Bluefield Solar Income Fund also saw its net asset value increase, as well as an increase in its dividend forecast. Image: Bluefield
The Bluefield Solar Income Fund (BSIF) saw its underlying profit rise to £21.4million as high power prices, investment in battery storage – with possible two-hour durations – and lower than expected irradiation are all shaping H2 2021.
In its interim results for the six months to 31 December 2021, OSFI’s underlying profit before amortization of debt was £21.4m, compared to £18.7m for the same one-year period. previously.
Total operating income, meanwhile, rose significantly to £54,510,638 from £14,189,525.
James Armstrong, managing partner of Bluefield Partners, said Solar energy portal in a call after today’s (February 22) earnings release that these were driven by two factors, one of which is rising RPI bond revenue. The other is that the company is selling electricity at “significantly higher levels than we were before.”
“Electricity markets have moved in our favor, but also have the advantage of being able to act very quickly and with agility to be able to terminate contracts,” he said.
Indeed, the company is renewing 150 MWp of contracts – around 25% of its portfolio – in the first half of 2022, which is part of BSIF’s power purchase agreement (PPA) strategy.
“Periodically we have back-to-back contracts because what we were looking to do was make sure we could benefit from them – so protect investors on a downside, but also have the ability, if necessary, to be able to fetch higher prices,” Armstrong said.
“They’re going to be re-hit at significantly higher levels than they are right now.”
Indeed, prices charged for OSFI’s PPAs have increased. The company entered into contracts at an average price of £71.34/MWh after July 2021, while at the start of 2022 it reached an average of £115.26/MWh.
The weighted average contract price per MWh across its portfolio had risen to £51.8/MWh by December 31, 2021, from £51.6/MWh for contracts commencing after June 30, 2021.
This is a result of the high prices seen over the past six months or so, with UK overnight electricity prices falling from around £78/MWh on average in June 2021 to around £245/MWh in December 2021 in Europe. gas hub prices have reached record highs.
OSFI cited tight global gas markets, below-average gas storage levels and current Russian gas supply limitations which it said are “potentially exacerbated by development on the Ukrainian border.” “.
Further pressure on prices was created by lower than normal renewable energy production and colder weather conditions, OSFI said.
BSIF currently has an operational solar portfolio of 613 MWp, consisting of 106 photovoltaic power plants. This breaks down into 65 large-scale sites, 39 microsites, and two rooftop sites.
It also includes 128 MWp of utility-scale subsidy-free ready-to-build solar projects and 45 MWp of ready-to-build battery storage assets.
During the period, BSIF acquired two ready-to-build projects, namely a co-located 25MWp solar battery site for £5m, and a 20MWp stand-alone battery storage development for £1.5m. sterling from Shaw-Energi Ltd.
The battery project is based in Liverpool, and construction is expected to begin in 2022. The acquisition follows the company’s expanded mandate in 2020, allowing it to invest in battery storage and wind power.
Asked by Solar energy portal regarding the battery storage durations being considered by OSFI – with recent trends showing more companies considering two-hour durations, including Harmony Energy and Gresham House – Armstrong said one hour was the predominant strategy until ‘to relatively recently, now with increasing concentration over two hours.
“It’s something we’re looking at, whether two hours would be a better solution. There are pros and cons to both.
“Because it’s still in that stage of development, we’re not at the stage where we make the decision, but we will make that decision relatively soon,” he said.
Subsequent to period end, OSFI also acquired a 47.5 MWp wind and solar portfolio from Good Energy, with all solar sites in this portfolio located in the South West.
The company explained how it has 100 MWp of approved PV projects, while its pipeline of solar and battery developments has reached around 800 MWp.
However, during the period, irradiation was approximately 2.9% lower than expected which, combined with the planned annual HV and general maintenance activity during the second quarter, which necessitated the temporary shutdown of the power plants, resulted in total production and production yield 3.6% lower than forecast. .
Armstrong was quick to assure that this is a departure from a “very high generation level” and should not continue as a trend in the future.
The interim results also detailed how more than 332 MWp of the company’s portfolio secured 25- to 40-year extensions, which Armstrong says is a way to create value from the existing portfolio.
The company has also entered a selection of its projects into the fourth round of the Contracts for Difference program and is awaiting the results of the qualifying review at the end of February 2022.
OSFI’s net asset value also increased to £610.0m from £471.4m for the same period a year earlier, while there was also an increase in dividend forecasts.
“There’s also a lot of really good news that’s going to come throughout the fiscal year, and beyond,” Armstrong said.