Response to DECC Press Release

RNS Number : 8204T

Bluefield Solar Income Fund Limited

22 July 2015

 



Bluefield Solar Income Fund Limited

Response to the Department of Energy and Climate Change's Proposed Changes to Regulatory Support for Solar Assets

Bluefield Partners LLP ("Bluefield"), the Investment Adviser to the Bluefield Solar Income Fund Limited ("BSIF"), has prepared a statement following today's announced consultations on changes to financial support for solar PV and changes to Feed-in-Tariff ("FIT") accreditation (the "Consultations") from the Department of Energy and Climate Change ("DECC") and its proposed changes to the regulatory support for solar assets.

Bluefield's statement

The proposals under the Consultations would have no impact on the projects currently held in the BSIF portfolio. Further, each of the sub-5MW construction projects in the pipeline currently being considered by Bluefield on behalf of BSIF would qualify for the Grace Period as proposed in the Consultations and would be eligible for the current Renewables Obligation ("RO") level of support. 

Bluefield also believes there will be future opportunities in regard to sub-5MW projects that would qualify for the Grace Period or that would be able to evidence the necessary significant financial commitment pursuant to the proposals, as well as further industrial and commercial projects. All of which provide a material pipeline of potential construction assets up to at least April 2017.

Background context

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

•      The proposals under the Consultations reflect the long-term goal of DECC 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 proposals for regulatory changes are exclusively forward looking and will have no impact on existing installed capacity.

•    Under the financial support for solar PV Consultation, the proposals are for the early closure of the RO across Great Britain to new solar PV projects of 5MW and below, as well as additional capacity added to an accredited solar PV station up to 5MW total installed capacity, which would mean that:

o     projects that meet certain 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 eligibility requirements; and 3) are accredited by 31 March 2017, will be eligible for the RO that applies at the date of accreditation; and

o     projects that cannot evidence significant financial commitment prior to 22 July 2015, but which are accredited by 31 March 2016, will still be eligible for the RO that applies at the date of accreditation, subject to a proposed future consultation on banding review.

•    Subject to the results of the financial support for solar PV Consultation, DECC proposes a future consultation for the review of RO banding for future sub-5MW solar PV projects.

•    The Feed-in-Tariff accreditation Consultation proposes the removal of pre-accreditation and pre-registration from the FIT scheme, whereby future installations will receive only the tariff rate as at the date of the relevant application for accreditation.

Policy Area

The Levy Control Framework (the "LCF") places a cap on how much can be spent on schemes to fund renewables and other low carbon electricity generation and was put in place so that the Government can keep track of policy costs on consumers' electricity bills and respond to the latest forecasts.  Across all schemes under the LCF, spending projections have been increasing, including as related to solar generation. Breaching the LCF cap would have a direct impact on consumers, as the LCF acts as a levy on consumer bills and because it is assumed that any costs incurred by licensed electricity suppliers are passed on to consumers in their energy bills.

Current forecasts by the Government predict the deployment of sub-5MW solar PV projects at a rate higher than provided for by DECC's October 2014 consultation, which DECC expects to be a significant cost to the LCF under RO.  Further, the Government has stated that the ability to pre-accredit under the FIT scheme facilitates deployment under the scheme, by making it easier for prospective generators to secure tariffs under the scheme, has also fuelled deployment spikes preceding tariff changes under "degression". The Government has stated that the policy must strike a balance between encouraging investment and the cost risk borne by electricity consumers.

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 278 million shares in issue and a market cap of c. £300 million. In June 2014 it agreed a three-year revolving credit facility with Royal Bank of Scotland, for up to £50 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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