The impact of the low power prices in the UK is continuing to be felt, as Foresight Solar Fund announces Net Asset Value (NAV) drop.
In 2020, the COVID-19 lockdowns caused energy usage to drop substantially, resulting in a drop in power prices. While usage has largely rebounded at this point, medium and long-term power price forecasts have still been revised down.
During Q1 2021, this was the key cause of Foresight's NAV falling to £558.7 million from £582.20 million in the quarter ending 31 December 2020. The investment fund’s NAV per ordinary share fell to 91.9 pence correspondingly, down from 95.8 pence per share in the previous quarter.
Of this drop, 2.3 pence per share can be attributed to a downturn in power price forecasts. It follows on from Foresight Solar Fund announcing it would continue to focus on fixed revenue streams after low power prices during Q2 of 2020 drove its NAV down by 13.1 pence per share in its full year results in March 2021.
In addition to the impact of power prices, recent increases in UK Corporation Tax to 25% from April 2023 caused the company’s NAV to fall -1.3 pence per share. However, it is assumed to remain unchanged for the remaining useful economic life of Foresight’s UK portfolio assets.
The company’s Gross Asset Value as of 31 March 2021 was £1,023.5 million, compared with £1,054.6 million as of 31 December 2020.