Foresight Solar Fund Limited has calculated that its net asset value (NAV) will decrease as of 30 September, due to the potential impact of the Electricity Generator Levy.
Only Foresight Solar’s UK solar assets which are not receiving subsidised payments (FiTs, ROCs, CfDs) are expected to fall within the scope of the proposed levy, while the company’s UK battery storage assets are not expected to fall within the scope of the proposed levy.
Foresight Solar has assessed the potential impact the levy (ignoring any other potential adjustments) would have on the company’s 30 September 2022 NAV.
The company’s NAV calculated as of 30 September 2022 incorporated discounts applied to the blended third quarter 2022 power curves for the period FY 2023 to FY 2027 inclusive, reflective of the uncertainty surrounding the likely form of Government intervention in the UK energy markets.
In assessing the potential net impact of the Electricity Generator Levy on the 30 September NAV, Foresight Solar has reversed the power curve discounts applied to the periods FY2023-FY2027 (increasing the September NAV by 7.8 pence per share) and applied the proposed levy on forecast UK solar generation revenues (reducing the September NAV by 8.6 pence per share).
The net impact of these changes alone would be to reduce the 30 September 2022 NAV by 0.8 pence per share.
The company’s unaudited NAV as of 30 September 2022 is £771.2m, 126.4 pence per share.
The Government has announced its intention to publicise draft legislation for the proposed Electricity Generator Levy in mid-December 2022 and Foresight Solar will reflect the expected impact of the levy in its 31 December 2022 NAV update.
On 17 November 2022 the Chancellor of the Exchequer announced, as part of the Autumn Statement, the introduction of a new Levy on excess profits realised by UK electricity generators, the Electricity Generator Levy.
The levy is proposed to take effect for the period from 1 January 2023 until 31 March 2028 at a rate of 45% of Exceptional Generation Receipts, which are calculated as revenue from power sales above a benchmark price of £75/MWh.
A £10m per year allowance will apply, such that Exceptional Generation Receipts below this threshold will be exempt.