BSIF successfully delivered one of the highest share dividends in the infrastructure sector. Image: Bluefield Solar.

Bluefield Solar Income Fund (BSIF), an investor focused on large scale renewable energy assets in the UK, has released its annual results for the year ended June 2024, claiming that its operational portfolio is now responsible for 5% of UK solar generation.

BSIF owns and operates a UK portfolio of 1.5GW solar assets, comprising 824.7MW ready-to-build and 776MW of operational solar capacity. Its pipeline also includes over 600MW battery projects. According to the company’s fourth interim dividend announcement, published alongside the annual results, BSIF successfully delivered one of the highest share dividends in the infrastructure sector.

This is despite its report that transactional activity in the UK renewables market has eased. It also claims that the UK’s development market has continued to be driven by factors such as increasing customer preference for clean energy, ambitious decarbonisation targets, demand for ESG investments and the inclusion of solar PV in Contracts for Difference (CfD) auctions.

Battery storage development activity has been “noticeable”, according to the dividend announcement, as developers seek to provide grid management solutions; grid constraints caused by the grid’s inability to manage large quantities of intermittent renewables were blamed for slower solar development activity during this quarter.

Supply chain issues and elevated development costs have proved a barrier to construction activity, though some activity has been seen in the UK solar and battery storage areas. Still, converting the UK’s development pipeline into operational solar and storage projects over the next five years will require developers to overcome high construction costs, grid connection lead times and access to new capital.

Regulatory environment for solar and storage

Given Labour’s promises to triple solar generation capacity in the UK by 2030, “unleashing a rooftop revolution” to boot, regulation to support and incentivise solar and storage rollout is to be expected.

In particular, BSIF mentions the Electricity Generator Levy, a temporary tax on income from electricity sold above the benchmark price, that will be in place until 31 March 2028. It is applied to extraordinary returns made on renewable, nuclear and waste energy generation and reduces the profit potential for projects, particularly those that can be paid by the grid to turn off during periods of curtailment. The levy does not apply to projects awarded CfDs.

The interim announcement also touches on the second review of electricity market agreements (REMA), which closed in May 2024. The market awaits a formal response to the consultation, which covers the possibility of zonal locational pricing and potential changes to the CfD scheme.

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