Bluefield readies value enhancement programme as it ducks asset outages

Bluefield Solar Income Fund (BSIF) is to concentrate on enhancing the value of its existing assets after considering attractive secondary market opportunities to be “few and far between”.

The UK solar investor published its annual results for the year ended 30 June 2017 this morning, revealing higher than expected performance from its 441MW operational portfolio which it credited to the company’s asset management practices.

But when assessing where the company may dedicate its activities moving forward, Bluefield revealed that it is to take a slightly different approach to other investors such as NextEnergy Capital, Foresight and BlackRock/Lightsource partnership Kingfisher, who have all targeted further acquisitions.

While not ruling out more market activity – Bluefield said its investment advisor is currently negotiating across large and small-scale transactions – it considered there to be a limited number of assets on the market that would meet its strict investment criteria.

This has been exacerbated by market forces described by BSIF to have sent asset prices climbing in recent months. New investors and funders have entered the space while cuts to subsidies have limited the availability of new investment opportunities, driving prices up as competition for the most productive and attractive assets increases.

As a result, Bluefield said it is to focus throughout the forthcoming financial year on “further value enhancing strategies”, and listed three activities in particular.

BSIF will this year embark upon an asset-life extension programme, secure optionality for the addition of battery storage assets on its existing portfolio where possible and actively discuss corporate and direct-wire power purchase agreement tie-ups to provide more predictable revenue streams.

Meanwhile Bluefield has discussed its asset performance for the year, which came in several percentage points ahead of forecast despite several periods of outages and defective components causing generation problems.

BSIF net performance ratio for the year stood at 83.4% against a forecasted 81.3%, equivalent to a generational yield of 986MWh.

This had been achieved by the firm’s technical asset management teams mitigating potential grid outages, specifically those affecting three assets in particular.

Vital grid improvement works on the Isle of Wight – first revealed to be impinging on solar generation by Solar Power Portal – stood to significantly affect the generation of Bluefield’s 5MW Durrants Solar Farm on the isle. Having originally been expected to result in 994.6MWh of lost generation, negotiations with distribution network operator SSE reduced this loss to 543MWh throughout the downtime, saving some £183,000.

Similar negotiations between SSE and other asset owners on the island, including Wight Community Energy, also saved generation revenues. 

However the largest saving originated from a planned outage that would’ve taken Bluefield’s 50MW West Raynham solar array offline for 29 days in the middle of summer. This was negotiated down to just 3.5 days, saving the firm more than £650,000 in revenue.

BSIF also received around £1.3 million in limited damages for various technical issues involving underperformance, revenue losses and minor component defects. However the company said that as the figure was such a small share – 2.8% - of total revenue, it reflected the “strong performance of the majority of assets” within the firm’s portfolio.

John Rennocks, chairman at BSIF, said it had been “another good year” for the company.

“Following another year of outperformance, our focus remains on optimising our revenue from the existing portfolio in a challenging market and on strong operational management through BSL, who will also actively pursue further value enhancing strategies across our portfolio.

“Whilst not underestimating the challenge posed by the desire to increase our dividends in line with RPI, we look forward to another successful year, delivering attractive returns to our shareholders,” he added.