Who will win the UK secondary solar race?

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There may not have been an awful lot of primary market activity in the UK since the end of March, but the country is more than making up for it in its booming secondary market.

Earlier today NextEnergy Solar Fund (NESF) revealed that it had completed a further two asset acquisitions, taking its operational UK portfolio to more than 500MW spread across 50 sites. In doing so it became only the second asset holder to own more than half a gigawatt, still trailing the UK’s largest owner – Octopus – which owns around about twice that amount.

NESF is on a hot streak. Earlier this summer it set its sights on as much as 600MW of the secondary market, before later that month raising more than £125 million to fuel such a spending spree.

Meanwhile, renowned asset management group BlackRock made waves in the UK market late last month when it announced that it was looking to invest up to £1 billion to acquire 1GW of operational UK solar from a standing jump. George Osborne’s part-time employers tapped up Lightsource to help them with the initiative, dubbed Kingfisher, with market consolidation high on its agenda.

Lightsource CFO Paul McCartie told Solar Power Portal that Kingfisher would not exactly be picky over what it sought to buy, but it would also not be rushed. It hopes that its ability to access both levered and unlevered financing structures would set it aside from other players in the market and Lightsource could still shift more of its in-house developed sites to Kingfisher on top of the 156MW seed portfolio it handed over to get things started.

And then there’s Vortex. When it fended off stiff competition to land the 365MW, 24-site ex-SunEdison portfolio from yieldco TerraForm Power late last year, the EFG Hermes-backed owner was catapulted to the upper echelons of utility-scale solar in the UK. The transaction completed in May and the portfolio was refinanced not long after, but Vortex has said it intends to bolt on more renewable capacity.

But what of other likely players? Foresight, comfortably among the UK’s largest solar owners with 475MW, said earlier this month that while it remained on the hunt for new sites, it would be taking a “prudent approach” and would only buy projects that were net asset value (NAV) accretive. It is also one of a number of asset owners with interests overseas, looking specifically at Australia and the US.

Bluefield struck a similar tone earlier this year when it moved to cool any expectations of it making a big splash in the secondary market, instead looking to optimise and make the very most of what it has already.

With different funds seemingly taking different approaches, it begs the question: Just how consolidated will UK solar become?

Writing for SPP earlier this year, our head of market research Finlay Colville suggested that somewhere between 1.5GW and 2.5GW could change hands over the next 18 months, a figure which has seemingly garnered consensus as a number of funds have muttered similar figures within their results call.

To put that into perspective, there is around 7.6GW of utility-scale solar in the UK, meaning that as much as one-third could come under new ownership by 2019.

Much of this is, predictably, expected to go to the more established names and players, most of which have been discussed here, but the extent of which remains to be seen. There are obvious benefits to operating at that scale, and how the UK secondary market consolidates over the next 18 months will have a lasting impact on the entire UK solar supply chain.

Will Octopus cement its position as the UK’s largest owner? Just how much of this 600MW under consideration will NESF land? Will Foresight, and Bluefield for that matter, continue to be as prudent as they suggest? Or will the newcomers of Kingfisher and Vortex shake the status quo? The future shape of the UK ground-mount market looks set to be decided in a handful of boardrooms.