Foresight Solar Fund (FSF) recorded above-expectation performance on the back of strong summer sun, but incidents including cable theft and other outages have beset the fund’s operations.
Reporting its interim results for H1 2018 this morning, FSF revealed that its 600MW-strong UK portfolio – which has since been bolstered by new acquisitions – generated around 200GWh of energy in the first six months of the year.
This level of production was nearly 1% above expectations against irradiation levels 3.2% above forecasts. The heatwave that spread across much of the UK throughout June, July and early August provided a boon for solar performance, but Foresight was impacted by a handful of performance issues in the first half of the year.
And, unfortunately for Foresight, the project most impacted by these incidents happened to be its – and the UKs – largest.
The 72MW Shotwick solar farm was first affected in April when cable was stolen from the site during a break-in. Although FSF said the EPC reacted quickly, the site was impacted until the end of May and the incident accounted for just shy of 1% of the asset’s expected production over the period.
But more serious was a cabling failure between the solar plant and the substation in late June, which took the entire site offline until the end of July. Shotwick was re-energised after more than a month idle, coinciding with the best period of weather this summer.
While Foresight’s investment manager expects to recoup compensation amounting to a “high proportion” of the revenue losses through insurance claims and ICP damages, production losses not covered by those is expected to be around £320,000.
In total, Shotwick's performance fell to 3.6% below expectation for the period despite irradiance standing 7.6% above forecasts.
In addition, underperformance issues affecting sites purchased from SunEdison are still being felt and are taking longer than expected to resolve, and around half of the 37MW Kencot solar farm’s output was affected by two separate voltage transformer failures between February and March, and April and May.
There was too interesting movement in power prices and Foresight’s management of its output. FSF said that while the average power price throughout Q1 2018 stood at around £50/MWh, it nearly doubled to £98/MWh in early March as a result of the so-called ‘Beast from the East’ weather system sending demand spiralling.
Foresight has also further increased the percentage of generators whose output is sold under fixed price arrangements. At the end of last year this stood at 29%, increasing to 44% by the end of April. That percentage has now breached the 50% mark and amounts to 54%, selling at a fixed weighted average price of £48.07/MWh.
Given that the average power price received across the portfolio – including those under fixed arrangements – stands at £46.54/MWh, Foresight has mitigated the impact of price volatility as greater quantities of cheaper renewable energy come on stream.
Power prices have too impacted on FSF’s net asset value, which has slipped almost 2% to £473.1 million since the turn of the year, primarily caused by a “continued softening” of UK power price forecasts.
Foresight expects downward movement of around 2.9% in its medium-long term power price forecasts, equivalent to around 1.1% per year.