Foresight increases asset value in Q1, eyes more UK solar investments

Foresight Solar Fund Limited (FSFL), the listed renewable infrastructure fund investing solely in operational U.K. solar plants, said on Monday that its net asset value in the first quarter of the year had increased from £209.8 million ($317.6 million) at the end of December to £244.7 million at the end of the March.

The London-based company, which completed the acquisition of the 37 MW Kencot solar farm in Oxfordshire, England, in March, also raised £36.1 million of gross proceeds in its second round of fundraising last month.

Foresight also finalized the connection of the 2.2 MW extension at its Wymeswold plant, increasing capacity by 7% to 34.4 MW. The company connected the extension to the grid in March 2015 and will therefore be eligible for the 1.4 Renewable Obligation Certificate (ROC) rate.

All of the 10 solar installations in the fund’s 233 MW portfolio are fully operational and secured ROC accreditation ahead of the March 31 deadline for projects greater than 5 MW.

Pipeline

Foresight has a significant pipeline of assets under exclusivity. “The March 2015 1.4 ROC banding deadline for assets over 5 MW drove large amounts of activity and new capacity being installed in the first quarter of 2015,” the company said. “This scale of U.K. installed solar capacity has created an active market in large-scale secondary assets, and as such the company is reviewing a number of secondary opportunities.”

Foresight added that it planned to install portfolios of new projects under 5 MW under the 1.3 ROC banding period, which it expects to provide “an attractive source of new investment opportunities in the short-term.”

Foresight reported that it had no debt at the underlying project level, in line with the its stated strategy, and added that performance of its assets in the quarter had likewise been in line with expectations.

Financing strategy

The company said it had refinanced and extended its revolving acquisition facility through the Royal Bank of Scotland and Santander from £100 million to £120 million with the objective of supporting future project acquisitions. In addition, the fund will introduce long-term financing and said it was currently evaluating a number of opportunities available in the market.

The company said it had adjusted its forecast to reflect the most recent forecasts, resulting in a reduced net asset value but added that independent forecasts continued to assume an increase in power prices in real terms over the medium to long-term.

In addition, Foresight pointed out that the negative impact of forecasts on net asset value had been “more than offset through a combination of increased operational efficiencies within the portfolio through the re-negotiation and improvement of key contractual terms, together with the continued reduction of the discount rate.”