‘Higher-than-expected irradiation’ leads to overperformance, says Foresight Solar. Image: Foresight.

Foresight Solar Fund has announced that higher-than-expected irradiation in the UK for the six months to June led to an overperformance of 2.8%.

Despite this, it is worth noting that the solar fund’s net asset value (NAV), as of June 2023, decreased to £726.6 million as it confirmed that around 200MWp of assets from its operational portfolio will be used for a divestment programme.

The solar and battery storage fund said that this divestment programme is expected to commence this year and continue into 2024.

According to Foresight, the “biggest driver” for the NAV decrease in Q2 2023 was due to a 50 basis points (bps) increase in the discount rate for UK solar projects.

The fund said in a statement that persistently high inflation led central banks around the world to hike base rates, with the Bank of England having raised its benchmark to 5.25%.

It said that “in response to the corresponding increase in the risk-free rate, Foresight Solar has taken its UK levered solar discount rate to 7.5% from 7% (A total increase in UK discount rates of 150bps since Q3 2022)”.

The result of this meant that the weighted average discount rate for the portfolio now stands at 7.55%, whereas in March 2023, it was 7.16%. This increase represents the “largest downward adjustment to the Q2 NAV”.