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UK solar assets outshine wind for UK yieldcos in H2

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Sunshine levels in the UK were more beneficial for renewables investors than wind conditions, in the second half of 2016, according to results from UK yieldcos.

Bluefield Solar income Fund said it generated 185GWh of electricity from its 74 UK-solar plants in the six months ended 31 December, some 4.6% ahead of budgeted expectations.

By contrast, rival yieldco Greencoat UK Wind said its portfolio of 19 wind farms generated 78 GWh in 2016, some 6% below budget, as average wind speed across the UK last year was 6% below the long-term mean. In only three months last year did wind speed exceed the 10-year average.

Nonetheless, both companies remain on track to meet, or exceed, their targets for high dividend payments, despite dramatic changes to UK government support for renewables, the Brexit vote and lower power prices for much of last year.

“As more investors become familiar with the sector, and competition for a predominantly fixed base of solar PV assets increases, this should have a positive effect on the company’s net asset value (NAV) and share price,” said Bluefield chairman John Rennocks.

“We have an improving backdrop in terms of the power markets and the capital structure in place … is highly attractive in times of a higher inflation market.”

Greencoat “does not expect any material change to its business as a result of the UK exiting the European Union,” said Tim Ingram, chairman of Greencoat, in the firm’s annual report.

“The company continues to look at acquiring operating UK wind farms (both onshore and offshore) from a market that is expected to reach £60 billion over the next few years, providing extensive and very encouraging opportunities for further value creating investment,” he added.

Greencoat, which has an NAV of about £800 million ($994 million) declared a full year dividend of 6.34 pence on shares that closed the year at 119.5p. Bluefield, with an NAV of about £389 million, paid a dividend of 7.25 pence for the year ended 30 June. Its shares closed the year at 105.8p. Both companies aim to raise their dividends in line with the UK retail price index.