Foresight Solar Fund has continued to experience serious underperformance issues with SunEdison-built assets that it owns a year after the problems were first made public.
In its annual report – published this morning – Foresight revealed that all four of the projects it acquired from SunEdison have continued to be plagued by issues related to underperformance, forcing the group to pursue the failed developer for further damages.
Foresight did however confirm that it was confident the financial compensation already received “fully compensates” it for the underperformance.
Last year Foresight disclosed that it was in advanced negotiations with SunEdison prior to its collapse for the loss of performance at three sites.
Those assets – Highfields, High Penn and Pitworthy – continued to underperform long into 2016 despite SunEdison issuing a statement to Solar Power Portal last year claiming the issue had been identified and fixed.
“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%,” the spokesman said at the time.
A fourth solar farm – Castle Eaton – has now also been found to experience issues.
This morning’s annual report provided both an update and divulged further information on the case, revealing that the performance of the sites in question deteriorated further around the same time that SunEdison filed for bankruptcy protection in the US.
Foresight’s technical team tracked the performance ratios of all four sites throughout Q2 and Q3 2016, leading it to identify underlying problems that SunEdison were then notified of under the related EPC contracts.
All four sites performed below levels guaranteed in the contracts, and an independent technical advisor was appointed to support Foresight throughout the process.
Foresight’s asset manager has made claims for the total value of identified defects and LDs resulting from the poor performance, calculated on a net present value basis to cover the remaining 23 years of project expectancy.
Foresight was also forced to terminate all four O&M contracts prematurely and appoint its internal O&M division Brighter Green Engineering, which has subsequently been working on “remedial plans” to correct those issues.
That Foresight has continued to experience problems with SunEdison-built assets in the UK is unlikely to be well received by EFG Hermes investment platform Vortex, which earlier this year reached an agreement to acquire the sought-after Terraform Power portfolio built by SunEdison that comprises 24 solar farms with a total capacity of 365MW.
Vortex agreed to pay £470 million for the portfolio but appointed Enertis to conduct technical inspections of the assets prior to the deal’s completion, expected later in H1 2017.
In total, Foresight’s portfolio performed 5.3% below expectations in the year ended 31 December 2016 and its SunEdison-built assets were not the only offenders.
The Bournemouth solar farm was plagued by a planned grid outage that reduced its annual generation by nearly a third (32.9%). Work to increase the line capacity which was originally slated to last eight weeks starting in February 2016 dragged on after additional faults were identified, and it was only the intervention of Foresight’s asset manager to negotiate the solar farm being re-energised prior to the work’s completion that saved it from being offline during the summer peak.
Foresight’s Spriggs farm asset was also affected by a PID issue which is still being resolved with the EPC, and the Wymeswold site was subject to a compensation claim against the EPC – Lark Energy – after its Final Acceptance Certification process uncovered defects relating to inverters, string combiner boxes and DC strings that had not been rectified to Foresight’s satisfaction.
Despite the various underperformance issues Foresight reported profit after tax of £30.7 million for the year, and a near 3% increase in net asset value per share to 102.9p.
Foresight also revealed it expects to close on the acquisition of a 50MW solar farm “imminently”, building on its purchase of the Shotwick Solar Park – still the UK’s largest by generation capacity – earlier this month.