Not long after it completed the acquisition of a 37MW solar farm in Kencot, Oxfordshire had Foresight Solar Fund outlined ambitious plans to do more business this year. Its acquisition facility has recently been extended and its share offer revived in an attempt to raise additional equity.

Ricardo Pineiro, fund manager at Foresight, says the fund is raising the capital to strike while the iron is hot. April’s ROC deadline triggered unprecedented development of large-scale solar assets in the first quarter of the year and Pineiro says that never has the secondary solar market been this tempting.

Is the recent refinancing an indication as to what to expect from Foresight this year?

Yes, Foresight Solar Fund currently has an attractive 100MW exclusive pipeline of assets. In order to take advantage of the pipeline we have extended the company’s acquisition facility to £120 million and have recently announced an additional equity raise under the funds placing programme. This will allow us to repay the existing acquisition facility giving investors immediate access to operational and therefore cash generative assets and enable the company to take advantage of this exclusive pipeline. The successful acquisition of this exclusive pipeline would represent an increase in generating capacity of around 50% for the company.

How has the acquisition market for solar farms changed recently?

Over the past two years, the UK solar market has matured and we have seen an increase in competition for these assets from other listed vehicles as well as US yieldcos now entering the market.

What has that meant for prices of solar farms on the market?

Although increased market competition has meant we have seen a slight compression in yields, we have a specific return mandate for the fund and continue to acquire assets in line with this. We are also considering the possibility of implementing long-term debt which will support future fund returns.

How does Foresight's pipeline shape up geographically in the UK?

Although the fund's mandate allows us to invest across the UK, they do tend to be in the southern region just in terms of them taking advantage of the higher irradiation.

How has April's ROC deadline affected the secondary market?

The 31 March 2015 ROC deadline for assets larger than 5MW drove large amounts of activity in Q1 2015, with estimates of 1.6GW of solar capacity being installed in the first quarter alone. This scale of UK installed solar capacity has created an active market in large-scale secondary assets and as such we are reviewing a number of attractive secondary opportunities. As an example, Foresight has recently secured exclusivity on a 51MW, 1.4 operational portfolio.

Who would you say are Foresight's main competitors for that swell of projects?

As well as competition from other listed renewable funds, we also see competition for assets from US yieldcos and developers who construct and retail solar project ownership. However, Foresight was an early entrant to the market and we are the second largest UK solar manager in terms of assets under management. This scale combined with our strong track record has allowed us to develop strong, proven relationships with developers which equips us with an inherent quality advantage in project selection, as well as the ability to maintain an attractive pipeline going forward. 

What's next on Foresight's radar and how do you feel the end transition to CfDs will affect its pipeline?

As well as attractive secondary opportunities, our pipeline also includes portfolios of sub <5MW 1.3 ROC assets as well as larger assets eligible for the 1.3 ROC “Grace Period”. Moving forward, we also expect to see more large-scale projects entering the CfD auction process following the end of the >5MW ROC subsidy and as installation costs in the UK solar sector continue to decrease. This should lead to solar becoming cost competitive with onshore wind in the short-term, allowing for an increase in CfD allocation in the next auction rounds. Although there are currently no CfD assets in our pipeline, we will continue to work closely with developers to ensure we are well placed to take advantage of potential CfD projects in the future.