Bluefield Solar Regulatory News (BSIF)

15 May 2014

BLUEFIELD SOLAR INCOME FUND LIMITED

Response to the release of DECC's Solar Strategy: Part 2 and the consultation on changes to future RO Scheme Support levels

Bluefield Partners LLP ("Bluefield"), the Investment Adviser to the Bluefield Solar Income Fund ("BSIF"), has prepared the following statement following the release of the Department of Energy and Climate Change's ("DECC") solar strategy document and the subsequent consultation into regulatory supports for new solar assets installed after April 2015.

In April, 2014, DECC released the UK Solar PV Strategy: Part 2 (the "Strategy"). This document should be viewed as a significant step for the UK solar industry in which the UK Government has clearly articulated a strategic ambition for balanced growth in the UK solar market up to 2020 and beyond. This statement is a summary of the key policy statements and proposals within the Strategy and the subsequent consultation (the "Consultation"), followed by a commentary by Bluefield.

Highlights

· The Strategy is an important and positive statement for the future prospects of the UK solar industry. It is targeting a significant increase in the installed capacity of solar energy in the UK from current levels in the next few years across all types of installation;

· The Strategy identifies commercial and industrial installations (including the Public Estate) as the key growth area for the next phase of industry development. DECC aims to accelerate the growth of this sector by reviewing uptake so far, adjusting permitted development rights, tackling landlord/tenant issues, and seeking new financing models;

· The Strategy confirms strong expected growth of large-scale ground-mounted solar, and remains supportive of large scale, whilst looking to accelerate the transition from the RO Scheme to Contracts for Difference (CfD) due to unexpectedly high levels of installations. The Consultation seeks transition to CfD proposed from 1 April, 2015 for assets greater than 5MWp whilst continuing the RO Scheme for sub-5MWp installations;

· Proposals reflect the long-term goal of DECC for balanced growth across different solar sectors using the most cost effective regulatory support available for the end consumer;

· The proposals for regulatory changes are exclusively forward looking and will have no impact on existing installed capacity. There are no proposed changes for any capacity installed up to 31 March, 2015.

Bluefield's Comment

Bluefield views the long term aspiration of the solar strategy document in a positive light. It illustrates the increasingly important and central role of solar PV in the UK's renewable energy mix. It is also recognition of the UK solar industry's ongoing cost reduction and deployment success combined with, broadly, high levels of public support.

The proposals of the consultation will require the industry to adopt the CfD mechanism earlier than expected as the government moves the large scale solar industry away from the RO Scheme from April, 2015 onwards. Cost reduction and deployment are at the heart of the recent success of the UK solar industry and will be critical prerequisites of its long term success.

Policy Area

Growth in commercial and Industrial Installations: the Strategy and Consultation are looking to engineer the creation of a new, large solar market, one which as yet has failed to gain the traction. Solar is ideally suited to the commercial and industrial type of installation DECC is promoting in the policy document: installations on brownfield sites or rooftops, creating a distributed generation model where the energy is used on-site, generally at a discount to typical energy costs. DECC are exploring both the non-financial and financial obstacles to this market in order to create what would be, if successful, the biggest single sector in the UK solar market.

BSIF has a stated aim to invest into commercial and industrial sites and its Investment Advisor, Bluefield, was one of the pioneers of the commercial investment market. Bluefield currently advises on over 40 solar installations on industrial and commercial sites, where on-site users such as Thames Water and Toyota benefit from direct supply of electricity from on-site solar generation.

Large Scale ground based installations: the Strategy and Consultation recognises the contribution of this area of the market, one that has seen strong growth since BSIF listed in July, 2013. In the past 9 months this market has gone from a very low base to become the biggest solar market in Europe for primary assets. There is expected to be continued strong growth under the RO Scheme until April, 2015.

The CfD support mechanism is designed for large scale installations and should provide clarity and simplicity for generators. The solar industry's successful conversion to CfD will need to see the government supportively consulting with the UK solar industry over the coming months, an industry characterised by relatively newly established small and medium sized private enterprises creating domestic employment and growth.

The UK solar generation market is now well established, highly successful and highly adaptable. We expect to see this success continuing.

Enquiries:

James Armstrong / Mike Rand / Giovanni Terranova

Bluefield Partners LLP - Investment Adviser

Tel: +44 (0)20 7078 0020

Tod Davis / David Benda

Numis Securities Limited - Company Broker

Tel: +44 (0)20 7260 1000

Kevin Smith

Heritage International Fund Managers Limited - Company Secretary & Administrator

Tel: +44 (0)1481716000

Note to editors

About Bluefield Solar Income Fund Limited (BSIF)

BSIF is a Guernsey-registered investment company focusing on large scale agricultural and industrial solar assets. It raised gross proceeds of £130 million in July 2013 through an initial public offering of shares on the main market of the London Stock Exchange. It raised a further £13 million in February, 2014 in an oversubscribed placement.

BSIF seeks to provide shareholders with an attractive return, principally in the form of semi-annual income distributions, by investing in a diversified portfolio of solar energy assets, each located within the UK, with a focus on utility scale assets and portfolios on greenfield, industrial and/or commercial sites.

About Bluefield Partners LLP (Bluefield)

Bluefield was established in 2009 as a specialist investor into solar energy. Bluefield's team has a proven track record in the selection, acquisition and management of large scale energy and infrastructure assets in the UK and Europe.

The managing partners have been involved in over £350m of solar photovoltaic funds and/or transactions in both the UK and Europe since 2008, including over £185 million in the UK since December 2011. Bluefield has led the acquisitions, and currently advises on, over 50 UK based solar assets. The majority of the assets are situated on industrial and commercial sites.

Bluefield was appointed Investment Adviser to the Company in June 2013.