Information Memorandum - Foresight Group

Is the equipment reliable?
Solar Power Plants have few moving parts and operate over
long periods with minimal maintenance. The Department of
Energy and Climate Change (DECC) has stated that “PV is
easier to deploy than other technologies and carries less risk
to the investor since it is a tried and tested technology”. The
EU Energy Institute has described solar panels as a good long
term investment, capable of performing well after thirty years
of life. The reliability of Solar Power Systems is increasing
with the development of modern technology, and their
performance will only improve over time.
The majority of solar panel manufacturers guarantee the
efficiency of their equipment for long periods. They typically
guarantee an 80% performance rate for 20-25 years and a
90% performance rate for 10-12 years. Solar Power Plants
owned by Investee Companies will generally be installed and
maintained by specialist contractors, who may also provide
guarantees to supplement the core equipment guarantees.
Such guarantees and contracts are of course subject to
normal commercial limitations.
Why is solar power interesting now?
Foresight believes that Solar Power Plants accredited under
the RO Scheme offer attractive returns to Investors. The UK
market has grown significantly in recent years, surpassing
1GW of capacity in early 2012, and this growth is expected to
continue, with DECC forecasts estimating that there will be
between 7GW and 20GW of solar power installed in the UK by
2020. Solar technology has now established itself in the UK,
with Solar Power Plants developing solid track records. The
supply chain has grown in line with the increase in capacity
and many reputable suppliers and contractors now operate
in the UK.
Solar panel prices have reduced substantially over the
past 2 years with a 50% reduction between summer 2011
Output figures
Generators
Source: www.decc.gov.uk
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Issues ROCs
for output
AN INTRODUCTION TO SOLAR POWER INVESTING
and March 2012. The RO Scheme is a market based incentive
so it does not expose investors to government spending
decisions. Furthermore, the scheme is designed with a
headroom mechanism, to ensure the value of ROCs
remains stable.
Government driven revenue support schemes introduced in
FORESIGHT SOLAR EIS FUND
Germany, Spain and Italy a number of years ago stimulated
major investment in the sector. Foresight has been investing in
Solar Power Plants in Italy and Spain since 2008 and believes
that the support under the RO Scheme will drive a wave of
investment from which the Fund can benefit.
The Renewable Obligation Scheme
The Renewable Obligation (RO) is the main financial
mechanism supporting the uptake of large-scale renewable
electricity generation in the UK. It came into force in April
2002 and requires energy suppliers to source a specified
proportion of the electricity that they supply to their
customers from renewable sources. This proportion is set
to increase annually until 2037 as determined by the
Department of Energy and Climate Change (DECC).
The RO works on the basis of Renewable Obligation
Certificates (ROCs). ROCs are issued to renewable energy
generators based on the amount of eligible renewable
electricity they generate. These ROCs can then be sold to
licensed UK electricity suppliers alongside the electricity
they produce. A supplier meets its obligations under the
RO by submitting ROCs (bought from generators) or by
paying a penalty to Ofgem (known as the “buy-out” price),
or a combination of the two. The payment that a renewable
generator receives for ROCs subsidises the additional costs
incurred by generating electricity from renewable energy
sources rather than fossil fuels and nuclear. Electricity
suppliers pass the additional cost of buying ROCs on to
their customers.
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Sell ROCs
4
Present ROCs
and/or
buy-out to
fulfil Obligation
Suppliers
FORESIGHT SOLAR EIS FUND 3
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