Foresight Solar Fund has published its results for 2024. Its NAV fell from 118.4p to 112.3p over the period. The chairman’s statement does not tell us what the return to shareholders was [regular readers will know how annoyed I am by this, but the share price started the year at 102.2p and finished it at 77p. Given dividends that went ex in the period of 7.895p, that gives a shareholder return of -16.9%.]. Dividends declared for the year were 8.0p and the target for 2025 has been set at 8.1p. The statement says that the trust’s average discount for the year was 24% but the actual discount at 31 December was over 31%. Foresight Solar paid out £66.5m over 2024 in dividends and buybacks.

Today, it is a bit narrower at 27.7%, but there is a good reason for this – the strategic review announced on 18 February.

The chairman observes that 2024 was the year with the lowest number of sun hours since the trust listed in 2013. Production of power was 7% below budget for the year.

The Australian portfolio was put up for sale during 2024. The chairman says that progress on this has taken longer than anticipated. The target now is to get this done by the third quarter of this year. The disposal programme has been expanded with plans to sell at least another 75MW of assets. There is new investment too, solar and battery storage under development totals 989GWp. Solar projects in Spain and battery storage projects in the Chelion BESS partnership are expected to make progress this year.

Operational highlights:

• 1,009GWh of renewable electricity exported to the grid, enough to power 367,504 UK households for a year – avoiding 351,451 tonnes of carbon dioxide emissions.
• Global generation 7.0% below budget with irradiation 4.5% under forecast.
• UK production was 6.0% lower than expected primarily due to irradiation 4.7% below expectations. This was only the third time the UK portfolio underperformed in its 11 years of operation.
• With the aim of providing greater certainty on future income, the manager has been actively hedging production into the future and securing advantageous prices to deliver revenue visibility and dividend cover.
• Post period, Foresight Solar implemented NAV-accretive hedges, increasing total contracted revenues for 2025 to 88% and for 2026 to 69%, both at an average price of £86/MWh.
• Foresight Solar continued to deliver on its income and growth strategy, building its proprietary pipeline and creating opportunities to drive long-term total returns.
• Entered a Spanish BESS framework to double the size of its development pipeline.
• Subsequently bid for 398MWp-worth of battery storage connection capacity in Spain.
• The first Spanish solar development project is expected to reach ready-to-build status in the second half of this year.
• Considering the in-house development of BESS in Australia, total solar and battery storage capacity under development is now 989GWp.

Strategic highlights

• The planned sale of the Australian portfolio continues to progress, although it has taken longer than initially expected due to the delivery and review of third-party inputs. The target is now to agree a deal in the third quarter of 2025.
• In addition, the board and the manager have agreed to extend the company’s divestment programme, earmarking at least another 75MW of operational assets for disposal.
• With certain shareholders seeking a material return of capital, the board envisages that proceeds from these additional sales should be used to facilitate enhanced liquidity for those shareholders seeking it.
• Post period, the board and the manager agreed a revised fee arrangement to more closely reflect share price performance, generating substantial cost savings for investors.
• The new structure is based on an equal weighting of market capitalisation and NAV, with lowered tiers of 0.95% per annum up to £500m and 0.8% p.a. over £500m. This equates to a 19% saving.
• The board is of the view that consolidation is likely to be a major feature in the sector in the year ahead. Directors are fully aware of the benefits that successful consolidation can deliver to shareholders, and this forms a critical part of the ongoing strategic considerations.

FSFL : Sun hasn’t been shining on Foresight Solar