Bluefield Solar Income Share Discussion Threads

[tournesol] 10/4/2019 23:17

So if they are written down to zero after 30 years, doesn't that imply that effectively 3% pa of the yield is effectively a return of capital? So the real yield = headline yield -3.33%?

[jimbox1] 10/4/2019 21:44

Tournesol, the earnings are stated after deducting a charge for depreciation of the assets (down to zilch over some 30 years). One must assume that the company will invest in replacing the assets over time.
To be fair, there is risk in the price of electricity, inter alia, and that is why we need a yield higher than "risk-free" gilts.

[tournesol] 10/4/2019 20:59

jimbox

but are the earnings secure long term?

don't the underlying assets have a limited life after which they are worth zilch?

[jimbox1] 10/4/2019 19:34

Nimbo1, I look at the earnings yield rather than the dividend yield. These might be a sell (so far as I'm concerned) if the earnings yield dropped below 6%. But earnings yield is currently 6.89%. Based on historic earnings, I'm happy to hold at least up to 157p in the short term. If there are prospects for earnings to grow, then I could justify holding to a higher price.

[nimbo1] 10/4/2019 11:59

At what price do these become a sell?...I've been in since about 110 and also hold trig and fsfl.

[zero the hero] 13/3/2019 13:49

Giovanni Terranova participating in a discussion panel at 9.30 26th March

[zero the hero] 13/3/2019 13:26

Nice steady investment this and the share price moving in the right direction.

Interesting article:




Anesco were in attendance - BSIF have been linked with them in the past. Time for a bit of Battery Storage?

[masurenguy] 12/3/2019 13:19

Added again @1.2945 earlier this morning. Lunchtime price of 130p is new ATH.

[masurenguy] 11/3/2019 23:41

Key points from the above referenced Mail article.

The shares have risen from £1 at launch to £1.29 today and the group has delivered annual dividends of 7p or more since 2014. A total payment of 7.68p is expected for the year to June 2019, putting the stock on a yield of more than 6%. The UK solar market has changed considerably in recent years. Prices have tumbled and solar energy is now commercially viable, so much so that new plants are no longer eligible for Government support.

Plants built before 2017 are subsidised however and Bluefield’s portfolio is entirely comprised of such assets, providing inflation-linked subsidies for 20 years or more. Most of the group’s plants were built between 2013 and 2016, when subsidies were relatively generous. Since then, Bluefield has bought very little because sites became increasingly expensive. Today, the portfolio has 46 large solar plants and 41 smaller assets, mostly in the south of the country and generating some 450 megawatts of electricity, enough for around 140,000 homes.

The cost of new plants has come down and Armstrong believes he can find sites that will generate a decent income for shareholders, even without Government subsidies. The British solar market is the 7th largest in the world, ahead of brighter countries such as France, Spain and Australia. Bluefield is at the forefront of the market, the stock has been a strong performer since the start and should carry on in that vein. At £1.29, the shares are a buy, particularly for the income-focused investor.

[carterit] 11/3/2019 18:47

....and an update BUY recommendation at £1.29 by the sunday mails midas column. See link...
hxxps://amedpost.com/midas-share-tips-update-solar-plants-shine-for-income-seekers/

[18bt] 28/2/2019 10:23

This is interesting in showing that FIT-free solar builds are now very close

[masurenguy] 27/2/2019 16:16

Bluefield Solar keen to catch extra rays as it eyes growth

Top yielding renewables trust Bluefield Solar Income (BSIF) is looking to catch a few extra rays with the next wave of unsubsidised solar assets, as well as through the extension on the life of its portfolio. The £475 million solar fund, which at 6% is the highest yielding renewables trust, has not bought any new assets for more than two years, pointed out its investment adviser James Armstrong. He said the trust was therefore looking to its ‘next phase of growth’, though did not specify how Bluefield planned to expand on the 87 assets it currently holds.

Despite a fall in the cost of producing electricity from solar parks, coinciding with the disappearance of the UK government’s subsidy programme, Bluefield held off on competing for secondary assets. Instead, the trust expects to see falling solar costs to drive the next wave of subsidy-free assets and to look for this area for growth. Armstrong explained that Bluefield was involved with assets from construction, working with contractors and using equity to fund solar parks through the construction process. ‘From IPO the assets have been funded through construction which has helped cut costs,’ he said. ‘It’s all about incremental gains.’

Canaccord Genuity analyst Ben Newell said: ‘[Bluefield] has maintained a patient and disciplined approach to growth over recent years and we believe that the growth of the subsidy-free market will provide the next stage in the evolution of this company.’ Another potential source of growth for the trust was also picking up on the recent trend in the renewables to extend the lease life of assets in its portfolio. This was something Bluefield’s closest rival, Greencoat UK Wind (UKW), had implemented in its own portfolio. The wind farm investor pushed out the life on its underlying assets from 25 to 30 years, lifting the trust’s net asset value (NAV) by 6.7p to 123.1p in the fourth quarter of last year.

Should Bluefield achieve the same on its own portfolio, Armstrong estimated this could equate to a one-off NAV uplift of between 7-8% if applied across all of its assets. Even if this only applied to half of its solar portfolio, he said this still had the potential to boost the trust’s NAV by 4-5%. ‘Solar can be easier to extend because it’s a simple asset,’ he said. ‘It’s nice, because not to say anything against them, but they’re quite boring assets that run for 40 years.’

BSIF is looking to extend the available tenure on its solar parks up to 40 years from the current average life of around 25 years. It is in negotiations for contracts on 75% of its portfolio, with contractual terms agreed on nearly half of these assets and formal lease changes completed on around a quarter of the portfolio, according to the Canaccord Genuity analyst note. Armstrong said extensions had not yet been baked into portfolio, which had already generated better-than-anticipated revenues in the trust’s half-year results.

Revenues were 17% above forecasts for the six-months to the end of 2018 driven by higher irradiation levels in the July, September and October thanks to the summer heatwave. Bluefield also benefited from rising power prices on contracts fixed in the period. UK power prices hit an eight-year monthly average high in September 2018, at an average cost of £67 megawatts an hour. Bluefield took advantage of this price increase after June 2018 by re-striking most of its power purchase agreement (PPA) contracts with customers. This boosted the trust's average PPA weighted price from around £45/MWh to in excess of around £58/MWh from December. Armstrong said the trust was likely to see the benefits of these price increases in the second half of the year.

Bluefield paid its first interim dividend in February of 1.9p per share and expects its annual dividend for 2018/19 to increase from 7.43p per share last year up to 7.68p. The trust outperformed both in terms of NAV and shareholder total returns over the last six months, producing gains of 4.4% and 4.5% respectively, against a 10.2% fall in the FTSE 100 total return index. It had also doubled benchmark returns since listing in 2013, with its NAV up 51.7% and a share price increase of 56.4%, versus a return of 26.6% from the index.

hxxps://citywire.co.uk/investment-trust-insider/news/bluefield-solar-keen-to-catch-extra-rays-as-it-eyes-growth/a1204710?ref=investment-trust-insider-latest-news-list

[a0002577] 26/2/2019 13:22

Hi Tartshagger I also hold RedT, Why don't you write to them? I will if you would like

Interestingly the board said this about prolonging asset life

"The equity IRR implies that the future cash flows of the Company, based upon the Directors' Valuation of GBP609.7m, which includes the conservative assumption of a zero terminal value of each asset after c.25 years of operational life, are expected to deliver a c.6.6% gross annualised return on today's NAV.

For the Company's portfolio this equates, within the Directors' Valuation as at 31 December 2018, to a weighted average portfolio life of 21.3 years. The Board has elected not to adopt a longer assumed life, even for assets with extended lease or planning permissions at this stage."

Unlike some other companies which have already marked up their NAV .to account for increased asset life.

[tartshagger] 26/2/2019 13:05

Buried in the Chairman's statement is the following highly interesting observation:-

"When extending lease terms, the Investment Adviser is using the opportunity to add further value through including new rights to install and operate battery storage facilities so that when the commercial climate for such infrastructure becomes attractive, these facilities can be rapidly deployed across the portfolio."

I also hold RedT, the British Vanadium based energy storage systems company. I would like to know if the Board has received a presentation from RedT, on the face of it their new Gen3 energy storage would be an excellent fit and if installed, could result in a significant re-rating here

[a0002577] 26/2/2019 12:13

Also bought in (again) today at 1.283667 per share - showing as a sell on ADVFN

[masurenguy] 26/2/2019 08:34

Topped up this morning @128.63, which is showing as a Sell.

[18bt] 26/2/2019 07:58

There's some interesting detail in the invstment manager's report including this explanation of clipping
"The reason behind this fall in efficiency is a result of the plants experiencing inverter saturation, commonly referred to as 'clipping', during periods of unexpectedly high irradiation. Inverter saturation occurs when the DC power from the PV array exceeds the maximum input level for the inverter.

In the UK, due to lower average irradiation levels (e.g. when compared to Southern Europe) it is common to oversize the generating capacity by a factor of 1.2 to 1.4 (i.e. building more module capacity than inverter capacity) to ensure generation is maximised at times when irradiation is below peak levels. An example might be a plant which is licensed to deliver 5MWp to the grid being built with a generating capacity of 6MWp; whilst 1MW will be 'clipped' at times of peak irradiation, the plant will be able to deliver 5MW for significantly more hours in the year than is the case where 5MW is the peak output available from the panels.

The consequence of clipping is that during periods of exceptionally high irradiation the output from the modules will exceed the permitted input of the inverter. At this point, whilst the plant will be generating above forecast expectations, since the inverter is not capturing all of the available DC generation the performance ratio of the plant (i.e. conversion efficiency) reduces."

This is where advances in storage technology could add further value in the future.

[18bt] 26/2/2019 07:44

Interims out - strong operational performance. And an indicator that they might start growing the asset base again: "We expect that this patience and discipline will soon be rewarded with the potential arrival of an economic UK market for solar assets without subsidy, for which the Company is well prepared to apply its highly effective investment model for primary market assets by funding through construction." Meanwhile, taking the 6% yield and a little asset growth.

And rather hidden in the detail is this: "the Company was able to take advantage of these [electricity price] rises and re-strike the majority of our contracts. This has delivered medium term certainty over a large percentage of our revenues and we have also seen our average weighted power contract price increase to in excess of GBP58 per MWh, up from GBP45 in the first half of 2018. As many of these contracts were struck for in excess of two years our shareholders will benefit from these higher priced contracts for a prolonged period, with most of these higher prices becoming effective in or shortly after January 2019.

So great visibility on earnings and dividend increases for the next 2 years

[zero the hero] 09/2/2019 16:36

A nice long read on this, probably nothing new to some of you, but certainly useful to someone like me



Click on the PDF on the bottom

[a0002577] 31/1/2019 10:52

The power prices are a rolling lagging indicator - i.e they are being set now for the next three years - in other words the benefits from the move to £60+ "is only just beginning to be fed into your Company's revenue generation." as they say.

It will generally apply to all six Green Infrastructure Cos so not the time to sell methinks.

[masurenguy] 30/1/2019 15:44

Thanks A0002577 - an interesting extract from the AR which provides a much more relevant insight into the shareprice rise over the past 4 months. The yields that I quoted related to my average price
of a stock rather than in relation to todays price. In fact I did make an arithmetic error where BSIF is concerned. On the basis of a projected dividend of 7.8p for this year, it is actually 6.75% against my current average price.

[a0002577] 30/1/2019 15:27

Masurenguy, you rightly ask "Why would the progress at Greencoat rub off on Bluefield? They have renewables in common but Greencoat is in wind while Bluefield is in solar. These energy sources are based upon quite different economic equations and also future logistical and market potential.

There is however, one factor common to all renewables which is the price they get paid for electricity. It is worth reading this from the latest Annual Report of BSIF

When we did the IPO in July 2013, short term fixed price power contracts (12 to 36 months) were being struck in excess of GBP55 per MWh. By Q1 2016, the power market for contracts of a similar tenor were trading in the GBP30s per MWh. From this low point the market started to recover. Today I can report that new contracts are consistently in the GBP50s per MWh and the most recent contracts have been struck in the GBP60s per MWh. This upturn is only just beginning to be fed into your Company's revenue generation. We should add the caveat that we are not forecasting that the market is going to keep marching forward but the Investment Adviser has prepared some interesting analysis on the short term drivers in the UK power market, which highlights why we have seen this rebound since 2016 and also why this recent increase seemed to have surprised some of the independent forecasters.

Clearly, power prices are the biggest variable largely outside our control. I say 'largely outside our control' because whilst we cannot influence the prevailing pricing within the European and UK gas markets we can enhance the value of the contracts that are available to us. This means having flexibility in respect of the tenor of the power and ROC contracts and flexibility in the choice of the provider of the contract. We have that flexibility for in excess of 75% of the portfolio and each year our Shareholders benefit from this where we are able to maximise the value of the available contracts that come on to the market.

You also say that BSIF is your second largest holding. I make the yield just under 6% at todays price. JLEN, FSFL, TRIG, NESF and UKW are all a tad lower

[masurenguy] 30/1/2019 13:12

New ATH this morning ! :0). BSIF is the second largest holding (12.9%) in my Equity ISA a/c and my yield here is now 7.1%. My largest holding, CLIG (16.0%) is also now yielding 8.7%.

[masurenguy] 30/1/2019 09:26

Why would the progress at Greencoat rub off on Bluefield? They have renewables in common but Greencoat is in wind while Bluefield is in solar. These energy sources are based upon quite different economic equations and also future logistical and market potential

[rambutan2] 22/1/2019 18:27

Worth noting reason for leg up in share price in last few days: