Foresight Solar sees NAV decrease by 6% despite ‘above forecast’ electricity production

Dedicated solar and battery storage fund Foresight Solar has seen its net asset value (NAV) decrease by almost 6% to £726.6 million in H1 2023.

The results, which includes the firm’s global portfolio, decreased from the £771.5 million for the six months to 31 December 2022. This is despite the company witnessing “above forecast” global electricity production of around 2.8%, particularly from its UK and Australian assets.

Foresight stated in its results that “the company’s power price hedging strategy and higher inflation mitigated downward NAV pressure from lower near-term power forecasts and increased discount rates”.

It is also worth noting that high irradiation in 2022 led to the ‘strongest solar generation year to date’ for Foresight Solar, prompting a decrease in H1 results in comparison to last year.

The firm confirmed that its gross asset value (GAV) had also decreased from £1.3 billion on 31 December 2022 to £1.2 billion on 30 June 2023.

Foresight Solar is also set to commence a divestment programme of approximately 200MWp. According to the financial results, the proceeds will be used to “reduce debt and recycle capital into yield-accretive opportunities”.

Commenting on Foresight’s results, Alexander Ohlsson, chairman of Foresight Solar, said: “Electricity production across the portfolio was 2.8% above budget, driven by strong operational performance and good irradiation, and, with assets in all geographies performing well, cash generation was exceptionally strong.

“We have also commenced a divestment process to realise gains and recycle capital whilst retaining an attractively balanced portfolio. Proceeds from disposals will be used to reduce gearing and to cover commitments under the existing pipeline. Based on current forecasts, the sale of about 200MW of operational assets will allow the full funding of our expected pipeline until the end of 2025 without the need for additional external capital.

“Looking forward, the scale of growth opportunities for Foresight Solar is considerable. The impetus to achieve net zero targets is driving even more investment into renewable generation, and solar and battery storage are major beneficiaries, with both being comparatively low cost and quick to deploy.”

Ohlsson concluded: “With measures in place to shore up the balance sheet in a volatile macro environment, a highly cash-generative portfolio, and a laser-like focus on returns-accretive pipelines, Foresight Solar is well placed to continue delivering steady, resilient income with an element of NAV growth for decades to come.”