Renewable updates: Bluefield Solar and Gore Street eye buybacks

Green infrastructure trusts Bluefield Solar and Gore Street Energy Storage are considering buying back their heavily discounted shares as they find ways to unlock cash.

Bluefield Solar Income (BSIF ) could be in the market for more share buybacks after refinancing £300m of debt, while Gore Street Energy Storage (GSF ) edges closer to a repurchase after energising its final two assets.

The £509m Bluefield investment company has refinanced the 359-megawatt portfolio of solar assets it jointly owns with GLIL Infrastructure, with Bluefield owning just over a 25% stake.

The refinancing replaces £214m of existing inflation-linked debt with £297m of fixed rate debt at a rate of 5.8% until 2035 to match the subsidy period of the assets.

That results in Bluefield Solar’s total debt costs increasing from 3.4% to about 3.8%.

Although the fund’s borrowing costs have increased, Stifel analyst Iain Scouller said that the new agreement provides ‘more certainty on debt costs at a time when inflation has been volatile in recent years’ and also confirms a £21m cash inflow to the fund.

The £21m of cash together with the successful sale of 112MW of solar capacity as part of the partnership with GLIL means a total of £89m of capital has been returned to Bluefield since it partnered with GLIL in September 2024.

To date, £50.5m from the sale of 112MW of assets was used to repay part of the fund’s revolving credit facility (RCF), with another £10.6m going towards share buybacks and another £6.2m invested in the solar asset development pipeline.

Scouller said that the fund is now sitting on about £40m of cash which can be used to pay down the RCF, support further developments, or extend its share buyback programme following ‘the completion of the company’s original £20m allocation in January 2025’.

Bluefield shares have been hit by downbeat sentiment towards renewables in recent years, falling power prices and a cut in its dividend growth target. The shares currently trade at a discount of 28.6%. Including dividends, the net asset value (NAV) slipped 0.6% over the past year while the shares dropped 7.6%.

The investment company also noted that phase three of its GLIL partnership, which involves ‘the prospective sale by Bluefield of a limited portion of its ready-to-build pipeline, is currently in progress’.

John Scott, chair of the fund, said: ‘We have worked closely with GLIL and our lenders to complete this refinancing at an attractive price, enabling further capital to be returned to the company to support future RCF repayments and allowing the continued funding of the company’s highly attractive development pipeline.’

Gore Street powers up

Gore Street, an energy storage portfolio valued by the market at £234m, is also moving closer to a potential buyback having energised its final two construction assets, Enderby in the UK and Dogfish in Texas.

The fund said ‘successful energisation of all remaining assets under construction marks a pivotal milestone in transitioning to a steady-state portfolio’. All assets in the portfolio will now be revenue-generating by the end of June.

Non-British assets now represent 61% of the total energised portfolio on a megawatt basis, which the company said highlighted its ‘internationally diversified strategy’.

Manager Alex O’Cinneide, chief executive of Gore Street Capital, said that the energisation of the two assets ‘places greater importance on active management to maximise the portfolio’s revenue generation and asset uptime’.

There had been some concern over the US assets in the portfolio given the Trump administration’s action on investment tax credits for onshore and offshore wind projects, with an indefinite ban on all awards of federal permits and leases.

However, so far no action has been taken regarding the investment tax credits awarded to other energy projects.

Gore Street’s legal team has advised that ‘there has been no change in the eligibility of the company’s projects to quality for the investment tax credits’, with an application for the credits set to be ‘filed as soon as possible’.

O’Cinneide said there had also been ‘no change in market appetite or pricing from well-established investment tax credit buyers’ which is a reflection of ‘overall market confidence’.

‘While we remain cognisant of the broader sector challenges and the distressed nature of our peer group, the company has differentiated itself through a strategy that avoids the risks inherent with a single market concentration by utilising the appropriate amount of debt, minimising capex and through active management,’ O’Cinneide explained.

Despite the focus on diversification, the fund has not escaped the turmoil in its sector – the shares currently trade on a 55.8% discount to NAV, as the portfolio value has slipped 9.7% over the past year while shareholders have lost 25.6% on their investment.

That has led the fund to confirm it will use proceeds from investment tax credits to ‘prioritise shareholder value’, with the board ‘actively assessing’ how the cash will be used.

‘Options under consideration include returning capital to shareholders through mechanisms such as a buyback program, repayment of debt, investing in the portfolio, or a combination of the above,’ stated the fund.