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Q2 2024 quarterly valuation update for the energy and infrastructure sector | spotlight: NPV calculations
30 July 2024
Explore the latest valuation trends in the energy and infrastructure sector, with a spotlight on the use of NPV calculations. Our Q2 2024 update provides a snapshot of key publicly available valuation trends across the energy and infrastructure sector, covering both debt and equity metrics.
Three key themes from Q2 2024:
Stable cost of debt this quarter: Gilt yields have been stable over the past 3-6 months. This is helping transaction flow, allowing valuation expectations to stabilise.
Increasing transactional activity across the renewable energy sector: Market activity has been strong, helped in part by lower levels of volatility around the cost of capital. Publicly reported discount rates from listed funds (both general infrastructure funds and more focused renewable energy funds) have been largely flat now for 6-9 months, following a period of discount rate increases.
NPV calculations are critical to most valuations in the sector – and therefore ensuring accuracy is also critical: NPV calculations are basic building blocks to most asset valuations in the sector. Mistakes are not uncommon, though. It is, therefore, important for investors not just to understand how to calculate accurately but also to consider the valuation.
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