Bluefield Solar's gains from fixed Power Purchase Agreement (PPA)prices will be largely offset by the new windfall tax on low-carbon generation, it said in its report for the second half of 2022.
The renewable energy and storage asset income fund has released its Interim Report for the six months ending 31 December 2022, reporting a small increase in its Net Asset Value (NAV) to £870.7 million. This was principally due to higher electricity prices, however the company forecasts that these benefits are likely to be offset by the Energy Generator Levy (EGL).
Bluefield’s PPA sales strategy – fixing power for one to three years ahead – has allowed the company to benefit from rising inflation with over 80% of its merchant revenue hedged until March 2024, and so reported limited revenue exposure to recent electricity market declines.
The report detailed that the average seasonal weighted power price for the 12 months ending 31 December 2022 increased by 70.75% from the year ending 31 December 2021 to £85.80 per MWh – these values contain price fixes made from up to two years prior.
The majority of these gains however, the company reported, will be offset by the EGL, as well as the increased cost of debt.
The EGL went live this January, and imposes a 45% windfall tax on “extraordinary returns” made by companies generating low-carbon electricity.
Nevertheless, Bluefield reported that, as roughly 53% of its revenues out to the mid-2030s are derived from the subsidy schemes – such as Feed in Tariffs or Contracts for Difference schemes (CfDs) – its board has a “high degree of confidence” in achieving dividend cover in excess of 2.0x in the financial years ending June 2023 to June 2025.
Bluefield's solar portfolio played an increasingly significant role in this reporting period's revenues.
In the six months before 31 December 2022, Bluefield’s solar portfolio achieved a Net Profit of 76.96% (2.54% lower than FY 2021/22) but still generated 327.4GW – 6.2% more power than expected.
Despite the decrease in PR, the total generation of Bluefield’s solar portfolio increased by 26.6%, compared to the same reporting period in 2021. The company attributed this to its portfolio capacity increasing by 10.1% and irradiation levels being 9.7% higher than the company’s forecast.
These factors have resulted in Bluefield’s solar generation yield increasing by 9.6% to 462.55MWh, compared to the same reporting period in FY 2021/22.
Bluefield’s current solar construction and development pipeline for solar capacity is 956MW, including the 49MW Yelvertoft solar PV project in Northamptonshire.
“It is very pleasing to report on another successful period for Bluefield Solar, with further growth of our asset base and delivery of excellent returns for shareholders. With continued progress in its proprietary development pipeline, along with construction underway on Yelvertoft, the Company is entering an exciting period, delivering on each of the three tenets of its development strategy: invest, construct and the selective recycling of capital,” said John Scott, chair of Bluefield Solar.
“Bluefield Solar looks to the year ahead with great confidence and relishes the opportunity to play an increasing role in the UK’s transition to renewable and sustainable methods of electricity generation.”
Solar Power Portal's publisher Solar Media will host the UK Solar Summit on 27-28 June 2023 in London. The event will explore UK’s new landscape for utility and rooftop solar, looking at the opportunities within a GW+ annual market, and much more. For more information, go to the website.
Solar Power Portal's publisher Solar Media will host the Renewable Energy Trading Summit on 6-7 June 2023 in London. The event will explore PPA structuring, revenue risk management strategies, renewable energy certificates, and much more. For more information, go to the website.