Ecofin Water & Power Opportunities Plc

Interim Management Statement for the four months to 31 January 2010, and January 2010 Review

To the Shareholders of Ecofin Water & Power Opportunities plc (the "Company"),

This interim management statement has been produced solely to provide additional information to shareholders in order to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.  It should not be relied on by any other party for any other reason.

This Interim Management Statement relates to the period from 1 October, 2009 to 31 January, 2010, and contains information that covers this period, and up to the date of publication of the interim management statement.  More detailed performance information is available on the Investment Manager's website, www.ecofin.co.uk.

The Company invests on a global basis primarily in the equity and equity-related securities of utility and utility-related companies although the Company may invest, to a limited extent, in the debt securities of such companies and may hold significant cash or cash equivalent positions from time to time.  The global utilities sector consists of those companies involved in the electric power, water and gas distribution businesses.  At 31 January, approximately 18.2% of the Company's investment portfolio was invested in the United Kingdom, 23.0% in the Euro-zone [and Switzerland], 40.4% in the United States and 18.4% in other countries.  At 31 January, 2009, approximately 16.3% of the Company's portfolio was invested in emerging markets.

Over the four month period to 31 January, 2010, the Company's Ordinary Shares traded at an average discount to their net asset value per share of 19.0%.

Material Events and Transactions

Following the reorganisation of the Company's share capital in the second quarter of 2009 and the issue of Convertible Unsecured Loan Stock and Zero Dividend Preference Shares in July 2009, there were no material events or transactions in the four months to 31 January, 2010-or since then to the date of this announcement-which affected the Company or its financial position other than the purchase and sale of securities undertaken in the normal course of the Company's business.

Contact details:

Duncan Hayes

Phoenix Administration Services Limited, Company Secretary

Telephone: 01245 398950

In January, the net assets of the Company declined by 4.1% while the FTSE All Share index declined by 3.6%, the Dow Jones Euro Stoxx index declined by 6.9% and the US S&P 500 index declined by 2.9%, all in sterling terms.  In the utilities sector, the FTSE Utilities index declined by 2.2%, the Dow Jones Euro Utilities index declined by 8.5% and the US S&P 500 Utilities index declined by 4.4%, all in sterling terms. Over the course of the month, sterling declined by 0.8% against the US dollar and rose by 2.4% against the Euro.

During January one of the fund's largest positions, Hansen, the world leading wind turbine gearbox manufacturer, was very weak as it deferred its targets of future volumes. Large wind turbine manufacturers are tending to delay orders at the moment, likely to last for a couple of quarters. We remain confident Hansen is positioned to benefit from the long-term trends of the wind industry thanks to its global leadership positioning.

International Power on the other hand, benefitted from initial press suggestions that GDF-Suez's and International Power's management had entered talks.

Integrated utilities lagged behind the sector in January while Infrastructure stocks however held up well. They were down -1.6% in January versus -2.7% for the general market and -5% for European utilities as a whole.

UK press suggested that Northumbrian Water may be subject to a bid from its main shareholder Ontario Teachers Pension Plan. Although this was not confirmed, it is likely to fuel speculation in the sector going forward.

ITC, another of the fund's large positions, outperformed the Utility index by 8.4% during the month of January due to a few notable catalysts, including winning the very lucrative Michigan wind build-out contract. Also the Southwest Power Pool Staff recommended a list of 'Priority' projects which included ITC's. The decision is expected by April 2010.  Lastly, carbon legislation, falling from grace post-Copenhagen and the Massachusetts election outcome, may offer an opportunity for 'Energy Only' legislation wrapped in a jobs / green package.  President Obama has recently intimated that the Senate Cap & Trade legislation may be dead but that incentivized renewables may offer a "market approach". 

Integrated utilities suffered in January due to lower gas prices and further concerns on earnings.  Overall, the performance of the sector universe was very mixed, ranging from +2% to -16%.  Picking the right names is very key in such an environment.  We expect to see a modest improvement in power demand, as supported by weather and an economic recovery, stabilizing commodity prices, and positive legislative developments to support a clean energy / jobs initiative and on-going favorable dividend tax treatment.

January saw a substantial reversal in both the Shanghai and Hong Kong listed Chinese equity markets, with the Shanghai composite and Hong Kong-listed Chinese companies, as tracked by the HSCEI index, down 8.8% and 10.1% respectively. Concerns surrounded the rapid increase in Chinese loan origination during the first two weeks of January, combined with strengthening economic figures that resulted in several policy measures intended to begin drawing excess liquidity out of the financial system.

Basic materials and infrastructure sectors will likely continue to suffer in our opinion. Monetary policy is seeing changes following the enormous stimulus measures of 2009.  With the very strong economic recovery leading to the tightening cycle starting earlier than the market anticipated, we expect market weakness to continue as economic figures continue to strengthen in Q1. Import/export and transport related businesses will benefit from increased utilization and pricing expectations related to the economic recovery, as well as more defensive utility distributors.

Ecofin Water & Power Opportunities plc.  Registered in England 4134479.  Registered Office:  Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW, United Kingdom