Bluefield Solar Income (BSIF ) is throwing £20m into a share buyback programme to remedy the ‘excessive’ 26% discount to which the stock has fallen as the market worries about the impact of lower power prices and falling inflation.

In early trading, the shares gained 2.3% to 101.3p, narrowing the gap to net asset value (NAV) slightly following a quarterly update which reported NAV per share was 136p at 31 December. This was virtually unchanged from 136.4p in September but down from 139.7p in June.

It said the share repurchases would be paid from cash and the proceeds of any asset sales previously announced.

‘The board of the company keeps its capital allocation policy under regular review, evaluating the relative merits of further investment (into both new and existing assets), the management of debt and returning value to shareholders via dividends or through other methods such as share buybacks,’ it stated.

Having recently declared a first interim dividend for the current financial year of 2.2p, the company also reminded shareholders its target for the full year was 8.8p per share, which it expects will be comfortably two times covered by earnings. At their current level, the shares yield 8.9%, above the 7.7% average of renewable energy funds, according to Deutsche Numis data.

Bluefield said the stability of its NAV in the last quarter was partly due to the inclusion for the first time of renewable energy guarantees of origin certificates (Regos) in its valuation. It is the latest fund to do this after their price shot up in the past year. Discount valuation and inflation rate assumptions were unchanged.

‘In addition, the company has recognised a slight uplift in expected power prices due to a small increase in long-term power forecasts whilst short-term hedging has predominantly offset reductions from near term power price weakness. There was additionally a minor negative adjustment due to operational cost updates and working capital movements,’ it said.