Information Memorandum - Foresight Group

AN INTRODUCTION TO SOLAR POWER INVESTING
Will the opportunity be affected by cuts in
Government spending?
The long-term revenue support provided by the RO Scheme
is not paid by the UK Government. Instead, legislation
requires the major electricity suppliers to pay the prices
directly to owners of Solar Power Plants. The costs are spread
among all licensed electricity suppliers, and may be passed
on to consumers as part of the normal bill for electricity
consumption. However, the Government has reasserted its
commitment to renewable energy in general and solar in
particular in the recently published draft Energy Bill and
Renewable Energy Roadmap. The recent agreement on the
Levy Control Framework will allow the spend on Low Carbon
electricity to triple in real terms from £2.35 billion in 2012/13
to £7.6 billion in real terms in 2020/21.
What if there are continued macro-economic difficulties?
In Foresight’s view, the drivers of solar power investment are
not related to general economic trends. The financial case
for investment is based on the commitment of the EU to
renewable energy, reflected in legally binding EU Directives
under which the UK has committed to source 15% of all energy
from renewable sources by 2020. This target implies that new
investment of around £110 billion will be required in the UK
alone, some of which is expected to be directed to solar power.
16 FORESIGHT SOLAR EIS FUND 3
If some of the investments will be outside the UK, is there
a currency risk?
There is no current intention to invest in Solar Power Plants
outside of the UK. However, Foresight has been able fully
to hedge the currency exposure of the capital cost for all
its solar power investments made by sterling denominated
funds in assets outside the UK. Likewise, it would expect to
do so for any such investments funded by the Fund in order
to protect investors from currency movements against the
pound sterling. For UK investments, depreciation of the
pound sterling against the US dollar or the Euro would tend
to increase equipment prices, potentially reducing the returns
from investments made after such depreciation.
Is planning permission a problem?
Ground-mounted installations usually require planning
permission, but Foresight expects planning authorities to be
supportive in this regard, on the basis that Solar Power Plants
are likely to have less visual and other impact on the local
environment than other renewable energy technologies (with
the possible exception of ground source heat pumps which
may also have little visual impact). Risks relating to planning
consents would generally be borne by the developers and are
not something to which it is expected Investors in Foresight
Solar EIS Fund 3 would be directly exposed.