Solar electricity’s attractions as an investment class are highlighted again this morning, with two specialist funds reporting strong growth in asset value and returns.
NextEnergy Solar Fund and Bluefield Solar Income Fund today separately signal to LSE followers quarterly rises in net asset value of 8.2% and 10% respectively, both on an unaudited basis.
Founded in 2007, Next Energy Solar Fund (NESF) has amassed 865MW of generating assets across 100 solar projects predominantly in the UK and Italy, plus battery and energy storage capacity of over 100MW. Battery projects in its pipeline include the unbuilt remainder of a 250MW joint venture with Eelpower.
At the end of June, unaudited valuations of NESF’s gross assets valued them at of £1.198 billion.
The power sales desk of parent Next Energy Capital continues to – in the words of today’s statement – “opportunistically secure power prices higher than forecasts, in line with NESF’s power sales strategy”.
LSE-quoted NESF is associated with two privately held funds:
- Launched in December 2021, NextPower UK ESG invests in British greenfield subsidy-free solar projects, benefitting from PPAs. The UK Infrastructure Bank is providing financing to the initial seed assets of the fund, and plans to invest up to £250m, half of the fund’s total target fund size, on a match-funding basis
- NextPower III ESG focuses on the international solar, principally in the US, Portugal, Spain, Chile, Poland and Italy.
As with NESF, Bluefield attributes its valuation uplift to higher forecasts for power prices, and higher inflation expectations. Both factors have been partially offset, says Bluefield, by higher discount rates applied in the valuation, reflecting an increased proportion of non-solar assets in the portfolio and a rise in UK gilt rates.
On 30 September Bluefield will announce its audited full year results to end June 2022.
Attacks on solar farms by Tory leadership contenders last week have attracted sustained rebuttals from UK solar leaders.
In six-weeks of hustings courting up to 160,000 Conservative members, would-be prime minister Truss in particular has repeatedly pandered to prejudices, attacking solar for allegedly taking land out of food production, and describing PV farms as ‘paraphenalia’.
“The candidates for PM continue to claim that solar farms are a threat to food security when the opposite is true,” the lobbyists proclaimed.
“One of the biggest risks to food security is our changing climate. This is clear from recent reports on how this year’s drought is literally shrinking the potato crop. Solar farms address climate change and so help prevent this, and are frequently used to graze livestock at the same time.
Environmental benefits, including support for flora and fauna and increasing biodiversity, added to farms’ societal contribution, the industry group added.
“Solar farms occupy less land than golf courses do, and by providing a stable revenue stream can help to keep farming profitable”, it said.