Foresight to take ‘prudent approach’ to new buys as liquidated damages mount up

The Shotwick Solar Park (pictured) was out of action for 28 days following a transformer failure in March. Image: WELink.

Foresight Solar Fund has said it is to take a “prudent approach” to acquiring more solar farms in the UK, as the firm continues to tap EPCs for liquidated damages.

The firm published its H1 results for the six-months ended 30 June 2017 yesterday, revealing profit after tax of £11.5 million on the back of earnings totalling £23.28 million.

Having recently taken its UK operational capacity to 475MW, Foresight discussed the potential for it to increase its portfolio size even further. It estimated that as much as 2GW of capacity could be sold within the next 18 months but admitted that the UK’s secondary market was a particularly competitive environment to operate in.

As well as the usual suspects of Foresight, NextEnergy Capital and other investors remaining acquisitive, the UK’s significant solar capacity has attracted further would-be buyers. Vortex, who purchased the 365MW Terraform Power portfolio at the end of last year, is said to be targeting additional purchases while BlackRock recently partnered with Lightsource to launch Kingfisher, a new fund which is to invest £1 billion with the aim of amassing a 1GW portfolio.

Foresight said it is actively reviewing a pipeline more than 500MW in size in both the UK and other international markets, but said it would be maintaining a “prudent approach” to new acquisitions and only taking on projects that would be “NAV [Net Asset Value] accretive”.

Meanwhile, the firm also revealed that its total electricity production for the period – 223.5GWh – was around 8% below expectations, largely down to short-term underperformance at a handful of sites attributed to “specific and isolated operational issues”.

That 8% underperformance has however been offset by around £3 million in liquidated damages received from EPC contractors to compensate for lost production from five specific sites.

Of its sites identified as underperforming during the period, four – Castle Eaton, High Penn, Highfields and Pitworthy – were constructed by SunEdison prior to its collapse, and those sites’ underperformance has been well noted in previous results.

Foresight provided an update on the situation and confirmed that Brighter Green Engineering, the O&M contractor it owns outright, had now assumed control of the sites and had since completed various remedial works. These have resulted in a “significant improvement” in technical performance, with further works to continue throughout the rest of the year.

Nevertheless, Foresight said it was confident that damages already received from SunEdison would compensate for both the cost of the works and the lost production.

Foresight was also beset by a transformer failure at Shotwick, the 72MW solar farm it acquired at the start of the year, which took the asset out of action for a 28 day period from 16 March 2017.