Commentary on DECCs Response to Consultation

RNS Number : 4687J

Bluefield Solar Income Fund Limited

17 December 2015

 



17 December 2015

Bluefield Solar Income Fund Limited

Commentary on the Government's Response to Consultation on Regulatory Support for Solar PV

Bluefield Partners LLP ("Bluefield"), the Investment Adviser to the Bluefield Solar Income Fund Limited ("BSIF"), has prepared a statement following today's publication of the Department of Energy and Climate Change ("DECC") of:

·     response to consultations launched this summer regarding changes to financial support for solar PV (the "July Consultations"), outlining changes to the regulatory support for solar assets, including changes to the Renewable Obligation Scheme (the "RO Scheme") and Feed-in-Tariff ("FIT") accreditation (the "Response"); and

·     a consultation on the level of banded support for new solar photovoltaic ("PV") under the RO Scheme (the "RO Band Consultation").

Bluefield's statement

The July Consultations were the Government's response to the significant growth in the UK solar market over the past few years, which has seen the UK become the largest growth market in Europe since 2013.

Whilst the changes announced in the Response will impact certain solar PV developments that are not yet installed or do not qualify for the Grace Period (as outlined below), they:

·     will have no impact on existing installed capacity of the BSIF portfolio;

·     have no impact on the existing pipeline BSIF is currently evaluating; and

·     create clarity around future RO Scheme and FIT eligibility of new capacity until March 2017.

Background context

•      The UK has been the largest market for solar plant construction in Europe for the past two years. The July Consultations were a response to the significant increase in the installed capacity of solar PV generation, especially large-scale, ground-based installations.

•      The Response and the RO Band Consultation reflect DECC's long-term goal for meeting objectives on cutting carbon emissions and continue to make progress towards the UK's 2020 renewable energy targets, while using the most cost effective regulatory support available for the end consumer.

•    The Response states that the Government will close the RO Scheme across Great Britain to new solar PV projects of 5MW and below, including additional capacity added to an existing accredited solar PV plant up to 5MW total installed capacity, which would mean that:

o     for projects that meet the Grace Period eligibility requirements and are installed up to 31 March 2017, there will be no changes;

o     projects that do not meet the Grace Period eligibility requirements, but which: 1) can evidence significant financial commitment prior to 22 July 2015; 2) meet all other current RO Scheme eligibility requirements; and 3) are accredited by 31 March 2017, will be eligible for the RO that applies as at the date of accreditation; and

o     projects that cannot evidence significant financial commitment prior to 22 July 2015 or that are eligible for the specified grandfathering exception or the banding reduction exception, but which are accredited by 31 March 2016, will still be eligible for the RO that applies as at the date of accreditation, subject to the results of the RO Band Consultation.

•    All new installations applying for FITs on or after 15 January 2016 will be subject to a new system of caps from 8 February 2016.

•    Pre-accreditation for FIT will be re-introduced from 8 February and all applications for pre-accreditation will be subject to the new deployment caps in the same way as applications for full accreditation.

Grace Period Criteria

To be eligible for the Grace Period, developers must meet one of the following:

·     Preliminary accreditation under the RO has been obtained for the station on or before 22 July 2015. The application for full accreditation must be on or before 31 March 2017.

·     Demonstrate that significant financial commitments have been made on or before 22 July 2015 with the application for accreditation, which must be on or before 31 March 2017, providing:

o  A grid connection offer and acceptance of that offer, both dated no later than 22 July 2015;

o  A Director's Certificate confirming ownership of the land, lease of the land, an option to lease or purchase the land, an agreement to lease the land or that the developer or a connected person is party to an exclusivity agreement in relation to the land as of and no later than 22 July 2015 by the developer or proposed operator of the station; and

o  Confirmation that a valid planning application had been received by the relevant planning authority in respect of the project no later than 22 July 2015 or a declaration that planning permission is not required;

·     Demonstrate delays in the planned grid connection to the electricity grid due to factors outside developers' control with the application for accreditation, which must be on or before 31 March 2017, providing:

o  A grid connection agreement consisting of: a grid connection offer; acceptance of that offer; and a document from the network operator which estimated or set a date no later than 31 March 2016 for delivery of the connection;

o  A written declaration by the generator that to the best of their knowledge, the generating station would have been commissioned no later than 31 March 2016 if the connection had been made on or before the estimated grid connection date; and

o  A letter or email from the network operator confirming that the grid connection was made after the estimated grid connection date; and that in the network operator's opinion, the failure to make the grid connection on or before the estimated grid connection date was not due to any breach of the grid connection agreement by the generator/developer.

Policy Area

Government continues to consider renewables to be a key part of the transition to a low-carbon economy and an essential part of the energy mix and believes the UK is making good progress towards the EU target of 15% final energy demand from renewables by 2020 and is committed to its aim of achieving 30% of electricity from renewable sources by 2020. The UK is on track to meet its next interim target of final average energy consumption from renewables, above the 6.3% in 2013/14, as reported in June 2015.  DECC believes that progress on UK renewable electricity deployment has been strong and the pipeline of projects towards 2020 remains healthy. Government expects to meet the renewable energy target of at least 30% of electricity demand to be met by renewable sources.  The measures set out in the Response are about protecting bill payers from unacceptable costs in the future and ensuring that support for renewables remains affordable.

Enquiries:

James Armstrong / Mike Rand / Giovanni Terranova

Bluefield Partners LLP - BSIF Investment Adviser

Tel: [phone]

Tod Davis / David Benda

Numis Securities Limited - BSIF Broker

Tel: [phone]

Kevin Smith

Heritage International Fund Managers Limited - BSIF Secretary & Administrator

Tel: [phone]

Tom Karim

CNC

Tel: [phone]

Note to editors

About Bluefield Solar Income Fund Limited (BSIF)

BSIF is a Guernsey-registered investment company focusing on large scale agricultural and commercial and industrial solar energy assets. It had an initial public offering of shares on the main market of the London Stock Exchange in July 2013. It has, currently, over 309 million shares in issue and a market cap in excess of £300 million.

BSIF seeks to provide shareholders with an attractive return, principally in the form of 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 and is an investment adviser to companies and funds investing in solar energy infrastructure. It has a proven record in the selection, acquisition and supervision of large scale energy and infrastructure assets in the UK and Europe. The team has been involved in over £1.4 billion of solar PV funds and/or transactions in both the UK and Europe since 2008, including over £380m in the UK since December 2011.

Bluefield has led the acquisitions, and currently advises on over 50 UK based solar assets that are agriculturally, commercially or industrially situated. Based in its London office, Bluefield's partners are supported by a dedicated and highly experienced team of investment, legal and portfolio executives. 

Bluefield was appointed Investment Adviser to BSIF in June 2013.

 

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