Bluefield Solar seems to be riding out the storm – Bluefield Solar Income Fund has published results for the year ended 30 June 2020. Over the year, while long-term power price forecasts have been slashed across the renewable energy sector, the NAV fell slightly from 117.98p to 117.01p. Underlying earnings per share rose from 8.62p to 9.53p. The dividend was 7.9p and the target for the new financial year is 8.0p. The NAV return was 6.3% and, as the share price fell from 136.5p to 134.5p, the return to shareholders was 4.7%.
Bluefield’s returns were towards the top of its peer group, helped by it fixing power prices in September 2018, when the power markets reached six-year highs. Power prices fell during the year as COVID affected the demand for power. Life extensions on its assets also helped the NAV. The valuation now assumes that 245MWp (about half the portfolio by capacity) now has an extra 15 years of operational life. Asset valuations for portfolios with comparable subsidy bandings to the company’s have continued to remain between about £1.20m/MWp to about £1.40m/MWp despite the power price falls. This is reflected in discount rates used to value the portfolio which now average about 6%, down from 6.5% in December 2019 and 7.18% in June 2019.
One big change this year was to recommence buying assets for the portfolio. The company bought 77.8MWp of solar assets in the year and shareholders gave permission for Bluefield to expand its activities beyond solar power.
Unsubsidised generation
The chairman says that “Looking past the severe depression in power prices caused by Covid-19 between March – July 2020 and the hiatus this has placed on meaningful levels of construction, we believe the conditions are in place for unsubsidised on-shore wind and solar to be scalable in the coming years and for the company to be a beneficiary”. Bluefield Solar has a proprietary solar development pipeline in excess of 350MWp through its agreements with a select number of developers and contract partners.