With a presence dating back to 2011, Foresight Solar has become one of the largest asset holders in UK solar and is now responsible for more than 700MW. This experience is helping the group conquer not just the secondary asset market, but also the burgeoning O&M sector through its subsidiary Brighter Green Engineering. Ricardo Piñeiro, director at Foresight and the group’s head of UK solar, talks to Inside Clean Energy about the secondary market, how the Brexit vote could impact it and Foresight’s lofty O&M ambitions.
There’s been a lot of talk about the Brexit vote. How has that impacted on competition in the secondary market?
It has created something of an opportunity. For those investors that have liquidity available and are still interested, it can create opportunities. We’ve clearly seen a decreasing number of potential investors; pre-Brexit there was a significant number of international investors actively looking for UK assets. In the last few months that has been less so, but we do believe that will be a temporary impact. At the end of the line, the features of UK assets remain unchanged. We still believe it’s a very attractive sector, we have quality assets installed, we have a significant size of total market capacity and there is access to a considerable pool of assets.
Of that pool of assets, what is the breakdown of that? Are there significant portfolios, or is it fragmented?
It is fragmented I would say. From what we understand – and we’re not directly involved in that process – the TerraForm portfolio is probably one of the largest you could expect to find on the secondary market at the moment. Then you have a combination of smaller portfolios, and you’re still seeing developers and construction companies developing 5MW sites. You have smaller sites, smaller portfolios of around 50 – 100MW, and then you have the larger portfolios from asset aggregators. We still see, for example, panel manufacturers holding assets, construction companies holding them on their balance sheets, and in the UK tax efficient funds that are still holding assets on their books. These funds tends to be planned exit funds, so again we expect to see an increase in asset availability in the future. Those we think will be the key drivers over the next 24 months.
Once Foresight acquires an asset, what happens next?
We have three main teams within Foresight, one is what we call the ‘execution’ team which is responsible for fund raising, deal execution and deal structuring, and then we have portfolio management and engineering. At the portfolio level we have for example accountants, individuals with legal and commercial backgrounds, and they are responsible for not only the financial performance of the site, but also trying to optimise the contractual structure that we have in place. For example recently we have been focusing on improving the commercial terms of our PPA agreements, other commercial contracts, insurance policies and others. The solar market is still quite a young industry in the sense there’s still potential for consolidation, potential to optimise the arrangements we have in place with our main stakeholders.
From the technical side, Foresight has taken the approach to have an in-house team of engineers. We have seven of them in total, of which six are dedicated to the UK market. They support us during the acquisition process to review the technical specifications of each solar park, but also more importantly they are responsible for the technical performance post-acquisition. That involves not only overseeing the O&M at asset level, but all sorts of testing we perform on site from panel-level to high voltage levels. Tests such as IV-curve, thermal imaging, searching for hotspots and attempting to understand panel degradation are all conducted.
This interview originally appeared in Issue 2 of Inside Clean Energy magazine. To view the interview in full, and to read the rest of the magazine, fill out the form below to download the entire issue for free.