Foresight Solar Fund Ltd (LSE:FSFL, FRA:1F5) fund manager Toby Virno joined Proactive's Stephen Gunnion to discuss the UK government's latest Contracts for Difference allocation round and what it means for renewable energy investors.
Virno explained that CFDs are 20-year agreements between renewable generators and the government that provide revenue certainty through fixed strike prices, reducing financing costs and encouraging investment. He said the latest allocation rounds create an attractive pipeline for Foresight Solar, with the company looking to recycle capital from maturing assets and expiring legacy schemes into newer greenfield solar projects with long-term contracted revenues.
"This new greenfield CFD project represents a great opportunity for us to rotate our portfolio into newer, younger assets with access to these very attractive, long-term contracted revenue streams," Virno said, pointing to greater revenue visibility and support for the fund's income objective.
The interview also covered how inflation-linked CFD revenues, reduced wholesale power price exposure and improved cash flow visibility could strengthen the long-term strategy, while bringing projects through construction may create opportunities to realise yield compression and refresh the portfolio over time.
Watch the full interview to hear Toby Virno's insights into the UK's renewable energy market, Contracts for Difference and Foresight Solar Fund Ltd (LSE:FSFL)'s investment strategy.
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