Edison review on Foresight Solar Fund (FSFL)
London, UK, 30 August 2022
Edison issues review on Foresight Solar Fund (FSFL)
Foresight Solar Fund (FSFL) is the largest solar investor listed in the UK by total net peak capacity of c 1.07GW (when operational). We believe that the global and UK climate change policies will remain renewable energy friendly, creating further solar and battery storage growth opportunities for FSFL. FSFL provides investors with a covered, sustainable and growing dividend (even in 2020 amid depressed power prices). It is focused on further strengthening its dividend cover (1.21x in FY21, targeting a minimum of 1.5x in FY22) over the next four years. FSFL has recently secured further exclusive positions in ready-to-build battery storage projects totalling c 60MW targeted for completion in the coming months. FSFL expects these to be accretive to the portfolio NAV and target yields.
Rising commodity prices in 2021 and H122 led to higher power prices, allowing FSFL to enter new short- and medium-term fixed contracts at attractive prices. This resulted in higher merchant revenues and NAV. The manager believes the dividend cover will strengthen over the next four years, at the current contract levels. In H122 and FY21, the UK portfolio (72% of total installed capacity) performed strongly and ahead of budget. While the Australian assets (16% of capacity) held FSFL's electricity generation back during FY21, the managers expect the Australian portfolio to make an improved operational contribution in FY22. conservative.
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