Results season and UK solar’s direction of travel

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Results season - that time of the year when firms reveal just how well, or poorly, they’ve performed - is always interesting, but as UK solar enters a critical juncture, this year’s season has become emblematic of PV’s direction of travel.

And pouring over two of the most recent sets of results, specifically those of Bluefield Solar Income Fund (BSIF) and Foresight Solar Fund (FSF), perfectly encapsulate the industry’s current status and the challenges it faces. 

Late last month BSIF reported its results for the six-month period ending 31 December 2018, detailing a 38% surge in underlying earnings to £18 million. 

Irradiation levels throughout the period were nearly 10% above expectations as a result of significantly favourable weather in July, September and October, resulting in Bluefield’s assets recording generation 11.1% above forecasts.

However BSIF was forced to admit that its portfolio’s net performance, a metric different to generation, was just 0.5% above forecast and 2.6% lower than the previous year’s equivalent performance. 

Aside from the relatively predictable annual panel degradation impacts, BSIF squared this portfolio underperformance is a fall in the operational efficiency of plants which has occurred as a result of such high irradiation, caused by inverter saturation or ‘clipping’. 

This occurs when the DC power output from a particular array exceeds the maximum input level for  an inverter, and stands to be particularly common in the UK as a result of design and build patterns in UK solar.

According to BSIF, it is common to oversize the generating capacity of solar plants in the UK - due to lower average irradiation levels for most of the year - by a factor of 1.2 to 1.4. This figure has been reached to ensure generation is maximised through the inverter when irradiation is below peak levels. 

BSIF’s own given example is developing a 5MWp solar farm which is licensed at that maximum output, but built at a capacity of 6MWp. While 1MW is ‘clipped’ at times of peak generation, the solar farm is able to deliver the maximum 5MW output for more hours of the year, maximising the farm’s performance. BSIF has not been alone in reporting instances of inverter clipping, with Foresight indicating it has experienced the same. 

Should the UK experience summers like 2018’s more frequently, then clipping could become more commonplace in the industry.

Meanwhile, BSIF also pointed towards outages and curtailments outside the company’s control to have cost the firm nearly 5,000MWh of generation, an increase on the generation lost in the same period last year and equivalent to around 2.2% of the portfolio’s total generation. 

The most significant periods were recorded at the 48MW Southwick plant in Hampshire, which was sent off line for 121 hours in July 2018 and a further 85 hours in September, both as a result of DNO-led failures. 

Those periods of downtime are expected to have cost the firm nearly 1,800MWh of generation alone, equivalent to more than £200,000 of lost revenue. 

It’s not just the past that results season gives an indication of. Talk of subsidy-free developments and investments has dominated the headlines of results disclosure of late, but there remains substantial work being done behind the scenes to optimise what funds already own.

BSIF’s results are clear in that the fund’s principal concern is extending the lifetime of its assets from 25 years to 40. Bluefield has undergone a project of extending these by revisiting existing land leases and is now more than three-quarters of the way through it, with contractual terms agreed with landowners on half of its sites. 

The next stage of this project is to make the necessary submissions to local planning authorities, which Bluefield is expecting to do throughout Q1 2019. 

But that’s not the only thing BSIF is trying to squeeze through planning. Rights to install and operate battery storage facilities are being added where possible, further bolstering asset value. 

Foresight is another established fund examining similar, as will other funds, and BSIF is eager to assess how beneficial such retrofits could be. 

Having amassed significant portfolios of assets, both Foresight and Bluefield find themselves in similar places. More prudent approaches to acquisitions are taking hold as competition in the secondary market is sending prices spiralling, and both funds are now taking longer-term views to eke as much as they can out of what they already have.

Between that and keeping a watching brief on subsidy-free developments, the funds have their hands full.