LEI: 2138004ATNLYEQKY4B30

30 September 2024

 Bluefield Solar Income Fund Limited
('Bluefield Solar' or the 'Company')

 Annual Report and Financial Statements for the Year Ended 30 June 2024

Bluefield Solar (LON:BSIF), the London listed income fund focused on acquiring and managing renewable energy and storage assets predominantly in the UK, is pleased to announce its Annual Results for the Year Ended 30 June 2024.

The Annual Report has been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism  

Highlights

As at 30 June 2024 / 30 June 2023

1. Underlying earnings is an alternative performance measure employed by the Company to provide insight to the Shareholders by linking the underlying financial performance of the operational projects to the dividends declared and paid by the Company. It is defined in the Alternative Performance Measure appendix.

2.  Total Shareholder Return is based on share price movement and dividends paid in the year. It is defined in the Alternative Performance Measure appendix.

3. Total Return is based on the NAV movement and dividends paid in the year. It is defined in the Alternative Performance Measure appendix.

4. Performance relates to the Company's 100% owned portfolio.

5. Based on Ofgem's Typical Domestic Consumption Values (TDCV). The TDCV has reduced, hence this metric has increased despite a decrease in generation compared with the previous year.

6. Based on generation data aligned with the relevant 2024 Government CO2e conversion factor. In the current Year, the Company reported avoided emissions on a gross basis, reflecting its equity share in investments but without allocating any avoided emissions to debt finance providers

Results Summary:

1.   Underlying earnings is an alternative performance measure employed by the Company to provide insight   to the Shareholders by linking the underlying financial performance of the operational projects to the dividends declared and paid by the Company.  It is defined in the Alternative Performance Measure appendix.

2.  Total underlying EPS is calculated using underlying earnings available for distribution, including unutilised prior year underlying earnings per share carried forward, divided by the average number of shares.

3.  Total return is based on NAV per share movement and dividends paid in the year.

4.  Total Shareholder Return is based on share price movement and dividends paid in the year.

5.  Total Shareholder Return since inception is based on share price movement and dividends paid since the IPO.

John Scott, Chair of Bluefield Solar, said:

"The year under review saw the Company and all others in our sector continue to trade at a discount to NAV, preventing us from raising fresh capital to diversify the Company's portfolio and aid the progression of our considerable development pipeline. In response, the Company has sought to deliver the optimum allocation of capital resources available as well as finding innovative ways of accessing new sources of capital. Most important of these new measures is the broad partnership with GLIL Infrastructure announced in December 2023 which, in addition to providing the Company with fresh capital to invest in new developments, has also allowed us to prudently reduce our debt position. Further, between March and the end of June, the Company has bought back over 9 million of its own shares at a cost of approximately £9.4m and adding 0.4 pps to the Company's NAV, demonstrating our commitment to taking a proactive approach to managing the discount to NAV where we can and adding value for shareholders."

"Two of our largest assets, Mauxhall Farm (44.4MW) and Yelvertoft (48.4MW), were energised at the end of July and beginning of August, respectively, demonstrating the continued progression of our development pipeline totalling nearly 1GW of solar and over 600MW of battery projects. The Company's 900MW portfolio is now responsible for 5% of UK solar generation, a statistic in which all shareholders can be justifiably proud. Looking ahead, we will continue to assess the Company's pipeline to progress the investments which will demonstrate the fastest accretive returns while continuing the important role of maximising the operating performance of our substantial portfolio to continue to provide our shareholders with a rising source of income."

James Armstrong, Managing Partner, Bluefield Partners, Investment Adviser to Bluefield Solar, said:

"I'm pleased to deliver another strong set of results for Bluefield Solar. We have focused on managing the company whilst the equity markets have been closed and we are extremely encouraged by the progress we have made in our capital recycling programmes and value enhancement activities. With strong policy support from the new government, supportive power markets and interest rates gliding down, the macro conditions are materially improving. With our proprietary pipeline giving us a clear strategic advantage we face the coming year with optimism. A particular mention should go to the strategic partnership with GLIL, which has continued to flourish, and we look forward to growing this partnership."

Analyst presentation

A remote call for analysts will be hosted by James Armstrong and Neil Wood of Bluefield Partners LLP at 09:30am today, 30 September 2024. For details, please contact Buchanan on BSIF@buchanan.uk.com.

A copy of the presentation is available via the Company's website and an audio webcast of the presentation will also be made available at 09:30am today.

https://bluefieldsif.com/

For further information:

Notes to Editors

About Bluefield Solar

Bluefield Solar is a London listed income fund focused primarily on acquiring and managing solar energy assets. Not less than 75% of the Company's gross assets will be invested into UK solar assets. The Company can also invest up to 25% of its gross assets into other technologies, such as wind and storage. Bluefield Solar owns and operates a UK portfolio of 883MW, comprising 824.7MW of solar and 58.3MW of onshore wind.

Further information can be viewed at www.bluefieldsif.com

About Bluefield Partners

Bluefield Partners LLP was established in 2009 and is an investment adviser to companies and funds investing in renewable energy infrastructure.  It has a proven record in the selection, acquisition and supervision of large-scale energy assets in the UK and Europe.  The team has been involved in over £6.7 billion renewable funds and/or transactions in both the UK and Europe, including over £1.6 billion in the UK since December 2011.

Bluefield Partners LLP has led the acquisitions of, and currently advises on, over 100 UK based solar photovoltaic assets that are agriculturally, commercially or industrially situated.  Based in its London office, it is supported by a dedicated and experienced team of investment, legal and portfolio executives.  Bluefield Partners LLP was appointed Investment Adviser to Bluefield Solar in June 2013.

ANNUAL REPORT

Bluefield Solar Income Fund Limited

Annual Report and

Financial Statements

FOR THE YEAR ENDED 30 JUNE 2024

Company Registration Number: 56708

General Information

Board of Directors (all non-executive)

John Scott (Chair and Chair of Nomination Committee)

Elizabeth Burne (Chair of Audit and Risk Committee)

Michael Gibbons CBE (Senior Independent Director and Chair of Remuneration Committee)

Meriel Lenfestey (Chair of Environmental, Social and Governance Committee)

Paul Le Page (retired 30 September 2023)

Chris Waldron (appointed 1 December 2023) (Chair of Management Engagement and Service Providers Committee)

Registered Office

PO Box 286

Floor 2, Trafalgar Court

Les Banques, St Peter Port
Guernsey, GY1 4LY

Administrator, Company Secretary and Designated Manager

Ocorian Administration (Guernsey) Limited
Floor 2, Trafalgar Court

Les Banques, St Peter Port
Guernsey, GY1 4LY

Independent Auditor

KPMG Channel Islands Limited

Glategny Court, Glategny Esplanade

St Peter Port

Guernsey, GY1 1WR

Registrar

Computershare Investor Services (Guernsey) Limited

13 Castle Street

St Helier

Jersey, JE1 1ES

Investment Adviser

Bluefield Partners LLP

6 New Street Square

London, EC4A 3BF

Sponsor, Broker and Financial Adviser

Deutsche Numis

45 Gresham Street

London, EC2V 7BF

Legal Advisers to the Company
(as to English law)

Norton Rose Fulbright LLP

3 More London Riverside

London, SE1 2AQ

Legal Advisers to the Company
(as to Guernsey law)

Carey Olsen

PO Box 98, Carey House

Les Banques, St Peter Port

Guernsey, GY1 4BZ

Principal Bankers

NatWest International plc

35 High Street

St Peter Port

Guernsey, GY1 4BE

Highlights

As at 30 June 2024 / 30 June 2023

*Developed a nature framework, aligned with the recommendations of the Task Force on Nature-related Financial Disclosures ("TNFD").

1. Underlying earnings is an alternative performance measure employed by the Company to provide   insight to the Shareholders by linking the underlying financial performance of the operational projects to the dividends declared and paid by the Company. It is defined in the Alternative Performance Measure appendix.

2. Total Shareholder Return is based on share price movement and dividends paid in the year. It is defined in the Alternative Performance Measure appendix.

3. Total Return is based on the NAV movement and dividends paid in the year. It is defined in the Alternative Performance Measure appendix.

4. Performance relates to of the Company's 100% owned portfolio.

5. Based on Ofgem's Typical Domestic Consumption Values (TDCV). The TDCV has reduced, hence this metric has increased despite a decrease in generation compared with the previous year.

6. Based on generation data aligned with the relevant 2024 Government CO2e conversion factor. In the current Year, the Company reported avoided emissions on a gross basis, reflecting its equity share in investments but without allocating any avoided emissions to debt finance providers

Results Summary

1.   Underlying earnings is an alternative performance measure employed by the Company to provide insight to the Shareholders by linking the underlying financial performance of the operational projects to the dividends declared and paid by the Company.  It is defined in the Alternative Performance Measure appendix.

2.  Total underlying EPS is calculated using underlying earnings available for distribution, including unutilised prior year underlying earnings per share carried forward, divided by the average number of shares.

3.  Total return is based on NAV per share movement and dividends paid in the year.

4.  Total Shareholder Return is based on share price movement and dividends paid in the year.

5.  Total Shareholder Return since inception is based on share price movement and dividends paid since the IPO.

Corporate Summary

Investment Objective

The investment objective of the Company is to provide Shareholders with an attractive return, principally in the form of regular income distributions, by being invested primarily in solar energy assets located in the UK. The Company also invests a minority of its capital into other renewable assets including wind and energy storage.

Structure

The Company is a non-cellular company limited by shares incorporated in Guernsey under the Law on 29 May 2013. The Company's registration number is 56708, and it is regulated by the GFSC as a registered closed-ended collective investment scheme and as a Green Fund after successful application under the Guernsey Green Fund Rules to the GFSC on 16 April 2019. The Company's Ordinary Shares were admitted to the Premium Segment of the Official List and to trading on the Main Market of the LSE following its IPO on 12 July 2013. On 29 July 2024, the UK Listing Rules were updated and as a result, the Company is now a member of the Equity Shares in Commercial Companies ("ESCC") category. The issued capital during the year comprises the Company's Ordinary Shares denominated in Sterling.

The Company makes its investments via its wholly owned subsidiary (Bluefield Renewables 1 Limited) and has the ability to use long term and short term debt at the holding company level, as well as having long term, non-recourse debt at the SPV level.

Investment Adviser

The Investment Adviser to the Company during the year was Bluefield Partners LLP which is authorised and regulated by the UK FCA under the number 507508.

In May 2015, Bluefield Services Limited (BSL), a company with the same ownership as the Investment Adviser, commenced providing asset management services to the investment SPVs held by the Company's wholly owned UK subsidiary, Bluefield Renewables 1 Limited (BR1).

In August 2017 Bluefield Operations Limited (BOL), a company with the same ownership as the Investment Adviser, commenced providing operation and maintenance services to the Company and provides services to approximately 80% of the capacity of the investment portfolio held by the Company as at year-end.

In December 2020, Bluefield Renewable Developments Limited (BRD), a company with the same ownership as the Investment Adviser, commenced providing BSIF with new build development opportunities in addition to arrangements in place with the Company's other development partners.

In October 2023, Bluefield Construction Management Limited (BCM), a company with the same ownership as the investment adviser, commenced providing BSIF with construction management services on the new build portfolio.

Chair's Statement

Introduction

The year ended 30 June 2024 (the "Year") has produced many challenges for your Company and its Investment Adviser. Despite a political environment which is strongly supportive of renewable electricity, our shares - along with all others in our sector - have traded at a persistent discount to underlying NAV, effectively preventing us from raising fresh capital in the stock market, a strategy which has served us and our Shareholders well for the first ten years of our existence. This is a problem to which I referred last year, and I am sorry to report that, with discounts widening across the sector, in the intervening twelve months the issue has become more acute; at one point, BSIF's discount exceeded 25%. We have therefore adopted a fresh approach to the twin questions of: from where do we access the funds needed to finance our growth; and what is the optimum allocation of the capital resources available to us?

BSIF's operating performance, which saw generation fall by 3%, was hampered by two factors. We suffered from a number of planned outages as inverters were replaced by newer and more reliable designs. The other factor was the weather, the Year in question seeing irradiation levels which were some 4.3% below expectations. Those who can remember the water-logged months of July/August 2023 and May/June 2024 will probably be surprised that the shortfall is not greater.

The most important development for BSIF, announced in December 2023, is our broad partnership with GLIL Infrastructure ("GLIL"), whereby we agreed under Phase One to co-invest in the acquisition of a 247MW portfolio of UK solar assets; and, in Phase Two, to sell to GLIL a 50% stake in one of our existing portfolios of operating solar assets, a transaction that was concluded in September 2024. As well as providing the Company with capital to invest in new developments, it has also allowed us to reduce our floating rate debt.

In light of the discount at which our shares have been trading, in February 2024 we announced a share buyback programme. Between the beginning of March and 30 June 2024, BSIF bought back over 9 million of its own shares at a cost of approximately £9.4 million. Buying at a discount to NAV added 0.4 pps to the Company's net asset value and the shares repurchased are held in treasury. Since Year end, we have continued to buy back shares and as at 26 September we have repurchased over 14 million shares and the discount stands at approximately 18%.

Although we did not complete any new solar projects during the Year, two of our largest solar investments - Mauxhall Farm (44.4MW) and Yelvertoft (48.4MW) - were energised at the end of July 2024 and the beginning of August 2024, respectively. Currently, our total generating capacity (including our 50% share in the assets which were the subject of Phase Two of our strategic partnership with GLIL) stands at 883MW, comprising 824.7MW of solar and 58.3MW of wind.

Highlights of the year

·      Total generation of the 100% owned portfolio, at 811GWh, fell by 3% as compared with the 836GWh generated in the year ended 30 June 2023;

·      Total declared dividends for the Year increased to 8.80pps, in line with our previously declared target (30 June 2023: 8.60pps) and with dividends covered 1.36 times by current earnings;

·      Irradiation was 4.3% below expectations and we suffered from significant plant downtime, largely on account of planned inverter replacements;

·      Our income rose 3.1%, despite spot electricity prices falling - thanks to contracts struck earlier and to our high proportion of regulated and inflation-linked revenues;

·      On 25 January 2024, the Company announced the completion of Phase One of its strategic partnership with GLIL, which was an investment of £20 million of equity, alongside £200 million from GLIL, to fund the acquisition of a 246.6MW portfolio of UK solar assets.

·      Subsequent to our Year end, we have completed Phase Two of our partnership with GLIL, comprising the sale of a 50% stake in a 112.2MW portfolio of operating solar assets, resulting in a payment to BSIF of circa £70 million, of which £50.5 million was used to repay the Company's Revolving Credit Facility ('RCF'). Following completion, the Company's equity stake in the combined portfolios increased to approximately 25%;

·      Work on the Company's development pipeline continued, with planning consents being secured on 223MW of solar projects and 90MW of battery projects, while the wider pipeline grew to 954MW of solar and 603MW of battery storage;

·      The NAV per share fell to 129.75pps (30 June 2023: 139.70pps), the reduction reflecting lower long term electricity prices and lower inflation expectations;

·      BSIF's shares traded at a persistent discount to NAV, the closing price on 30 June 2024 being 19% below the NAV (30 June 2023: 14% discount);

·      Subsequent to 30 June 2024, two major solar plants, with a combined capacity of 92.8MW, were energised.

At the Year end, the Group's total outstanding debt stood at £607 million, with leverage at 43% of GAV (30 June 2023: 41% of GAV).

Underlying Earnings and Dividends

The Underlying Earnings for the Year, before amortisation of long-term debt, were £94.6 million, or 15.5pps, and underlying earnings available for distribution, post debt repayments of £30.1m (4.9pps), were £64.5. million (10.6pps). Thus, the Company has earned comfortably in excess of its total dividend of 8.80pps for the Year.

This has enabled the declaration of a fourth interim dividend of 2.20pps, bringing the total dividend for the Year to 8.80pps (Prior Year: 8.60pps); the yield on our shares - based on a share price of 106.40pps on 26 September 2024 - is 8.3%. The Board has set a target dividend for the year ended 30 June 2025 of not less than 8.90pps. This extends our record of progressive increases, and reflects our intention to repay borrowings and continue a programme of share buybacks, while also investing in the development of our pipeline to generate and store electric energy.

Valuation and Discount Rate

There has been considerable activity in the secondary market for renewable electricity projects; demand for solar portfolios remains strong, providing ample evidence to validate the asset values adopted by BSIF. Prices seen in the market over the past two years range between £1.20m/MW and £1.45m/MW and over 1GW of operational capacity has been brought to market in the Year.

Some of this activity involves BSIF as a seller of operating solar investments; by entering into its partnership with us, GLIL acquired a 50% stake in a selection of BSIF's solar assets in Phase Two of the strategic partnership, for a price which values the 112MW portfolio at circa £140 million. The financial assumptions underlying this transaction are consistent with those used by the Company in publishing its latest NAV of 129.75pps as at 30 June 2024. The portfolio discount rate is unchanged at 8% for the valuation and the enterprise value of the Company's operational portfolio is £1,136.5m, representing £1.24m/MW for the solar assets (30 June 2023: £1.35m/MW).

Inflation

UK inflation has abated in the past year; in June 2023 RPI inflation was running at 10.7%, whereas this fell to 2.9% for June 2024. On a CPI basis, the figures were 7.9% and 2.0%, respectively. Sterling interest rates, however, have been slower to fall. In August 2024 the Bank of England reduced Base Rate by just 0.25%, to 5.00%, and the UK 5 year gilt rate is now below 4%, down from approximately 4.5% one year ago.

BSIF is a net beneficiary of inflation, since our regulated income is index-linked, boosting our revenues from ROCs and FiTs faster than the increase in our operating costs. The Company also adopts a prudent approach to leverage, with most of our debt being fixed at the historically low interest rates which prevailed until 2022; lower interest rates assist BSIF by reducing the cost of our revolving credit facility.

Power Prices

Spot electricity prices have softened considerably in the Year, but the Company's PPA strategy of fixing power prices for between one and three years in advance has allowed the Company to benefit from power contracts which are insulating the Company from short term price weakness. The average weighted prices for these contracts were £149/MWh for June 2024 (June 2023: £230/MWh).

Environmental, Social and Governance ("ESG")

I am pleased to say that our significantly enhanced ESG reporting has been well received by Shareholders and other commentators. We continue to build on our approach and once again I express BSIF's appreciation for the work done by the Investment Adviser to align the Company with best practice in this field. This year is the Company's second year of implementing and monitoring its ESG performance against its KPIs and further information is available on page 47.

Capital allocation and gearing

As noted earlier, with BSIF's shares trading at a significant discount, we continue to buy back our own shares on a regular basis and, since the commencement of this programme in February, total buybacks now exceed 14 million shares, all held in treasury. At the same time, we are steadily reducing the balance on our RCF and it is the Board's intention, within the constraints of the resources available to the Company, to persevere with both programmes.

The Board

As noted in our Interim Report, in November 2023 Chris Waldron joined the BSIF Board as a non-executive director.

Having been a member of this Board since the flotation of the Company in 2013, I intend to retire in 2025. Thus, the forthcoming AGM will be the final time I shall be seeking re-election to the Board. The Board is at an advanced stage of an exercise, involving an external search agency, to identify an additional director to be appointed during our current financial year.

The AGM

The Company's Annual General Meeting will take place at 10.30am on 6 December 2024 at Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey. Shareholders who are unable to be present in person are encouraged to submit questions in advance of the meeting.

Conclusion

BSIF is required every five years to give Shareholders the opportunity to vote for the continuation or otherwise of the Company.  Your Board was delighted when the vote held at the 2023 AGM resulted in a 98.56% vote in support of the continuation of the Company and we interpret this as a strong vote of confidence in our business and in our Investment Adviser, Bluefield Partners.

It is clear from their early weeks in office that the incoming Labour Government regards the expansion of indigenously produced renewable energy as one of its priorities and recent announcements regarding investment in significantly increased grid capacity suggest to us that they are entirely serious about fostering a three-fold increase in solar power by 2030 and that the opportunities for our business are legion. Our main constraint remains accessing the capital that is needed to develop the opportunities that exist. As well as our operating portfolio of nearly 900MW of wind and solar capacity, BSIF has a significant development pipeline, comprising nearly 1GW of solar projects and over 600MW of batteries.

Your Company is currently responsible for the generation of some 5% of all solar power in the UK and it is our intention to participate fully in the planned expansion of this resource. The recently established publicly owned energy company, Great British Energy, has been designed to accelerate clean energy deployment and we welcome this, as well as the other initiatives announced to date which will support the path to both net zero emissions and greater energy security and independence. At the same time, the Government recognises the need to reform electricity market arrangements to deliver the pace and scale of change required to meet its target of decarbonisation of the electricity system and continues to assess its options following a second round of consultations in May 2024. We are active participants in this debate.

Our primary objective for the current year is to progress those investments which meet our investment return criteria and which can be built and grid connected soonest, while working forensically on our existing portfolio to improve and update what is there, all with the objective of maximising the operating performance. We are fortunate to have a very significant volume of index-linked regulated revenue which, combined with our Investment Adviser's successful strategy of fixing medium term power sales contracts, gives us confidence in the prospects for BSIF and our ability to continue to provide our Shareholders with a rising dividend. 

John Scott

Chair

27 September 2024

Report of the Investment Adviser

Introduction from the Managing Partner of the Investment Adviser

In the year to 30 June 2023, the Company delivered the strongest earnings in its 10 year history and whilst records cannot be broken every year, the financial performance for the period to 30 June 2024 has once again been strong with the dividend target of 8.80pps comfortably covered by in period earnings (net of debt and taxes).

The Company's highly successful power price strategy has once again delivered material value to shareholders, but for the first time in its operating history the portfolio has suffered the twin effects of below budget irradiation (-4.3%) and below budget operational performance (-5.1%).

Whilst the Board and the Investment Adviser have no control over the amount of irradiation and wind speed, it is important to note the operational challenges faced by the portfolio are principally the result of one-off DNO outages and isolated challenges with particular inverter models.

The Investment Adviser, Bluefield Services and Bluefield Operations, have addressed this with a targeted inverter replacement programme, investing over £3.6m to June 2024 and the results of which are already delivering performance back towards expectations. 

Stepping outside of the Company, the equity markets over the past twelve months have continued to present a challenging year for the listed renewables sector. Across the sector, Bluefield Solar included, share price discounts to NAVs have persisted and so the prospect of capital raises from the equity markets has remained unattainable.

This has presented a multi layered challenge to the Company as it balances the need to continue progression of its extensive pipeline of development opportunities, to prevent the risk of loss of value, whilst simultaneously creating liquidity to reduce drawings under the Company's RCF balance and provide support to the Company's share buyback programme.

Despite these considerable challenges, it is highly pleasing to be able write about a series of actions the Company has taken over the past year which have made material strides in specifically addressing these challenges. These were:

1.     Strategic Partnership with GLIL: The announcement in December 2023 of the commencement of a Strategic Partnership with GLIL, the large infrastructure investor. This innovative arrangement, unique amongst the actions being taken by other listed peers, was structured to simultaneously address an attractive acquisition opportunity, provide liquidity for reducing the Company's RCF and progression of a selected portion of the Company's development pipeline.

The partnership covers three phases:

a.     Phase One of the partnership, completed in January 2024, enabled Bluefield Solar to acquire a minority stake in a highly attractive operational portfolio alongside GLIL as the majority investor. The agreement also has the option for Bluefield to increase its stake, assuming there are available funds.

b.     Phase Two of the partnership, completed in August 2024, was the sale by Bluefield Solar of a 50% stake in a 112MWp operational portfolio owned 100% by the Company. The sale, completed in line with the Company's prevailing NAV, realised proceeds of circa £70m and enabled a material initial repayment (being circa £50m) of the Company's drawn RCF balance (leaving it at circa £134m at the time of writing)

c.     Phase Three of the partnership, which is currently in progress, is a commitment for GLIL and Bluefield Solar to co-invest into a selected portfolio of circa 10% of the Company's proprietary development pipeline and enable construction over the next two to three years.

2.     Share buyback Programme: Turning attention to the challenge of the share price discount relative to the Company's NAV, in February 2024 the Board announced a share buyback programme of £20m in order to provide direct support to the share price. As at 30 June 2024, the Company had spent £9.4m of this allocation.

Whilst there has been considerable success with the various strategic initiatives deployed over the past twelve months, the steps that are taken next are just as important in ensuring performance of the Company continues to match that of the previous decade. What does this mean in practice?

On a direct basis, it means reviewing options for prospective disposals of up to a third of the Company's development pipeline (in line with the Company's previous statements on the percentage of retention) to deliver capital recycling and secure value from development activities as well as consideration of further sales, on a limited capacity basis, of the Company's operational assets. Both these initiatives will facilitate further reductions in the Company's RCF balance, as well as providing funds to progress and protect the value of the Company's remaining developments. An example of this is over 300MW of solar and co-located battery developments in the north east of England that we are looking to sell in part or as a single package. On completion this will provide additional liquidity to the Fund and should provide a material return to BSIF, who is the majority shareholder.

Further to this, we are actively looking at whether there are further sales of operational assets to recycle funds, and support the initiatives of further paying down of the RCF, and a continued share buyback strategy. And we also looking at making sure our structural debt is optimised for the long term benefit of the shareholders.

On a wider basis, it means continuing to operate the Company in keeping with the five core strengths that have been so successful in driving out performance for shareholders over the past decade:

1.     Capital Structure: continued focus on prudent use of leverage and in the near term a gradual reduction in RCF drawings, with long term financings secured at attractive rates on a fixed interest basis (a current average cost of debt of c.3.4% on £430m of long-term borrowings),

2.     Power Sales Strategy: striking Power Price Agreements contracts at the short end of the power curve (6-30 months), through competitive tender processes, enabling it to maximise value for shareholders from the most liquid part of the power market.

3.     Active Management: continuing to provide a dedicated workforce of 130 within Bluefield Partners and Bluefield Services, providing an end to end service, offering from development through construction to operation and long term management, all with ESG embedded across each function.

4.     Proprietary Pipeline: constantly applying the DNA of the business around accessing primary opportunities (as highlighted by the 1.5GW solar and storage proprietary pipeline the Investment Adviser has built up exclusively for BSIF) to provide a platform for continued growth or value accretive sales. 

5.     Capital Discipline: Since listing in 2013, a judicious approach to deployment of capital has been paramount as periods of significant investment activity have been combined with periods of restraint. This approach was at the forefront of the structuring of the Strategic Partnership with GLIL.

A lot has been achieved in challenging market conditions and we believe that the actions taken over the past year are showing real evidence of being able to address the issues at hand whilst allowing the Company's long term ambitions to remain undimmed.

James Armstrong

Managing Partner, Bluefield Partners LLP

1. About Bluefield Partners LLP ('Bluefield')

Bluefield was established in 2009 and is an investment adviser to companies and funds investing in renewable energy infrastructure. Our team has a proven record in the selection, acquisition and supervision of large scale energy and infrastructure assets in the UK and Europe. The Bluefield team has been involved in over £6.7 billion renewable funds and/or transactions in both the UK and Europe, including over £1.6 billion in the UK since December 2011.                                                

Bluefield was appointed Investment Adviser to the Company in June 2013. Based in its London office, Bluefield's partners are supported by a dedicated and highly experienced team of investment, operations, finance, legal and portfolio executives. As Investment Adviser, Bluefield takes responsibility for selection, origination and execution of investment opportunities for the Company, having executed over 200 individual SPV acquisitions on behalf of BSIF and European vehicles.

2.   Portfolio: Acquisitions, Performance and Value Enhancement

Portfolio Overview

As at 30 June 2024, the Company owned 100% of an operational solar portfolio of 129 photovoltaic ("PV") plants (consisting of 87 large scale sites, 39 micro sites and 3 roof top sites), 6 wind farms and 109 small scale UK onshore wind turbines, all 100% owned by the Company, with a total capacity of 812.6MW (30 June 2023: 812.6MW). In addition to this, the Company has a 9% stake in a 246.6MW portfolio of UK solar assets, acquired during the Year in partnership with GLIL Infrastructure, taking the total portfolio capacity to 834MW, comprising 776MW of solar and 58MW of onshore wind.

During the Year, the combined solar and wind portfolio, on the 100% owned assets, generated an aggregated total of 810.6GWh (Prior Year: 836.2GWh), representing a generation yield of 997.6 MWh/MW (30 June 2023: 1,029 MWh/MW).

Investment Approach, Acquisitions, and Divestments in the year

The Company has taken a disciplined approach to the deployment of capital since listing, investing only when there are projects of suitable quality at attractive returns to complement the existing portfolio. Rigorous adherence to restrained capital deployment inevitably means there can be periods where acquisition activity falls, even when sector activity appears in contrast, but this controlled approach is beneficial in driving long term, sustainable growth for Shareholders, as evidenced by the Company's record of sector leading returns since listing over a decade ago.

In December 2023, the Company announced a three-phase strategic partnership with GLIL, which envisages both parties investing together into UK focused solar assets, from development through to operational plants. The partnership will also facilitate deleveraging of the Company.

On 25 January 2024, the Company announced the successful completion of Phase One of the partnership with GLIL, which was an investment by BSIF of £20 million of equity, alongside £200 million from GLIL, to fund the acquisition of a 246.6MW portfolio of UK solar assets. BSIF's ownership stake in the portfolio was 9%.

After 30 June 2024, the Company announced the execution of Phase Two of the strategic partnership with GLIL, which was the sale of a 50% stake in a 112.2MW portfolio of UK solar assets owned by BSIF. Following amalgamation with the Phase One acquisition, the Company's equity stake across the combined portfolios has increased to 25%.

Portfolio Performance and Optimisation

Solar PV Performance

In the Year, irradiation levels were 4.3% lower than the Company's forecasts and 9.9% lower than the Prior Year, whilst generation at 647.9GWh, was 9.5% lower than forecast.

During the Year, the solar portfolio achieved a Net PR of 75.4% (Prior Year: 76.2%) against a forecast of 79.96%, due to key component downtime driven primarily by supply chain challenges for key High Voltage ('HV') equipment. Consequently, generation yield was 859.15MWh per MW of installed capacity, 7.8% lower than recorded in the Prior Year.

Table 1. Summary of Solar Fleet Performance for the Year:⁴

Notes to Table 1. 

1.     Periods of irradiation where irradiance exceeds the minimum level required for generation to occur (50W/m²)

2.     Excluding grid outages and significant periods of constraint or curtailment that were outside the Company's control (for example, DNO-led outages and curtailments)

3.     Average Total Unit Price includes all income associated with the sale of power, all subsidy payments, liquidated damages and insurance claims amounts. ROC recycle revenue is included assuming a 10% recycle rate for both actual and forecast revenue

4.     Excludes the strategic partnership with GLIL

Total revenue for the Year was £160.5 million, 13.75% lower than forecast but 1.9% higher than the Prior Year. PPA agreements which commenced during the Year were the principal reason for the increased revenue, as the average power price rose 17% to £165/MWh in the Year, up from £141/MWh in the Prior Year.

Operational costs for the Year (incorporating all fixed, contracted costs such as lease payments, O&M fees etc.) totalled £29.5 million, including expenditure associated with the optimisation & enhancement projects (see below).

Solar PV Optimisation & Enhancement Activity

The Investment Adviser is taking proactive steps to mitigate risks to both the short- and long-term operational performance of the portfolio. This is achieved through a rolling capital investment programme to proactively address key risks to operational performance. The Investment Adviser has identified that one of the key causes of lower than expected availability is a long lead time for spare parts for major high voltage components, notably central inverters.

Large central and string inverter revamping projects were completed during the Year, with many of the projects being completed in the final quarter of the Year. These projects improved performance during that final quarter, and it is expected that the performance uplifts from these projects will be fully realised in FY 2024/25, with further inverter repowering and optimisation projects planned during that year.

As at 30 June 2024, 494.6 MW of the PV portfolio (being 66% of the solar PV portfolio) have leases that allow for terms beyond 30 years , of which 362 MW (100% of applications successful) benefit from planning terms in excess of 30 years. The Investment Adviser continues to pursue lease extensions on the remaining assets in the portfolio.

GLIL Partnership Portfolio

Further to Phase One of the strategic partnership with GLIL, the acquisition of a 246.6MW UK Solar portfolio from Lightsource bp was completed on 24 January, with BSIF holding an equity stake of 9%. During the period from January 2024 to June 2024, this portfolio's generation was 5% below forecast, primarily driven by the below expected irradiation (-7.2%).

Onshore Wind Performance

As at 30 June 2024, the Company held an operational onshore wind portfolio of 135 installations, comprising 109 small scale turbines (55-250kW) and 26 larger turbines (850kW-2,300kW), with an aggregated capacity 58.4MW.

During the Year, the wind portfolio generated 162.7 GWh, 2% below forecast. This was largely due to several major component failures, resulting in extended downtimes across the portfolio. Despite this, generation has improved significantly compared to the Prior Year, up 21.6% due to a combination of improved availability and wind speeds.

  Table 2. Aggregated Wind Portfolio Performance for the Year

Notes to Table 2.

Total revenue for the Year was £30.3 million (Prior Year: £27.9 million), with an average revenue per MWh of £186. Revenues achieved were 3% below forecast, though these were 9% higher compared to Prior Year, due to increased generation.  

Onshore Wind Optimisation & Enhancement Activity

In Northern Ireland, 17 of the 29 small-scale turbines were identified for repowering with replacement EWT 250kW turbines. This will increase both efficiency and output, whilst maintaining their respective NIRO accreditation status. 

As at 30 June 2024, 13 turbines have been repowered and returned to operation, with the remaining four turbines having received planning approval for repowering, with a new 25-year term. One project has received turbine delivery, with repowering planned by 31 December 2024.

General Portfolio

OFGEM Audits

As part of the industry-wide audits of FiT and RO-accredited generating assets, the Asset Manager has been working closely with the regulator on certain assets that have been selected, at random, for audit. All closed OFGEM audits have had relevant enquiries satisfied, with the respective assets' accreditation being maintained. The Asset Manager is working closely with OFGEM to close enquiries on the remaining open audits.

Health & Safety Activities & Cyber Security

Please refer to the Environmental, Social and Governance report for further information on health & safety activities and cyber security.

3. Power Purchase Agreements

The Company actively monitors power market conditions, ensuring that contract renewals are spread evenly through any 12-month period, with competitive tender processes on both fixed and floating price options run for each PPA renewal in the 3 months prior to the commencement of a new fixing period. 

Flexibility within the Company's capital structure enables PPA counterparties to be selected on a competitive basis and not influenced by lenders requiring long term contracts with one offtaker.  This means the programme of achieving value and diversification from contracting with multiple counterparties (which in turn reduces offtaker risk) is executed for the benefit of Shareholders.

By rolling PPA fixes during the Year and targeting the most liquid area of the power market (one to three years), the Company was able to complete a number of fixes during periods, with average levels turning out above day-ahead base-load settlement prices over the same period. Evidence of this is reflected in the Company's average seasonal weighted power price, which for the Year was £148.80/MWh (Prior Year: £141.00/MWh), while the average day-ahead base load settlement price was £72.79/MWh (Prior Year: £169.97).

As at 30 June 2024, the average term of the fixed-price PPAs across the portfolio is 32.5 months (Prior Year: 26.2 months) and the Company has a price confidence level of 67% to December 2024 and 48% to June 2025 (on a capacity basis), representing the percentage of the Company's portfolio that already has fixed prices in place and thus no exposure to power market fluctuations. Looking ahead, the strategy has also secured power fixes, and thus revenue certainty, at levels that are in excess of the latest forecaster expectations.

Table 3. PPA Fixed Power Prices (average for fixes completed vs blended average forecaster price during the Year)

Footnote: MW stated in the BSIF portfolio weighted average contract price refers to the total amount of the portfolio fixed for that year; excludes assets under the Strategic Partnership  portfolio.

The Investment Adviser believes its PPA policy is the best strategy for Shareholders, who are looking for stable revenues and forecastable, sustainable dividends with high visibility of revenues on a rolling multiyear basis. It is this approach that has delivered almost a decade of sector leading dividend cover (covered by current earnings and post debt amortisation).

4. Proprietary Pipeline

Over the past five years, the Company has continued to implement its new build strategy across the solar value chain to ensure that the Company continues to build its market share amongst UK solar power producers, with the Company signing co-development agreements to fund new sites. The Company also expanded its strategy to battery storage, which will enable the diversification of the Company's revenues and allow us to monetise the expected increases in volatility of power prices in the future.

This focus on development activities has enabled the Company to identify a significant pipeline of assets which can be built over the next five years. As these projects progress, the Company is working with selected construction contractors to ensure that projects are designed and built to a high specification for long term performance.

The new build strategy has delivered well on its objectives thus far; the development pipeline now stands at over 1.5 GW and the first two developments to enter the construction phase (Yelvertoft and Mauxhall Farm) connected to the electricity network shortly after 30 June 2024. Yelvertoft will receive a Contract for Difference ("CfD") for its output under AR4.

The following sections provide a more detailed update on both our construction and development programmes.

Construction Programme

As at 30 June 2024, 93 MW of projects were under construction. These projects are Yelvertoft Solar Farm (a 49MW solar PV park in Northamptonshire) and Mauxhall Farm Energy Park (a 44MW solar PV project in North East Lincolnshire). Mauxhall Farm is planned to be a co-located project and construction of a 25MW battery energy storage scheme is expected to commence in the year ending 30 June 2025.

As at the end of the Year, the Company had a pipeline of future solar assets with a capacity of 541MW and battery storage assets with 233MW capacity that are fully consented and are in pre-construction. The projects have connection dates between 2024 and 2030.

Of this, the Company is actively exploring EPC contracts for two projects (17MW capacity in total), both of which have CfDs under AR4 and it plans to launch tenders for a selection of its AR5 accredited projects in the year ending 30 June 2025.

EPC agreements for the Company's new build projects are expected to be fixed price contracts comparable to Yelvertoft and Mauxhall Farm and will require contractors to provide full procurement activity and to supply all materials. The Investment Adviser completes a full assessment of each contractor's procurement and supply chain management processes to ensure compliance with the Company's ESG policies and standards.

Development Programme

The Investment Adviser has been pursuing its development strategy since 2019 to enable the Company to continue to be a key player in the UK renewable energy market. Since this time, a portfolio of 954MW of solar and 603MW of batteries has been built up across 28 projects.  The Company has an investment limit in pre-construction development stage activities, restricted to 5% of gross assets; less than 3% is currently committed.

Currently, no value is attributed to projects without planning consent. Once developments receive planning consent and move from the development stage to pre-construction, the Investment Adviser believes it is appropriate to reflect this change in the Company's valuation. At this point in their lifecycle, the projects will have received all the necessary planning consents, land rights and valid grid connection offers and so have discernible value beyond the direct costs of development.

5. Analysis of underlying earnings

The total generation and revenue earned in the Year by the Company's portfolio, split by subsidy regime, is outlined below:

The Company includes ROC recycle assumptions within its long term forecasts and applies a market based approach on recognition within any current financial year, including prudent estimates within its accounts where there is clear evidence that participants are attaching value to ROC recycle for the Year.

The key drivers behind the changes in Underlying Earnings between this Year and the Prior Year are the combined effects of lower PPA pricing, debt interest and tax (including EGL).

Underlying Portfolio Earnings

1 Other Revenue includes ROC mutualisation, ROC recycle late payment CP21, insurance proceeds, O&M settlement agreements and rebates received.

2 Includes the Company, BR1 and any tax charges within the group.

3 Excludes one-off transaction costs and the release of up-front fees related to the Company's debt facilities

4 Target distribution is based on funds required for total target dividend for each financial year. 

The table below presents the underlying earnings on a 'per share' basis.

* Average number of shares is calculated based on shares in issue at the time each dividend was declared.

** Reserves carried forward are based on the shares in issue at the point of Annual Accounts publication (being 597m shares for 30 June 2024 and 611m shares for 30 June 2023).

6. NAV and Valuation of the Portfolio

The Investment Adviser is responsible for advising the Board in determining the Directors' Valuation and, when required, carrying out the fair market valuation of the Company's investments.

Valuations are carried out on a quarterly basis at 30 September, 31 December, 31 March and 30 June each year, with the Company committed to conducting independent reviews as and when the Board believes it benefits Shareholders.

As the portfolio comprises only non-market traded investments, the Investment Adviser has adopted valuation guidelines based upon the IPEV Valuation Guidelines published by the BVCA (the British Venture Capital Association). The application of these guidelines is considered consistent with the requirements of compliance with IFRS 9 and IFRS 13.

Following consultation with the Investment Adviser, the Directors' Valuation adopted for the portfolio as at 30 June 2024 was £965.5 million (30 June 2023: £1,018.4 million).

The table below shows a breakdown of the Directors' valuations over the last three financial years:

Discounting Methodology

The Directors' Valuation is based on the discounting of post-tax, projected cash flows of each investment, based on the Company's current capital structure, with the result then benchmarked against comparable market multiples, if relevant. The discount rate applied on the project cash flows is the weighted average discount rate. In addition, the Board continues to adopt the approach under the 'willing buyer/willing seller' methodology, that the valuation of the Company's portfolio be appropriately benchmarked to pricing against comparable portfolio transactions.

Key factors behind the valuation

There have been several factors that have been considered in the Investment Adviser's recommendation to the Directors' Valuation (and which are quantified in the NAV movement chart on page 28):

(i)            Power price forecasts and costs have been inflated to June 2024 terms using actual inflation data published on the Office for National Statistics webpage. The Fund's RPI assumption for 2025 remains unchanged at 3.00% (June 2023: 3.00%). On 1 August 2024, the Bank of England cut Base Rate for the first time since the beginning of the pandemic in March 2020, reducing Base Rate from 5.25% to 5.00%, the same rate as it was in June 2023.

(ii)           The Company's previous inflation assumptions for ROC revenues had been slightly below the reported number and in utilising actual inflation for ROC sites, the valuation has increased.

(iii)          Renewable Energy Guarantees of Origin for the period 2026-2030 have been included for the first time in the 30 June 2024 valuation. This adoption follows evidence that reasonable value is now being achieved through power purchase agreements signed and expectations from forecasters that some value will continue to be secured for REGOs in the future.

(iv)          The portfolio discount rate has been maintained at 8.00% (June 2023: 8.00%).

(v)           Inclusion of the latest forecasters' power price curves as at 30 June 2024 has resulted in a decline in the valuation as prices have normalised following a prolonged period of higher power prices, driven largely by increases in commodity prices exacerbated by the impact of the Russian invasion of Ukraine on wholesale gas prices. Further information regarding power prices is included in section 3 of this report.

(vi)          The value attributed to the Company's development and construction portfolio has risen during the Year, reflecting sites receiving planning permission and further progress and investment into construction projects.

(vii)         Working capital has declined in the Year, reflecting the payment of dividends through the Year, the execution of the Company's share buyback programme, and performance compared to forecasts. 

(viii)        Investments into Joint Ventures (JVs) have been included in the valuation for the first time following the successful completion of Phase One of the strategic partnership with GLIL. The JV continues to progress with the post year-end signing of Phase Two of the strategic partnership in the form of a sale of operational assets from BSIF into the JV, and the forthcoming Phase Three, whereby the Company and GLIL intend to commit capital to a selection of the Company's development and construction pipeline.

By reflecting the core factors above within the Directors' Valuation for 30 June 2024, the enterprise value of the operational portfolio is £1,136.5 million (June 2023: £1,195.2 million), representing an effective price for the solar component of £1.24m/MW (June 2023: £1.35m/MW). These metrics sit within the pricing range of precedent market transactions and the 'willing buyer-willing seller' methodology upon which the Directors' Valuation is based.

Power Prices

A blended forecast of three leading consultants is used within the latest Directors' Valuation , as shown in the graph below. This is based on forecasts released in the three months ended 30 June 2024. For illustration purposes, the graph below also includes the blended curve used in the Company's accounts for the Prior Year.

The curves used in the 30 June 2024 Directors' Valuation reflect the following key updates:

1.     Short-term European gas prices have fallen amid strong gas storage levels and an evolving gas supply chain following Russia's invasion of Ukraine, with Norwegian supply and LNG imports from across the globe providing substitutes for Russian gas, with a similar trend reflected in the wholesale power price curve;

2.     Higher renewable generation capacity deployment levels in the medium term (with ambitions for up to 60GW offshore wind and 30GW onshore wind by 2030) as the UK strives to meet its net zero targets and fully decarbonise its power system by 2030; and

3.     Annual demand for electric power in Great Britain, driven principally by electrification of heat and transport, is expected to rise from 298TWh in 2024 to 423TWh by 2035.

There have been no material changes to assumptions regarding the future performance of the portfolio when compared to the Directors' Valuation of 30 June 2023. A cost optimisation on expiry of subsidies has been introduced for business rates and insurance. This has been introduced to reflect that these costs are directly related to the level of income received by the assets, which will fall once the subsidies expire.

The assumptions set out in this section remain subject to continuous review by the Investment Adviser and the Board.

Reconciliation of Directors' Valuation to Balance sheet

*GAV is the Financial Assets, as at 30 June 2024, at NAV of £781.6m plus RCF of £184.0m and third party portfolio debt of £423.1m (giving total debt of £607.1m).

Enterprise Valuation sensitivities

Valuation sensitivities are set out in tabular form in Note 8 of the financial statements. The following diagram reviews the sensitivity of the EV of the portfolio to the key underlying assumptions within the discounted cash flow valuation.

7. Financing

Debt Strategy

Since its IPO, the Company has focused on a simple and defensive approach to debt. This means having debt agreements that have, primarily, fixed interest rates and are amortising. Debt is split into (1) long-term asset-level debt, and (2) a revolving credit facility at fund-level for short-term funding. Debt in the portfolio is generally not subject to stringent lender requirements on PPAs, allowing the Company to take advantage of more competitive PPA pricing.

The Company's weighted average cost of long-term debt at 30 June 2024 is 3.53% (30 June 2023: 3.50%) and is largely locked-in via fixed interest rates. Whilst the Company has some index-linked debt, it also has significant levels of RPI linked revenues, leaving the Company a net beneficiary of inflation.

The revolving credit facility, detailed below, is the only floating-rate debt instrument in the portfolio and represents 30% of the total debt balance. 71% of asset-level debt has a fixed interest rate. 29% of principal for long-term debt is inflation-linked.

Revolving Credit Facility

The Company's subsidiary BR1 has a revolving credit facility with RBS International, Santander UK and Lloyds Bank Plc, with a total committed amount of £210 million and facility margin of 1.9% (the 'RCF').  The RCF also has an uncommitted accordion feature allowing it to be increased by up to a further £30 million.

The maturity of the facility is May 2025. The Company is in discussions with the lenders to extend the RCF by an additional two years. As at 30 June 2024, £184 million was drawn from the RCF (30 June 2023: £153 million). After the year-end, following the completion of Phase Two of the strategic partnership with GLIL, £50.5 million was repaid, reducing the drawn balance to £133.5 million.

External Debt

Excluding the Company's RCF, total outstanding loans from third-party lenders as at 30 June 2024 total £423 million, with each loan secured against a portfolio of assets and fully amortising within the life of the respective asset's subsidies. The average interest cost, excluding the Company's RCF, across the external debt facilities in the table below is 3.53%.

Note: Index-linked debt treated as fixed for the purposes of this table as proportion fixed represents interest rate risk only

GAV Leverage

The Group's total outstanding debt as at 30 June 2024 was £607 million (30 June 2023: £584 million) and its leverage stands at 43% of GAV (30 June 2023: 41%), within the 35% - 45% preferred range the Directors have outlined as desirable for the Company.

8. Market Developments

UK renewable generation capacity and deployment

At 31 March 2024, Government data shows that UK solar PV capacity stands at 16.7GW across 1.6 million installations. Of this amount, around 7.3GW (46% of the total solar capacity in the UK) and 5.1GW (32%) is accredited under the RO and FiT schemes, respectively, 3.4GW (21%) is unaccredited and less than 1% is under the CfD scheme. Onshore and offshore wind installed capacity stands at around 15.5GW and 14.7GW, respectively. The UK has 4.4GW of operational battery storage capacity, according to data from energy association RenewableUK.

The UK's total renewable generation capacity is projected to continue to grow over the coming years as the Government strives to meet its net zero targets and meet power demand from the electrification of the domestic heat, transport and industrial sectors. Deployment is expected to be supported by several policy initiatives, including the CfD scheme and various planning and grid reforms which are described in more detail in the next section of this report.

The incoming Labour Government has set ambitious targets to double onshore wind, triple solar generation capacity and quadruple offshore wind by 2030. To support this ambition, several first-of-a-kind initiatives such as a new Mission Control for Clean Power 2030, headed by the former chief executive of the Climate Change Committee (Chris Stark), an Onshore Wind Industry Taskforce and a publicly owned energy company (Great British Energy) have been set up, all of which should support greater renewable energy roll out over the upcoming years.

The chart below illustrates the distribution of total installed capacity across different renewable generation technologies at 31 March 2024 compared with a year earlier.

Secondary market transactions, development and construction activity

Transactional activity in the UK renewables market has eased to some extent, with several infrastructure funds completing capital recycling via asset disposal programmes to demonstrate value and support deleveraging efforts. Activity in the UK development market has continued to be driven by factors such as ambitious decarbonisation targets, increasing preferences by customers for clean energy, demand for ESG investments and the inclusion of solar PV in upcoming CfD auction rounds.

Development activity has been noticeable in the battery storage area, with developers seeking to provide solutions to help manage the grid as larger quantities of intermittent renewables are added to the system. Solar development activity has been somewhat slower, primarily due to grid constraints.

Some construction activity has been observed in the UK solar and battery storage area, although this is against a backdrop of supply chain challenges and elevated development costs. Converting the UK's significant development pipeline into operational solar and storage projects over the next five years will require developers to adopt an innovative approach to overcome challenges surrounding high construction costs, grid connection lead times and access to new capital.

With 776MW of operational solar capacity, the Company maintains a strong position within the UK solar market, owning 5% of the UK's utility-scale solar PV capacity.

9. Regulatory Environment

The regulatory environment remains under the spotlight as the Government seeks to support renewable energy deployment under particularly tough macroeconomic conditions. Key themes are outlined below.

Update on Contracts for Differences (CfD)

In September 2023, the Government awarded support for 3.7GW of new build renewable generation capacity through its CfD scheme - allocation round 5 (AR5). Solar projects represented the majority share at 52% (1.9GW) and onshore wind at 40% (1.5GW), while no offshore projects were successful. This was the lowest overall renewable capacity procurement level since 2017 and just over a third of the total 10.8GW that was procured in the AR4. The overall budget for AR5 (across successful pot technologies) was £227 million per year, down from £295 million per year in AR4.

In September 2024, the AR6 results were published. A total of 9.6GW of renewable energy projects were successful, of which 3.3GW solar projects won contracts (or 34% of total awarded capacity), onshore wind at 990MW (10%), offshore wind at 4.9GW (51%) and floating offshore at 400MW (4%).  The Government revised the overall AR6 budget to £1.6 billion, up by £0.5 billion from the previous level amid calls from industry to help meet renewable targets. Most of the budget uplift went to offshore wind, while established technologies including solar and onshore wind rose by £65 million to £185 million. The AR6 administrative strike prices across all technologies rose from the previous round, with solar and wind up by 30% and 21% respectively, at £61/MWh and £64/MWh, respectively.

The Government's consultation on the proposed amendments to AR7 and future rounds closed in March 2024. Several changes were put forward, such as the inclusion of onshore wind full repowering as a new eligible technology, the introduction of hybrid metering to better accommodate co-located projects and changes to the inflation indexation methodology for allocation rounds further ahead. The market awaits a formal Government response to this consultation.

Electricity Generator Levy

The Electricity Generator Levy - a 'temporary' 45% tax on income from electricity sold above the benchmark price - is set to be in place until 31 March 2028. It applies to extraordinary returns made by renewable (solar, wind, biomass), nuclear and energy from waste generators that are connected to the UK national transmission or local distribution networks. Revenues from CfDs are excluded from this levy.

Review of Electricity Market Arrangements

The Government's second consultation on the UK's Review of Electricity Market Arrangements ("REMA") closed in May 2024. REMA aims to identify necessary reforms needed to transition to a cost effective, lower carbon and secure electricity system. The most significant reform options at the time included the possibility of zonal locational pricing and potential changes to the Contract-for-Difference scheme. The market awaits a formal response to the REMA second consultation.

Bluefield Partners LLP

27 September 2024

Environmental, Social and Governance Report

1. Introduction

An introduction from the Chair

I am pleased to present the Company's ESG progress within this report. The Company remains dedicated to contributing to a cleaner and more resilient energy system, and its ability to adapt - evidenced through its strategic partnerships, accretive use of capital, and evolving ESG approach - will support the Company in delivering long-term value to its Shareholders.

Despite a challenging year for listed renewable funds, we continue to deliver renewable energy at scale, helping to tackle the global emergencies of climate change and biodiversity loss. The recent change in Government brings a fresh perspective on energy policy, with a commitment to deliver zero-carbon electricity by 2030. To achieve this, the UK needs rapid, large-scale deployment of renewable technology and the infrastructure to support these installations. This will not only accelerate the transition to net zero, but also deliver energy security and affordable energy pricing.

As such, I am proud of the achievements made by the Company during the Year, particularly the construction of two major new solar assets which have been energised in recent weeks. On an annual basis, these assets are expected to generate enough renewable energy to power approximately 33,000 UK homes and avoid the equivalent of 18,800 tonnes of CO2e annually.

As the sector grows, responsibility must be taken for both the positive and negative impacts of renewable energy operations, with industry players working together to drive responsible business practice across global supply chains. The Company recognises, and works to manage and minimise, the potential adverse impacts of its business operations, considering them within its responsible investment approach. At the same time, ESG opportunities, such as those relating to nature enhancement, present an exciting avenue through which the Company can create additional value.

John Scott,

Chair

An introduction from the Investment Adviser

This report marks a continuation of the Company's commitment to transparency and accountability by consistently reporting its ESG performance, maintaining year-on-year alignment with the Task Force on Climate-related Financial Disclosures ("TCFD") recommendations, and sustaining its reporting practices under the EU's Sustainable Finance Disclosure Regulation ("SFDR"). As the Investment Adviser, we continue to work on the Company's behalf to increase the availability and quality of ESG data relating to the Company's assets, to better inform our strategic decision-making.

The Company continues to respond to a dynamic ESG regulatory and reporting landscape, and work has been undertaken to review the Company's alignment with new disclosure rules. As part of its horizon scanning, the Investment Adviser proactively monitors for emerging ESG trends and assesses the interdependencies of ESG topics material to the Company, such as the linkage between decarbonisation and biodiversity, or the social impact of a growing renewable sector. This insight is used to inform the Company's management of ESG risks and opportunities.

The Investment Adviser's business model, with in-house expertise across development, investment, construction and operational activities, facilitates the integration of ESG across the asset lifecycle . The Investment Adviser's commitment to strengthening its ESG capabilities is reflected in the expansion of its ESG team, who work to build resilience into the Company's investments. We look forward to continuing to deliver the Company's ESG aspirations, and help protect Shareholder value, by further refining our ESG commitments, KPIs, and strategic approach in the coming years. 

James Armstrong,

Managing Partner of Bluefield Partners LLP

2.  ESG Highlights

During the Year, the Company:

•              Executed a second physical scenario analysis, which examined the potential impacts of changing wind speeds on the Company's wind portfolio.

•              Developed near-term net zero targets, covering the Company's scope 1, 2 and 3 emissions.

•              The Company's West Raynham Solar Farm was the first site in the UK to be awarded gold certification from Wild Power®, an independent certifier, for its biodiversity enhancement efforts.

•              Developed a nature framework, aligned with the recommendations of the Task Force on Nature-related Financial Disclosures ("TNFD").

•              Delivered 13 classroom workshops and 16 solar site visits to schools in the vicinity of the Company's assets .

3. Purpose of this Report

This ESG report summarises the Company's approach to responsible investment during the Year, including a summary of ESG risks and opportunities material to the Company, and how these are being managed to help build resilience and create additional value within the Company's investments. In particular, the report demonstrates to Shareholders, and other stakeholders, the continued commitment of the Company to review, assess, and enhance its ESG performance. The content within this report is supported by additional information published within the Company's regulatory disclosures, available on its website.

Please note, the figures presented within this report relate to the Company's wholly owned investments. Relating to the Company's new strategic partnership, the Company is in the process of onboarding these assets onto its ESG reporting regime, whilst at the same time reviewing existing KPIs to ensure they remain relevant for strategic partnerships as opposed to sole ownership. As a result, the Company has reported the ESG performance associated with its 9% equity share  against a subset of its ESG KPIs, presented in the ESG Appendix. Please refer to the case-study presented on page 38 for information on how the Company applied its responsible investment approach to these investments.

Whilst the Company has significantly enhanced its ESG reporting in recent years, the reporting landscape continues to evolve. The International Sustainability Standards Board published its sustainability disclosure standards (IFRS S1 and S2) in June 2023. The Company has undertaken an assessment of its ESG and climate-related disclosures against these standards and will review its reporting approach in light of these requirements over the coming months.

4. ESG Strategy

ESG Context

As a renewable energy business, the Company is supporting the UK's transition to a net zero economy through the provision of renewable energy. With renewables powering a significant portion of the UK grid mix in the past year , the Company is well-positioned to further support the UK in achieving its legally binding target to bring all Greenhouse Gas emissions ("GHG") to net zero by 2050 .

The Company recognises its broader ESG impacts and responsibilities, and its ESG strategy has identified a range of priority topics across various ESG areas, which underpin its responsible investment approach. These priorities have been integrated into a comprehensive framework designed to help deliver value for stakeholders and support long-term returns for Shareholders.

Regulation & Framework Alignment 

EU Sustainable Finance Disclosure Regulation ("SFDR") & EU Taxonomy

The Company is classified as an Article 8 product under the SFDR and published its second PAI statement in June 2024. Please refer to Periodic Annex IV and the Company's website for further information regarding its ongoing compliance with the SFDR and EU Taxonomy.

UK Sustainability Disclosure Requirements & UK Green Taxonomy

As a non-UK AIF, the Company is not currently in scope of the UK Sustainability Disclosure Requirements ("SDR"). However, the applicability of the framework to overseas funds is currently pending. The Company is monitoring the guidance and will be prepared to review its alignment, subject to any new legislation.

As a UK authorised firm, the Investment Adviser is within scope of the SDR's anti-greenwashing rule and has implemented processes to support the Investment Adviser's compliance.

Task Force on Climate-related Financial Disclosures ("TCFD") & Task Force on Nature-related Financial Disclosures ("TNFD")

The Company has voluntarily adopted the recommendations of the TCFD and its third TCFD report is presented on page 52. The Company has developed a nature framework aligned with the recommendations of the TNFD.

Sustainable Development Goals

The United Nations Sustainable Development Goals ("SDGs") have been mapped against the Company's ESG pillars, following the alignment protocol. In total, eight goals have been identified where the Company believes it can make a positive contribution. The Company's largest contributions will be in relation to Goal 7, 'Affordable and Clean Energy' and Goal 13, 'Climate Action'. The Company's portfolio generated 810,602 MWh of renewable energy during the Year, supporting domestic energy security and decarbonisation of the UK energy market. The Company reports and endeavours to minimise the negative impacts of its operations, as described throughout its ESG and regulatory disclosures. Further information on the Company's alignment with the SDGs can be found on the Company's website (www.bluefieldsif.com).

Commitments & KPIs

Key commitments for the Year are presented in Table 1. A full breakdown of the Company's commitments and KPIs, and performance against these, is presented in the ESG Appendix. Commitments and KPIs are reviewed annually to align with the Company's evolving ESG strategy, with any changes approved and monitored by the Board.

Table 1 - Key ESG commitments for the Company

The Investment Adviser engages the Company's key service providers to enable the monitoring of asset-level sustainability aspects. However, some aspects of data collection remain challenging. As a result, data gaps still exist, and estimates continue to be used in certain circumstances. Work will continue to improve the accuracy and quality of ESG data over time. The Investment Adviser is currently embedding an ESG system on behalf of the Company, which will enable enhanced data insights and analytical capabilities.

ESG Oversight

The Board has ultimate responsibility and oversight of ESG risks and opportunities, and ESG is considered by the Directors as part of Board meetings, investment decisions and risk management. The Board has an ESG Committee, chaired by Meriel Lenfestey, which meets at least twice a year.

Operationally, ESG is managed by the Investment Adviser, with regular updates provided to the Board through investment committee papers, ESG committee meetings, Board meetings and ad hoc calls or written updates. The Investment Adviser is responsible for embedding and monitoring ESG initiatives across the portfolio, working to integrate ESG into all stages of the asset lifecycle. The Investment Adviser's Head of ESG provides updates to the Board of the Investment Adviser through quarterly Board reports, and regularly reports ESG progress to the Investment Director and Managing Partner.

Responsible Investment

The Company recognises the importance of sustainability in all aspects of investment. The Company is well positioned to consider ESG within its investments, given the long-term nature of its business model.

ESG is embedded within the Company's investment process, and a standalone ESG due diligence questionnaire ensures detailed checks are made in relation to ESG risks and opportunities, as identified by SASB standards. Diligence is also undertaken in relation to requirements of the SFDR, including PAI indicators and climate risk screening, and the EU Taxonomy's Do No Significant Harm (DNSH) criteria. Further information can be found in the Company's Sustainable Investment Policy, available on its website.

The Company's Investment Adviser has been a signatory of the UN Principles for Responsible Investment since 2019.

Case Study: Co-investment

On 22 December 2023, the Company announced a long-term strategic partnership with GLIL Infrastructure, through which both parties committed to acquiring a portfolio of 58 UK solar assets. This acquisition was completed on 25 January 2024, and the Company acquired a 9% equity share in the portfolio. Although a minority stakeholder, a priority for the Company was to apply its responsible investment approach to these investments. The Company:

●     Performed comprehensive ESG due diligence on the 246.6MW portfolio of assets, including checks regarding SFDR and EU Taxonomy requirements;

●     Included ESG schedules and obligations with respect to the Company's ESG policies in agreements with asset management and Operation & Maintenance (O&M) providers; and

●     Created a post-investment ESG plan, to guide follow-up action from Asset Management and O&M service providers.

The Company continues to work to onboard the assets into its ESG reporting regime.

5. Climate Change Mitigation

Key Commitments

•       Report renewable energy generation annually;

•       Invest in industry collaborations to support the energy transition;

•       Continue to build climate resilience and inform business strategy through climate risk assessments and scenario analysis; and

•       Develop a net zero pathway.

Advocating Renewable Energy

As a UK-focused renewable energy business, the Company contributes towards climate change mitigation and remains committed to supporting the UK's decarbonisation agenda. Achievements during the Year include:

·      Generated 810,602 MWh of renewable energy;

·      Powered the equivalent of 300,000 UK homes with renewable electricity for a year;

·      Avoided 167,800 tonnes of CO2e emissions; and

·      Had 93MW of solar infrastructure under construction at Year end, which on completion is estimated to generate an additional 91,000 MWh of renewable energy annually.

In recognition of its positive environmental contribution, the Company has been awarded the following accreditations: TISE Sustainable/Guernsey Green Fund/LSE Green Economy Mark

Political Engagement

During the Year, the Investment Adviser emphasised the cost and speed at which solar can be deployed and developed through responses to policy consultations, direct engagement with policymakers (including through briefings and letters), and appearances at Government-related committees and inquiries. Please refer to page 77 for a summary of engagement during the Year.

With the change of UK Government in July 2024, and the formation of the Department of Energy Security and Net Zero, the Company and its Investment Adviser look forward to re-engaging with the Government to continue these efforts through meetings, attendance at relevant events, and participating in appropriate formal Select Committee inquiries and consultations.

Industry Engagement

The Investment Adviser partners with trade industry bodies to engage UK policymakers across the political spectrum in advocating for renewable energy. Engaging with industry groups also enables the Investment Adviser to inform and contribute to best practice, stay abreast of market developments, and support the UK's energy transition. Bluefield employees are active participants in trade body working groups. For example, the Head of ESG for the Investment Adviser contributes to the Solar Energy UK Natural Capital Steering Group, and representatives of Bluefield Operations are part of the Solar Energy UK Skills Steering Group.

As the renewable sector grows, industry collaboration will be essential in addressing emerging social and environmental risks, such as those relating to supply chain or asset end-of-life. The Company has committed to investing in industry collaborations supporting the energy transition; please refer to page 72 for further information.

Carbon Emissions

GHG inventory

The Company reviews and reports its GHG emissions every six months. Please refer to page 59 of the Company's TCFD report for the GHG inventory relating to the Year. 

Carbon targets and the net zero pathway

The Company has developed near-term targets on its journey to align to net zero by no later than 2050. The targets follow the core principles of the Science Based Target Initiative ("SBTi") near-term criteria for Financial Institutions (FI), but are not SBTi validated. The Investment Adviser views that the current guidance is not well suited to the investments made by the Company, particularly regarding the criteria relating to scope 3 emissions, where the majority of the Company's emissions lie.

Therefore, the Company has adopted holistic near-term targets for financed emissions, including a 50% absolute reduction in project scope 1 and scope 2 emissions   by 2030 (from a 2023 calendar base year), and to engage 75% of project suppliers, by emissions, to set their own scope 1 and scope 2 targets by 2029. These targets currently apply to the Company's wholly owned investments; the application of the targets to the Company's strategic partnership is under review. The Company will review its position on SBTi validation over coming years if revisions are made to the relevant standards, or if more applicable standards are released.

Monitoring carbon emissions is a vital step on the pathway to net zero, but there are challenges, particularly regarding the collaborative action needed to drive down scope 3 emissions. The Company is aware that its ability to decarbonise will rely on wide-scale change across the industry and economy, requiring significant Governmental support. Nevertheless, the Company has developed this initial set of net zero targets to guide action across its investments over coming years, and is committed to reviewing and adjusting these targets over time so that they remain appropriate to the nature of the Company's investments. Whilst the net zero pathway has been modelled, the focus over coming months will be to formalise target-specific roadmaps to support the Company in delivering the required emissions reductions.

Managing climate-related risks & opportunities

The Company is committed to building climate resilience within its portfolio. During the Year, the Company undertook a second physical scenario analysis, focused upon the potential impact of changing wind speeds, and developed a climate adaptation plan. Please refer to the Company's TCFD report for further information.

6. Pioneering Positive Local Impact

Key Commitments

1.             Evaluate biodiversity net gain across the operational portfolio and achieve at least 20% biodiversity net gain on new solar developments;

2.             Conduct independent biodiversity assessments across at least 10% of sites annually (relating to assets over 1MW in capacity);

3.             Continue to promote positive action within the communities the Company operates within through community benefit funds and educational sessions; and

4.             Develop a nature framework, building upon existing biodiversity commitments and encompassing the recommendations of the TNFD.

Land use and land management

Nature is an area of focus and commitment for the Company. The UK has been assessed as one of the most nature-depleted countries in the world , and the Company recognises the significant risk that nature loss may present to businesses and the economy. Nature's intrinsic relationship with climate requires a unified response, and through its land under management, the Company seeks to enhance nature across its portfolio and promote environmental stewardship as part of asset lifecycle management. 

The construction and operation of renewable infrastructure assets can impact the local environment, for example through land use change or disturbance to habitats and species. The Company endeavours to minimise its negative impacts where possible, and the collection of asset-level environmental data supports the Company in monitoring adverse environmental impacts over time.

Solar farms can support agricultural activities while providing an alternative revenue source for farmers. During the Year, conservation grazing was introduced to one of the Company's solar assets, to better manage the land for wildlife. Sheep are typically removed from fields during the wildflower window between April and early August, allowing plants to set seed and bloom. Additionally, at Stow Longa solar farm in Cambridgeshire, information gained from ecological assessments has been used to amend land management activities to better support farmland bird species. Further information can be found on the Company's website (www.bluefieldsif.com).  

Quantifying Biodiversity

The Company has continued to measure the biodiversity across its portfolio to establish a baseline from which opportunities to enhance nature, through the addition of site-specific measures, can be identified. During the reporting year, the Company conducted an additional 15 biodiversity net gain  assessments across operational assets, bringing the total to 45 since the introduction of this approach in 2023.

The Company also conducted ecological assessments across 10 operational solar assets. Following industry best-practice, assessments on botany, invertebrates, breeding birds and soil were undertaken. For the first time, environmental DNA (eDNA) was analysed, which focused upon invertebrate and fungi identification. The results of the biodiversity net gain assessments and ecological surveys will be used to identify nature enhancement activities for the coming year.

The Company shares ecological data with the UK trade body Solar Energy UK, for inclusion within industry-wide datasets and annual solar habitat reports. This contribution supports the understanding of ecological trends and the development of industry best practice.

Case study - Wild Power® Gold certification

In May 2024, West Raynham Solar Farm was awarded gold certification from Wild Power®, an independent certifier providing tools and processes to help developers and operators measure, manage, monitor and report on their biodiversity efforts .

Biodiversity and land management specialists from Bluefield Operations and Wychwood Biodiversity conducted an ecological survey which identified appropriate management improvements for the site. The existing measures and new additional features contributed to the site achieving its Wild Power® gold certification. The site already hosted approximately 40 acres of wildflower meadow with conservation grazing, and five acres of young tree plantings. Enhancement work included increasing ecological data monitoring and availability, conducting an ecosystem services assessment, and installing additional microhabitats for protected species including birds, reptiles, and a maternity bat roost box.

Joe Arafa, Director of Wild Power® said: "We are delighted to have issued the UK's first Wild Power® certification to Bluefield's West Raynham Solar Farm. We commend Bluefield for their work to enhance the biodiversity measures at the site and congratulate them for achieving Wild Power's gold standard at West Raynham."

Nature Framework

The Company has developed a nature framework during the Year, building upon and bringing together previous nature activity. Its aim is to provide an overarching strategy  through which the Company can identify and manage its nature-related risks and opportunities; communicate activities associated with nature in a consistent and clear manner; and align with emerging regulatory and framework requirements. It will also guide actions to integrate nature more fully across the asset lifecycle, from development through to end-of-life.

To inform the framework, workshops were held with representatives from the Investment Adviser and other service providers, including from O&M, asset management, investment, commercial, construction and development teams, to explore nature-related impacts, dependencies, risks and opportunities which exist across the asset lifecycle. This information was combined with that obtained from a landscape review, which evaluated broader nature impacts and dependencies associated with the solar & wind energy sectors, market analysis, and consideration of the localities of the Company's assets.

Key focus areas within the framework include:

•              Land management

•              Nature protection & improvement

•              Engagement & education

•              Materials sourcing & supply chain

Focus over coming months will be to finalise KPIs which can be used by the Company to monitor and communicate its nature activities.  

Community Impact and Initiatives

An increasing number of communities may be impacted by renewable energy projects as the industry grows. As the owner of infrastructure assets, the Company recognises the importance of maintaining a social licence to operate and seeks to build and maintain positive relationships with the communities close to its investments. Local stakeholders, including landowners, residents, and parish council members, are engaged as appropriate across the asset lifecycle, including during project development, construction and operation.

The Company has continued its partnership with Earth Energy Education to deliver an educational programme to schools close to the Company's assets, equipping students with knowledge about climate change and the role renewable energy can play in powering a more sustainable future. Between Sept 23 - July 24, the Company delivered 13 classroom workshops and facilitated 16 site visits with support from site engineers and other Bluefield employees.

The Company has also paid over £296,000 to community benefit schemes , funding local community projects. For example, in connection with Bradenstoke Solar Farm, a £10,000 grant was used towards the construction of a new, larger village hall, serving the communities of East Tytherton, Tytherton Lucas and neighbouring villages and hamlets within the Bremhill civil parish.

Case study: Community engagement during the construction of Yelvertoft Solar Farm

Since 2022, the Company has proactively engaged with the community surrounding its new 48.4 MWp Yelvertoft Solar Farm in Northamptonshire, aiming to keep residents informed about progress on construction and invite feedback. The Company's development partner, Bluefield Renewable Developments, and EPC contractor for the site, Equans, have facilitated this process. The Company has shared updates on its measures to protect biodiversity at the site (in line with planning requirements) and the drainage management systems installed to help prevent flooding, which had previously caused issues in the area. Positive feedback on the impact of the flood mitigation measures has already been received.

A community benefit fund has also been established, with the Company providing an annual contribution to the Yelvertoft parish council to support initiatives benefiting local residents. In addition, the Company has facilitated site visits and solar energy lessons for children at local primary schools, providing students with an insight into the construction process and how the constituent elements of a solar farm work together to produce renewable energy.

Delivery Partnerships

Engagement with key service providers is the primary method for implementing sustainable business practices by the Company. During the 2022/2023 Year, several policies were adopted by the Company, including a Sustainable Procurement Policy, Human Rights Policy, Waste Management Policy and Supplier Code of Conduct.

Focus during the Year was on the implementation of these policies across the Company's operations. For example, an external consultant was engaged to support the Company in reviewing human rights due diligence processes across the asset lifecycle. There was continued roll-out of the Company's Supplier Code of Conduct, with a spend-based approach taken to identify priority suppliers to engage with. A webinar was held in June 2024 to offer suppliers the opportunity to learn more about the Code and how it applies. Bluefield also adopted its own Supplier Code of Conduct, relating to its UK operations , enabling the cascade of the Company's ESG expectations onto a subset of its tier 2 (i.e., not directly engaged by the Company) suppliers. Work will continue over the coming year to further integrate the policies across the Company's operations and key service providers.

Case Study: Engaging with Engineering, Procurement, and Construction (EPC) Contractors

The Company recently engaged a new EPC contractor to deliver construction works for an upcoming project. The Investment Adviser engaged and supported the EPC to calculate their carbon footprint for the first time. Such actions demonstrate the Company's efforts to positively influence contractors and suppliers in the sector and support them in their responsible business approach.

Health & Safety

The Investment Adviser continues to ensure health and safety (H&S) awareness, policies, processes and procedures remain at the forefront of activity around the Company's portfolio. Asset H&S policies are reviewed at least annually by a third-party H&S advisor. All main O&M contractors are audited annually by a qualified third-party specialist consultant, with any key findings followed up on by the Asset Manager.

EPC contractors, O&M Contractors, and Asset Managers provide updates on their H&S performance on a regular basis. For the Year, the Company recorded:

●             Lost time incident rate (calculated per 100,000 employees):  1.16

●             Number of reportable accidents (RIDDOR) : 3

●             Number of near misses:   169

The majority of near misses were reported by Bluefield Operations, where identifying, investigating, and reporting near miss incidents is culturally ingrained within the organisation (helping reduce the probability of H&S incidents occurring). Therefore, the relatively high number of near misses is reflective of a proactive risk management culture.

7. Generating Energy Responsibly

Key Commitments

•              Ensure 100% of the Company's assets are covered by a Human Rights Policy, which covers United Nations Global Compact principles and OECD guidelines;

•              Require adoption of the Company's Supplier Code of Conduct by priority  Tier 1 and, where possible, Tier 2 suppliers; and

•              Continue to develop due diligence mechanisms to identify, prevent and mitigate human rights impacts across the Company's operations and, where possible, its supply chain.

Human and Labour Rights

Human and labour rights remain high priorities for the Company. While the Company recognises that its supply chains are complex and full transparency has not yet been achieved, it will continue to monitor its processes in relation to human and labour rights, committing to make improvements as the approach to conducting due diligence evolves. The Company also recognises that human rights due diligence is an ongoing process, where stakeholder engagement is important at each step. Please refer to the Company's website (www.bluefieldsif.com) for further information on its approach to this area. 

In June 2023, the Company adopted a Human Rights Policy aligned to international standards and guidelines, notably the United Nations Guiding Principles on Business and Human Rights. Following adoption of this policy, focus has turned to its implementation, with the Company firstly reviewing its human rights due diligence processes. Key stages of the project included:

·      Identification of key stakeholder groups where human rights due diligence should be focused;

·      High-level assessment of human rights risk for each of these stakeholder groups, informed by a risk workshop attended by Bluefield stakeholders (who are involved at different stages of the asset lifecycle). The result was the identification of high priority risks and the potential impact of each on rightsholders;

·      An environmental & social risk analysis on the Company's top 20 suppliers, following a spend based approach;

·      Review of the Company's current human rights KPIs; and

·      Review of the Company's human rights communication processes.

This analysis led to recommendations tailored to the asset lifecycle and identified actions to be taken, where needed, at each lifecycle stage (e.g. development, construction and ongoing operation). The Company also mapped mitigations currently taken against identified risks and steps required to further advance its due diligence approach. The Company will continue to monitor and update its human rights due diligence processes, where appropriate, across the portfolio.

Examples of the Company's human rights due diligence and management mechanisms:

·      Human rights considerations embedded within pre-investment due diligence;

·      Comprehensive ESG due diligence undertaken on key third parties such as EPCs, or O&M service providers as part of transactions;

·      Obligation for new key suppliers to adhere to the Company's Supplier Code of Conduct;

·      Human rights considerations built into procurement oversight processes for key infrastructure, specifically solar PV and battery energy storage systems;

·      Adoption of policies aligned to human rights frameworks;

·      Social audits requested for solar PV manufacturing facilities as part of EPC engagements; and

·      External ESG risk analysis undertaken on key solar and battery manufacturers.

The Company's Modern Slavery Statement is available on its website (www.bluefieldsif.com).

Responsible and Sustainable Procurement

Since the turn of the century, the renewables industry has scaled rapidly and achieved significant growth. However, due in part to the long lifespan of renewable energy infrastructure, which can reach 40 years, there has historically been a limited focus on end-of-life processes. As the first generation of solar and wind farms approach the end of their economic lifetimes, responsible decommissioning of sites and equipment is becoming a key sustainability topic. Increased scrutiny on ESG credentials has brought this issue to the attention of the industry, investors, and the media, highlighting the potential environmental impact and the opportunity to improve circularity by reusing materials and reducing waste. Addressing this challenge could unlock emissions reduction opportunities and value in constituent materials.

During the Year, the Company partnered with Lancaster University to launch a research programme focused on end-of-life decision-making for renewable assets. The first stage of the programme, due for completion in September 2024, was a project focused upon the development of a 'materials passport' for a new build solar farm. The aim of the project was to map the constituent equipment and components needed to build a solar farm, enabling insight into opportunities to enhance the recyclability, recycled content, and recovery of materials.

Materials passports are a concept gaining traction across the construction industry  , and the Company is pleased to have applied this principle to a UK solar project . This material mapping exercise may also unlock opportunities or points of leverage from an emissions reduction, climate adaptation, and natureperspective. This project will enable the Company to better consider circular economy principles in future construction projects.

Good Governance and Business Ethics

Corporate Governance

Please refer to page 91 for the Company's Corporate Governance Report.   

As an FCA-regulated entity, the Investment Adviser maintains high standards of professional conduct. Key policies, including in relation to anti-bribery, anti-corruption and anti-money laundering, conflicts of interest, and compliance are in place, and third-party compliance advisers are used to ensure regulatory obligations are met through quarterly reviews and the undertaking of an annual audit of business activities. As part of an employee's induction process, employees are guided through the Investment Adviser's position on anti-bribery and corruption. To ensure ongoing awareness, all employees are required to complete computer-based training on this topic. In addition, in support of the Investment Adviser's approach towards appropriate conduct and ethics, employees are required to sit computer-based training on Bullying and Harassment, and Whistleblowing. 

Diversity

Diversity is an important consideration for the effective functioning of the Company's Board. Please refer to page 92 of the Corporate Governance Report for further information on the Board's commitment in this area.

Board Training

The Board undertook training sessions to build awareness of climate-related issues. One session focused upon net zero targets and pathways, including the different accreditation frameworks available and the Company's proposed targets up to 2030. The other session, in July 2024, explored the climate risk work undertaken by the Company to date, with special consideration of topics such as extreme heat, changing wind patterns, and the Company's climate adaptation plan.

Cybersecurity

Cyber security risk is managed under the Company's overarching risk management framework, and the Company looks to continually evolve its approach to cyber security, including through periodic reviews and engagement with key service providers. The Investment Adviser has continued to arrange penetration testing of 74% of the portfolio (excluding small scale sites) by a specialist external consultant, as part of a cyber security review. Further tests are planned for the coming financial year.

8. Looking Forward

As the Company looks to 2025, its commitment to sustainability and responsible investment remains resolute. Recognising the dynamic nature of ESG factors and the evolving regulatory landscape, the Company is poised to enhance its approach to align with best practices and emerging standards. With a clear vision and adaptive strategy, the Company is confident in its ability to deliver sustainable value for its shareholders in an increasingly changing world.