Foresight Solar Fund, one of the UK’s largest owners of utility-scale solar assets, has detailed how changes to the way embedded benefits are calculated will impact its top line.
Reporting its half-year results for six months ended 30 June 2017, Foresight said it expected changes to embedded benefits would stand to “materially affect” what would be received by the company’s generation portfolio, clarifying that it would however represent less than 2.5% of future annual revenue.
Ofgem’s review of embedded benefits first arose last May, sparking consternation from various energy market stakeholders.
The Association for Decentralised Energy quickly called for a review of Ofgem’s proposals, which it said appeared “rushed”, however Ofgem confirmed its decision to enact the overhaul earlier this year.
Ofgem said it was minded to accept industry proposals to reduce embedded benefit payments from the current ~£45/kW to ~£2/kW; an astonishing reduction of 95%.
Since the decision was confirmed various companies have been quick to deride the changes, and it attracted considerable ire at National Grid’s Power Responsive conference held earlier this summer.
Foresight’s current solar portfolio stands at 475MW, spread across 19 operational sites throughout the UK. It also owns two battery storage assets, and is primed to acquire further generators as the UK’s secondary solar market continues to thrive.
While almost two-thirds of the company’s revenue originated from the Renewables Obligation Certificates received for solar generation, the company still owes a lot to other revenue streams and the sale of generated power.
And it is this portion of revenue that would be hit by not just Ofgem’s targeted charging review, but other material changes to capacity and balancing markets which, Foresight has said, “are likely to affect the future energy mix and therefore wholesale power prices”.
