23 March 2023

Foresight Solar Fund Limited

("Foresight Solar" or the "Company")

FSFL secures the rights to a 467MWp development-stage solar pipeline in Spain

Foresight Solar Fund Limited, a fund investing in a diversified portfolio of ground-based solar and battery storage assets in the UK and internationally, is pleased to announce it has secured a pipeline of development-stage solar farms with a total potential capacity of 467MWp. The entire project rights have been secured from Grupo Cuerva, a renewable energy company and distribution network operator, and another Spanish developer.

This strategic investment - codenamed "Project Lynx" - is located across the south and east of Spain and consists of the rights to six subsidy-free solar development projects. Two of the sites have sought grid connections under the existing application routes and one of those, totalling 57MWp, has already secured grid access with the potential to reach ready-to-build status in 2024. The remaining projects will apply for connections via the upcoming capacity market auctions, which are estimated to take place over the next few years.

Foresight Group's knowledge of the Spanish market and its presence in the country were instrumental in establishing the bilateral discussions that led to this transaction. The Investment Manager's team in Madrid will oversee the projects' evolution alongside the experienced developers responsible for establishing them, who will continue the development under a services agreement.

Development-stage projects are those that have secured land rights and have a delivery plan but still require additional work to guarantee the necessary permits to start construction. Under the structuring of this transaction, a modest down payment has been made to the vendors at closing, with Foresight Solar retaining preferential rights to increase the portfolio over time.

Full consideration for the assets is contingent on milestone achievements tied to the projects securing grid connections and reaching ready-to-build status over the next few years. Payments for the development rights are also cross-collateralised, such that the initial outlay for any asset that fails to progress may be offset from future milestone payments for successful ones. This helps to protect the Company's risk adjusted returns regardless of the total number of projects that are eventually successful in achieving planning consent.

There is no guarantee that all projects will proceed, and, from an investment planning perspective, the Company has taken a prudent view on the success rate for the portfolio. If it outperforms the base case, Foresight Solar retains the option to recycle capital via asset sales at the ready-to-build stage.

Commenting on the investment, Alexander Ohlsson, Chairman of Foresight Solar Fund Limited, said: "Spain is an important market for the Company given the government's commitment to significant deployment of solar to help achieve ambitious decarbonisation targets. Alongside that, the country also enjoys some of the highest irradiation levels in Europe.

"The Investment Manager has the expertise to take on these types of projects, carefully pricing risk and capturing the increased financial upside for the Company. This was demonstrated when our existing 125MW Spanish solar portfolio was brought through to operations last year, resulting in approximately two pence per share of NAV uplift in 2022. This acquisition now gives Foresight Solar the opportunity to further deliver value for shareholders."

Commenting on the deal, Ross Driver, Managing Director at Foresight Group and Co-Manager of Foresight Solar, said: "Our Madrid team has secured this landmark transaction for Foresight Solar, and we are delighted to capitalise on the recent change in investment policy to permit such investments. Securing projects at this early stage allows the Company to capture the full benefit of progressing assets through the value chain, where we can recognise NAV uplift at both the ready-to-build and construction completion milestones, as well as look to recycle capital along the way."

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