Foresight begins unsubsidised solar spree in Portugal

The landmark acquisition follows the firm’s maiden energy storage investment last month amid a £500m fundraise.

UK-based Foresight Group has bought a 7.2MW solar plant in Portugal in what it said is the start of its unsubsidised solar portfolio across Southern Europe.

The Vale Matancas project, bought from developer Exus Management Partners, is set to be connected by the end of the year and has a 25-year power purchase agreement.

The acquisition is Foresight’s first foray into owning solar projects without benefitting from government subsidies and it said it is aiming to buy similar plants across Portugal, Spain and Italy. Its current solar portfolio is spread across 80 assets in the UK, Italy, US and Australia.

Portugal has been focused on developing solar plants without subsidies since the election of Antonio Costa in November 2015.The government last year said it subsequently received 180MW of applications for unsubsidised projects in the first six months alone, although these figures were disputed by the industry. However, UK-based developer WElink Energy announced plans four months ago to build Europe’s largest unsubsidised solar farm in Portugal, a 220MW development it said would be worth £200 million ($258 million; €226.1 million).

“At the current cost of the technology, solar assets can operate without separate subsidies and deliver superior risk-adjusted returns for our investors,” said Carlos Rey, senior investment manager at Foresight. “Grid parity forms a key part of our long-term strategy as we are looking to consolidate further our leadership as a worldwide solar operator.”

The move into owning unsubsidised solar projects is the latest diversification of the investment firm’s strategy which last month saw it buy a 35MW battery storage project in the UK. The company is also understood to be raising £500 million for its Foresight Energy Infrastructure Partners fund, with a first close expected by the end of the year.