Foresight acquires further 51% of two solar farms in Queensland

UK-based close-ended investment trust Foresight Solar Fund Ltd, recently, has acquired the remaining 51% stakes in Australia’s Oakley and Longreach solar farms, thus gaining full managerial control of the two Queensland solar farms.

The US-based solar power investment Company invests in a diversified portfolio of ground-based solar PV assets in the UK, Spain, and Australia. It is to be noted that Foresight already owned a 49% stake in these farms after it acquired the duo in the year 2017. 

Now, after buying the remaining 51% from Canadian Solar Inc, the Company has acquired 100% ownership of the solar farms. 

The firm has stated the acquisition gives Foresight complete management control over future optimisation initiatives. The acquisition marks the extension of last year’s active streak of investments in renewable energy into early 2022.

Oakley and Longreach benefit from the power purchase agreement signed with the Queensland government concerning the sale of electricity along with large scale generation certificates. According to Foresight, the overall equity consideration of both the assets is equivalent to approximately 1% of the Company’s current net asset value. 

Current trends on how Renewable energy is swapping hands:

According to the independent energy research firm Rystad Energy, anything between 8 gigawatts and 9 GW of renewable energy capacity swapped hands in Australia in 2021, increasing from 2 GW-3 GW in 2020.

As per analysts, going by the current trend and acquisitions by Palisade, First Sentier and Partners Group, one can say that buyers increasingly prefer wind power assets over utility-scale solar.  

However, mergers and acquisitions in the grid-scale solar sector were hampered by concerns related to congestion on the transmission grid, thus conveying that some solar farms had problems luring bidders.

Nonetheless, another factor that impacts solar is the abundant generation during day hours, which sends wholesale prices to zero or into negative territory; in contrast, wind farm owners get some generation when there is a rise in wholesale prices. 

Bottom Line:

The acquisition strengthens Foresight’s global portfolio, while the diminishing revenue profile of both the assets will enhance the predictability of the firm’s portfolio cash flow generation in the medium as well as long term.