Last checked at 
22 Nov 2022 07:00
22 November 2022
Bluefield Solar Income Fund Limited
('Bluefield Solar' or the 'Company')
UNAUDITED 30 SEPTEMBER 2022 NET ASSET VALUE, AUTUMN STATEMENT UPDATE AND
DEVELOPMENT UPDATE
Bluefield Solar (LON: BSIF), the sterling income fund focused on acquiring and managing UK-based renewable energy assets, announces the Company's net asset value ('NAV') as at 30 September 2022. Unless otherwise noted herein, the information provided in this announcement is unaudited.
The Company's NAV as at 30 September 2022 was £884.0 million, or 144.6 pence per Ordinary Share, compared to the audited NAV of 140.4 pence per Ordinary Share ('pps') as at 30 June 2022.
This equates to a movement of +4.2 pps, a NAV total return for the quarter of 3.0% and gearing (based on the Gross Asset Value of the Company) of 34%. The major factors behind this change are the increase in the sale price of electricity in the UK, offset to an extent by the Company's adoption of a higher discount rate.
The 30 September 2022 NAV is stated after deducting the FY2021/22 fourth Interim dividend of 2.09 pps announced on 30 September 2022 and paid on 4 November 2022. Excluding the deduction of the fourth interim dividend would result in a NAV total return for the quarter of 4.5%.
Following the Chancellor's Autumn Statement on 17 November 2022, the NAV as at 30 September 2022 has been updated to reflect the potential impact of the Electricity Generator Levy ("the Levy"). This results in an estimated reduction of 3pps in the NAV.
Item | pps effect |
NAV at 30 June 2022 (audited) | 140.4 |
Q3 Power forecasts (inc. contingency to 2025) | +9.6 |
Discount rate (6.75% to 7.25%) | -3.8 |
Inflation (2023 - 3.4% to 5.5%) | +0.8 |
Operational updates | -0.3 |
FY21/22 fourth Interim dividend paid | -2.1 |
NAV at 30 September 2022 (unaudited) | 144.6 |
Autumn Statement impact - the impact of removing the power price contingency, and including the Electricity Generators Levy | -3.0 |
UPDATED NAV at 30 September 2022 (unaudited) | 141.4 |
The original 30 September 2022 NAV used the power curves available at that time from the Company's three independent forecasters. However, at that date considerable uncertainty surrounded Government policy around the UK energy market, so contingency adjustments were made to such projections at the time, of approximately 65% in 2023, 50% in 2024 and 25% in 2025 in relation to unhedged power for that period.
The 30 September 2022 NAV included an increase in the equity discount rate to 7.25% (an increase of 0.50% from 6.75% as at 30 June 2022), reflecting increases in both the Bank of England Base Rate and 15 year Gilt yields since the 30 June 2022 NAV. Inflation for 2023, applied only on subsidies and costs, has been amended to 5.5% in line with expectations from forecasters that decreases from the highs of 2022 will be more gradual than previously expected.
All other core valuation assumptions have remained consistent with the NAV issued in the Company's financial statements for the period ended 30 June 2022.
Autumn Statement Update - Impact on 30 September 2022 NAV
On 17 November 2022, as part of the Autumn Statement, the Chancellor of the Exchequer announced the introduction of a new levy on excess profits produced by electricity generators.
The Levy will take effect from 1 January 2023 until 31 March 2028 and will apply a rate of 45% to 'Exceptional Generation Receipts', which are determined by revenue from power sales that exceed a benchmark price of £75/MWh, resulting in a combined 70% tax rate on these earnings from those revenues above £75/MWh for the period the Levy applies.
A £10 million per year allowance will apply, such that Exceptional Generation Receipts below this threshold will be exempt.
Revenue earned under Feed in Tariffs ('FiT'), Renewable Obligation Certificates ('ROCs') or Contracts for Differences ('CfDs') will be exempt.
As the Autumn Statement has provided material confirmation of the Government's approach to energy policy, the Directors have attempted to estimate what the impact of this would have been on the Company's 30 September 2022 NAV.
This follows two steps; removal of the contingency applied to Q3 power forecasts until 2025 (increasing the September NAV by 11.0pps) and application of the Levy (reducing the September NAV by 14.0pps). The combined effect of these changes results in a prospective reduction of 3.0pps and an adjusted 30 September 2022 NAV of 141.2pps.
Development update
In the period since 30 June 2022, the Company has achieved planning permission on a further four PV projects, totalling 215MWp. The expected connection dates for these projects run from H1 2025 to H1 2026.
These projects are in addition to Yelvertoft, a 50MWp PV plant, which has started construction and is expected to connect in Q4 2023, and Mauxhall Farm, a combined 44MWp PV and 25MWp battery plant, targeting connection in Q1 2024. The projected cost of these projects is c.£70 million, which the Company has the option to fund through further debt issuance.
In the light of the levy, the Board will in due course consider the economic position on those projects where planning consent is secured but dates for connection to the grid are yet to be confirmed.
Dividends
The first interim dividend for FY2022/23 will be declared in January 2023. Target dividends for FY2022/23 are not less than 8.40 pence per Ordinary share.
Sell-side analyst briefing
A briefing for sell-side analysts will be held today at 1.00pm via a remote call facility. To register for the briefing, please contact Buchanan on BSIF@buchanan.uk.com. No new material information will be disclosed during the call.
- Ends -
For further information:
Bluefield Partners LLP (Company Investment Adviser)James Armstrong / Neil Wood / Giovanni Terranova |
Tel: +44 (0) 20 7078 0020 www.bluefieldllp.com |
Numis Securities Limited (Company Broker)Tod Davis / David Benda / Vicki Paine |
Tel: +44 (0) 20 7260 1000 www.numis.com |
Ocorian (Company Secretary & Administrator)Patrick Ogier |
Tel: +44 (0) 1481 742 742 www.ocorian.com |
Media enquiries:Buchanan (PR Adviser)Henry Harrison-Topham / Henry Wilson
| Tel: +44 (0) 20 7466 5000 www.buchanan.uk.comBSIF@buchanan.uk.com |
About Bluefield Solar
Bluefield Solar is a sterling income fund focused on acquiring and managing renewable energy and storage projects in the UK, to provide long term, growing dividends for its shareholders whilst furthering the decarbonisation of the energy system. Not less than 75% of the Company's gross assets will be invested into UK solar assets. The Company can also invest up to 25% of its gross assets into other technologies, such as wind and storage. The majority of the Company's revenue streams are regulated and non-correlated to short term UK energy market fluctuations. Bluefield Solar owns and operates one of the UK's largest, diversified portfolios of solar assets with a combined installed power capacity in excess of 766 MWp.
Bluefield Solar is listed on the Main Market of the London Stock Exchange and is a member of the FTSE 250, classified within the Closed End Investments subsector.
Further information can be viewed at www.bluefieldsif.com
About Bluefield Partners
Bluefield Partners LLP was established in 2009 and is an investment adviser to companies and funds investing in renewable energy infrastructure. It has a proven record in the selection, acquisition and supervision of large-scale energy assets in the UK and Europe. The team has been involved in over £4 billion renewable funds and/or transactions in both the UK and Europe, including over £1 billion in the UK since December 2011.
Bluefield Partners LLP has led the acquisitions of, and currently advises on, over 100 UK based solar PV assets that are agriculturally, commercially or industrially situated. Based in its London office, it is supported by a dedicated and experienced team of investment, legal and portfolio executives. Bluefield Partners LLP was appointed Investment Adviser to Bluefield Solar in June 2013.