Small is beautiful, says UK’s largest solar fund

New solar still attractive to funds

Competition to acquire large solar sites is driving the UK’s largest listed solar investment fund to look for portfolios of smaller developments.

Posting interim results, Next Energy Solar Fund (NESF) said its total operational portfolio now stands at 539MW, with the company hopeful of adding a further 193MW.

At least 59.8MW of that pipeline will be subsidy-free developments. NESF said it had acquired the rights for four utility scale subsidy-free developments and intends to build them within the next 12 months. These include a 10MW site in Wrexham, a 19.6MW site in Worcestershire, a 20.7MW site in Warwickshire and a 9.5MW development in Cheshire.

Chairman of the board, Kevin Lyon, said subsidy-free developments, potentially co-located with storage, is where the company sees the next stage of growth for the solar sector.

The company said its operational assets had outperformed in terms of energy generated by around 2% across the portfolio, although a 43-day DNO outage at its 5MW Hall Farm site in Leicestershire meant energy generation for that plant was -22.1% compared to budget.

Small wins

Lyon said increasing competition to acquire large operational solar sites following the closure of subsidy schemes is leading the fund to “focus on smaller portfolios of several solar plants to be built for us”.

Lyon added that the economies of scale of larger sites were not necessarily of benefit for investors because these have been priced into projects touted on the secondary market.

“As a result, we have found that larger assets or portfolios do not present any particular economic advantage to the company,” he added.

Lyon said “focusing on smaller assets results both in an accretion in the value of the company’s portfolio as well as mitigating risk through diversification”.

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