Greencoat Solar to acquire 156MW portfolio from BlackRock Real Assets and Lightsource bp

Greencoat Capital LLP has agreed to the acquisition of a 156MW solar portfolio from BlackRock Real Assets and Lightsource bp. The investment was made by Greencoat Solar II LP on behalf of a number of the UK’s largest pension funds. It will bring solar generating capacity of funds managed by Greencoat to almost 880MW. This transaction marks the first successful realisation for BlackRock’s Global Renewable Power II Fund and has provided investors with a combination of stable income and attractive capital growth at exit.

The 156MW portfolio’s electricity output will annually displace c.65,000 tonnes[1] of emitted carbon dioxide and supply around 45,000[2] homes equivalent. The portfolio is largely Renewables Obligation Certificates (ROC) accredited with an average of approximately 16 years of support remaining. One of the assets, the 14.4MW Charity Farm, is backed through a Contract for Difference (CfD).

BlackRock’s Global Renewable Power team acquired a 90% stake in the portfolio in 2017 through its partnership with Lightsource bp, who maintained a 10% stake in the portfolio. The partnership has delivered financial and operational improvements throughout its holding period and realised the de-risked portfolio at a premium for investors. Greencoat will be acquiring 100% ownership from both vendors. Lightsource bp will continue to provide ongoing asset management and operational services.

Karin Kaiser, Greencoat Capital, said: “This is a brilliant portfolio of proven operational assets that will provide our clients predictable cashflows with inflation protection over the long term, whilst contributing to the decarbonisation of the UK’s electricity sector. The acquisition takes installed solar capacity to over 880MW, across the Funds we manage, generating enough power across the year to power all the homes in a city the size of Manchester. We continue to see a strong opportunity for solar aggregation in the UK, and an active near-term pipeline.

This transaction delivers to investors in Greencoat Solar II long term secure income cash flows that over the long lifetime of these assets will be uncorrelated to general stock market factors.”

Rory O’Connor, Global Chief Investment Officer and head of Europe for BlackRock Renewable Power, added: “The structural transition to a lower carbon future is providing attractive investment opportunities in renewable power globally. There is a significant re-allocation of capital underway that underscores the resilience of the sector, even while public markets face uncertainty as the world addresses the COVID-19 pandemic. This asset realisation comes as we achieve the second close of our Global Renewable Power Fund III at $1.5bn, reflecting the expertise and depth of the BlackRock Renewable Power platform and strong ongoing demand from our clients looking for renewable power and climate infrastructure investment opportunities that can deliver attractive and sustainable returns.”

Paul McCartie, Chief Investment Officer for Lightsource bp, said: “The portfolio was originally developed and constructed by Lightsource bp and is today a strong operational portfolio. We look forward to working with Greencoat and continuing to provide operational services in the future. The transaction is testament to the strong growth of the UK market and has been realised through the lasting partnership with BlackRock Renewable Power.”

Greencoat Capital’s advisors for the transaction were: Eversheds Sutherland – legal; Evergy – technical; EY – finance.

[1] Forecast output of *MWh per annum, displacing fossil generation with carbon intensity of 400g of CO2/KWh

[2] Average UK home consumes *MWh per annum