Foresight Solar & Environmental sell Scottish battery project stake

Foresight's Solar and Environmental Infrastructure funds have sold their 50% stake in the Lunanhead battery project in Scotland.

Foresight Solar (FSFL ) and sister trust Foresight Environmental Infrastructure (FGEN ) have exchanged contracts to sell their 50% shared stake in a battery storage project in Scotland.

The 50MW Lunanhead project in Perthshire has been sold to a third-party buyer at a price consistent with its end of June carrying value, with completion expected later this quarter. 

According to updates from the two boards, the decision reflects Foresight’s capital allocation policy, with Lunanhead’s development return potential assessed against other options like share buybacks or debt repayment.

For FGEN, the investment accounted for less than 0.2% of its portfolio. 

FSFL, with a market cap of £452m, is primarily solar-focused, while FGEN, £503m, has a broader environmental mandate. Both trusts offer attractive yields of 9.9%.

At their June valuations, Stifel analyst Iain Scouller noted that both funds wrote down the project’s carrying value due to higher grid costs and weaker revenue assumptions, representing roughly a one-third reduction in value.

He added that battery development projects have absorbed ‘a lot of management time’ and ‘disproportionate investor attention,’ and said the disposal will allow Foresight to refocus on its core electricity generation portfolio.

The trusts also announced that Sandridge, another co-owned 50MW battery storage project, has been energised and is entering final commissioning and testing, with commercial operations expected shortly. 

Both funds continue to explore options for Foresight’s equally sized Clayfords battery project, which they also co-own. They are assessing developing the project versus share buybacks or debt repayment.

Sandridge will become FGEN’s second operational battery energy storage system (BESS) project, after West Gourdie.

Numis analyst Colette Ord welcomed the Lunanhead disposal in line with net asset value (NAV), noting that the more material milestone for FSFL remains the ongoing sale of 75MW of its operational solar assets.

She underscored strong year-to-date share price performance from both funds, with FSFL up 14.2% and FGEN up 16.7%, ahead of a flat peer group.

Both trusts trade at a 24% discount to NAV, narrower than specialist BESS funds such as Gresham House Energy Storage (GRID ) and Gore Street Energy Storage (GSF ) which are on discounts of 32% and 43% respectively.