Renewable energy investment trusts are drawing fresh investor interest as the conflict in Iran pushes oil prices above $100 per barrel and raises the prospect of sustained higher power prices across the UK.

The average trust in the Association of Investment Companies (AIC) renewable energy infrastructure sector has gained 1.2% since the conflict began, outperforming broader markets at a time of heavy selling.

Total share price returns for the sector fell just 1.3% in March, according to Ashley Thomas, infrastructure and renewables analyst at Winterflood Securities, against a 5.5% decline for the AIC Infrastructure sector and a 6.7% fall for the FTSE All Share.

Retail investor data from Winterflood suggested the sector recorded the third largest value of buy orders across all AIC sectors during the month, with Greencoat UK Wind PLC (LSE:UKW) the most popular trust among renewable energy and infrastructure names.

Saftar Sarwar, chief investment officer at Binary Capital, said the closure of the Strait of Hormuz had underscored the fragility of oil-dependent energy infrastructure and was accelerating government impetus to deploy domestic, low-carbon alternatives.

Iain Scouller, analyst at Canaccord Genuity, pointed to damage at Qatar’s liquefied natural gas (LNG) facility, which QatarEnergy said would affect 17% of its export capacity for between three and five years, as a further factor likely to keep UK power prices elevated.

Scouller noted that most trusts in the sector have locked in around 80% of revenues at fixed or proportionate prices for the next year or two, limiting the immediate upside from higher spot prices.

However, he said there was a growing chance that independent power price forecasters would begin revising their assumptions upward, which could break a two-year trend of falling net asset value (NAV) forecasts and potentially deliver flat-to-positive NAV returns in the first half of 2026.

Canaccord upgraded Greencoat UK Wind to buy in March, citing its approximately 30% exposure to merchant power prices, a prospective dividend yield of more than 10%, and shares trading at a 28% discount to the latest NAV of 133.5p.

Markuz Jaffe, research analyst at Peel Hunt, cautioned that higher inflation expectations accompanying an energy price spike could push up discount rates and weigh on trust valuations, partially offsetting the revenue benefit.

Thomas flagged a further risk specific to policy, warning that higher energy costs could prompt the government to introduce affordability measures, as it did with the Electricity Generation Levy in 2022, representing a potential constraint on returns even if power prices remain elevated.

The AIC Renewable Energy Infrastructure sector currently offers an average dividend yield of more than 10%.