Foresight adds to SunEdison woes with underperformance compensation claim

  • Highfield.

    Highfield Farm (pictured) produced nearly 16% less energy than expected in 2015. Image: SunEdison.

Foresight Solar Fund has added to international solar firm SunEdison’s woes, revealing that the two parties are in advanced negotiations to settle a claim over underperformance at three sites.

Foresight released its full-year results for 2015 earlier this week and noted that during an operational performance analysis, it found three sites to have drastically underperformed.

The 12MW Highfields site was the worst offender, producing just 10.2GWh of electricity throughout the year-long period against expected production of 12.1GWh, an underperformance of 15.6%.

Two others – the 10MW High Penn and 16MW Pitworthy projects – underperformed by 4.6% and 5.5% respectively.

Foresight said that upon analysis, SunEdison discovered that the PV modules at the sites were “not performing in line with guarantees”.

“As such, the Company is now in advanced negotiations with SunEdison in order to receive full financial compensation for loss in performance over the lifetime of the plants,” Foresight stated.

SunEdison’s woes have been well documented having once been a considerable power in the global solar market. Its share price peaked at US$31.56 in July last year but closed yesterday at just US$1.53, a slide of more than 95%.

Last October the company announced its decision to “de-emphasise” the “uneconomic” UK market, selling the residential installer it acquired just a few months prior. It has since had to clear a number of legal hurdles shrouding its already re-jigged merger with US installer Vivint Solar and yesterday delayed the publication of its own annual results pending an internal investigation.

However in a statement issued to Solar Power Portal on Wednesday, SunEdison claimed that the problem was rectified soon after it was spotted, and that the affected plants are now working as expected.

“The exceptional situation with these specific three plants was identified and immediately solved. The performance of the SunEdison sites in the UK is, on average, sustainably above 100%," a spokesman for SunEdison said.

Combined performance across Foresight’s total asset portfolio was however slightly above expectations, largely attributable to a near 5% over-performance from its largest asset; the 46MW Landmead project.

Total energy generation from Foresight’s 338MW portfolio for the 12 months ended 31 December reached 298.76GWh, resulting in total revenues for the period of £36.7 million.

While Foresight’s net asset value (NAV) soared by circa 42% year-on-year to £297.11 million, it was significantly hit by factors outside of the company’s control.

The continued slump in UK power prices – also bemoaned by fellow asset holders Bluefield Solar last week – wiped around £25 million off Foresight’s NAV over the course of the year, while the UK government’s decision to remove the Levy Exemption Certificate from renewable generators was also felt.

That decision resulted in a 3.2% hit to NAV, equivalent to around £8.9 million, and Foresight stated that it is “considering its options” regarding last month’s failed bid to seek damages from the government through a judicial review of the decision.

Despite the decision, the company noted its opinion that retroactive changes to subsidy remain unlikely and Alexander Ohlsson, chairman at Foresight, said the company believes “the UK solar market remains attractive”.

An asset pipeline totalling 150MW has been identified for the company to pursue over the next six months.

Foresight also expects to finalise a long-term financing strategy, designed to make use of “favourable debt market conditions” in the UK, which it said would “further underpin returns to investors”.

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