 2) Being active owners and incorporating ESG issues into ownership policies and practices, 3) Seeking appropriate disclosure on ESG issues from the entities in which they invest, 4) Promoting the acceptance and implementation of the principles within the investment industry, 5) Working together to enhance effectiveness in implementing the principles, 6) Reporting on their activities and progress in implementing the principles.

The UN SDGs or United Nations Sustainbale Development Goals are a set of 17 global goals established by the United Nations in 2015. The goals are designed to address some of the world's most pressing social, economic and environmental challenges, with the aim of achieving a more sustainable future for all by the year 2030. The 17 SDGs cover a wide range of issues including poverty, hunger, health, education, gender equality, clean water, clean energy, economic growth, industry innovation, climate action and more. Each goal is accompanied by specific targets and indicators to track progress. They provide a universal framework for governments, businesses, organisations and individuals to work together and take concrete actions to advance social progress, protect the planet and ensure prosperity for all. They promote a hollistic approach to sustainable development.

Uplift to NAV refers to an increase in the reported or calculated NAV of a fund's investments. This increase can occur for various reasons, but typically represents the appreciatios in the value of the fund's portfolio of assets. The uplift to NAV can result from factors such as capital gains on investments, improved performance of portfolio companies, or revaluation of assets.