Bluefield broadens scope in bid to target ‘attractive opportunities’ of storage and other renewables

Bluefield Solar Income Fund (BSIF) is looking to diversify its portfolio, branching out into storage and other renewable technologies.

The investor has previously only made moves in the UK solar market, however it is now proposing an amendment to its Investment Policy that would allow it to invest in other technologies.

The amendment would broaden its mandate to allow for up to 25% of its Gross Asset Value (GAV) to be invested into energy storage assets and renewable energy assets other than solar. Within the 25%, up to 10% of the GAV could be invested into non-UK assets and up to 5% in UK solar development opportunities.

BSIF cited the increased levels of renewables likely to come onto the UK grid – as well as predictions the green economy will be a beneficiary of the COVID-19 recovery – as resulting in increased greenfield opportunities, which in turn would result in higher levels of intermittent generation and potentially increased levels of power price volatility.

The changes to BSIF’s mandate would therefore allow it to benefit from the growth in renewables whilst profiting from power price volatility where possible, it said.

In particular, it is looking at operational subsidised wind, which it said has a “complementary generation portfolio” to its existing assets. BSIF also cited subsidised hydro as being another complementary technology, although the market for the technology is smaller.

BSIF was clear, however, that it is still evaluating subsidy-free solar, as well as undertaking an assessment of subsidy-free wind.

“The recent drop in UK power prices puts pressure on the company’s model but the cost reduction dynamic of both technologies would indicate that subsidy free investments will continue to be a viable, and economically attractive, option over the long term,” it said.

Making note of the need for storage to help manage intermittent generation, BSIF said it is “important” it has the ability “to invest in the right storage solutions at the appropriate time”. It added that storage is “strategically important” due to the expectation that intermittent generation will result in higher volatility in pricing, which creates an arbitrage opportunity for storage operators.

“The Company holds the view that while the economics of battery and other storage technologies remain difficult to forecast, storage will be a vital part of the energy transformation in the coming years and it continues its evaluation of the competing technologies, both internally and with third party advisers, and is preparing the ground to invest into energy storage assets at the appropriate time,” it stated.

The proposal is subject to Shareholder approval, and if approved will come into effect from 1 July 2020.

Alongside the proposal, BSIF's Board is also seeking authority to allot up to a further 37,049,962 Ordinary Shares, which represent 10% of its ordinary share capital, on a non preemptive basis. This follows the Board being granted authority to allot up to 36,988,353 Ordinary Shares on a non pre-emptive basis at BSIF's 2019 AGM.