FORESIGHT

SOLAR FUND

LIMITED

ANNUAL REPORT AND

FINANCIAL STATEMENTS

For the year ended 31 December 2023

YEARS

ABOUT US

Strategic Report

Highlights 1

Business Model 3

Company Structure 4

Chair’s Statement 6

Investment Manager’s Report 13

Sustainability 43

Risk and Risk Management 56

Going Concern

and Viability Statement 80

Financial Review 82

Alternative Performance Measures

(“APMs”) 91

Governance

Board of Directors 94

Corporate Governance Report 96

Management Engagement

Committee Report 104

Nomination Committee Report 106

Audit and Risk Committee Report 109

Directors’ Remuneration Report 113

Directors’ Report 115

Statement of Directors’

Responsibilities 118

Financial Statements

Independent Auditor’s Report 120

Statement of Profit and Loss

and Other Comprehensive Income 127

Statement of Financial Position 128

Statement of Changes in Equity 129

Statement of Cash Flows 130

Notes to the Financial Statements 131

AIFMD Disclosures (Unaudited) 163

Advisors 164

Glossary of Terms 165

FRONT COVER IMAGE

Shotwick, UK

Foresight Solar Fund Limited was awarded the Green Economy Mark in2019.

Thisrecognises companies that derive 50% or more of their revenues from

environmentalsolutions.

Foresight Solar is a closed‑ended

investment company with more than

£1.2 billion deployed in a diversified

portfolio of solar PV and battery

storage assets.

The sustainability-focused fund contributes to a lower carbon future by investing

in and managing approximately 1GW of renewable energy infrastructure.

Contents

In this report

Chair’s Statement

Investment

Manager’s Report

Page 6 Page 13

Sustainability

Page 43

HIGHLIGHTS

Investment

objectives: Key performance indicators (“KPIs”)

Preserve

and enhance

capital value

£697.9m

NET ASSET VALUE

(“NAV”)

(31 December 2022:

£771.5m)

118.4p

NAV PER SHARE

(31 December 2022:

126.5p)

8.0%

ANNUALISED TOTAL

NAV RETURN SINCE

IPO

(31 December 2022:

9.0%)

6.2%

ANNUALISED TOTAL

SHAREHOLDER

RETURN SINCE IPO

(31 December 2022:

7.8%)

Deliver sustainable,

progressive

quarterly dividends

7.55p

DIVIDEND PER SHARE

DECLARED FOR 2023

(31 December 2022:

7.12p)

1.6x

NET DIVIDEND COVER

FOR 2023

£295.9m

TOTAL DIVIDENDS PAID

SINCE IPO

6.0%

TARGET DIVIDEND

GROWTH FOR 2024

1.5x

ESTIMATED NET

DIVIDEND COVER FOR

2024

33.3%

DIVIDEND GROWTH

SINCE IPO

(Including 2024 target)

Develop further

portfolio

diversification

969MW

PORTFOLIO CAPACITY

467MWp

PROPRIETARY

DEVELOPMENT

PIPELINE

1. Refer to the Alternative Performance Measures (“APMs”) shown on page 91 for more details and definitions of the terms used in this report.

2. Net dividend cover calculated solely from operating cash flow generated in the period.

AS AT 31 DECEMBER 2023

SANDRIDGE, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

HIGHLIGHTS CONTINUED

AS AT 31 DECEMBER 2023

Foresight Solar celebrated its ten-year anniversary

on the London Stock Exchange in October

Grew the proprietary pipeline

Acquired the rights to a 467MWp portfolio of development-stage solar projects.

Record cash distribution from assets

The £120.4 million was the highest in Foresight Solar’s decade-long history.

First project sale

Divested a stake in the Spanish Lorca portfolio at a 21% premium to holding value,

highlighting the Company’s prudent valuation assumptions.

£20 million returned to Shareholders via buybacks

Deployed half of the committed repurchase allocation, delivering 1.1 pence per share

(“pps”) of NAV accretion.

Lowered gearing

Divestment proceeds and free cash used to repay £40 million of variable rate debt.

Record renewable electricity generation

1,094GWh

exported to the grid, enough to power 402,754 UK households for a year.

Increased dividend target

Board approved the 7.55pps dividend for 2023 and announced an increase

of 6% year-on-year to a 8.00pps payout target for 2024.

10 YEARS ON LSE, UK

1. Generation figures have been adjusted, where relevant, for events in which compensation has

been, or will be, received.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

BUSINESS MODEL

What we do

Foresight Solar is a sustainability-focused investment trust that aims to deliver progressive returns alongside long-term NAV growth by owning, developing and operating utility-scale

solar and battery assets.

How we create value

1. Identify, acquire 2. Develop, build 3. Operate, enhance 4. Hold/exit, redeploy

The Investment Manager

leverages its global footprint

and local networks to source

solar PV and battery storage

opportunities at different

stages of development. These

are screened for suitability and

potential targets are subject to

due diligence to assess risks,

confirm valuation assumptions

and review sustainability

considerations. Investment

approval is multi-level and

culminates with Board sign-off

for all material decisions.

There is a strong focus on risk

and opportunity identification

and mitigation to deliver assets

in line with their investment

case. The Company actively

manages assets, employing

strategic approaches

to make development,

construction and maintenance

determinations. To minimise

risks, Foresight Solar partners

with credible and experienced

counterparties to secure future

pipeline, build out projects

and manage them. Regular

communication with the

Board ensures effective asset

management.

The Company seeks to

ensure optimal operational

availability and maximise

revenue potential. The

portfolio is regularly assessed

for opportunities to improve

performance, both operational

and financial, and to better

meet sustainability objectives.

The Investment Manager

regularly seeks to capture the

value identified for the benefit

of Shareholders.

Foresight Solar’s strategy involves

holding assets for cash yield

that supports its progressive

dividend. Alongside this, there

is the opportunity to provide

Shareholders with long-term

NAV growth from bringing

projects from development

to construction and then to

operation. In certain instances, the

Company will generate additional

value by divesting assets at

favourable prices. The Investment

Manager and the Board evaluate

these opportunities against

diversification goals and an asset’s

potential to generate stable

financial returns over time.

Sustainability considerations

Environmental, social and

governance criteria are

integral in any investment

assessment. The Investment

Manager undertakes a

thorough analysis against a

pre-determined minimum

threshold for any asset.

Third-party service providers,

sometimes with the assistance

of technical advisors, monitor

and manage the day-to-day

performance, including

sustainability KPIs, of each

asset in the portfolio.

Measurement of sustainability

KPIs from as early as the due

diligence phase all the way

to investment, and later to

operation, allows the Asset

Manager to continually seek

and execute improvement

opportunities across the

portfolio.

Sales proceeds will typically be

used to repay debt or to invest in

new assets that provide attractive

risk-adjusted returns, including

development-stage options that

grow the Company’s pipeline and

provide more upside pathways.

The value we create

Financial benefits

£120.4m

distributed from underlying assets in 2023

£295.9m

paid to Shareholders in dividends since IPO

Environmental benefits

1,094GWh

of clean energy

generated in 2023, enough to power

402,754 UK homes forayear

378,486tCO

avoided compared to

country-specific gridintensity

Social benefits

£392,816

contributed to local communities

where the Company operated in 2023

1. Generation figures have been adjusted, where relevant, for events in which compensation has been, or will be, received.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

COMPANY STRUCTURE

Foresight Solar Fund Limited is a

closed-ended company with an indefinite

life. It was incorporated in Jersey under the

Companies (Jersey) Law 1991, as amended

on 13 August 2013, with registration

number 113721.

The Company’s Initial Public Offering on

24 October 2013 raised £150 million,

creating the UK’s largest listed solar

investment company at the time. Its shares

are listed on the Premium Segment of the

Official List and traded on the London

Stock Exchange’s Main Market. The

Company is also a constituent of the FTSE

250. As at 31 December 2023, there were

589,239,345 Ordinary Shares in issue.

As an investment company, Foresight Solar

has no direct employees and outsources

its operations to certain key service

providers. FSFL makes its investments

through intermediate holding companies

and underlying project vehicles/special

purpose vehicles.

The operating structure and key service

providers are detailed in the graphic:

Shareholder loan

repayments,

equity

distributions

Dividends

Equity

investment

Shareholder

loans, equity

investment

Shareholder

loans, equity

investment

Foresight Solar Fund

Limited

Shareholders

HOLDCOs

Intermediate Holdings

Companies

Investment Manager

Foresight Group LLP

Company Secretary

&Administrator

JTC (Jersey)

Short and long-term

debt providers

Other key service

providers andadvisors

Corporate Brokers –

Jefferies International

Limited, Singer Capital

Markets

Auditor – KPMG

Registrar – Computershare

Investor Services

egal Advisors – Dickson

Minto, Ogier

Assets

Project Special Purpose

Vehicles

Asset Manager

Foresight Group Asset

Management

Shareholderloan

repayments,

equity

distributions

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

COMPANY STRUCTURE CONTINUED

Investment objective

The Company’s objective is to provide investors with a

sustainable, progressive quarterly dividend and enhanced

capital value through investment in a diversified portfolio

of ground-based solar farms and battery storage systems

(“BESS”) predominantly located in the UK.

Investment policy and strategy

Foresight Solar pursues its investment objective by

acquiring and managing solar PV and BESS assets at

different stages of maturity.

The Company’s aim is to build a diversified portfolio

with majority or minority ownership. When investing

in a stake of less than 100%, Foresight Solar secures

its rights through shareholder agreements and other

legal transaction documents. Investments may be made

in equity, debt or intermediate instruments but not in

securities traded on an investment exchange. To optimise

returns, the Company is permitted to invest money held

for working capital in cash deposits, gilts and money

market funds.

Operationally, each solar power plant in the portfolio

enters a power purchase agreement (“PPA”) with a

creditworthy offtaker. Under these contracts, the Special

Purpose Vehicles (“SPVs”) sell electricity and, in some

cases, green certificates to the designated buyer. Not all

PPAs include mechanisms such as fixed prices or price

floors, allowing the Company to retain some exposure to

merchant power prices.

Investment restrictions

To diversify its portfolio and spread risk, there are

limitations to the Company’s investment universe and

approach:

•

Geography: Investments outside the UK are limited to

25% of Gross Asset Value (“GAV”). (Refer to the APMs

shown on page 91 for more details and definitions.)

•

Leverage: Gearing, calculated as overall Company

borrowing as a percentage of GAV, will not exceed

50% at the time of drawdown. The Board intends to

limit long-term gearing, calculated as overall Company

borrowings excluding intra-Group loans and revolving

credit facilities, to 40% of GAV.

•

Portfolio composition: No single asset shall exceed

30% of GAV post-acquisition. If the investment is an

additional stake in an existing asset, the combined value

should not exceed 30%.

•

Stage: Foresight Solar is allowed to deploy no more

than 5% of GAV in development-stage projects. These

assets are characterised as solar or BESS opportunities

that are pre-construction and may not have secured

grid connection rights or planning consent on the date

of investment. Similarly, projects under construction are

limited to 25% of GAV.

•

Technology: The Company may only invest in

utility-scale battery storage systems up to a limit

of 10% of GAV.

Any material change to the investment policy will require

the prior approval of Shareholders by way of an ordinary

resolution, in accordance with the Listing Rules.

Alternative Investment Fund Management

Directive (“AIFMD”)

Although the Company is located outside the European

Economic Area, its marketing activities in the UK are

subject to regulation implemented under the AIFMD and

the National Private Placement Regime.

The AIFMD, as implemented across the European Union

(“EU”) and in the UK, aims to harmonise the regulation of

Alternative Investment Fund Managers (“AIFMs”), as well

as impose obligations on firms that manage or distribute

alternative investment funds in the EU or the UK or that

market shares in such funds to EU or UK investors.

Under the AIFMD, the Company is self-managed and acts

as its own AIFM.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

CHAIR’S STATEMENT

On behalf of the Board, I am pleased to present the

audited Annual Report and Financial Statements for

Foresight Solar Fund Limited (”Foresight Solar”, the

“Company” or “FSFL”) for the year ended 31 December

2023.

In its tenth year, Foresight Solar performed well in a

challenging market. As central banks sought to tame

inflation, interest rates in many countries increased at the

fastest pace for a generation. Investors reacted to the

uncertainty of when the tightening cycle would peak and

the prospect of rates remaining higher for a prolonged

period. As a result of these technical market dislocations,

share price discounts to NAV across the real assets

investment trust sector widened significantly.

It was key to respond to these circumstances rapidly in

support of Shareholders’ interests. Therefore, the Board

implemented a package of measures that included a share

buyback programme, asset sales and debt repayment, all

reflective of a disciplined approach to capital allocation.

These initiatives were based on the view that markets

have been significantly undervaluing Foresight Solar’s

portfolio, making a compelling case for re-investment in the

Company’s stock.

Both during and after the period, several large

subsidy-backed solar portfolios were sold in the UK.

he deals presented reliable benchmarks for projects

comparable to Foresight Solar’s in the country. In each case,

the transactions closed at valuations materially above FSFL’s

£1.17 million per megawatt holding value (31 December 2022:

£1.29m/MW), supporting the Company’s more conservative

valuation assumptions. (See page 42 for details on the UK

portfolio valuation.)

Although navigating the complexities of the market required

the Directors’ and the Investment Manager’s full attention,

2023 was a milestone year. On the operational side, the

portfolio distributed a record amount of cash, positioning

the Company well for the future and providing confidence

in a resilient dividend with a cover of 1.61x. The extra capital

allowed the Board to pay down floating rate debt and return

an extra £20 million to investors via share buybacks. There is

now adequate liquidity for FSFL to invest in returns-accretive

opportunities when markets recover.

This was a tough period for markets,

but Foresight Solar’s record electricity

production and historic cash generation

helped it provide strong income for

Shareholders and set itself up for growth

once macro conditions improve.

Alexander Ohlsson

Chair

Total shareholder return (“TSR”)

120

-30

150

NAV total return and total shareholder return since IPO

2013 2014

2015 2016 2017 2018 202120202019

2022

NAV total return

2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

CHAIR’S STATEMENT CONTINUED

Generation from the UK portfolio was once again above

budget. Production was lower than expected in Australia

due to record economic curtailment, and marginally below

budget in Spain as a result of mixed weather conditions.

Although Foresight Solar’s 58 operating assets generated

more than 1TWh of electricity for the first time, global

production was 1.9% below forecast.

This was enough renewable energy to power the

equivalent of over 402,000 UK homes for an entire year.

Considering the Company’s contribution throughout

the past decade, the projects have exported enough

electricity to meet the demand of almost 10% of UK

households for an entire year. That’s an undeniable

contribution to the decarbonisation of energy production

and the fight against climate change. (See in the

Sustainability section of this report from page 43 for more

details.)

We are proud of the Company’s performance over the last

ten years, having consistently delivered on its investment

objectives. Shareholders have received a sustainable,

progressive dividend that has now increased more than

33%. An investor who bought FSFL stock for 100 pence at

listing would have received 66.49 pence in income along

the way. Including the Company’s growth over that time,

that has delivered a total NAV return of 120% and a total

shareholder return of 84% since IPO.

The Company has unquestionably been impacted by the

challenging macroeconomic landscape over 2023 and it

is frustrating to see the share price trade at a significant

discount to NAV. The Directors remain focused on taking

action to address the discount whilst acknowledging that

there are elements outside of the Company’s control.

The Board is united in its belief that Foresight Solar

will continue to deliver income and capital growth for

investors, and, therefore, will recommend Shareholders

vote against the resolution to discontinue the Company at

the next Annual General Meeting (“AGM”) in June.

Investments and realisations

In March, Foresight Solar completed Project Lynx, the

first acquisition of its growing proprietary development

pipeline. Leveraging the Investment Manager’s local

network in Spain, FSFL purchased the full rights to a

467MWp portfolio of six solar projects. This is an exciting

opportunity that represents the first of several planned

investments into early-stage assets to drive long-term

growth in a capital-efficient manner.

On the capital recycling side, the Company also made its

first divestment, selling a 50% stake in Lorca, a 99MW

portfolio of three operational assets in Spain. The deal,

which closed at an attractive 21% premium to holding

value, was the first stage of a phased programme to sell

around 200MW of assets. It exemplifies FSFL’s strategy

to crystallise value uplifts from projects and eventually

recycle capital to accelerate growth. (See page 23 for a

case study of how this capital allocation approach has

been implemented).

The proceeds from the transaction were immediately used

to pay down the revolving credit facility (“RCF”), lowering

variable interest rate debt. The additional liquidity may

also facilitate future deployment into other development

and construction-stage opportunities. We look forward to

updating Shareholders on divestments as the programme

continues into 2024.

Key financials

The NAV per Ordinary Share at 31 December 2023 was

118.4 pence (31 December 2022: 126.5 pence). (See page

40 for details on Net Asset Value movements.)

In response to the continued rise in UK gilt yields and the

subsequent narrowing of risk premia, the Board increased

discount rates by an average of 0.87 percentage points

for the year. This brought the portfolio’s weighted average

discount rate to 8.03%, the highest in the Company’s

history. In total, the increase in discount rates resulted in

a NAV reduction of 6.8 pence per share (“pps”) over the

year. With an implied real return of 5% to 6% over assumed

long-term inflation and clear opportunities for growth,

the Board considers that Foresight Solar continues to be

positioned attractively for investors.

Power price forecasts softened across markets during

the year, falling from their first quarter highs. Against this

backdrop, Foresight Solar reaped the benefits of a prudent

hedging strategy which locked in exposure to elevated

electricity prices. This insulated the portfolio from

near-term adverse shifts in valuation and anchored the

Net Asset Value. Viewed in isolation, the fall in power price

forecasts led to a NAV reduction of 3.9 pps. At the same

time, the falling power price estimates in the UK reduced

the Company’s Electricity Generator Levy liability. On

its own, this move resulted in an uplift to NAV of 3.1pps,

almost offsetting the fall inpower forecasts.

Total revenue for the year was £162.2 million (31 December

2022: £164.5 million), with EBITDA of £136.2 million

(31 December 2022: £141.2 million). Both metrics were

marginally below budget, mostly resulting from merchant

prices falling further than expected – although this only

represented a small proportion of income.

1. Based on Ofgem consumption estimate of 2,700kWh/year for the typical UK household.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

CHAIR’S STATEMENT CONTINUED

Key financials continued

Due in part to timing of cash receipts, the Company

recorded its highest ever distributions from assets, with

£120.4 million paid from the portfolio in 2023, an 8%

increase from the £111.8 million achieved the previous year.

The Directors believe the market is materially undervaluing

the portfolio, a view supported by recent comparable

transactions. Starting with an initial share buyback of £10

million in May, the Board has since increased this allocation

four-fold, becoming proportionally one of the largest

repurchase programmes in the renewable investment

trust sector. Share buybacks of £19.9 million at a weighted

average price of 96.1pps during the year contributed to

1.1pps in NAV accretion. The shares are held in treasury.

Operational performance

The UK portfolio once again delivered solid performance,

with good levels of availability enabling the assets to

capture slightly higher-than-expected solar irradiation and

deliver annual generation 0.7% above budget. Looking

at the technical performance, excluding distribution

network operator (“DNO”) outages, electricity production

was 1.2% above budget, with irradiation 2.1% higher

than expectations. (See page 32 for details on portfolio

performance.)

The Spanish projects had their first full year of operations

and contributed towards the Company’s investment

objectives with encouraging initial performance.

Production was 1.5% below budget, predominantly due to

heavy storms early in the year that caused irradiation to be

1.6% below forecasts. Excluding DNO outages, generation

was in line with budget, implying a positive performance

ratio for the portfolio.

Having been ahead of forecast for the first half of 2023,

the Australian plants were subject to unusually high levels

of economic curtailment in the third quarter. This meant

that, according to local regulations, the sites were forced

to shut down when there was excess generation on the

network. Overall, production was 9% below budget.

The Board and the Investment Manager are acutely aware

of the challenges the country’s grid system poses and this

is a key focus area for the coming year.

Construction and development

The construction of Sandridge BESS continues to

progress. Despite delays caused by grid reinforcement

works, the Investment Manager expects the site to

be energised in summer 2024, reaching commercial

operations shortly thereafter.

Foresight Solar holds 50% stakes in two other

pre-construction battery projects, totalling 50MW.

TheInvestment Manager has conducted preliminary

activities required to build these assets and is now

considering the best options to progress the sites given

FSFL’s capital allocation strategy.

In Spain, the first project from the solar development

portfolio may be granted approval later this year.

Once it achieves planning consent, the Board will

evaluate various options, including whether to progress

through construction or to divest and capitalise on the

development gain.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

LOS PICOS, SPAIN

CHAIR’S STATEMENT CONTINUED

Capital allocation

The Board is committed to a highly disciplined

capital allocation approach and has sought to clearly

communicate the priorities for surplus cash: any

new commitment must yield a competitive return on

investment whilst also factoring in the Company’s growth

strategy and, in the current environment, the benefits of

repaying debt or buying back FSFL stock at the prevailing

discount to NAV. In the near term at least, the Board

considers that new investments will be predominantly

focused on the deployment of modest sums to grow the

proprietary development pipeline.

The Company paused the construction of new BESS

projects, limiting exposure to the final payments for

the Sandridge battery storage site, which were already

contractually agreed. Cash available, after providing for

dividends and for these limited existing commitments,

can then be shifted to investments in returns-accretive

opportunities.

The only direct investment in 2023 was the modest

initial sum to acquire the rights to the Spanish

development-stage projects. Well-structured,

early-stage opportunities like this are an excellent way to

build pipeline for relatively small upfront outlays and can

provide strong returns.

The Directors’ other main focus was limiting interest

exposure and applying surplus funds towards repaying

the variable rate RCF. In the current environment of

higher interest rates and elevated inflation, capital from

operations and proceeds from disposals will continue to

be applied to reduce the facility’s balance.

This plan is designed to maximise liquidity for when

market conditions improve. This capital allocation strategy

aims to deliver sustainable, progressive income and

NAV growth. It will be driven as much by organic value

accretion as by investment of fresh capital.

Shareholders

RCF

Foresight Solar portfolio Distributions and deleverage:

Cash

available

buybacks:

£20m

Repayments:

£40m

NAV uplift

Dividends:

£44m

Reinvestments

for growth:

£11m

Operational portfolio

969MW

Construction pipeline

75MW

Development portfolio

460MWp+

Net

operational

cash flows:

£71m

Divestment

proceeds:

£24m

Future

divestments

Cash

reserves:

£20m

1. Cash flow details on page 88.

Capital allocation strategy in 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

CHAIR’S STATEMENT CONTINUED

Strategic priorities

Alongside the high-quality yield Foresight Solar

consistently pays out, it also targets long-term organic

capital growth. The primary focus is on investing in

development-stage and construction-ready assets

to benefit from financial upside as the projects are

progressed and de-risked. FSFL’s growing pipeline is

intended to be the “engine room” of future growth.

It will deliver new projects with the potential for value

uplifts once they obtain planning consent and again once

they reach operations – if the Company builds them out.

The investment in the 467MWp Spanish development

portfolio is a key step in this direction. The Investment

Manager will target growth of this proprietary pipeline to

between 2GW to 3GW in the near term. Like Project Lynx,

there is potential to structure these deals with limited

upfront capital at risk, rewarding development partners

as projects obtain planning consent. The Company will

principally target the UK and other established European

geographies, across both solar and BESS.

Ultimately, the goal is to create a steady flow of assets

reaching the ready-to-build phase in any given year.

Based on prevailing market conditions and considering

the make-up of the portfolio at the time, the Company

then has the option to build the solar and battery plants

or to sell the rights and recycle the capital. It is possible

that, aspart of the strategy, Foresight Solar may divest

asmanyopportunities as it elects to construct.

Dividends

The Board declared total dividends of 7.55 pence per

share for the year, in line with its target. The fourth and

final dividend of 2023, equivalent to 1.895pps, will be

paid on 24 May 2024. Dividend cover on a cash basis for

the period was 1.61x after a total of £40 million of debt

repayments and £20 million of share buybacks.

The Directors are pleased to announce a target dividend

of 8.00 pence per share for 2024, an increase of 6.0%

compared with the previous year. This above-inflation

increase is possible due to the Company’s revenues’

inflation correlation and its high cash generation. The

Board also recognises the need to provide a compelling

return for investors in a higher interest rate environment.

With this increase, Foresight Solar offers investors a

c.6.8% dividend yield based on NAV and c.8.8% at the

prevailing 91 pence share price at market close on the

eve of publication. The 2024 target is expected to be 1.5x

covered from cash generated in the period, with 2025

cover estimated at 1.35x based on the latest revenue

forecasts. Against a backdrop of macroeconomic

uncertainty and geopolitical tension, the Board is

reassured that dividend cover would be over 1.0x for each

of the next two years even if merchant power prices fell to

zero.

When determining the year-on-year increase, the Directors

always focus on the Company’s objective to deliver a

sustainable, progressive dividend and passing the rises in

subsidised revenues to Shareholders.

Debt facilities

As at 31 December 2023, the Company’s total

outstanding debt was £442.6 million (31 December

2022:£524.8million), including long-term debt of

£367.6 million (31 December 2022: £409.8 million). Total

gearing decreased to 38.8% of GAV (31 December 2022:

40.5%), driven in part by the repayment of the RCF during

the year.

Long-term structural gearing represented 32.2% of GAV

(31 December 2022: 31.6%), comfortably below the 40%

target. Virtually all of Foresight Solar’s long-term debt is

fully hedged against interest rate movements and fully

amortising. Of all the long-term facilities, 24.0% are

RPI-linked and, therefore, exposed to movements in

inflation. (See page 83 for details of GAV and gearing.)

During the year, the Company announced it had extended

its £150.0 million sustainability-linked revolving credit

facility for 12 months. Whilst there is no requirement to

refinance ahead of the February 2026 due date, FSFL

made substantial repayments to reduce borrowing of its

only unhedged credit line. At a time when interest costs

are high, this proved a judicious cost control decision.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

CHAIR’S STATEMENT CONTINUED

Sustainability

Foresight Solar’s activities are inherently sustainable.

The production of renewable energy and the addition

of flexible storage to the grid, necessary to facilitate

the build-out and operation of intermittent generation,

directly contribute to a lower carbon economy.

Nonetheless, the Company seeks to implement best

practices throughout its operations and constantly reviews

its approach to drive improvement.

In this report, we present a new-look sustainability

section on page 43. From record electricity generation

to equivalent CO emissions avoidance and, from the

inception of a biodiversity management project to the

impact on local communities, the updated format tells

the compelling story of FSFL’s participation in the world it

operates in and brings along with it relevant metrics.

Having established the required practices to be

considered Article 9-compliant, we communicated in the

2022 Annual Report the intention to seek certification

under the European Sustainable Financial Disclosure

Reporting (’’SFDR’’). During 2023, however, with more

information available about the Sustainability Disclosure

Reporting (’’SDR’’) standards, the Board decided to

prioritise certification under the UK regime. Foresight

Solar’s Jersey headquarters, its London listing, and the

characteristics of its shareholder base make prioritising

SDR a better allocation of resources.

One of the requirements of the new UK regulation is

the integration of sustainability in firms’ investment

objectives. The Board will, therefore, propose wording for

Shareholder approval at the AGM that reflects this need,

highlighting Foresight Solar’s commitment to providing

income and NAV growth while generating positive

environmental outcomes.

Governance

We said goodbye to Peter Dicks in June, when he stepped

down from the Board. Having been a Non-Executive

Director since the Company was founded, he offered

critical input and invaluable insight. We want to, once

again, thank Peter for his contribution and wish him

success in future endeavours.

In September, we welcomed Lynn Cleary to the Board.

She is a proven leader with a wealth of financial services

experience. Her knowledge and expertise will be

invaluable to oversee the execution of Foresight Solar’s

strategy and to support its growth ambitions. Lynn will

stand for election at the next Annual General Meeting.

For the next steps of its succession plan, the Nomination

Committee is exploring an appointment in jurisdictions

other than Jersey. It will continue to seek candidates from

diverse social and ethnic backgrounds, cognitive and

personal strengths. (See page 106 for the Committee’s

report and details on succession planning.)

Annual General Meeting

We look forward to engaging with investors at the next

AGM scheduled to take place on 12 June 2024 at 9:30am.

Details of how Shareholders may participate will be set

out in the Notice of Annual General Meeting that will be

published in due course.

Discontinuation vote

For the first time, in accordance with the Company’s

Articles of Association, a Special Resolution will be put

to Shareholders for the discontinuation of the Company.

The vote is triggered by an average share price discount

to NAV of more than 10% over the course of the financial

year. In 2023, FSFL’s shares traded at an average 16%

discount to their Net Asset Value. The Directors are

confident that this weakness in the share price was

primarily the result of macroeconomic and geopolitical

factors that affected the entire renewable infrastructure

sector.

Until 31 December 2022, FSFL traded at a 3.1% historic

premium to NAV. The solidity of management and

operations persist, and the Company will continue to

implement its strategy. The Board has also taken steps

to ameliorate the position of Shareholders through the

capital allocation strategy, debt repayment and share

buybacks. We are convinced that, in time, this prudent

approach will address the discount to NAV.

The Directors will, therefore, recommend that

Shareholders vote against the resolution for the

discontinuation and, consequently, in favour of the

Company’s continuation as we aim to continue delivering

value.

Regardless, we are engaging with investors to discuss any

concerns they may have. During 2023, the Directors and

the Investment Manager hosted more than 30 meetings

with institutional and retail investors, answering questions

and listening to feedback. At the end of the year, we

also conducted our first investor survey, mandating an

independent consultancy to gather views and track

Foresight Solar’s positioning and reputation.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

CHAIR’S STATEMENT CONTINUED

Outlook

After a challenging year for markets, the Directors believe

there are reasons for optimism. The energy transition

represents one of the biggest investment themes in a

generation. Since 2010, renewable infrastructure has

attracted around £120 billion of private investment in the

UK. In the 12 months to September 2023, the country built

an estimated 2.9GW of rooftop and utility-scale solar,

bringing installed capacity to just over 18GW.

However, this remains only a fraction of what is required

to meet the country’s Net Zero targets. A report from

Parliament’s Public Accounts Committee concluded that

hitting 2050 goals would require investment in renewable

energy infrastructure to increase from an estimated

£23 billion in 2022 to between two to three times that

amount per annum into the 2030s.

The Committee on Climate Change, the government

advisor, has also warned that Britain needs 4.5GW of new

solar each year until 2035 to achieve its objective, which

implies several billion pounds needs to be deployed to the

sector annually.

The solar power opportunity is even more prominent in

Europe. According to some estimates, cumulative capacity

is expected to double to 390GW by 2032. Energy storage,

meanwhile, has the potential to increase 20 times in the

continent to 45GW/89GWh by the end of the next decade.

With an improved financial position and a clear strategy

to deliver income and growth, allied with the Investment

Manager’s global footprint and in-house expertise,

Foresight Solar has the ambition, strategy and tools

it needs to capitalise on the global shift to a low

carbon economy.

Alexander Ohlsson

Chair

11 March 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

LOS LLANOS, SPAIN

WHAT’S IN THIS SECTION

INVESTMENT MANAGER 14

TEN YEARS OF FORESIGHT SOLAR:

GROWING WITH THE MARKET 16

MARKET CONTEXT 19

Q&A WITH THE FUND MANAGERS:

CELEBRATING FORESIGHT

SOLAR’S TEN YEARS 21

REVENUE ANALYSIS 25

POWER PRICES 26

PORTFOLIO OVERVIEW 31

OPERATIONAL REVIEW 37

MOVEMENTS IN NET ASSET VALUE 40

INVESTMENT

MANAGER’S REPORT

£697.9m

Net Asset Value

(as at 31 December 2023)

£1.17m/MW

UK portfolio valuation

(More details on page 42)

PADDOCK WOOD, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

£12.2bn

assets under management

435

infrastructure assets under management

175

investment, commercial and technicalprofessionals

4.7GW

total green energy technology capacity

The Company’s

Investment Manager,

Foresight Group LLP,

is responsible for

the acquisition and

management of assets,

including the sourcing

and structuring of

new transactions,

and advising on the

borrowing strategy.

Founded in 1984, Foresight Group is a leading

listed infrastructure and private equity investment

manager authorised and regulated by the Financial

Conduct Authority. With a long-established focus on

sustainability-led strategies, it aims to provide attractive

returns to its institutional and retail investors from

hard-to-access private markets.

Foresight manages hundreds of infrastructure assets with

a focus on solar and onshore wind, bioenergy and waste.

The firm also owns renewable energy-enabling sites,

energy efficiency management solutions, social and core

infrastructure projects, and sustainable forestry assets on

behalf of its clients.

The infrastructure division consisted of almost 200

investment, portfolio and technical professionals as at

30September 2023 – the latest publicly available data.

The team is comprised of:

(i) An investment management team responsible for

originating, assessing and pricing assets, managing

due diligence and executing transactions

(ii) An asset management team with expertise across

electrical and civil engineering, finance and legal

disciplines

Foresight Group’s private equity team manages 21

investment vehicles across the UK and Ireland. The division

reviews more than 3,000 business plans each year, and

currently supports a portfolio of over 250 SMEs.

The third pillar of the business, Foresight Capital

Management, is responsible for four strategies across

seven investment vehicles, answering for £1.0 billion in

assets under management (“AUM”).

Foresight Group operates in seven countries in Europe

and in Australia with AUM of £12.2 billion. Foresight Group

Holdings Limited listed on the Main Market of the London

Stock Exchange in February 2021 and was admitted to the

FTSE 250 in September 2023.

INVESTMENT MANAGER’S REPORT

1. Data accurate as per Foresight Group’s latest

interim results.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Ricardo Piñeiro

Partner, Head of Infrastructure

Background

Mr Piñeiro joined Foresight Group in 2011

and is a Partner and Head of Infrastructure.

A member of the firm’s Executive Committee,

he has 18 years of experience in fund

management, sustainable infrastructure

investment and financing in the UK and

internationally. During his time at Foresight,

Mr Piñeiro led the FSFL investment

management team for almost ten years.

Prior to joining Foresight, Mr Piñeiro worked

at Espirito Santo Investment, where he

focused on lending and advisory for the

energy infrastructure and transportation

sectors.

Gary Fraser

Partner, CFO and COO

Background

Mr Fraser is the CFO of Foresight Group

and one of its Executive Directors.

He has 30 years of experience providing

or facilitating specialist financial input into

corporate, portfolio and VCT decisions.

Prior to Foresight, Mr Fraser worked at

F&C Asset Management as a Company

Secretary, focusing on financial, legal and tax

compliance, technical and financial reporting,

and corporate finance. He also worked at EY

with audit and risk assurance.

Mr Fraser is a Chartered Fellow of the

Securities Institute, Chartered Accountant,

and has a BAcc from the University of Stirling.

Ross Driver

Managing Director, Infrastructure

Toby Virno

Senior Investment Manager,

Infrastructure

Background

Mr Driver joined Foresight Group in 2021

to oversee the delivery of Foresight

Solar’s investment mandate. He has almost

20Ùyears of infrastructure and renewable

energy investment experience covering deal

structuring and execution, debt financing and

asset management. Prior to Foresight,

Mr Driver spent eight years at InfraRed

Capital Partners. He also worked at John

Laing Investments and KPMG Corporate

Finance.

Mr Driver holds an MBA from the University of

Chicago, Booth School of Business and a BA

in Finance, Accounting and Management from

the University of Nottingham.

Background

Mr Virno joined Foresight Group in 2018.

Withnearly a decade’s experience in

investment and financing of sustainable

assets and projects, particularly solar PV and

BESS, he is part of the full-time Foresight

Solar team helping deliver the Company’s

investment mandate.

Mr Virno is a Chartered Accountant and holds

a bachelor’s degree in Physics from

the University of Oxford.

INVESTMENT MANAGER’S REPORT CONTINUED

Key members of the Foresight Solar team

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Ten years of Foresight Solar: Growing with the market

INVESTMENT MANAGER’S REPORT CONTINUED

FSFL raises

£150m

at its London Stock

Exchange IPO

Equity raise:

£61m

UK reaches

10GW

of installed solar capacity

First large-scale BESS

projects commissioned

in the UK

2013 2014 2015 2016 2017

Key:

FSFL acquires its first solar

farm, the 34MW Wymeswold,

the largest operating project

in the UK at the time

UK reaches

5GW

of installed solar capacity

UK government introduces

CfD to replace ROC as the

main subsidy mechanism

in the country

Equity raise:

£60m

338MW

of capacity

Equity raise:

£75m

FSFL expands to Australia

with the purchase of four

projects totalling

170MW

Ofgem outlines the supportive

UK BESS regulatory

framework

ROC scheme closed

to new entrants

Equity raise:

£117m

BESSSolarFSFL

Regulation

After its first full year

of operation, FSFL’s

portfolio comprises

assets

NAV total

return since

IPO

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

Equity raise:

£106m

Equity raise:

£65m

UK government sets 2050 Net

Zero targets into law

Solar becomes the cheapest

form of energy production

globally

UK reaches

1GW

of installed BESS capacity

Inclusion of BESS

in the FSFL mandate.

First investment

in the sector with a

50%

stake (25MWp)

UK reaches

2GW

of installed BESS capacity

Spanish projects begin

operation

UK government launches its

Review of Electricity Market

Arrangements (“REMA”)

2018 2019 2020 2021 2022 2023

Key:

FSFL grows its proprietary

pipeline with 467MWp deal

in Spain

Capacity in Europe expected

to double to 390GW by 2032

Ofgem updates its grid

connection queue rules to

accelerate solar and BESS

roll-out

Capacity in Europe

expected to increase 20x to

45GW/89GWh by 2031

Solar power cells reach

30% energy efficiency

in laboratories

UK reaches

15GW

of installed solar capacity

Produces more than 1TWh of

renewable energy in a year

Completes its first divestment,

selling a 50% stake in the

Lorca portfolio

UK FSFL portfolio reaches

723MW

across 50 assets

Establishes development-

stage allocation for portfolio

FSFL purchases 50% stakes in

two BESS sites (50MWp)

FSFL acquires four

ready-to-build sites

in Spain totalling

125MW

BESSSolarFSFL

Regulation

NAV total

return since

IPO

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Key investment metrics

INVESTMENT MANAGER’S REPORT CONTINUED

31 December 2023 31 December 2022

Net Asset Value (“NAV”) £697.9m £771.5m

NAV per share 118.4p 126.5p

Dividend per share declared for the year 7.55p 7.12p

Annualised total NAV return since IPO 8.0% 9.0%

Gross Asset Value (“GAV”) £1,140.5m £1,296.3m

Share price 102.2p 118.8p

Ordinary Shares in issue 589,239,345 609,958,720

Market capitalisation £602.2m £724.6m

Annualised total shareholder return since IPO 6.2% 7.8%

UK portfolio valuation £1.17m/MW £1.29m/MW

Total operating revenue £162.2m £164.5m

Total operating expenditure (£26.1m) (£23.3m)

Total operating profit (EBITDA) £136.1.m £141.2m

1. The purpose and calculation methodology of the key APMs are shown on page 91.

2. During the period, 20,719,375 shares were repurchased and are held in treasury. More details on page 153.

PARK FARM, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

United Kingdom

The high energy prices of 2022, triggered by the Russian

invasion of Ukraine, exacerbated underlying inflationary

forces and set the stage for the following 12 months. It is,

therefore, no surprise that power prices remained a key

variable in 2023, although this time they were trending in

the opposite direction.

Governments successfully found alternative sources of

natural gas, and coupled with a careful roll-out of storage

capacity, pressure on prices eased in the first half of the

year. Milder-than-expected autumn and winter then led to

further softening, which has continued into early 2024.

Also weighing on markets is the potential escalation

of geopolitical tensions in the Middle East, which

risks pushing fossil fuel prices back up, as well as the

forthcoming UK general election, which is likely to cause

political uncertainty. The campaign also sparks questions

about fiscal probity as politicians seek to win voter

support.

Political considerations may also have an impact on

eagerly awaited regulatory updates. The Department for

Energy Security and Net Zero (“DESNZ”) will soon publish

feedback from the initial call for evidence regarding a

potential transition of the Renewables Obligation subsidy

scheme to Fixed Price Certificates; and the result of the

second consultation on the Review of Electricity Market

Arrangements (“REMA”), which is expected in the first

half of 2024. The Investment Manager has been tracking

developments closely and will review the output of these

processes in detail.

In the final quarter of the year, the Energy Act 2023

received Royal Assent. The legislation aims to boost

investment in clean energy technologies through the

development of a new, more efficient tendering process

for network upgrades.

It also created a new regulator, the Future System

Operator, to drive change in energy system planning as

the UK transitions to a lower carbon economy.

The government also granted more powers to National

Grid to manage connection queues and free up capacity

for projects due to begin operations.

These are positive developments, increasing tailwinds for

renewables, pointing towards reduced costs in the longer

term, and bolstering well-capitalised developers.

Utility-scale solar has continued its steady growth,

with some estimates predicting as much as 3GW of new

capacity installed in 2023. Lower component costs and

successful allocations in the latest Contracts for Difference

auction, with solar securing almost 2GW in Allocation

Round 5, are expected to fuel deployment in the coming

years.

A growing power purchase agreement (“PPA”) market is

also expected to provide revenue visibility for generators’

new projects. Countering these supportive factors,

however, are increased financing costs and a softening

electricity price outlook.

Battery storage, meanwhile, currently faces several

near-term headwinds. Lucrative but declining ancillary

service revenues have not been fully replaced by merchant

trading. This has been a function of structural challenges

with the grid’s balancing mechanism, but also of falls in

wholesale power prices and a corresponding reduction

in market volatility.

Over the longer term, the Investment Manager believes

the case for BESS remains positive. Batteries are a

natural complement to the intermittency of renewable

energy generation. The decline of ancillary revenues

was not a surprise and returns are expected to improve

as construction costs begin to fall again and developer

premia moderate.

WYMESWOLD, UK

MARKET CONTEXT

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

Australia

The Federal Government extended price caps on gas and

coal until 1 July 2025, reducing fuel costs for generators

for several more years. The decision also means New

South Wales (“NSW”) and Queensland (“QLD”) fossil

fuel power producers may receive as much as A$1 billion

in compensation if they have more expensive supply

contracts already in place. The lower commodity futures

pushed down short-term time-weighted average prices,

with the biggest impacts seen in NSW and QLD due to

export-exposed coal plants.

Economic curtailment during solar generation hours

increased in 2023 and had an above-forecast impact for

around 25% of the year. This curtailment happens when

a generator bids a unit out of dispatch to avoid low or

negative electricity prices. In other words, when prices fall

below a certain threshold, a plant is turned off. With solar

farms, this might happen, for example, at peak supply

times, when utility-scale plants and rooftop arrays produce

“too much” power.

Whilst autumn set new wind and solar production records,

the mild weather kept grid demand relatively low, causing

the curtailment of 40% to 55% of solar generation.

To tackle this issue, the Australian government is

continuing to support energy storage projects and

launching Capacity Investment Schemes in NSW,

Victoria (“VIC”) and South Australia. Separately, the

Australian Renewable Energy Agency provided grants to

2GW/4.2GWh of grid-scale BESS that are scheduled to be

operational by 2025.

In this complex environment, the price for Large-Scale

Generation Certificates (“LGCs”) experienced notable

fluctuations, declining from approximately A$70 in

late 2022 to A$45 in December 2023. The forecast for

prices in 2030 currently sit at A$15, reflecting delays in

commissioning renewable projects.

Spain

A key highlight of 2023 was the Council of Ministers’

update of the Plan Nacional Integrado de Energía y

Clima (“PNIEC”). The National Integrated Energy and

Climate Plan is Spain’s local implementation of EU-wide

efforts to reduce carbon emissions and outlines how the

country intends to meet the bloc’s energy and climate

targets for 2030. As the geopolitical and macroeconomic

environment shifted, the government revised its plan to

set even more ambitious targets.

The new plan includes many different forms of electricity

generation. The most relevant changes for the Company

came in the form of aggressive new targets for

utility-scale solar roll-out, which was revised up by an

impressive 37.2GW, and for the deployment of energy

storage systems, which was significantly increased by

6.5GW. Such adjustments are logical given Spain’s high

solar irradiation and growing intermittent renewable

generation footprint, requiring tools to stabilise its

electricity grid and bolster resilience.

In comparison to other European countries, Spain has the

highest expected dependency on solar PV to meet clean

energy goals.

The reliance on intermittent generation makes it one of

the most suitable locations for complementary battery

storage systems, offering opportunities for experienced

investors with a local presence, such as Foresight Solar.

The government’s commitment will provide additional

support to the renewable energy industry over the coming

years, ensuring it remains active. Indeed, appetite for

projects remains high, and multiple acquisitions and

financings were announced in 2023.

The Royal Decree-Law 8/2023 (“RDL” 8/2023), passed

in December 2023, was another important development.

With the goal of incentivising further renewable energy

use and production, the legislation extends the deadline

for two regulatory milestones to maintain the validity of

grid access and of connection permits. The deadline to

secure the Administrative Construction Authorization

was extended to up to 49 months, and the Administrative

Exploitation Authorization can be prolonged to up to

eight years on a voluntary basis. On another positive note

for renewable generators, the RDL does not include an

extension of the gas clawback mechanism or the gas price

cap beyond 31 December 2023.

PNIEC

2023-2030

target

PNIEC

2021-2030

target

Deployed

as at 2020

Solar PV 76.4GW 39.2GW 11.0GW

Energy storage 18.5GW 12.0GW 6.4GW

Source: Ministerio para la Transición Ecológica y el Reto Demográfico (“MITECO”); Energy storage includes

pumped-hydro storage and batteries (no explicit breakdown provided in the PNIEC 2023-2030 target).

MARKET CONTEXT CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

Ross Driver: The market has changed

significantly over the last ten years and

Foresight Solar has had to evolve. Tell us

about that process.

Ricardo Piñeiro: We had a clear view of what we

wanted to achieve with portfolio construction from

the outset. The investor proposition from IPO was

focused on providing a high-quality yield with the

potential for NAV growth over time. In an era of

ultra-low interest rates, often negative in real terms,

the fund’s yield was highly attractive to investors

given realistic alternatives and the established

annual increase in the dividend has provided

inflation protection.

The fund was built around a core of UK operational

ROC-backed solar projects with an established

generation profile, clear revenue visibility and

inflation linkage. We established one of the biggest

portfolios in the UK with some of the largest

projects in the country at the time. It was also

diversified, with projects of a minimum size, located

in different parts of the country and built with

equipment from multiple manufacturers.

This approach enabled FSFL to deliver on its

investment objective and has given the Board the

confidence to increase the dividend payout over

25% during the Company’s first 10 years alone.

We acknowledge that the current macroeconomic

environment is fundamentally different. Investor

priorities have shifted following steep hikes in

central bank rates, institutional fund managers’ own

investor redemptions, and the changing alternatives

landscape. Whilst we expect gilt rates to moderate

over the next year or so, a return to rock bottom

interest rates is not on the cards.

FSFL must, therefore, continue to evolve.

Q&A WITH THE FUND MANAGERS: CELEBRATING FORESIGHT SOLAR’S TEN YEARS

Ricardo Piñeiro

Partner, Head of

Infrastructure

Ross Driver

Managing Director,

Infrastructure

Ross Driver and Ricardo Piñeiro recount the dawn

of Foresight Solar in 2013, how the Company has

grown over the last decade, and the strategy to

continue providing the income and growth it is

committed to generate in years to come.

We’re centred on offering an attractive yield,

hence the decision to provide an above-inflation

increase for the 2024 dividend target. This will be

complemented by an enhanced focus on long-term

capital growth through investment in a proprietary

development pipeline and the construction of

solar and BESS projects. Alongside this, we will

continuously seek opportunities to recycle capital

to realise value uplifts for investors.

RP: I know you have dedicated a significant

amount of time to analysing the battery

storage market. What’s the opportunity

there?

RD: Renewable electricity-generating capacity

must be significantly expanded if countries are to

reach their Net Zero emissions targets. In the UK,

for example, the Climate Change Committee, the

government’s independent advisor, estimates the

country will need to reach 70GW of operational

solar farms by 2035 if we are to meet current

commitments. For context, we had about 18GW of

installed capacity at the end of 2023. That roll-out

of intermittent generation is a significant

opportunity for battery storage over the next

decades – despite the short-term noise as the

market matures.

We’re also seeing demand for BESS in Europe,

particularly in countries that are building

renewables quickly, like Spain and Italy. Since the

sun doesn’t shine and the wind doesn’t blow all the

time, capturing the cheap electricity solar and wind

produce to charge batteries – especially at certain

times of the day when demand is limited – and later

discharging when demand has peaked and prices

are higher, is good for the environment and smart

business. Essentially, it’s a different sector that

offers a diversified income stream for the Company

and naturally complements its core business.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

RP: How about development-stage projects,

can you give us more insight into your

rationale for investing in those?

RD: We updated Foresight Solar’s investment

mandate to allow us to invest up to 5% of GAV in

early-stage assets. We’re working with developers

to target feasible sites that are yet to secure all the

necessary permits to start construction, and to help

fund their pipelines. There is a risk that some of

these projects ultimately will not get built, but there

is significant upside potential in the ones that do

proceed, and we will invest in portfolios to spread

the risk.

Ultimately, there are two reasons why we’re doing

it. The first is to grow our proprietary pipeline.

That way, we have clearer visibility over what

projects are coming through and, when they reach

the ready-to-build stage, we have the option to

sell them for a profit or take them forward through

construction to operations ourselves. The second is

the financial upside: targeting earlier-stage assets

and structuring deals to limit initial capital at risk

offer the potential for higher returns with valuation

uplifts when projects achieve planning consent,

and then again once they progress through

construction.

We view a well-constructed development-stage

pipeline as the engine for future NAV growth.

In the ten years since the Company started

operating, Foresight Solar has raised its dividend

every year, delivering more than 30% growth in that

time, and providing investors with a 120% total Net

Asset Value return.

Q&A WITH THE FUND MANAGERS: CELEBRATING FORESIGHT SOLAR’S TEN YEARS CONTINUED

Going forward, we will increasingly focus on total

shareholder return, targeting a higher dividend

every year whilst also aiming to grow the NAV

organically. We expect projects emerging from the

development-stage pipeline to play a key role in

this story.

RD: The value creation for

stakeholders starts before the projects

produce electricity, though. As a

sustainability-focused fund, we provide more

than “just” financial returns…

RP: Absolutely! We don’t see our role as Investment

Manager to be focused exclusively on financial

returns. We have responsibility in the way we

manage our sites, and that means, for example,

being a good neighbour to local communities and

working to unlock potential biodiversity gains in

and around our plants.

On the first point, we’ve contributed more than

£1million to local authorities throughout the

years. We also work closely with schools to host

students at our sites and raise awareness about

the importance of renewable energy. In fact, we’re

expanding this outreach programme.

On the environmental side, in addition to directly

contributing to Paris Climate Agreement goals by

generating carbon-neutral electricity, we’ve been

working with farmers for years, opening sites to

sheep grazing, planting wildflowers and installing

beehives across multiple locations.

Foresight Group also kicked off a double materiality

analysis following guidance from the International

Sustainability Standards Board (“ISSB”).

This exploration will delve into financial and impact

materiality, tracing the sustainability-related

risks and opportunities that can affect the firm’s

business – the outside-in perspective – and

assessing Foresight Group’s potential impact on

people and nature – the inside-out perspective.

It’s another show of commitment to sustainability

best practices and generating more than financial

returns.

Solar deployment required to meet

Net Zero goals

2010

2020 2030

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

LOS LLANOS, SPAIN

The Lorca portfolio

The Spanish electricity market is one of Europe’s most

active for the deployment of new renewable projects

and continues to be a key market for the Company

because of its attractive opportunities.

In 2020, Foresight Solar reached a significant growth

milestone when it purchased its Spanish assets.

In one swoop, FSFL established a foothold in a third

market and expanded into subsidy-free solar energy

generation.

The Lorca portfolio, a 99MW project comprising three

sites in the south of the country, was acquired at the

pre-construction stage. The Investment Manager’s

presence in Iberia and its knowledge of the local market

were instrumental in establishing the relationships that

led to the deal.

Optimisation process

Foresight Group’s Madrid team oversaw the

construction of the plants and worked to secure a

power purchase agreement with Statkraft, Europe’s

largest producer of renewable energy. The ten-year

PPA provides long-term revenue visibility for

approximately 70% of the assets’ annual production

and directly contributes to dividend cover.

Less than 24 months after acquisition of the initial

project rights, Las Salinas (30MW), Los Llanos (49MW)

and Los Picos (20MW) started exporting to the grid;

and the first full year of operations contributed to

Foresight Solar’s record electricity and cash generation

in 2023.

The strong operational performance drew the attention

of a fund advised by EB-Sustainable Investment

Management (“EB-SIM”), a subsidiary of Evangelische

Bank, which was searching for an opportunity to make

its first direct investment into the sector and Foresight

Solar was considered the right partner.

CASE STUDY:

FORESIGHT SOLAR’S INCOME

AND ORGANIC GROWTH STRATEGY

INVESTMENT MANAGER’S REPORT

CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Capturing upside for Shareholders

When the Lorca assets progressed from construction to

operation in 2022, they delivered a 2 pence per share

uplift to the Company’s Net Asset Value. Then, the sale

of a 50% stake at a 21% premium to holding value in

2023 crystallised returns and led to another 1.6pps NAV

increase – all whilst maintaining exposure to a portfolio

that will continue to deliver long-term revenue and

provide dividend cover.

The in-house expertise to identify assets with strong

potential, build them, operate them and realise the full

financial upside for the Company, exemplifies Foresight

Solar’s income and growth strategy.

There is now a significant opportunity to execute the

same approach with FSFL’s growing proprietary pipeline.

The earlier-stage investments amplify the opportunities

since they offer the chance to realise value when projects

have planning approved and, if constructed, reach

operations. At those milestone moments, Foresight

Solar can take profits by selling the assets at multiples

of the invested capital and recycle that cash; or opt to

construct or operate them with a view to further cash

generation.

INVESTMENT MANAGER’S REPORT CONTINUED

LAS SALINAS, SPAIN

Overview of financial upside

Acquired: Lorca

portfolio of 3

(99MW)

pre-construction

projects.

Pipeline 2020 2021 2022

Opportunity

Divestment: Sold

50% share at

21% premium.

Operation: Sites

began full

commercial

production

in August.

Optimisation: Signed 10-year

Statkraft PPA, locking in revenue

for 70% of production; structured

project finance facility.

Construction: Foresight local

technical team oversaw build.

Acquisition: Rights to 467MWp development-stage pipeline in Spain. First project at RTB in 2024.

NAV impact: Projects held at cost.

Operational

portfolio

2023

NAV impact: 1.6pps

uplift.

NAV impact: 1.9pps

uplift.

NAV impact: Projects

held at cost.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Foresight Solar generates income by producing

and exporting electricity to the grid. The revenue

predominantly arises from regulatory support mechanisms

available in the markets in which the Company operates

and from the sale of electricity to third-party offtakers –

either at fixed or merchant prices.

The Company defines “contracted revenues” as those

that have a high degree of receivable certainty. Income

from subsidies and from fixed price power purchase

agreements are considered contracted, whereas

day-ahead electricity sales are labelled merchant or

uncontracted.

In 2023, approximately 40% of revenues were derived

from subsidies, with the remaining 60% from the sale

of electricity. Given the favourable pricing available,

the Company fixed the majority of its electricity sales

via PPAs, such that 91% of revenue was considered

contracted, with the remaining 9% merchant.

On a net present value basis, as at 31 December 2023,

contracted revenues over the entire investment period

represented 53% of the total forecasted revenue.

The Company will continue to minimise the impact of

power price volatility on future cash flows by entering

fixed price arrangements for the sale of electricity.

The goal is to achieve a high percentage of annual

fixed revenue in the short and medium term by actively

managing the power price exposure of forecast

production.

By way of example, Foresight Solar can fix an amount

of electricity sales in the summer, due to the seasonal

production profile of solar assets, to support the dividend

policy, whilst leaving some exposure to market rates that

allow it to capture potential upside from power price

volatility in other seasons.

2024 2025 2026

Average fixed price for UK portfolio £/MWh £96.50 £86.50 £100.80

Proportion of contracted revenues

for the global portfolio

86% 79% 58%

Status of contracted revenues

The Investment Manager continually monitors

opportunities to enter new fixed price arrangements up

to five years ahead. The goal of this active power price

hedging strategy is to provide more certainty over future

revenue and ensure dividend cover.

The table below sets out the average PPA fixed price

achieved for the UK portfolio in each calendar year so far,

and the proportion of global generation that has been

hedged as at the publication of this report.

INVESTMENT MANAGER’S REPORT CONTINUED

100

Contracted vs merchant revenue breakdown

2024

Contracted revenue (PPA)Contracted revenue (subsidy) Merchant revenue

2025 2026

REVENUE ANALYSIS

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

United Kingdom

Wholesale power prices fell significantly from their late

2022 highs during the year. The day-ahead auction

average at N2EX, the exchange-traded marketplace in

the UK, closed at £94/MWh across calendar year 2023,

a 54% decrease on the £204/MWh registered during the

previous 12 months. The drop was driven mostly by lower

commodity prices, particularly natural gas, which traded

above historical averages but well below the levels seen

following Russia’s invasion of Ukraine.

Throughout the period, Foresight Solar benefited from

its active hedging strategy, locking in attractive power

prices and securing income to underpin the dividend.

Arrangements signed during 2022, for example, fixed

prices at higher rates than the spot wholesale market

offered during 2023, resulting in price certainty into 2026

for a considerable proportion of assets. As a result, the

average realised price across the UK portfolio, including

fixed price arrangements and merchant exposure, was

£115/MWh – 22% above the N2EX average for 2023 and

modestly below the £117/MWh secured in 2022.

In response to the high energy prices of 2022, the UK

government introduced the Electricity Generator Levy

(“EGL”) later that year. This windfall tax is scheduled to

remain in place until April 2028, applying a 45% additional

charge on generation revenue over £10 million and above

a £75/MWh cap. This benchmark rate will rise in line with

CPI each year starting from April 2024.

Based on current electricity price forecasts, however, the

Company does not expect to incur any EGL liabilities once

allowances are utilised.

Australia

In the first half of 2023, power prices across QLD and VIC

averaged A$114 and A$72, respectively. This was a marked

decrease from the same period of 2022, which faced

unprecedented market volatility – including the temporary

suspension of the country’s National Electricity Market.

Whilst Queensland and Victoria followed a similar trend

in the six months to June, they had a radically divergent

second half of the year.

In QLD, higher demand coupled with the outage of coal

generators caused volatility and drove prices higher in

November and December. Meanwhile, the outage of the

NSW/VIC interconnector, which usually acts as a relief

valve for excess supply, led to excess electricity in Victoria,

where most of the baseload brown coal assets are located.

Excess renewable generation in the third quarter, allied

to mild weather, led to negative pricing intervals across

the whole country. The increase in frequency of these

events, especially between peak solar generation hours,

is reflective of the reduction in the average spot price,

especially in October, when more than half of intervals

recorded were below zero.

Spain

Power prices trended down in 2023, falling to a yearly

average of €87/MWh – a significant drop from the 2022

mean of €162/MWh, although this still remains well above

the average of €46/MWh registered between 2016 and

2020. The reduction was predominantly driven by falling

natural gas prices.

Spanish benchmark electricity prices are set according

to a marginal production model, which means they are

based on the cost of the most expensive plant required to

satisfy demand – typically gas-fired generation. The war in

Ukraine pushed up natural gas prices and electricity costs

quickly followed.

The spiralling energy prices were eventually capped by the

Spanish government, which imposed a ceiling for thermal

generators and applied a levy on “extraordinary revenues”.

These interventions were held in place for the majority of

2023 and effectively kept electricity prices lower than in

neighbouring countries.

The text of Royal Decree-Law 8/2023, however, did not

include mention of any extension of the price cap or of

the clawback mechanism beyond 31 December 2023.

This could lead to upward price pressure, a positive

development for renewable energy generators.

POWER PRICES

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Subsidy revenues

The buy-out price for Renewables Obligation Certificates

(“ROCs”), the United Kingdom’s main support mechanism

for large-scale renewable electricity projects, for the

2024/25 annual compliance period increased to £64.73

(2023/24: £59.01). The change reflected the average

monthly percentage move in the Retail Price Index ("RPI"),

a common measure of inflation, during 2023. On average,

the Company received 1.41 ROC/MWh across the UK

portfolio. Meanwhile, the 2024/25 Feed-in Tariff rate for

Yardwall, the only UK asset to which ROC does not apply,

was £95.30/MWh (2023/24: £90.60/MWh).

In Australia, the average Large-Scale Generation

Certificate (“LGC”) price secured by the portfolio for

the full year was A$24.12 per certificate, higher than the

A$21.12 registered in 2022. This was due to step-down

mechanisms in the contracted price, although, considering

the timeline to 2030, they were in line with forecasts.

The lower contracted prices at Oakey 2 were more

than offset by higher support payments at Longreach,

Oakey 1 and Bannerton. The Company also entered new

agreements to sell certificates at fixed prices out to 2028

and 2030, limiting the impact of LGC price volatility on

revenue.

Power price forecasts

The Investment Manager uses forward-looking power

price estimates to assess the likely future income of the

portfolio’s assets for valuation purposes. The Company’s

assumptions are formed from a blended average of

three independent consultants’ forecasts, adjusted by

the Investment Manager for the expected capture price

discounts for solar generation – the half-hourly market

pricing during production periods – as considered

appropriate.

For assets with fixed price arrangements in place, the

contracted values are used instead of the blended

forecast.

For assets with subsidy arrangements in place for a period

shorter than their assumed useful economic life, the

blended forecast is used for the remaining period.

LONGREACH, AUSTRALIA

INVESTMENT MANAGER’S REPORT CONTINUED

POWER PRICES CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Power price forecasts continued

United Kingdom

Power price forecasts decreased significantly compared

to December 2022 estimates due to the fall in natural

gas prices. The most significant drop was in near-term

estimates, covering the next three years – a period for

which the Company has already fixed a large proportion of

energy sales, limiting exposure to falls in merchant prices.

Over the short to medium term, power prices are expected

to fall 6.4% in real terms each year as the market reverts

to historical averages by around 2030. From that point,

prices are forecast to flatten out, with a 1.5% decline

expected per annum as solar capture price discounts

become more prominent.

When the assumed asset life extends beyond 2050, the

Investment Manager has plotted no real growth in forecast

power prices.

Brexit had a direct impact in a section of the UK electricity

market, affecting the going prices for Renewable Energy

Guarantees of Origin (“REGOs”). These certificates are

used to assure the renewable source of electricity sold

into the grid, and the UK leaving the EU has driven up

their value due to stricter eligibility criteria. The Company

has locked in materially higher prices for the REGOs its

portfolio generates and the expectation is that they will

trade at higher levels than in the past.

The significant increase in global thermal commodity

prices seen in 2022 was passed through to electricity

costs, resulting in higher Time Weighted Averages

(“TWAs”) and Dispatch Weighted Averages (“DWAs”).

However, they fell in 2023, and forecasters expect them

to return to historical levels in the short to medium term.

The growth in rooftop solar, popular in Australian

households, and the delay in hydrogen projects for

electrification can make it harder to immediately address

economic curtailment (“EC”). Although 2023 levels

may prove to be the peak, EC is unlikely to decrease

significantly in 2024 and is expected to hover around 25%

for the next two or so years.

UK wholesale vs solar capture power price

December 2023 wholesale December 2023 Foresight Solar capture price estimate

100

£/MWh

2022 2026 2030 2034 2038 20462042

2050

December 2022

200

100

150

UK wholesale power prices

2023 2026

£/MWh

2029 2032 2035 2038 204720442041

2050

June 2023

December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

POWER PRICES CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Power price forecasts continued

Australia

The significant increase in global thermal commodity

prices seen in 2022 was passed through to electricity

costs, resulting in higher Time Weighted Averages

("TWAs”) and Dispatch Weighted Averages ("DWAs”).

However, they fell in 2023, and forecasters expect them

to return to historical levels in the short to medium term.

The growth in rooftop solar, popular in Australian

households, and the delay in hydrogen projects for

electrification can make it harder to immediately address

economic curtailment ("EC"). Although 2023 levels

may prove to be the peak, EC is unlikely to decrease

significantly in 2024 and is expected to hover around 25%

for the next two or so years.

In the medium to long term, power prices in the country

are expected to continue rising as coal power plants

retire, either due to economics or to end-of-life, and as

gas generators and storage are increasingly used at the

margin. As solar energy production continues to grow

and price cannibalisation increases, the gap between

wholesale power prices and solar capture prices is

expected to widen, so the introduction of battery storage

will be helpful.

June 2023December 2022

Queensland wholesale power prices

2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048

2050

A$/MWh

December 2023

Victoria wholesale power prices

A$/MWh

June 2023December 2022

2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048

2050

December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

POWER PRICES CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

100

Spain wholesale power prices

2023

€

/MWh

2026 2029 2032 2035 2038 2041 20472044

2050

December 2022December 2022 June 2023 December 2023

Spain

Power price projections decreased significantly

in the short to medium term due to the decline in

natural gas prices. Higher-than-expected deployment

of self-consumption solar capacity also added

downwardpressure.

In the long term, fundamentals in the Spanish energy

market remain largely unaffected. A significant amount of

new renewable energy capacity, particularly utility-scale

solar, is expected to connect to the grid over the coming

years. This is likely to result in lower power prices,

particularly for solar generators, although the expected

addition of storage and interconnection capacity should

serve to mitigate the negative impacts.

INVESTMENT MANAGER’S REPORT CONTINUED

POWER PRICES CONTINUED

LOS PICOS, SPAIN

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

PORTFOLIO OVERVIEW

Global portfolio by peak capacity

Key:

Operational – 64%

Construction – 5%

Development – 31%

Global portfolio revenue by NPV

Key:

Electricity sales

– Merchant – 47%

Subsidy – 42%

Electricity sales

– Contracted – 11%

Country portfolio revenue

Key:

UK subsidy income – 39%

UK electricity sales

– Merchant – 4%

UK electricity sales

– Fixed – 46%

AUS subsidy

– Merchant – 1%

AUS electricity sales

– Merchant – 1%

AUS electricity sales

– Fixed – 3%

Spain electricity sales

– Merchant – 3%

Spain electricity sales

– Fixed – 3%

Countries by installed capacity

Key:

UK – 75%

Australia – 17%

Spain – 8%

Countries by production

Key:

UK – 62%

Australia – 21%

Spain – 17%

1. As at 31 December 2023.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Type

Asset

Installed

peak

capacity

(MW)

Operational/under

construction

Connection date

Acquisition

cost

(£m)

Revenue type

1 Wymeswold 34 Operational March 2013 45.0 ROC/Electricity sales

Castle Eaton 18 Operational March 2014 22.6 ROC/Electricity sales

Highfields 12 Operational March 2014 15.4 ROC/Electricity sales

High Penn 10 Operational March 2014 12.7 ROC/Electricity sales

Pitworthy 16 Operational March 2014 19.3 ROC/Electricity sales

Hunters Race 10 Operational July 2014 13.3 ROC/Electricity sales

Spriggs Farm 12 Operational March 2014 14.6 ROC/Electricity sales

Bournemouth 37 Operational September 2014 47.9 ROC/Electricity sales

Landmead 46 Operational December 2014 52.4 ROC/Electricity sales

Kencot Hill 37 Operational September 2014 49.5 ROC/Electricity sales

Copley 30 Operational December 2015 32.7 ROC/Electricity sales

Atherstone 15 Operational March 2015 16.2 ROC/Electricity sales

Paddock Wood 9 Operational March 2015 10.7 ROC/Electricity sales

Southam 10 Operational March 2015 11.1 ROC/Electricity sales

Port Farm 35 Operational March 2015 44.5 ROC/Electricity sales

Membury 16 Operational March 2015 22.2 ROC/Electricity sales

Shotwick 72 Operational March 2016 75.5 ROC/Electricity sales

Sandridge 50 Operational March 2016 57.3 ROC/Electricity sales

Wally Corner 5 Operational March 2017 5.7 ROC/Electricity sales

Coombeshead 10 Operational December 2014

36.6

(Acquired

portfolio)

ROC/Electricity sales

Park Farm 13 Operational March 2015

Sawmills 7 Operational March 2015

Verwood 21 Operational February 2015

Yardwall 3 Operational June 2015 FiT/Electricity sales

Abergelli 8 Operational March 2015 3.7 ROC/Electricity sales

Crow Trees 5 Operational February 2016 1.8 ROC/Electricity sales

Cuckoo Grove 6 Operational March 2015 2.5 ROC/Electricity sales

Field House 6 Operational March 2016 3.1 ROC/Electricity sales

Fields Farm 5 Operational March 2016 1.7 ROC/Electricity sales

Gedling 6 Operational March 2015 1.9 ROC/Electricity sales

Homeland 13 Operational March 2014 5.2 ROC/Electricity sales

Marsh Farm 9 Operational March 2015 4.0 ROC/Electricity sales

Current portfolio and production

INVESTMENT MANAGER’S REPORT CONTINUED

PORTFOLIO OVERVIEW CONTINUED

WYMESWOLD, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Type

Asset

Installed

peak

capacity

(MW)

Operational/under

construction

Connection date

Acquisition

cost

(£m)

Revenue type

33 Sheepbridge 5 Operational December 2015 1.9 ROC/Electricity sales

Steventon 10 Operational June 2014 4.2 ROC/Electricity sales

Tengore 4 Operational February 2015 1.3 ROC/Electricity sales

Trehawke 11 Operational March 2014 4.7 ROC/Electricity sales

Upper Huntingford 8 Operational October 2015 3.1 ROC/Electricity sales

Welbeck 11 Operational July 2014 4.4 ROC/Electricity sales

Yarburgh 8 Operational November 2015 3.4 ROC/Electricity sales

Abbey Fields 5 Operational March 2016 1.5 ROC/Electricity sales

SV Ash 8 Operational March 2015 3.4 ROC/Electricity sales

Bilsthorpe 6 Operational November 2014 1.9 ROC/Electricity sales

Bulls Head 5 Operational September 2014 2.2 ROC/Electricity sales

Lindridge 5 Operational January 2016 1.7 ROC/Electricity sales

Manor Farm 14 Operational October 2015 6.1 ROC/Electricity sales

Misson 5 Operational March 2016 2.0 ROC/Electricity sales

Nowhere 8 Operational March 2015 3.7 ROC/Electricity sales

Pen Y Cae 7 Operational March 2015 2.9 ROC/Electricity sales

Playters 8 Operational October 2015 4.0 ROC/Electricity sales

Roskrow 9 Operational March 2015 3.7 ROC/Electricity sales

Sandridge 25 Under construction — 12.7 Merchant

Clayfords 25 Ready to build — 14.1 Merchant

Lunanhead 25 Ready to build — 16.4 Merchant

UK sub-total

798 728.4

1. Original equity cost at time of acquisition, including

transaction costs. For assets under construction,

this includes estimated construction costs to start of

operations. International acquisition costs converted to

GBP including transaction costs at the applicable rate at

the time of acquisition.

2. Includes the 2MW extension acquired in March 2015.

3. Accounts for the Company’s 50% stake in Sandridge BESS

(50MW).

4. Accounts for the Company’s 50% stake in Clayfords

(50MW).

5. Accounts for the Company’s 50% stake in Lunanhead

(50MW).

6. Generation figures have been adjusted, where relevant,

for events in which compensation has been, or will be,

received.

WYMESWOLD, UK

31 December 2023 31 December 2022

Total

generation

(GWh)

Generation

variance

in relation

to base case

Irradiation

variance

in relation

to base case

Total

generation

(GWh)

Generation

variance

in relation

to base case

Irradiation

variance

in relation

to base case

United Kingdom 678 0.7% 2.1% 734 8.6% 9.4%

INVESTMENT MANAGER’S REPORT CONTINUED

PORTFOLIO OVERVIEW CONTINUED

Current portfolio and production

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Type

Asset

Installed

peak

capacity

(MW)

Operational/

under construction

Connection date

Acquisition

cost

(£m)

Revenue type

Australia

1 Bannerton 53 Operational July 2018 22.9 LGC/Long-term PPA

Longreach 17 Operational March 2018 5.7 LGC/Long-term PPA

Oakey 1 30 Operational February 2019 9.2 LGC/Long-term PPA

Oakey 2 70 Operational May 2019 34.0 LGC/Electricity sales

Australia sub-total

170 71.8

Type

Asset

Installed

peak

capacity

(MW)

Operational/

under construction

Connection date

Acquisition

cost

(£m)

Revenue type

Spain

Virgen del Carmen 26 Operational November 2022 18.0

Long-term PPA/Electricity sales

Los Llanos 25 Operational

August 2022

64.2

3 Las Salinas 15 Operational

(Acquired as

portfolio)

Los Picos 10 Operational

Spain sub-total

82.2

31 December 2023 31 December 2022

Total

generation

(GWh)

Generation

variance

in relation

to base case

Irradiation

variance

in relation

to base case

Total

generation

(GWh)

Generation

variance

in relation

to base case

Irradiation

variance

in relation

to base case

Australia

237 -9.0% 8.3% 248 -12.5% -11.8%

31 December 2023 31 December 2022

Total

generation

(GWh)

Generation

variance

in relation

to base case

Irradiation

variance

in relation

to base case

Total

generation

(GWh)

Generation

variance

in relation

to base case

Irradiation

variance

in relation

to base case

Spain 179 -1.5% -1.6% — — —

INVESTMENT MANAGER’S REPORT CONTINUED

PORTFOLIO OVERVIEW CONTINUED

1. Original equity cost at time of acquisition, including transaction

costs. For assets under construction, this includes estimated

construction costs to start of operations. International

acquisition costs converted to GBP including transaction costs

at the applicable rate at the time of acquisition.

2. Accounts for the Company’s 48.5% stake in Bannerton

(110MW).

3. Generation figures have been adjusted, where relevant, for

events in which compensation has been, or will be, received.

4. Accounts for the Company’s 50% stake in the Lorca portfolio

(100MW).

5. Original equity cost at time of acquisition of 100%, does not

include the 50% divestment in 2023.

Current portfolio and production continued

BANNERTON, AUSTRALIA

Global portfolio 1,094 -1.9% 3.4% 982 2.3% 2.1%

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Portfolio summary

As at 31 December 2023, Foresight Solar’s portfolio

comprised 61 assets with a total net peak capacity of

1,044MW, of which 25MW remains under construction

and 50MW in pre-construction.

In the UK, the Company has an operational portfolio of

50 solar assets, with a total installed capacity of 723MW.

In addition, FSFL holds 50% stakes in three battery

storage projects, equivalent to 75MW, that are currently

in construction or pre-construction. Foresight Solar also

owns four operational solar sites in Australia, totalling

170MW of installed capacity, and, following the sale of

a 50% stake in its Lorca portfolio in Spain, it now holds

76MW of installed capacity distributed across four solar

plants in the country. (See the full portfolio composition

from page 31.)

In the UK, the assets all benefit from regulatory support

and are accredited under the Renewables Obligation

scheme, except for Yardwall, which is a Feed-in Tariff

scheme-accredited project (representing less than 1%

of the portfolio in the country). The Australian assets,

meanwhile, benefit from subsidies in the form of

Large-Scale Generation Certificates.

The Company’s Spanish projects do not rely on regulatory

support. The sites instead bid into the long-term

power purchase agreement market, aiming to strike

production deals at determined prices with creditworthy

counterparties for a certain period. This approach provides

a high proportion of contracted income and revenue

visibility. The assets have been successful in settling those

transactions, with the Lorca portfolio signing a ten-year

agreement with Statkraft in December 2021 and Virgen del

Carmen establishing a ten-year offtake agreement with

Shell in September 2020.

Acquisitions and divestments

Project Lynx

In March 2023, Foresight Solar secured a pipeline of

development-stage solar farms in Spain with a total

potential capacity of 467MWp. The Company purchased

the project rights from Grupo Cuerva, a renewable energy

company and distribution network operator, for low

single-digit millions of euros.

The six subsidy-free solar projects are planned to be

located across the south and east of Spain. Two of

the sites have sought grid connections under existing

application routes and one of those, totalling 57MWp,

has already secured grid access with the potential to

reach ready-to-build status later this year. The remaining

projects will apply for connections via the upcoming

capacity market auctions, which are likely 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 developers

responsible for establishing them, who continue to take

them forward under a services agreement.

Project Jerez

The period’s other transaction, and a first for Foresight

Solar, was the agreement to sell a 50% stake in its Lorca

portfolio in Spain to a fund advised by EB-Sustainable

Investment Management (“EB-SIM”) a subsidiary of

Evangelische Bank. The buyers paid €26.9 million, a

21% premium to the assets’ holding value at the time,

representing an exit IRR of 12.1% on funds invested in the

stake sold.

Lorca is a 99MW subsidy-free portfolio made up of three

sites: Las Salinas (30MW), Los Llanos (49MW) and Los

Picos (20MW). Purchased at the ready-to-build stage in

December 2020, Foresight Solar took the projects through

construction, realising a 2 pence per share NAV uplift

when they became operational two years later.

INVESTMENT MANAGER’S REPORT CONTINUED

PORTFOLIO OVERVIEW CONTINUED

LOS LLANOS, SPAIN

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

BESS construction update

Sandridge (construction)

The project, a 50MW, one-hour lithium-ion battery located

in the UK, continued to progress in 2023, with the delivery

and installation of the cells advancing steadily.

The asset management team was regularly in touch with

the distribution network operator to ensure it finished

the necessary enhancement works to allow for grid

connection once construction is finished.

The project is now likely to reach energisation during

summer 2024.

Clayfords and Lunanhead (pre-construction)

Pre-construction works on the two projects progressed

well and the Investment Manager has agreed terms for

a broader framework engineering, procurement and

construction ("EPC") contract that could cover both sites.

Battery cell prices fell meaningfully during the year,

although at the same time revenue forecasts for BESS

have become more challenging.

The Board and Investment Manager are carefully

scrutinising every investment decision in line with the

Company’s capital allocation policy. Whilst the Manager’s

Construction Management team are continuing to

progress all necessary planning and pre-construction

milestones, the Investment Manager will work with the

Directors to carefully consider the best possible approach

for taking these projects forward.

INVESTMENT MANAGER’S REPORT CONTINUED

PORTFOLIO OVERVIEW CONTINUED

BOURNEMOUTH, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

United Kingdom portfolio performance

The UK operational assets outperformed expectations

during the year, with electricity generation 0.7% above

base case after adjusting for financial compensation

received, reflecting annual irradiation that was 2.1% higher

than forecast.

During the period, no material events occurred, but a

few assets were impacted by transformer, switchgear or

HV cable failures. In each instance, the Asset Manager

proactively dealt with the incidents, drawing on the spare

parts inventory to minimise downtime – in line with the

Company’s established strategy.

As with many in the sector, Foresight Solar continues to

deal with supply chain reliability challenges, particularly

with certain inverter manufacturers. As a preventative

measure, in the first quarter of 2023, the Asset Manager

started replacing certain devices and redistributing

inverters so plants were ready in time to benefit from the

higher spring irradiation. Replacements at two further

plants occurred later in the year, freeing more units to be

utilised as spares across the portfolio.

The Asset Manager works hard to foster good

relationships with local distribution network operators,

and has regularly negotiated to reduce the number of days

required for planned outages or to move them to periods

of lower irradiation.

Despite this proactive engagement, the country’s sites

remain at risk from outages. Throughout 2023, stoppages

continued, albeit typically in the lower irradiance months.

Excluding these types of stoppages, production during the

year was 1.2% above estimates.

INVESTMENT MANAGER’S REPORT CONTINUED

600

400

200

800

1,000

Foresight Solar global portfolio production

AustraliaUK Spain

2015 2020 20222014 2016 2017 2018 2019 2021 2023

1,200

GWh

OPERATIONAL REVIEW

Health and safety

Two minor fires occurred at different assets in 2023. The

Asset Manager dealt with them swiftly and there were no

injuries or any material damage to equipment.

Health and safety services to the SPVs remain in place

via an independent consultancy that provides additional

support. The Asset Manager regularly monitors incidents

and uses the feedback from these occurrences to raise

awareness, drive improvements and limit risks.

Ofgem audits

The Office of Gas and Electricity Markets ("Ofgem"),

the UK energy regulator, retains open audits on many solar

farms, including some of the Company’s projects. The

Asset Manager has responded, now awaits instruction to

close them and does not anticipate any material issues.

At the end of 2023, a total of 12 audits remained open,

and six were fully closed during the period.

Ofgem continues to request audits and the Asset

Manager follows up promptly. As part of the regulator’s

oversight role, more investigations are expected in 2024.

To prepare for this, the Asset Manager has conducted

mock audits across the entire portfolio, mapping potential

issues in advance and mitigating the prospect of future

unfavourable Ofgem reviews.

Security

There was only one theft in the entirety of 2023.

The incident caused a minor impact on Fields Farm’s

performance. The Company has filed an insurance claim

to seek compensation for the material damage and the

production losses.

On the digital front, work has continued to upgrade assets

and improve cyber resilience, as well as to complete

penetration testing and ensure enhancements are

adequate. Foresight Solar improved its cyber risk register

and added new suppliers to the list completed in 2022.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

United Kingdom portfolio performance continued

Asset optimisation

The Company started more actively reviewing specific

replacement options after it discovered the potential

for systemic failures in a type of inverter. This process

is motivated from an abundance of caution rather than

imminent risk since the inverters were only present on

sites representing a modest proportion of portfolio

capacity. It is, however, a good example of the proactive

steps a responsible Asset Manager should undertake on an

established operational portfolio.

Regardless of isolated issues, the Asset Manager

pushed forward with technical optimisation to improve

performance. This strategy has proven successful, reducing

downtime and driving operational efficiency. (Read more in

the asset management case study on page 39.)

Another key ongoing improvement workstream is the

effort to extend leases, which has direct, positive financial

implications as the longer periods of land use translate

to higher asset valuations. The Investment Manager is

currently prioritising lease extensions of projects with a

total installed capacity of 260MW, roughly a third of the

UK operational portfolio.

Throughout 2023, the Company signed and completed

lease extensions on the equivalent of 34MW of assets,

and a further 21MW of capacity are currently in advanced

discussions with landlords.

Prudently, the Company does not assume useful asset lives

of 40 years until the corresponding lease arrangements

are signed.

Australia portfolio performance

Periods of high economic curtailment and transmission

constraints resulted in generation from the Australian

portfolio ending the year 9% below budget, occurring

despite favourable irradiation that was over 8% above

budget for the year.

The Company’s assets in Queensland faced record levels

of economic curtailment in the second half of the year.

During Q3 in particular, Longreach , Oakey 1 and Oakey 2

faced multiple periods of economic curtailment at times

exceeding 50%, or periods of negative pricing (prices

below A$0/MWh) when both Longreach and Oakey 1 had

to stop production.

Meanwhile, production from the Bannerton project in

Victoria was below budget for the year, primarily as a

result of transmission constraints from the Australian

Energy Market Operator.

These challenges are not unique to the Company’s assets

and are impacting the majority of ground mounted

solar projects in similar locations. Periods of economic

curtailment are expected to remain elevated for the

next two-three years, especially during periods of milder

weather and excess solar generation, highlighting the

challenges with the Australian grid. Notwithstanding this,

the consultant power curve forecasts continue to show

power prices increasing in the near to medium term.

The reduction in near term revenues, however, has placed

pressure on debt cover ratios in the immediate term and

the Investment Manager has worked with the Lenders to

agree a modest level of distributions will be retained within

Longreach, Oakey 1 and Bannerton. It is also not expected

the projects will be in a position to make distributions for

at least the next six months.

Health and safety

An arc flash, a type of electrical discharge akin to a

minor explosion, at Oakey 1 and caused minor injury to

an operative. The Asset Manager conducted a full review

to establish the cause of the incident and implemented

appropriate actions following its conclusion.

Spain portfolio performance

Despite lower-than-expected irradiation and

weather-related challenges during 2023, the Company’s

Spanish assets performed in line with expectations. The

period was the first full year of operations from the Lorca

portfolio and from Virgen del Carmen, and the sites

contributed to Foresight Solar’s record cash generation.

In Granada, where the three Lorca assets are located,

the lack of rain impacted planting works required as

part of the project’s environmental commitments. The

Asset Manager rolled out a plan with several measures to

mitigate the problem and regularly tracks progress. This is

also operationally important because too much dust risks

causing soiling issues on panels.

Despite some operational challenges, including a

transformer failure in August, Virgen del Carmen

production was in line with forecast. The Asset Manager

is focused on addressing the final requirements to attain

sign-off for the Project Acceptance Certificate and

conclude the EPC contract.

INVESTMENT MANAGER’S REPORT CONTINUED

LOS PICOS, SPAIN

OPERATIONAL REVIEW CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Background

When Foresight Solar listed in October 2013, it was the

largest fund of its kind. The Company rapidly built its

portfolio, and five years in, had 50 operating projects in

the UK – including some of the country’s largest plants.

With a selection of the solar farms starting their

11th year of operation, the Asset Manager must deal

with expected technical challenges – as would be the

case with any long duration infrastructure asset.

The evolution of the renewables sector and the growth

of the market have led to consolidation among service

providers, leading to occasional limited support from

inverter manufacturers, lack of warranty in some cases

or narrow repair provision.

Nowhere is this clearer than with inverters. Their failure

has severe impacts on performance and revenue, so

ensuring their smooth operation is a significant task.

Revamping vs repowering

There are two main approaches to inverter replacement,

revamping and repowering:

• Restoring capacity: The first option, revamping,

consists of complete or partial replacement, removal

or reinstallation of modules or inverters on a

"like-for-like" basis. This is done without changing

a site’s capacity. Often, this process is applied to

replace defective or underperforming components

and restore an ageing plant to its original scope as

part of a planned programme of lifecycle works.

• Increasing capacity: Repowering, meanwhile, is the

full replacement of modules or inverters to increase a

site’s capacity, and therefore generate more revenue.

Due to advances in inverter and module technology,

this is now feasible without the need to occupy more

land.

Current restrictions around changes to the capacity

of subsidy-backed projects in the UK limit the options

to repower sites, making revamping the more realistic

option during the subsidy period. Clearly, this dynamic

will change once government support expires and the

changes have the potential to deliver upside for the

portfolio.

Foresight Solar approach

After a detailed analysis of the options, Foresight Solar

launched a revamping programme to deal with the

above-average failure rates of a specific type of inverter

and a subsequent lack of support from the original

manufacturer.

Over the course of the year, almost 9MWp of inverters

were revamped across three sites, on each occasion

replacing one or two zones. Banks of four installed

inverters were substituted by one new, higher-powered

option from a different provider. The replaced inverters

that were still functioning were then distributed to other

assets as part of a spare parts programme.

The benefits are noticeable. The graph below shows the

performance variance for the three revamped plants and

the two projects to where the inverters were distributed.

CASE STUDY:

ASSET MANAGEMENT DELIVERING FINANCIAL VALUE

INVESTMENT MANAGER’S REPORT CONTINUED

OPERATIONAL REVIEW CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Asset performance variance

Jul 2023 Aug 2023

Sept 2023

Oct 2023 Nov 2023

-1

-3

-2

The Company’s NAV per share decreased to 118.4 pence

in 2023 from 126.5 pence in the previous 12 months.

Abreakdown in the movement is shown in the graph.

Valuation methodology

The Investment Manager is responsible for providing

fair value market estimates of the Company’s underlying

assets to the Board every quarter. The models incorporate

a broad range of assumptions based on long-term

forecasts and are generally unaffected by short-term

fluctuations, economic gyrations or portfolio technical

performance. Material changes to long-term expectations

typically have a greater impact.

The Investment Manager determines assets’ fair value

using discounted cash flows (“DCF”) from the date of

acquisition. Assets in development or under construction

are valued at cost until the date of commissioning and

start of operations. Revenues and costs accrued during

construction or during the commissioning phase do not

form part of the DCF calculation in making a fair valuation.

This approach adheres to both IAS 39 and IFRS 13

accounting standards (see page 133 for more details),

as well as the International Private Equity and Venture

Capital Valuation (“IPEV”) guidelines.

Based on the recommendation of the Investment Manager,

the Board reviews and challenges the operating and

financial assumptions, including the discount rates, used

in the valuation of the portfolio before approval.

Discount rates for valuation

The Investment Manager regularly reviews the discount

rates used to value the portfolio to ensure they remain in

line with the Company’s risk profile and that they reflect

market changes. This analysis is based on valuation

information from transactions with comparable assets,

reviews of the risk premium above the risk-free rate, and

input from independent third parties.

INVESTMENT MANAGER’S REPORT CONTINUED

MOVEMENTS IN NET ASSET VALUE

Taking those factors into consideration, the weighted

average levered discount rate across the Foresight Solar

portfolio closed the year at 8.03% compared to 7.16% on

31 December 2022.

The increase reflects the evolving macroeconomic

environment which led central banks around the world to

raise interest rates during 2023. Foresight Solar increased

its discount rate for the levered UK portfolio to 8.0%

(31 December 2022: 7.0%) to maintain an adequate

premium to the Bank of England’s risk-free rate.

The discount rate used for UK asset cash flows which have

received lease extensions beyond the initial investment

period of 25 years was taken to 9.0% for subsequent years

(31 December 2022: 8.0%), reflecting the merchant risk

of the expected inflows beyond the first two and a half

decades.

In the Australian portfolio, assets are valued using

a discount rate which is dependent on the level of

contracted revenues. The weighted average discount rate

increased to 8.37% (31 December 2022: 8.00%) because of

an additional premium factored in during the third quarter

of 2023.

Since the Spanish assets had their first full year

of operations in 2023, valuations moved to a DCF

methodology in the period. On 31 December, the discount

rate for Virgen del Carmen sat at 7.25% whilst the Lorca

portfolio’s was 7.75%, reflecting the assets’ additional

leverage risk. In November, the Company sold a 50% stake

in Lorca at a 21% premium to its holding value, proving the

prudence of its assumptions.

Non-UK asset valuations are updated quarterly to reflect

movements related to exchange rates.

Assets that have not reached operations, such as the

three battery projects in the UK, are valued at cost and

will continue to be held that way until they are connected

to the grid and fully operational, at which point their

valuations will move to a DCF basis.

In terms of assessing climate change risk, the Investment

Manager benchmarks the discount rate against a similar

asset base to ensure the underlying climate risk exposure

is factored into the analysis.

Asset life

The expected weighted average life of the UK portfolio

as at 31 December 2023 was 31.1 years (31 December

2022: 30.8 years) from the date of commissioning. This

represents a remaining portfolio useful life of 22.4 years

when the historical operational periods are taken into

account.

The average useful economic life ("UEL") across 41 of the

50 operational UK assets goes beyond 25 years, averaging

32.6 years from the date of commissioning. Conservative

operational and lifecycle costs are incorporated into the

extended useful life period.

The expected UEL for Australian assets increased to 37

years (31 December 2022: 34.4 years) and held steady at

40 years for Spanish sites (31 December 2022: 40 years).

Movements in NAV

Share buybacks

Foresight Solar spent £19.9 million to repurchase

20.7 million shares since its buyback programme was

announced in May 2023. This was accretive to NAV due

to the purchase price being below the Company’s holding

Net Asset Value.

Dividends paid

The Company paid £44.4 million in dividends during the

year to 31 December 2023.

Fund costs

Total costs were £11 million, predominantly composed of

management fees, financing costs and corporation tax.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

Movements in NAV continued

Other adjustments

Working capital adjustments released £4.4 million.

Foreign exchange movements

Fluctuations in exchange rates over the period negatively

impacted the GBP valuations of the Australian and Spanish

assets by £5.1 million.

Time value

A value uplift of £51.5 million, resulting from moving the

valuation date forward and, therefore, bringing future cash

flows closer to the present (and discounting them less).

Project actuals

Reflects the cash performance of the portfolio compared

with the modelled forecast. Economic curtailment in

Australia and lower merchant power pricing for the few

assets that had not hedged their production resulted in

marginally below-budget cash generation.

Power price forecasts

The Company uses forward-looking power prices to

assess the likely future income of its assets for valuation

purposes. The assumptions are based on a blended

average of the forecasts provided by third-party

consultants which are updated quarterly. The £14.2 million

valuation change during the period includes the impact of

the changes to UK, Australian and Spanish price forecasts.

In 2023, the Company re-benchmarked its UK solar

capture price assumptions against actual observed

portfolio performance, resulting in an £8.5 million

downside impact because of the more conservative

forecast for potential discounts.

Reduction in Electricity Generator Levy liabilities

Reflects an £18.2 million decrease in EGL payments

forecast. This is a direct result of lower-than-expected

revenue because of falling power prices to April 2028,

the proposed end date of the windfall tax.

Inflation forecasts

This update reflects a £3.5 million decrease because of

actual inflation for 2023, which was ultimately less than

the 6.5% forecast used in the valuation model, and a

change in expected inflation for 2024, which was raised

to 3.5%. For future years, assumptions remain unchanged:

3.0% from 2025 to 2030, dropping to 2.25% thereafter.

Discount rates

The Investment Manager reviewed discount rates and, as a

result, the UK levered discount rates increased to 8.0% from

7.0% during the year. The rates applied to the valuations of

the Australian and Spanish assets were also revised upward,

resulting in a negative £39.9 million impact.

Lorca stake sale and revaluation

In the first step of its phased divestment programme,

Foresight Solar sold a stake in the Lorca portfolio at a 21%

premium to the third quarter holding value. The gain from

the sale and the revaluation of the remaining 50% of the

portfolio provided a £9.4 million uplift.

Other portfolio valuation adjustments

Operational and financial updates to the portfolio,

including lifecycle costs, tax modelling and interest

receipts on cash balances, resulted in a £5.6 million upside.

Valuation sensitivities

Where possible, assumptions are based on observable

market and technical data. In many cases, such as forward

power prices, independent advisors are used to provide

evidenced information, enabling the Investment Manager

to adopt a prudent approach.

The chart on the next page shows the impact per share of

changes in key valuation assumptions on NAV.

600

700

650

800

750

£m

£771.5m

(£44.4m)

(£11.0m)

(£4.4m)

(£19.9m)

(£5.1m)

(£7.4m)

(£22.8m)

£9.4m

£5.6m

£51.5m

£18.2m

£697.9m

NAV:

December

2022

Dividends

paid

Fund

costs

buybacks

Lorca

uplift

Power

forecasts

Inflation

Discount

rates

Reduction

in EGL

NAV:

December

2023

Project

actuals

Forex

-7.5p

-1.9p

Other

-0.7p

+1.1p

-0.9p

-1.2p

Time

value

+8.7p

-3.9p

+3.1p

-0.6p

-6.8p

+1.6p

118.4p

(£3.5m)

(£39.9m)

Other

+0.9p

126.5p

Movements in Net Asset Value (£m and pence per share)

MOVEMENTS IN NET ASSET VALUE CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

INVESTMENT MANAGER’S REPORT CONTINUED

Impact on NAV and NAV per share

NAV per share

-25p -20p 25p20p-10p 10p-5p 5p

FX rates

(+/-20%)

Operating costs

(+/-10%)

Tax rates

(+/-1%)

-15p 15p

Discount rate

(+/-0.5%)

£61.3m(£58.0m)

£17.5m(£17.7m)

£17.3m(£17.3m)

£4.0m(£3.4m)

Inflation rate

(-/+1.0%)

Energy yield

(-/+10%)

Power prices

(-/+20%)

£23.7m

£106.8m

£97.8m

(£22.2m)

(£114.3m)

(£104.1m)

All amounts presented in

£million (except as noted)

31 December 2023 30 June 2023 31 December 2022 30 June 2022

Portfolio value

584.1 620.2 648.8 678.3

Cash held

25.4 14.8 22.2 12.0

Portfolio equity valuation

558.7 605.4 626.6 666.3

Debt

290.7 301.7 306.8 310.2

Enterprise valuation

849.5 907.1 933.4 976.5

Capacity (MWp)

723.1 723.1 723.1 723.1

£m/MWp

1.17 1.25 1.29 1.35

Movements in NAV continued

Valuation sensitivities continued

The Investment Manager has set out the inputs which it

has ascertained would have a material effect on the Net

Asset Value in note 16 to the Financial Statements. All

sensitivities are calculated independently of each other.

United Kingdom portfolio valuation

Both during and after the period, there were

announcements of the sales of substantial ROC-backed

solar portfolios. The deals offered a reliable benchmark for

assets similar to Foresight Solar’s UK projects, providing

important market guidance on pricing.

In each case, the transactions closed at valuations

materially above the Company’s portfolio holding value,

supporting FSFL’s prudent assumptions.

The most recent deal relates to the sale of Thurrock

Council’s stake in 53 UK solar projects with a combined

capacity of 514MWp. The transaction price, highly

publicised after the failure of the operator, Toucan Energy,

indicated a value per megawatt of £1.36 million against

Foresight Solar’s latest £1.17m/MW valuation of its own

portfolio.

The Investment Manager considers the Thurrock portfolio

highly comparable given the ROC vintage of the assets.

Based on internal analysis, Foresight Group infers the

Company most likely uses more conservative assumptions

for inflation, asset lives, energy yields and discount rates.

The FSFL valuation potentially also includes more

conservative power price forecasts, which are based on

the blended rate of three leading consultants. The Board

believes that this approach is appropriate in a softening

power price environment, particularly in the medium term

– beyond the Company’s current price fixes.

The table above demonstrates the calculation of the

Company’s UK portfolio valuation in £m/MW over recent

periods. In line with the NAV, the reduction in valuation

during 2023 was predominantly driven by the increase in

the discount rate and lower power price forecasts.

It should also be noted that Foresight Solar continues to

amortise its long-term debt and, more recently, has held

higher cash balances.

In any case, these data points evidence the strong demand

for assets with revenue visibility and government-backed

subsidies.

MOVEMENTS IN NET ASSET VALUE CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

WHAT’S IN THIS SECTION

FOREWORD FROM THE CHAIR 44

APPROACH TO SUSTAINABILITY 47

ENVIRONMENT 50

LOCAL COMMUNITIES 52

SUPPLY CHAIN 54

SUSTAINABILITY

The Company’s direct investments

into solar energy generation and

battery storage support global

decarbonisation targets and

countries’ sustainability agendas.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Sustainability is an integral consideration of everything

Foresight Solar does. By definition, the Company’s

business, which involves developing, building and

operating solar farms and battery storage assets,

contributes to a less carbon intensive electricity system.

In the decade since the Initial Public Offering, for example,

Foresight Solar generated 7,176GWh of electricity,

supplying enough clean energy to power the equivalent of

almost 10% of UK households for an entire year.

Environmental, social and governance criteria are

fundamental to our investment selection process, to the

day-to-day running of our projects and to the overall

risk management map in place. At every step of the way,

Foresight Group tracks and analyses relevant data to

enable the Investment Manager and the Board to make

better-informed decisions leading to improved financial

returns for Shareholders and positive outcomes for

stakeholders.

Naturally, I’m thrilled to write this first edition of the

foreword to the Sustainability section of Foresight Solar’s

Annual Report and draw your attention to the excellent

work done throughout 2023.

Sustainability performance

At the operational level, the Company had a record year

of renewable electricity production. Following the first

full year of production for the Lorca portfolio and Virgen

del Carmen, Foresight Solar exported 1,088GWh of clean

electricity to the UK, Australian and Spanish grids.

The growth contributed to a reduction in our carbon

footprint, which fell to 0.41 tCOe/£m invested from

1.16 tCOe/£m invested in 2022, and our weighted average

carbon intensity (“WACI”) of investee companies, which

dropped to 1.51 tCOe/£m in revenue from 5.17 tCOe/£m

in revenue last year. Those are, respectively, 79% and 86%

lower than 2021, when we first started reporting these

metrics.

Biodiversity net gain

The passage of the Environment Act 2021 in England

enshrined into law the government’s strategy to develop

land and contribute to the recovery of nature. The new

legislation will require infrastructure developers and

owners to understand the types of habitats present on

their sites and introduce enhancements.

As part of the requirements, projects granted planning

permission will have to deliver a minimum 10% biodiversity

net gain. Those that are not able to do so will have the

opportunity to buy credits to compensate, creating a

mechanism like the one already established carbon credit

market.

In place since February 2024, the regulation presents a

potential opportunity for assets with additional land and

long leases to create and sell those biodiversity units.

These biodiversity credits may open a new source of

revenue to the Company. Sites would have the opportunity

to generate additional income alongside the hugely

positive impact of, for example, planting and growing

wildflowers, hedges and other typical habitats. Solar

projects are primed to benefit, and the baselining work

Foresight Solar started in 2023 will allow the Company to

measure the scale of the opportunities across its land.

SUSTAINABILITY

1. As of 2023, the Company is using the International Financial Institutions (“IFI”) approach to GHG Accounting for Renewable Energy Projects and uses the Harmonised IFI Default

Grid Factors for calculation.

FOREWORD FROM THE CHAIR

1,088GWh

of clean electricity generated

402,754

UK homes powered

378,486tCO

avoided compared to country-specific grid

£392,816

contributed to local communities

Highlights

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Biodiversity net gain continued

In a pioneering initiative, we commenced a research

assessment of our 50 UK sites, measuring their

current ecological status, calculating the equivalent

biodiversity units and established a roadmap for potential

enhancements.

This biodiversity assessment effort is another example

of Foresight Solar’s approach to sustainability and the

importance of generating positive financial, environmental

and societal outcomes.

Regulatory update

Tracking the correlation between positive outcomes and

financial indicators or the potential impacts of climate

change-related risks on companies’ performance is no

easy feat. Fortunately, we are not the only ones trying to

address these challenges and many credible institutions

have been working on standards to allow leaders to report

on these topics and investors to more readily factor them

into their decision making.

In June 2023, the International Sustainability Standards

Board (“ISSB”) issued its inaugural standards, IFRS S1 and

IFRS S2, taking the first step in what it hopes to be a new

era of sustainability-related disclosures in capital markets.

The goal is to create a common language for disclosing

the effects of climate-related risks and opportunities on

companies’ prospects and create trust in the materials.

IFRS S1 provides the framework to enable companies

to communicate the sustainability-related risks and

opportunities they face over the short, medium and long

term. Meanwhile, IFRS S2 sets out specific climate-related

disclosures, in a similar approach to the Task Force on

Climate-related Financial Disclosures (“TCFD”).

It is now up to local regulators to make the guidance

mandatory in their jurisdictions. Given the ISSB’s

interaction with authorities in several countries, we expect

it will be a matter of time before that happens.

In the UK, for example, the government is developing the

Sustainability Disclosure Standards (“UK SDS”), which are

expected to be closely aligned to the global benchmark

and will likely be finalised later this year.

Another notable development in 2023 was the unveiling

of the Sustainability Disclosure Requirements (“SDR”) by

the UK Financial Conduct Authority. Capturing UK entities,

the measures aim to improve trust in and transparency of

sustainable investment products. The package has three

main pillars: an anti-greenwashing rule that will take effect

from 31 May 2024; the introduction of four new labels that

funds with sustainable characteristics will be available to

use, along with accompanying disclosures, from July 2024;

and naming and marketing requirements that will need to

be abided by 2 December 2024.

Whilst it is still early days for SDR, the timelines are tight.

Due to Foresight Solar’s Jersey registration, it is initially

out of scope for the current SDR regime. Regardless,

FSFL’s inherent sustainability features, its London listing

and the characteristics of its shareholder base, naturally

lead to seeking equivalence to SDR. The Investment

Manager is, therefore, already working closely with

advisors to determine the equivalent label for the

Company and to address the necessary compliance

requirements.

The first step in this process is to establish a non-financial

objective that aligns with the Company’s investment goal.

To meet this requirement, the Board plans to propose

a resolution at the next AGM to approve the necessary

wording.

This process will involve thorough preparation and careful

consideration, but the Directors expect it to reinforce

Foresight Solar’s commitment to facilitating climate

change mitigation and the transition to a low carbon

economy.

Although it will continue to make the necessary

disclosures, for now, the Company no longer has plans

to pursue formal alignment with SFDR. FSFL’s structure,

investment activities and disclosures will, nevertheless,

continue to improve.

Governance

Regulation and governance usually walk in lockstep,

especially when it comes to listed investment trusts.

Although Foresight Solar has no employees, the Board

understands the importance of fostering an environment

that is diverse and inclusive. A direct measure of that is

Director representation.

As Monique O’Keefe, the Chair of the Nomination

Committee, outlines in her report (see page 107 for

details), a key element to maintain a balance on the

Board is to promote diversity of gender, social and ethnic

backgrounds, cognitive and personal strengths. Whilst

there is some work to be done, our Director group is now

majority female, reaching an important milestone.

SUSTAINABILITY CONTINUED

FOREWORD FROM THE CHAIR CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Looking ahead

In the pages that follow, we report relevant sustainability

metrics, including KPIs related to the United Nation’s

Sustainable Development Goals (“SDGs”) and greenhouse

gas (“GHG”) emissions numbers. We also outline a

selection of our initiatives that have positive impacts on

the environment, the communities where we operate and

in our supply chain. I invite you to keep reading the full

details.

Needless to say, the Directors, the Investment Manager

and the Company’s service providers are focused on

achieving Foresight Solar’s sustainability commitments

and will continue working to do so. I look forward to

updating you on how matters have developed in the next

Annual Report.

Alexander Ohlsson

Chair

11 March 2024

60%

female

(2022: 40% female)

Average ratio of female to

male Board members

40%

male

(2022: 60% male)

Average ratio of male to

female Board members

SUSTAINABILITY CONTINUED

FOREWORD FROM THE CHAIR CONTINUED

Board gender diversity

SANDRIDGE, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Sustainability considerations inform Foresight Solar’s

investment process and asset management. They are at

the centre of the Company’s strategy. A key component

of this is the ability to quantify, measure and enhance the

impact of FSFL’s operations.

To track and evaluate progress, the Investment Manager’s

Sustainable Infrastructure Investment Strategy is based

on:

• Establishing sustainability-led investment strategies

informed by Foresight Group’s sustainable investment

principles and considering climate risks and

nature-related opportunities

• Incorporating sustainability into investment processes

using proprietary systems for assessing and

enhancing sustainability performance throughout

the investment lifecycle

• Ongoing monitoring and management of

sustainability performance through the collection and

analysis of portfolio sustainability metrics, driving

optimisation

• Transparent reporting to all relevant stakeholders

The nature of Foresight Solar’s operations means it is

well positioned to deliver attractive financial returns

alongside positive environmental and social outcomes.

To demonstrate its commitment to achieving sustainable

impact, it regularly presents quantitative reporting against

the UN’s SDGs.

Sustainable impact reporting

The SDGs are a set of 17 objectives that seek to mobilise

the international community to deliver sustainable

development by 2030. They represent a key driver of the

Company’s investment activities.

The table on the following page demonstrates the SDGs

the Company contributes to, the underlying targets

that contribution is measured against, and the yearly

performance.

SUSTAINABILITY CONTINUED

APPROACH TO SUSTAINABILITY

SANDRIDGE, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

649,711kg

(2022: 601,195kg)

NOx (nitrous oxide) avoided vs

energy generated from gas

1,088GWh

Renewable energy generated

969MW

Of renewable energy capacity

connected to the electricity grid

476,455kg

(2022: 440,876kg)

SOx (sulphur dioxide) avoided

11,310kg

(2022: 10,465kg) PM10

(m10 particulate matter) avoided

402,754

UK homes powered for a year

5,174kg

(2022: 4,787kg) PM2.5

(m2.5 particulate matter) avoided

2023 969MW

2022 894MW

2023 1,088GWh

2022 983GWh

378,486 tCO

Emissions avoided compared

tocountry-specific grid intensity

103,454 ToE

avoided

Tonnes of oil equivalent contributing

to the avoidanceoffossil fuel use

2023 103,454 ToE

2022 95,729 ToE

2023 378,486 tCO

2022 351,303 tCO

3 Good health

and well‑being

7 Affordable

and clean energy

9 Industry,

innovation and

infrastructure

15 Life on

land

13 Climate

action

SUSTAINABILITY CONTINUED

Target: Substantially reduce the

number of deaths and illnesses from

hazardous chemicals and air, water

and soil pollution and contamination.

Contribution: Achieved through the

reduction of pollution and emissions

by the installation and management

of clean energy generation assets.

Target: Increase the share of

renewable energy in the global

energy mix.

Contribution: Achieved by reducing

reliance on fossil fuels via investment

in renewable energy generation.

Target: Develop reliable, sustainable

infrastructure, to support economic

development and human well-being,

with a focus on affordable and

equitable access for all.

Contribution: Achieved by

future-proofing energy systems

through investment in generation

assets using the latest technologies

to maximise electrical output.

Target: Improve education,

awareness and human and

institutional capacity on climate

change mitigation, adaptation,

impact reduction and early warning.

Contribution: Achieved by

raising awareness and improving

institutional capacity on climate

change mitigation.

Target: Take urgent and significant

action to reduce the degradation

of natural habitats, halt the loss of

biodiversity and protect and prevent

the extinction of threatened species.

Contribution: Achieved by

preserving the integrity of land

through investment in low-polluting

technologies, and introducing

environmental initiatives through

active asset management that

supports biodiversity.

APPROACH TO SUSTAINABILITY CONTINUED

2023 1,142,650kg

2022 1,057,323kg

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

EU Taxonomy alignment

A key element of the European Commission’s sustainable

finance agenda, the EU Taxonomy is a classification system

that provides science-based, industry-specific thresholds

to identify sustainable assets and funds. The goal is to

provide assurance to investors that assets make a genuine

contribution to sustainability targets whilst also having no

material negative environmental consequences.

Foresight Solar invests only in solar PV and battery

storage assets, both of which are EU Taxonomy-compliant

and contribute to the climate mitigation objective.

Therefore, the Company retains its 100% alignment.

This internal assessment involves scrutinising each project

against the Taxonomy’s Technical Screening Criteria,

inclusive of the Do No Significant Harm criteria, to ensure

sites meet the required standard.

The Taxonomy is considered a “living and breathing”

document, meaning it can be subject to change. However,

due to the nature of Foresight Solar’s assets and their

centrality to the energy transition, the Board does

not believe there is significant risk of these activities

being removed from the framework. The Directors also

expect the Company will maintain its 100% alignment

of investments by value made into environmentally

sustainable economic activities (as defined in Article 3

of the Taxonomy Regulation).

SUSTAINABILITY CONTINUED

APPROACH TO SUSTAINABILITY CONTINUED

BOURNEMOUTH, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Portfolio sustainability metrics

GHG emissions

118.56

(2022: Zero)

Scope 1 GHG

emissions (tCO

164.88

(2022: 897.11)

Scope 2 GHG

emissions (tCO

122,049

(2022: 21,410)

Scope 3 GHG

emissions (tCO

122,332

(2022: 22,307)

Total GHG

emissions (tCO

Carbon footprint

0.41

(2022: 1.16)

Carbon footprint (tCO

e/£m invested)

Weighted average carbon intensity (“WACI") of

investee companies

1.51

(2022: 5.17)

WACI of investee companies (tCO

e/£m revenue)

Share of non‑renewable energy

consumption and production

97%

(2022: 85%)

% share of assets with a

renewables tariff for on-site

consumption

94%

(2022: 76%)

% of overall portfolio

consumption from renewable

sources

100%

(2022: 100%)

% of energy generated from renewable sources

Emissions reporting

Although Foresight Solar’s assets make a significant and

quantifiable contribution to climate change mitigation,

there are still emissions associated with the operation and

maintenance of the portfolio.

To minimise its carbon footprint, the Company has worked

to reduce Scope 2 emissions and shifted even more of its

sites to renewables tariffs.

This effort has increased the share of projects relying on

green electricity for on-site consumption to 97%, leading

to a reduction of 82% in Scope 2 emissions in comparison

to 2022.

Scope 1 update

Sulphur Hexafluoride (“SF

”) is a gas commonly used in

electrical installations to insulate components.

Whilst not toxic or an air pollutant, it is considered a

greenhouse gas because of its global warming potential,

which is 23,500 times more potent than CO.

During the period, the Company contained three SF

leaks

and launched investigations to determine their causes.

Foresight Solar is studying the feasibility of switching to

non-SF

-dependent technology to prevent further issues.

Emissions avoided:

Compared to country-specific grid intensity

378,486 (2022: 351,303) tCOe avoided

SUSTAINABILITY CONTINUED

ENVIRONMENT

1. Scope 3 emissions are calculated using the PCAF emissions factors, which were increased in 2023 – up to four-fold in some cases. Data quality is assessed to be Data Quality 5.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Foresight Solar is implementing a new approach to better

understand its portfolio’s footprint, improve oversight

and identify opportunities.

Using Geographical Information Systems (“GIS”),

alongside regular site visits, allows the Investment

Manager to gain valuable insight into the habitats in and

around the Company’s solar farms. This mapping work is

also laying the foundation for nature-based reporting and

enhancements.

The primary objective of the biodiversity baselining is

to identify and measure the existing habitats within the

boundaries of Foresight Solar’s sites. Covering 1,382

hectares of land across the UK – the equivalent of 2,200

football pitches – the mapped GIS data serves as a

dynamic framework that is adaptable to evolving land use

and nature and climate changes.

In addition to the baselining work, the Company has

commissioned independent consultants to complete a UK

portfolio-wide biodiversity assessment.

A preliminary report on Abbey Fields showed a footprint

analysis, evaluating margins for improvement. Despite

limitations in the site’s size, Foresight Solar’s commitment

to biodiversity gain remains steadfast. The report

demonstrated the potential for a detailed analysis and

was part of the incentive for the roll-out to the other

49operational solar assets in the UK.

Solar farm biodiversity enhancements

Sawmills, a 7MWp solar plant in Devon, undergoes annual

biodiversity surveys as part of ongoing monitoring.

The findings from the latest report focused on botany,

invertebrate pollinators and breeding birds.

The botanical analysis identified 48 species of plants,

dominated by 12 grass and 34 herbaceous types. The

field margins remained the most diverse, with large

areas of well-established native wildflowers contributing

to biodiversity. The invertebrate survey, meanwhile,

identified nine species, including five butterfly and four

bee types. The results are the second highest abundance

rate seen on site, indicating a thriving ecosystem.

Even though progress has been made, the report

identifies other opportunities. The Asset Manager will

continue the biodiversity enhancements, including

sowing native meadow seeds, creating rough grassland,

planting hedgerows, installing nest and roost boxes for

birds and bats, and maintaining beehives.

Among the ecologist’s recommendations for additional

improvements are:

• Weed control using selective herbicides and regular

cutting

• Field margin preservation utilising mulching mowers

• Additional sowing of bee-specific wildflower blocks

near beehives

• Seeding of native species to infill hedgerow gaps

• Support for winter bird species, targeting the rare cirl

bunting, with bird seed areas

Sawmills demonstrates Foresight Solar’s proactive

approach to biodiversity. Ongoing efforts to implement

recommended enhancements will strengthen the

project’s ecological resilience and contribute to the

long-term success of the Company’s sustainability goals.

CASE STUDY:

USING TECHNOLOGY TO ENHANCE BIODIVERSITY

SUSTAINABILITY CONTINUED

ENVIRONMENT CONTINUED

SAWMILLS, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

For several years, Foresight Solar has supported a team of

educational consultants to bring the benefits of renewable

energy to life in rural areas of the UK. The partnership

provides educational site visits, in-school workshops

and bespoke resources to inspire the next generation of

scientists and engineers, and to encourage a sense of

pride towards their local solar farms.

During 2023, five of the Company’s assets hosted 16 site

visits for a total of 555 students, with 422 pupils taking

part in 14 workshops. These events help make the sites

more meaningful to communities, contribute to educate

the children and their families on the benefits of renewable

energy, and demonstrate the importance of protecting

and enhancing biodiversity.

CASE STUDY:

SITE VISITS: EDUCATING FUTURE GENERATIONS

SUSTAINABILITY CONTINUED

LOCAL COMMUNITIES

“It was very interesting to find

out more information about

solar panels. My favourite part

was bug hunting.”

Year 2 pupil after a visit to Park Farm

“I enjoyed creating circuits with

my friends and exploring how

powerful and efficient solar

power is. I found it surprising

that chickens and sheep are

allowed in the fields with solar

panels. Seeing how machines

could track the amount of

energy produced was also very

interesting.”

Year 5 pupil after a visit to Coombeshead

“I thought the visit was very

informative and pitched at the

right level. It was well pitched

for our special needs pupils

too. The children were able to

relate it to their own lives.”

Teacher after a visit to Sawmills

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Across geographies, in 2023, Foresight Solar contributed

almost £400,000 to local communities. This money is

used in myriad ways by regional authorities to improve the

life of residents near the Company’s operational sites.

During the period, the cash was invested in infrastructure

improvements that contributed to combat speeding,

facilitated pedestrian and disabled access to community

venues, improved internet connection at local government

facilities, among others.

CASE STUDY:

LOCAL IMPACT WITH COMMUNITY BENEFITS PAYMENTS

SUSTAINABILITY CONTINUED

LOCAL COMMUNITIES CONTINUED

BOURNEMOUTH, UK

Hilperton Parish Council, Wiltshire

Foresight Solar’s contributions were put towards the

purchase and installation of two speed indicators

with extra flashing lights to warn motorists when

they are exceeding the imposed speed limit. The

new devices are also able to wirelessly connect to

computers, allowing the easy capture of data that

can be shared with local traffic authorities as well as

county police.

Verwood Town Council, Dorset

A substantial grant was dedicated towards several

infrastructure developments and improvements

in the community. Renovation projects included

the replacement of floors at both the Verwood

Evangelical Church and the Verwood Concert Brass

Band Hall. Additionally, the money contributed to the

construction of a new garden at the Verwood Youth

and Community Centre.

Long Sutton Parish Council, Somerset

The money was dedicated to environmental research

and education. The local authority conducted a

survey with The Wildlife Trusts to monitor factors

such as soil quality and identify areas that could

benefit from rewilding. The councillors also planned

a fair to discuss ways to improve the environment,

as well as debate the repurposing of land for

community use.

Alkington Parish Council, Gloucestershire

and Westborough and Dry Doddington Parish

Council, Lincolnshire

With the Company’s support, both councils

purchased new playground equipment. In the case

of Alkington, the kit will be installed in a completely

new recreational ground, whilst Westborough and

Dry Doddington purchased two bespoke circular

metal tree seats, one for each village.

The pieces provide opportunities for role play and

support valuable learning and development for the

children, including building confidence and creative

communication.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

There is no “one-size-fits-all” answer to solving supply

chain issues. To try and address the challenge, the

Investment Manager takes a layered approach to mitigate

sustainability risks. The combination of actions include, for

example:

•

Selective fund geographies – Setting investment

strategies focused on geographies with strong

regulatory frameworks

•

Robust internal due diligence processes –

Interrogating key counterparties and their governance

frameworks at the project level

•

Promulgation of a Supplier Code of Conduct –

Referencing directly the UN Guiding Principles on

Business and Human Rights and the OECD Guidelines

for Multinational Enterprises, and contractually binding

counterparties to uphold the Code of Conduct

•

Direct engagement – Interacting with primary,

secondary and tertiary suppliers to interrogate their

approaches to risk mitigation within their own supply

chains

•

Enhanced due diligence – Using specialist third

parties to conduct in-person audits of higher-risk

counterparties and their facilities

•

Collaboration – Working with industry partners and

peers to deliver more effective engagement with key

suppliers

•

Ethixbase platform – Enabling indirect interrogation of

suppliers across regulatory and sustainability risk via

this specialised service

As an investment company managed by Foresight

Group, the Company’s policy and practices in relation to

modern slavery and human trafficking are covered by the

Investment Manager’s Modern Slavery Act statement.

The document sets out Foresight Group’s approach to

matters such as services and supply chain due diligence,

training, recruitment and welfare of employees and can be

found on the website:

www.foresightgroup.eu/modern-slavery-statement

SUSTAINABILITY CONTINUED

SUPPLY CHAIN

SHOTWICK, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

CASE STUDY:

INTERROGATING SUPPLY CHAINS

SUSTAINABILITY CONTINUED

SUPPLY CHAIN CONTINUED

Foresight Solar has used Ethixbase to conduct due

diligence on its primary suppliers for solar panels,

inverters, and operations and maintenance (“O&M”)

service provision. This is also an obligation under the

Company’s sustainability-linked revolving credit facility.

The due diligence analysis more than satisfies the

requirements of the RCF and lays a solid foundation for

conversations with its stakeholders. During 2023, four

new suppliers were added to the platform and underwent

screening, with no material risks highlighted.

FSFL suppliers by

service category

Suppliers submitted to Ethixbase

due diligence

Key:

Panel manufacturers – 50%

Inverter manufacturers – 30%

O&Ms – 20%

Key:

Undergone due diligence – 95%

Not submitted – 5%

SHOTWICK, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Foresight Solar is exposed to multiple risks that have the

potential to affect its valuation, reputation and financial or

operational performance. The nature and levels of risk are

identified according to FSFL’s investment objectives and

existing policies, with risk tolerance ultimately defined by

the Board.

The Investment Manager and the Administrator have a

comprehensive risk management framework in place to

reduce the likelihood and the potential impact of principal

and emerging risks. The Company relies on the Investment

Manager’s internal systems and controls and on external

service providers, such as the Administrator, to effectively

manage risk across the portfolio and maintain an

up-to-date risk register.

Risk management, as well as the risk management

framework, are regularly reviewed by the Audit and Risk

Committee and then checked in detail by the Board at

least once per year.

Principal risks

Set out on the next pages are the principal risks and

uncertainties, along with their mitigants, most relevant

to the Company given the nature of its business.

Access to capital continues to be a key concern. Because

of high inflation and the subsequent increases in interest

rates, at the time of publication, Foresight Solar’s shares

are trading at a discount to the value of the underlying

portfolio. This means FSFL has limited prospects of raising

equity to fund new investments or repay debt in the near

term. Higher interest rates also have a direct impact on

the Company’s cost of financing, albeit limited to a single

unhedged facility. The Board has sought to mitigate these

impacts through prudent capital allocation, prioritising the

reduction of gearing and returning cash to Shareholders

through a buyback programme.

Another key risk potentially impacting the sector is

government intervention. The possibility of windfall taxes

materialised in 2022, with renewable energy generators

being forced to pay additional taxes in the UK and in Spain

as a result of record high electricity prices. Separately,

the United Kingdom’s Department for Energy Security

and Net Zero launched a consultation regarding the

transition to Fixed Price Certificates for sites accredited

under the Renewables Obligation scheme, which may

impact revenue. The market also awaits results from the

second consultation for the Review of Electricity Market

Arrangements in the UK.

The Board has paid close attention to risks associated with

the electricity price outlook as forecasts have steadily

reduced.

Whilst the portfolio is well hedged against near-term

adverse price movements, the Company continues to

proactively hedge its exposure at levels that support

dividend cover in years ahead.

On a more positive note, the potential impact of supply

chain risks has reduced as Foresight Solar neared

completion of the Sandridge BESS build-out and the

Company’s exposure to construction projects reduced.

In any case, some risk to the valuation of the proprietary

development-stage pipeline and to the supply of

components for lifecycle investments remain.

More information on the risks that should be considered

before investing in the Company are contained in the

Prospectus, available at: https://fsfl.foresightgroup.eu/

shareholder-centre#KeyDocuments

Emerging risks

Emerging risks are characterised by a greater degree of

uncertainty. The Board regularly reviews them with the

support of the Investment Manager, the Administrator and

other relevant advisors.

Whilst inflation is falling across markets, the Directors

remain aware of the potential for inflationary shocks

becoming entrenched and leading to higher operating

costs. Geopolitical tensions across Europe and the Middle

East may also add upward pressure to prices.

As the Board continues to integrate climate risk reporting,

it has identified specific concerns related to climate

change that are increasingly relevant to the portfolio.

Evidence of evolving climate patterns, for example, is

increasingly apparent and these changes may have a

direct impact on operational and financial performance.

Risks are identified according to the Company’s investment objectives and existing

policies, with the levels of risk tolerance ultimately defined by the Board.

RISK AND RISK MANAGEMENT

Regulatory change, including changes to subsidies (—)

Access to capital (—)

Near and long-term energy prices (—)

Fund performance ( )

Portfolio performance ( )

Financial gearing ( )

Counterparty risk ( )

Supply chain ( )

Development and construction ( )

Changing climate patterns ( )

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Business area Risk summary Mitigation Trend and outlook

Regulatory

change,

including

changes to

subsidies

The risk: Changes in political support for renewable

energy have the potential to adversely impact the

subsidies available for renewable generation, whether

on a prospective or retrospective basis.

Why it exists: Whilst subsidies are underwritten by

government support, they are also open to prevailing

political pressures. There are well-known examples

when they have been retrospectively reduced, albeit

with subsequent legal challenge, as was the case in

Spain.

Following the UK government’s implementation

of the Electricity Generator Levy, seen by many

as an intervention in energy markets, in late 2022,

consultations on electricity market arrangements and

ROC-backed projects have been taking place. The

latest involves consideration of the transition to Fixed

Price Contracts – which remains open at the time of

publication.

Potential impact: Any changes with retrospective

effects may adversely impact the Company’s valuation

and its ability to meet return targets.

The Investment Manager monitors relevant regulatory

developments and political statements on an ongoing

basis across all markets it operates in.

The Investment Manager’s ability to influence political

decision-making on its own is limited, and it has,

therefore, become a member of select investor groups

and trade associations who lobby on behalf of the

industry.

The Investment Manager continues to liaise with

industry representatives and peers and take part in

direct discussions with governments to understand

the direction of travel for policy and, as far as possible,

mitigate downside risk for the Company.

Power prices have fallen significantly since their peaks

in 2022, which may reduce the UK government’s

impetus to focus on short-term market interventions.

Energy prices remain a key political issue, however, and

will likely receive significant attention during the UK

general election in 2024.

Progress to Net Zero and energy security will also likely

be key themes, with substantial public and private

investment required to reach lower emissions goals.

Access to

capital

The risk: In 2023, the macroeconomic backdrop led

to a widespread de-rating not only of the renewable

energy but the entire real assets investment market,

crystallising this risk as funds trade at wide discounts

and are effectively locked out from raising equity.

Why it exists: Markets experienced the sharpest period

of fiscal tightening in a generation as central banks

significantly increased interest rates. This led to a

dislocation between fair asset prices and investors’

return expectations when compared to the risk-free

rate and returns from fixed income options.

Potential impact: The risk of reduced appetite for

the Company’s shares is that it may struggle to raise

additional capital for new investments and be unable to

grow, which would result in a long-term decline in NAV.

The Company adheres to a disciplined capital allocation

approach and has taken multiple actions to address the

discount to NAV that its shares have traded at.

The Board paused additional capital investment into

new projects to focus on paying down the variable rate

debt and commence a share buyback programme.

The Investment Manager has also implemented a

capital recycling programme, which has achieved

its first success with the 50% sell down of the Lorca

portfolio at a 21% premium above book value. Proceeds

were immediately used to pay down the RCF.

The Company has also used the significant cash

generated from the portfolio to expand the share

buyback programme to £40 million.

Market sentiment appeared to be improving in late

2023 and in early 2024 before tailing off again.

Several comparable UK solar transactions have taken

place to confirm asset valuations, but this has not had

perceivable impact on the Company’s or the sector’s

ratings.

For the listed renewable energy investment sector to

experience a broad re-rating will likely require a clear

indication of when the Bank of England will begin to

reduce the base rate.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Business area Risk summary Mitigation Trend and outlook

Long-term

energy prices

The risk: Downward adjustments to long-term power

forecasts have the potential to significantly impact

NAV and Foresight Solar’s ability to meet its future

obligations and dividend payments.

Why it exists: Power curve forecasters generally

assume that the mass deployment of renewable energy

producers with a low marginal cost of generation will

limit real price increases. The potential for energy

market redesign also presents a risk if it results in

lower-than-expected long-term power prices for

renewable energy generators.

Potential impact: A greater reduction in future power

curves than currently forecast may have a significant

negative downside effect on the Company’s NAV in the

short term and reduce dividend cover in the medium to

long term.

Whilst the Company can readily fix power prices under

its current PPA agreements up to five years ahead,

itbecomes more challenging beyond this point.

FSFL uses a blended rate of three specialist power price

forecasters that estimate market prices to 2050.

There is a developing corporate PPA market that the

Investment Manager is tracking and is beginning to

offer longer-term offtake agreements. However, the

maximum length of these is generally 10 years to

15years. The trade-off is also locking in acceptable

pricing compared to the forward curves.

Notwithstanding the above, risk remains that the

longterm power curves drop significantly. That will

then be reflected on the long-term PPA market as well.

Long-term power prices remain difficult to predict

as they are a function of supply and changes to the

market.

Positive price signals will continue to be required to

encourage the scale of renewable energy deployment

required to meet Net Zero targets.

Near-term

energy prices

The risk: Generally, the price at which a solar PV plant

sells its electricity is determined by market prices.

Why it exists: The price of electricity can be broadly

separated into supply-side risks, demand-side risks

and regulatory risk. A decline in market price could

adversely affect the price of electricity generated by

solar PV assets and, consequently, the Company’s

financial position.

This was demonstrated in the UK during 2023, when

average electricity prices fell from around £200/MWh

at the start of the year to closer to £90/MWh in the

fourth quarter.

Potential impact: A sudden fall in unhedged power

prices could result in Foresight Solar not generating

sufficient cash flow to pay its dividends.

In the short and medium term, the Company manages

energy price risk by actively hedging electricity prices.

FSFL has adopted a strategy to minimise the impact of

power price volatility to future cash flows by entering

fixed price arrangements for the sale of the energy it

produces. The goal is to achieve:

•

A minimum percentage of fixed revenues

representing 60% of expected total annual revenue

•

A target percentage of annual fixed revenues

representing 75% of expected total annual revenue

on a two-year rolling basis

During the second half of 2022, the Investment

Manager hedged a higher proportion of electricity

prices, running into 2024, it appeared clear they would

not remain at those levels for much longer. Foresight

Solar, therefore, had 91% of revenue considered

contracted for 2023.

The Company has fixed more than the minimum 60%

target for total annual revenue for a few years ahead

and the Board does not perceive there to be significant

risk in fixing further amounts at attractive rates.

Power prices fell significantly during 2023, in line with

falling natural gas prices as supply stabilised.

Forward wholesale electricity prices in the UK have

continued to soften in early 2024, moving back

towards the long-term average.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Business area Risk summary Mitigation Trend and outlook

Fund

performance

The risk: The Company performs materially below its

sector peer group in terms of its stated investment

objective, leading to a loss of confidence from

investors.

Why it exists: Meeting the investment objective in a

dynamic and competitive marketplace is a challenge

that requires the Investment Manager and the Board to

implement good strategic decisions and stay on top of

key market developments.

Challenging market conditions have made the

comparison between funds even starker, with corporate

actions receiving increased scrutiny. There are greater

calls for consolidation and heightened takeover risk.

Potential impact: Risk of reduced appetite for its

shares means that the Company may struggle to raise

additional capital for new investments and be unable to

grow. This would, in turn, result in a long-term decline

in the NAV.

It is the Investment Manager’s role to deliver the

Company’s mandate under the oversight of the Board.

Foresight Group continuously monitors performance

and, with the assistance of the brokers and the

Administrator, analyses peers’ delivery, reporting

regularly to the Directors.

The Board oversees the Investment Manager’s

performance on an ongoing basis at the quarterly

Board meetings, during ad hoc updates, and specifically

via the Management Engagement Committee.

The current macroeconomic environment is

challenging, but it is affecting the entire asset class.

Setting FSFL apart, the Board and the Investment

Manager have followed through on a series of proactive

measures, demonstrating disciplined capital allocation,

delivering on asset disposals, reducing leverage with

debt repayments, and returning capital to Shareholders

via buybacks.

Intense scrutiny and comparison of the Company and

its peer group will likely continue, contrasting actions

taken and relative performance.

At the AGM in June 2024, the Company will be subject

to a discontinuation vote triggered by the share price

discount to NAV being greater than 10% over the

course of 2023. Whilst the Board will recommend

Shareholders vote against discontinuation, this

discount control mechanism provides investors the

ultimate say on the Company’s performance.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Business area Risk summary Mitigation Trend and outlook

Portfolio

performance

The risk: Foresight Solar’s operating portfolio

meaningfully underperforms in comparison to

budgeted expectations.

Why it exists: There are multiple factors that could

result in asset underperformance, including poor

technical operation, network issues, low irradiation or

overly optimistic initial assumptions.

Issues in specific geographies have the potential to

cause an outsized impact. The challenging grid and

market conditions in Australia in recent years, for

example, have resulted in global portfolio production

being lower than it could have been.

Potential impact: Underperformance of a significant

proportion of the portfolio or systemic issues resulting

in excessive downtime may threaten the Company’s

ability to meet its obligations to Shareholders and to

creditors.

Diversification is one of the primary mitigants to the risk

of systematic underperformance. This comes in many

forms, including geographical and technological, but

also of revenue streams, equipment manufacturers and

electricity offtakers.

The Company’s portfolio is sufficiently diversified that

no one single issue should itself be large enough to

threaten Foresight Solar’s financial resilience.

In Australia, economic curtailment, when projects

are effectively switched off during negative pricing

intervals, was above forecast in the second half of 2023,

leading to lower production.

The Investment Manager’s local asset management

team has been progressing options for the installation

of battery storage or other alternative offtake

arrangements that can limit the impact of curtailment.

In any case, this is a clear example of when assets can

underperform due to market and grid issues whilst

technically operating normally.

The Asset Manager also closely monitors O&M

contractors’ performance to ensure a high quality of

service. The portfolio has a variety of providers, and

services are periodically re-tendered.

Remaining on top of key lifecycle programmes in

an ageing portfolio and mitigating the impact of

external factors will continue to require active asset

management.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Business area Risk summary Mitigation Trend and outlook

Financial

gearing

The risk: Foresight Solar’s subsidiaries and its

investments have in place third-party debt facilities

that can create greater potential for losses if cash is

insufficient to meet repayments. The Company may not

be able to refinance existing borrowing on equal terms,

or at all.

Why it exists: The yield payable to Shareholders

relies partly on banks making project finance facilities

available on normal terms. Any change to lender

appetite or significant alterations to terms would

impact the yield to Shareholders.

The significant rise in interest rates in 2022 and 2023

carries the risk of placing greater pressure on FSFL

finances due to higher variable payments and/or

refinancing risk. The variable interest rate payable on

revolving credit facilities linked to SONIA, for example,

is unpredictable.

Increasing discount rates results in reduced portfolio

valuation, which, in turn, increases the level of gearing

as a percentage of GAV/NAV.

Potential impact: A reduction in available cash flow

at borrower level can impact the ability to cover debt

service obligations on a periodic basis and affect the

Company’s capacity to pay dividends. There is also

the risk of a significant rise in interest rates that will

make short-term facilities (i.e. RCF, Australian debt)

materially more expensive at the point of refinancing.

The Investment Manager enters interest rate hedging

arrangements for a minimum of 80% of the outstanding

debt balances to reduce exposure to benchmark rates

and limit the risk of cash flow volatility from interest

rate movements.

The Company’s long-term debt is currently 99.5%

hedged. In respect of short-term, variable rate debt,

Foresight Solar extended the terms on its revolving

credit facility until 2026. During the year, it also paid

down the balance on the RCF by £40 million to £75

million using proceeds from the sell down of Lorca,

which also significantly reduced floating rate exposure.

Additionally, the Investment Manager is carrying out

a detailed restructuring analysis to identify further

options to reduce gearing pressure.

Once the debt is arranged, the Investment Manager

continually monitors the covenants on the various

facilities to flag and mitigate risks.

Whilst interest rates are forecast to begin falling later

in 2024, there is no expectation they will return to the

lows seen during the last decade.

The Investment Manager will, therefore, reflect this in

its assumptions when refinancings fall due.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Business area Risk summary Mitigation Trend and outlook

Counterparty

risk

The risk: The Company’s main contractual

counterparties either fail or perform poorly, resulting in

them being unable to fulfil their obligations.

Why it exists: Foresight Solar outsources key services,

such as construction, operations and maintenance, and

offtake arrangements, via PPAs, as well as financial

hedges to third-party specialists.

Higher interest rates resulted in higher debt payments

for many businesses, putting greater strain on balance

sheets. It is important to more actively monitor for

signs that entities on which the Company relies on are

starting to struggle.

Potential impact: If the counterparty fails, without

sufficient protections the Company is left with the

responsibility of continuing the services and the

potential associated additional costs.

Counterparty risk is a key consideration in how the

Investment Manager structures its procurement and

contracting arrangements on the Company’s behalf.

When selecting construction contractors, for example,

their credit rating, balance sheet strength and payment

record are all taken into consideration. Parent company

guarantees or performance bonds are also typically

sought to provide downside protection. However,

if a contractor failed during construction, it would

inevitably lead to delays.

The Investment Manager regularly reviews the

opportunity to benchmark key providers or tender

for services such as O&M and PPA offtakes. Contracts

include termination provisions for insolvency or poor

performance and will typically not be signed for longer

than five years without a review point.

Replacement risk is relatively well mitigated by a

competitive landscape. For example, in the event of

a PPA offtaker failing, the Company would be able to

quickly replace the agreement in a liquid market. The

risk, however, would then be lower prices than those

originally contracted.

The Company also maintains a diversified pool of

suppliers such that it does not become overly reliant on

a single counterparty.

The impact of higher borrowing costs will still be

filtering through to counterparties as existing debt

arrangements expire.

The risk will be heightened if interest rates remain

higher for longer. In this case, balance sheet

weaknesses may only become evident in the next year

or two.

RISK AND RISK MANAGEMENT CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Business area Risk summary Mitigation Trend and outlook

Supply chain

The risk: When it comes to supply chain, the challenge

is essentially two-fold: i) access to key equipment

and resources shipped internationally is delayed or

becomes increasingly expensive due to supply and

demand imbalances; and ii) the Company inadvertently

acquires equipment required for a solar park or BESS

project that has had input from forced labour or

modern slavery in the supply chain.

Why it exists: Global supply chains have been placed

under significant strain following the COVID-19

pandemic, geopolitical developments and international

conflicts. The macroeconomic environment has also

impacted supply and demand dynamics.

In terms of ethical concerns, the solar supply chain has

been under increased scrutiny in recent years following

articles about the use of forced labour and modern

slavery in China.

Potential impact: Strained supply chains can lead to

volatile pricing for components such as solar panels

and battery cells. This uncertainty can make investment

decisions challenging since these costs make up a

significant proportion of project expenditure.

As a leading renewable investor, there are serious

reputational and share price risks of connection to

firms suspected of using forced labour. That’s why the

Investment Manager is seeking to shed greater light on

the supply chain that manufactures the components

and services used in its projects.

Significant fluctuations in the supply chain resulting

in volatile prices and/or shipping delays will happen

periodically, typically at times of market stress.

The Investment Manager not only maintains strong

relationships with head contractors but also key

component manufacturers to closely track pricing

dynamics. This supports the decision-making process

when seeking fixed price contracts for construction and

timing of entry into arrangements.

In response to labour market and ethical concerns

in the solar and BESS supply chains, the Investment

Manager has developed its own strategy, building on

UK trade association advice.

To understand the existing supply chain, the Investment

Manager engaged consultant Ethixbase in 2022 for the

following services:

•

Due diligence and ESG reports on the

Company’s suppliers

•

Dashboard analytics that can be split between

assets, locations etc.

•

Ongoing monitoring and remediation service

•

Modern slavery questionnaire and

dashboard/analytics

•

Managed service to follow up on the questionnaires

directly with suppliers on the Company’s behalf

•

Potential to roll out this due diligence to other

technologies, including battery storage

Whilst there are limitations to Ethixbase’s ability to

penetrate the full supply chain, the service improves the

Company’s ability to identify risks, map suppliers that

may require further support, and work to ensure their

processes are more robust.

The Investment Manager continues to observe a

positive trend of engagement with the major solar

panel and BESS cell manufacturers, who recognise

the risk of failing to address concerns over working

practices in their own supply chains.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Business area Risk summary Mitigation Trend and outlook

Development

and

construction

The risk: Delays to construction timetables, which

may result in projects not being able to commence

generating power and, therefore, revenues; the risk of

bad workmanship in constructing plants; and delays in

the connection of solar and BESS projects to the grid.

Why it exists: The Company invests in development

and construction-stage projects that are inherently

riskier than those already operational.

Potential impact: If protracted, delays to generating

revenue can negatively impact returns. Projects may

also have debt obligations that they are required to

service, or a PPA, which can place an investment in

financial difficulties.

The use of third parties for development and

construction exposes the Company to risks associated

with the delegation of responsibility. This is mitigated

through the negotiation of contracts that shift delivery

responsibility to the contractor. Contractual risks will

typically be mitigated by performance bonds and

milestone payments, with funds transferred only once

certain conditions are met.

In addition, the Investment Manager employs an

experienced in-house construction management team

to oversee the process, with support from independent

technical advisors to ensure milestones are achieved on

schedule and in line with specifications.

The Investment Manager carries out careful due

diligence on the third parties contracted for

development and construction.

Due to the time required to construct each solar or

BESS project, there will be a period when each site is

unable to generate operational cash flow, but during

which it will still be accruing interest on the financing.

Given the increased focus on development and

construction assets for the portfolio, the Investment

Manager has strengthened its teams with experienced

resources.

Many contractors are keen to enter the renewables

space. This is welcome competition as deployment

increases.

RISK AND RISK MANAGEMENT CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Business area Risk summary Mitigation Trend and outlook

Changing

climate

patterns

The risk: Unprecedented changes to weather patterns

affect the provision of sunlight due to, for example,

excessive cloud cover and storms or because of smoke

from more regular wildfires.

Why it exists: A consequence of global warming and

climate change appears to be that many regions of

the world experience changes to long-established

climate patterns. Relevant examples include: the UK

suffering warmer average temperatures and less

rainfall; Australia living through several years of La Niña

weather events that resulted in severe storms and wet

summers, limiting irradiation.

Potential impact: These are long-term patterns, and

their impacts will be measured over many years. The

direct effect, however, is that solar irradiation in certain

regions may end up being materially different to that

forecast at the time of a project’s development. With

financial projections based on historic data, if actual

sunshine hours are lower than forecast, less revenue

will be generated.

The Investment Manager monitors and assesses the

impact of climate and weather-related risks on an

ongoing basis. Whilst there are limited actions the

Company can take to address climatic shifts, there

are preventative measures that can be put in place to

mitigate their effects.

Before any investment decision is made, for

example, the Investment Manager applies its

proprietary methodology to map sustainability risks

and opportunities. The Sustainability Evaluation

Tool establishes a benchmark for monitoring and

improvement throughout an asset’s life.

Asset construction takes into consideration

geographical diversity – among other factors – to limit

exposure to any one market. If chronic patterns persist,

the Investment Manager can update its models and

review the Company’s presence in problematic areas.

The Investment Manager regularly monitors the

portfolio’s actual generation, comparing it to the

base case assumption. If there is a divergence, the

Investment Manager investigates the reasons for the

deviation and, if appropriate, updates the forecasts for

the asset – the change is also reflected in the underlying

valuation.

Technological advancements are also making modules

more effective and will help improve productivity.

The Investment Manager is monitoring this evolution

and factors it into its proposals for repowering and

revamping plants.

2023 was the hottest year on record. If carbon

dioxide and other greenhouse gas emissions continue

unabated, the negative effects of climate change will

become even more pronounced.

It is hard to foresee exactly what these impacts will

be, but the Company has tried to map the potential

financial outcomes and included a climate-related

scenario analysis from page 75.

RISK AND RISK MANAGEMENT CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Climate change‑related risk

Risks traditionally considered non-financial, such as climate

change, have the potential to impact long-term returns.

Foresight Solar’s investments make a meaningful contribution

towards decarbonisation efforts in the countries in which it

operates, and the Investment Manager is working to assess

climate-related risks and opportunities within the portfolio.

Climate change is one of the defining challenges of our

time and the Company is supportive of the Task Force on

Climate-related Financial Disclosures’ established framework

to assess and present those risks. TCFD creates a uniform

approach for organisations to report on how they expect

climate-related risks and opportunities to impact their

businesses over time.

As a result, Foresight Solar is voluntarily reporting on the

TCFD for the third year. This will continue to develop to

identify and share both risks and opportunities the Company

faces because of climate change.

The consideration of climate-related matters is embedded

throughout FSFL’s governance, strategy and risk

management processes. The Company has responded to the

recommended disclosures for the year to 31 December 2023,

whilst also recognising that its TCFD-aligned reporting will

continue to evolve in the future.

TCFD disbanded in January 2024, transferring monitoring

responsibilities to the ISSB. This brings certainty to

companies and stakeholders, streamlining the sustainability

and climate-related disclosures landscape.

With the ISSB’s standards already outlined, it is up to

local regulators to make the guidance mandatory in their

jurisdictions. In the UK, the government is developing the

UK SDS, expected to be in place by July. The objective of

the new standards is to help companies publish consistent

information for the 2025 financial year.

Until the new regulatory framework is fully implemented,

it is considered best practice to follow the “traditional”

TCFDformat.

RISK AND RISK MANAGEMENT CONTINUED

Board governance

Along with the Investment Manager, the Directors

shape the Company’s strategy, review performance and

authorise new initiatives. A key aspect of the Board’s

role is to ensure that sustainability considerations,

along with the frameworks to manage them, are

incorporated in Foresight Solar’s investment and

operational processes. The Board seeks to ensure that

asset management activities are also effective and

aligned with market best practices.

Therefore, the Directors have responsibility and

accountability for FSFL’s climate-related risks and

opportunities.

They set the risk appetite for new investments and

provide oversight for the management of the existing

portfolio. Foresight Group’s tracking of climate-related

risks and opportunities, for example, is part of the

Management Engagement Committee’s yearly review

of the Investment Manager’s overall performance.

Meeting at least once a quarter, the Board and

the Investment Manager discuss strategic risks

and opportunities, ensuring they are monitored

and managed. Specific climate-related risks are

incorporated in the Business Risk Assessment, tracked

on an ongoing basis, and considered in the Company’s

strategy, as well as on the day-to-day operations of

itsassets.

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES

Governance

Disclose the Company’s governance around climate-related risks and opportunities.

• Describe the Company’s governance around climate-related risks and opportunities

• Outline management’s role in assessing and managing climate-related risks and opportunities

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Role of the Investment Manager

In targeting new opportunities, the Investment

Manager’s Investment Committee (“IC”) is responsible

for considering market, regulatory and physical issues

pertaining to climate-related risks, as well as the

opportunities open to that investment. The IC will formally

consider and review each proposed transaction during a

series of meetings that apply increasing scrutiny as a deal

progresses towards approval.

It is the Investment Manager’s responsibility to track all

sustainability and climate change-related issues, and

empower its deal teams to ensure that material concerns

are integrated into the investment, asset management

and reporting processes. Foresight Group’s in-house

sustainability function supports the due diligence process,

liaising with third-party consultants to undertake supply

chain auditing, and feeding into the final decision.

The Investment Manager assesses material sustainability

topics at the asset level for all potential infrastructure

investments using proprietary systems. The Sustainability

Evaluation Tool (“SET”) facilitates the integration of

sustainability factors into investment management

processes and throughout an asset’s lifecycle. (Refer to

page 77 for details on the SET.)

Role of the Asset Manager

The asset management team is responsible for closely

monitoring the performance of and the risks relating to

the Company’s assets. They also review climate-related

factors that may present new opportunities or pose

threats to long-term project forecasts. This includes

regular inspections of the assets and, where specific

issues become more frequent, the escalation of potential

systemic risk.

The Asset Manager also acts to proactively mitigate

risks. On certain sites, for example, it has overseen the

installation of cooling systems to transformers in response

to changing irradiation patterns and higher average

temperatures.

Another responsibility of the asset management team is

to collect key sustainability performance indicators for

the operational portfolio, including data for Scope 1 and

Scope 2 emissions. This tracking enables the Company to

monitor aspects of its impact on climate change. At this

stage, more work is required to better understand Scope

3 emissions and the ability to reduce them. Since this type

of emissions is created by third-party providers, such as

operations and maintenance suppliers, it requires working

with partners to measure their carbon footprints and

gauge their plans to reduce them. Due to its complexity,

Scope 3 emissions in this report have been calculated

using the PCAF methodology and the associated sector

and geography-specific emissions factors.

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

SANDRIDGE, UK

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

LAS SALINAS, SPAIN

RISK AND RISK MANAGEMENT CONTINUED

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

Strategy

Disclose the actual and potential impacts of

climate-related risks and opportunities on the

Company’s business, strategy and financial

planning – when such information is material.

• Describe the climate-related risks and opportunities

the Company has identified over the short, medium

and long term

• Detail the impact of climate-related risks and

opportunities on the Company’s businesses,

strategy and financial planning

• Explain the resilience of the Company’s strategy,

taking into consideration different climate-related

scenarios, including a 2°C or lower scenario

Impacts of climate‑related risks

and opportunities

Climate change presents risks and opportunities for

Foresight Solar. The Company seeks to capitalise

on the opportunities created by the deployment of

renewable energy technology and energy efficiency,

specifically in the solar and battery storage markets.

The table on the following pages sets out a

non-exhaustive list of the strategic climate-related

risks and opportunities the Company has identified

over the short, medium and long term.

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Climate-related risks

Risk Warmer winters lead to lower power prices and

pressure on generating assets’ revenue streams

Growing interest in renewable generation drives

competition for investments and increases costs

Over-deployment of renewables causes challenges

for electricity networks

Description

•

Climate-driven changes in prevailing seasonal

temperatures may result in permanent fluctuations in

electricity demand for heating, for example, across

seasons and reduce prices at certain times of the year.

•

This could result in less predictable, more volatile market

pricing.

•

Regulatory environment incentivises less fossil fuel

consumption and fosters the growth of renewables,

raising commodity prices and increasing costs to

build assets. More interest from investment funds and

corporates in solar assets leads to greater competition

for investment and higher acquisition and construction

costs.

•

Favourable policy and regulatory environment leads to

overbuild of renewable capacity, resulting in a backlog of

projects waiting for connection due to grid unavailability

and, later on, resulting in lower electricity prices.

•

Low power prices might affect investor appetite because

of insufficient returns, limiting capital available to

continue the build-out of renewables.

•

Regulators and policymakers may intervene in markets,

changing the established pricing structures due to new

dynamics (e.g. REMA in the UK).

Category

Transition – Market Transition – Market Transition – Market; Policy and legal

Likelihood

Likely Very likely Likely

Time period

Impact

Investment

Manager

response

•

The portfolio’s geographic diversification, with a global

footprint, and strategic composition, with multiple

technologies, provides some resilience to changing

power prices.

•

Increased market volatility promotes the case for flexible

storage assets, such as batteries, which realise greater

trading revenues during periods of heightened volatility.

•

Foresight Solar has changed its investment mandate

to include a modest level of development exposure,

enabling it to minimise the threat of competition by

investing in assets at an earlier stage.

•

The revised investment mandate also enables the

Company to take advantage of enhanced risk-adjusted

returns by bringing assets from development to

ready-to-build and operational status.

•

The portfolio’s composition, which includes battery storage,

and its geographic dispersion, globally and in the UK, reflect

a well-diversified set of solar assets by location and points

of connection within the UK.

•

Foresight Solar actively participates in regulatory

discussions to try and shape policy and minimise potential

negative effects.

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

Short term (0-3 yrs) Long term (10+ yrs) Financial planning

Medium term (3-10 yrs) Strategy Existing portfolio

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Climate-related risks continued

Risk More frequent extreme weather

events cause damage to assets or

negatively impact production

Changing climate patterns

fundamentally alter the availability of

renewable resource

Climate change places greater strain

on natural resources required for the

construction and operation of solar

and battery assets

Technological developments displace

existing renewables assets

Description

•

Climate change will make extreme

weather events, such as storms, floods,

droughts, bush fires and high heat,

more frequent, potentially interrupting

site construction – causing delays – or

operations – leading to downtime or

reduced electricity generation.

•

Unexpected and unprecedented changes

to weather patterns affect the provision

of sunlight because of excessive cloud

cover or because of smoke from more

regular wildfires.

•

Global warming is causing many regions

of the world to experience changes to

long-established climate patterns.

•

Positive regulatory environment,

increased climate focus and popularity

of renewables may lead to supply

challenges and price pressures on raw

materials used in module production and

storage components, such as silicon and

lithium, respectively.

•

Scarcity of commodities in case of

production or supply disruptions after

more frequent natural disasters.

•

Government and philanthropic incentives

drive breakthrough innovation and

cause existing assets to be outdated or

displaced because of obsolescence

or inefficiency.

Category

Physical – Acute Physical – Chronic Transition – Market; Technology

Transition – Technology;

Policy and legal; Reputation

Likelihood

Likely Very likely Possible Unlikely

Time period

Impact

Investment

Manager

response

•

The Investment Manager assesses the

full range of acute physical weather

risks during sustainability-focused

due diligence prior to the closing of

transactions and during the acquisition

process. (Refer to the heatmap on page

77 for more detail.)

•

Site topography and a location’s

susceptibility to impacts from weather

events are taken into consideration

during the investment process to, for

example, minimise flood risks and limit

the impacts from extreme wind.

•

Before any investment decision is

made, the Investment Manager applies

its proprietary methodology to map

sustainability risks and opportunities.

•

Asset construction factors in

geographical diversity, which ensures the

portfolio’s exposure to any one market

is limited. If chronic patterns persist,

models can be updated and markets

canbe reviewed.

•

The Company procures and stocks extra

parts crucial for operations, limiting

downtime in case of maintenance and

securing savings on procurement.

•

Foresight Solar is agile in its investments

to protect itself from increases in the

price of commodities.

•

Foresight Group’s global network and its

management of other renewables funds

provide the Company with scale benefits

in procurement and purchases.

•

Substituting innovations would take a

long time to deploy at sufficient scale

to render the portfolio obsolete. The

Investment Manager follows these

advances closely and would be able

to explore updated opportunities in

that period.

•

New, more efficient renewable generation

or storage systems also present an

opportunity. The Company has the

experience, the size and the capital to

invest in these technologies once they

are market proven.

RISK AND RISK MANAGEMENT CONTINUED

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

Short term (0-3 yrs) Long term (10+ yrs) Financial planning

Medium term (3-10 yrs) Strategy Existing portfolio

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Climate-related opportunities

Opportunity Capital directed to renewable

investments continues to grow

Continued build-out of renewables

leads to mature battery storage

markets

Carbon tax implementation and/or

GHG emissions prices rise

Political and societal support for the

energy transition intensifies

Description

•

Regulatory support, investor and lender

pressure maintain momentum for fossil

fuel disinvestment and shift to renewable

energy infrastructure, increasing capital

flow to solar to meet Net Zero goals.

•

Need for infrastructure to help balance

the intermittent generation profile of

renewables and offer more grid flexibility

may drive demand for battery storage

systems (“BESS”).

•

Increased penetration of renewable

generation leads to more volatility in

electricity markets, resulting in the need

for more battery storage to balance and

stabilise the grid.

•

Carbon prices rise, leading to greater

demand for renewables as governments,

corporates and individuals look to offset

their environmental footprint.

•

Emissions reporting obligations create a

more transparent market and

investors shift more aggressively

to low-carbon funds.

•

Government policies aimed at facilitating

the transition to a Net Zero economy may

lead to subsidies for certain technologies

to increase uptake or build-out.

Category

Transition – Market

Resource efficiency; Products and services;

Markets; Resilience

Markets Markets; Products and services

Likelihood

Very likely Very likely Very likely Likely

Time period

Impact

Investment

Manager

response

•

Higher flows into the sector are likely to

make fundraising easier and potentially

reduce Foresight Solar’s cost of capital.

•

Increased competition for assets

may drive up prices for the portfolio,

increasing benefits of the Company’s

capital recycling programme.

•

More demand for solar and battery

storage projects can spark a more

competitive debt market for assets,

lowering interest rates.

•

More volatile wholesale energy prices

may provide additional revenue

opportunities via arbitrage trading for

battery storage assets.

•

Growth will result in more established

business models and a reliable revenue

stack in markets around the globe.

•

Foresight Solar can invest up to 10%

of GAV into BESS. In time, it may be

attractive to review this allocation cap so

the Company can take more active steps

in this sector.

•

Foresight Solar operates in markets

where solar is an established technology

and demand is still growing.

•

The Company’s small environmental

footprint may appeal to

sustainability-focused investors.

•

Emissions reporting could become a

differentiator for the Company.

•

Government-backed incentives create

further opportunities for investment and

accelerate the Company’s growth.

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

Short term (0-3 yrs) Long term (10+ yrs) Financial planning

Medium term (3-10 yrs) Strategy Existing portfolio

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

RISK AND RISK MANAGEMENT CONTINUED

Climate-related opportunities continued

Opportunity Technological developments

complement the existing portfolio

European and OECD PPA markets

mature further

Climate emergency sparks more

supportive regulatory and planning

frameworks

Transition to electricity happens

faster than expected

Description

•

Advances in new and existing

technologies, both in solar generation

and battery storage, improve scale and/

or efficiency of current installed capacity.

•

Driven by the international communities’

focus on climate action, a stronger

competitive market for offtakers

emerges, offering more opportunities

and selection.

•

A favourable regulatory environment

with lower barriers to building

renewable infrastructure may facilitate

optimisations and extensions of existing

assets, and open the door to even more

opportunities for new projects.

•

Regulatory support and technological

developments accelerate the

electrification of industrial processes and

of residential infrastructure, increasing

the demand for renewable electricity.

Category

Energy source; Resource efficiency Markets; Resilience Markets; Resilience Energy source; Markets

Likelihood

Likely Possible Possible Unlikely

Time period

Impact

Investment

Manager

response

•

Innovations may have a direct effect

on existing projects, improving

revenues, extending asset lives and/or

loweringcosts.

•

The Company could also benefit from

improvements for future projects,

realising better returns for Shareholders.

•

Countries are growing their solar fleets.

The Investment Manager has strong

presence, deep expertise and extensive

networks to help the Company capitalise

on these opportunities.

•

The Company would enter new,

advantageous PPA contracts to sell its

electricity production and capitalise on

demand for corporate power purchase

agreements – as has been done with the

Spanish assets.

•

Initiatives such as BESS co-location, lease

extensions and plant updates can lead

to NAV growth and lengthen asset life.

Ultimately, makingthese easier to deliver

can provide more resilience, and ensure

longevity for the Company.

•

A reliable installed portfolio with a strong

track record in multiple geographies is a

competitive advantage for the Company

to capitalise on higher demand.

•

The Investment Manager’s experience

with power purchase agreements

andother offtake structures is also a

positive factor.

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

Short term (0-3 yrs) Long term (10+ yrs) Financial planning

Medium term (3-10 yrs) Strategy Existing portfolio

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Strategy

In the short term, renewable energy is likely to continue

benefiting from political and societal support in the

drive to transition economies away from fossil fuels.

The regulatory and planning environments for solar and

battery storage in Foresight Solar’s target markets are also

expected to continue to develop favourably.

Alongside the ever-greater focus on sustainability, more

capital is being directed into all areas of renewable energy.

Significant investment into solar and battery storage is

forecast in the Company’s core markets. Russia’s invasion

of Ukraine in 2022 reignited the energy security debate

in many Western nations, pushing the renewable agenda

higher up governments’ priority lists.

These factors create an environment supportive of

potential growth if the Company can continue to source

investment opportunities with attractive returns and

acceptable risk profiles. Assuming that will be the case,

this positive environment should carry across to Foresight

Solar’s fundraising prospects.

There is, however, such a thing as too much money. Too

much deployment into solar generation and battery

storage can lead to heightened competition for assets.

Greater demand for renewable projects could, in

turn, place downward pressure on returns and lead to

overpayment. In this regard, maintaining discipline is

key to ensuring FSFL continues to make value accretive

investments.

Financial planning

Increasing power price volatility is a key example of how

climate-related changes and the energy transition present

both opportunities and challenges for the Company’s

finances. A prolonged fall in electricity prices and the

associated merchant revenue for the generating solar

portfolio is a significant risk. An active power price

hedging strategy, however, allows Foresight Solar to

manage it. In practice, the Company secures a significant

proportion of income with price agreements up to five

years ahead, retaining a level of merchant exposure to

make sure it can capture the upside in case prices rise –

as was seen in 2022.

Significant deployment of renewable energy generation

in a short period of time can lead to power price

cannibalisation. Forecasters currently estimate a

stagnation of real power price growth in the medium

to long term, and a significant build-out of renewable

generation at marginal cost may push those assumptions

below expected levels. However, if this indeed happens,

it will likely result in a reduction in the number of new

projects, as many would become economically unviable,

and thus a re-balancing of development.

The Company has entered a sustainability-linked credit

facility which provides the opportunity to achieve savings

on margins if specific criteria are met. Enhanced disclosure

of sustainability metrics presents an opportunity for clean

energy generators to differentiate their offering to current

and prospective Shareholders. It is reasonable to assume

that investors will increasingly screen opportunities and

allocate capital based on sustainable criteria, including

TCFD compliance, and to assume that the companies that

score well on those standards will be more successful in

attracting capital.

RISK AND RISK MANAGEMENT CONTINUED

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

Existing portfolio

The possibility of extreme weather conditions becoming

more commonplace poses a risk to Foresight Solar’s

assets, as well as the markets the Company operates in.

The UK, for example, has experienced more frequent

severe flooding. In Australia, bush fires may become

increasingly commonplace, affecting production. Severe

droughts are also expected to affect Spain more often.

To stay ahead of this, the Asset Manager continues to

carry out flood risk assessments and cautious geolocation

analyses across sites as part of its operational due

diligence and management.

Regular occurrences of extreme heat will also pose an

issue since the efficiency of solar panels falls at high

temperatures. Even in more moderate climates such as

the UK, higher temperatures can lead to heat stress on

equipment. This reality has already started impacting

the Company’s sites and fans have been fitted to cool

inverters and transformers at Spriggs Farm and High

Fields. The expectation is that heat stress will become

more prominent in the future, and the Asset Manager is

preparing to adapt other sites.

On the other hand, the retirement of coal and nuclear

baseload generation, substituted by intermittent

renewable power, will likely lead to more wholesale power

price volatility in markets around the globe. These higher

peaks and lower lows are beneficial to the arbitrage

trading strategies of battery storage projects, and will be

an increasingly relevant component of their revenue stack.

Over the longer term, the Company will more actively

monitor new technologies to ensure its core assets are

not displaced. Solar is currently well placed, offering

one ofthe most cost-effective, quick to deploy sources

of energy production, but generating technologies will

continue to evolve.

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Climate‑related scenarios and resilience

Overview

Since the 2022 Annual Report, the Company has been

working with S&P Global Climanomics to analyse different

potential scenarios in the future. The platform offers

the most comprehensive analysis across four options,

integrating not only physical and transitional risks, but also

climate-related opportunities.

The basis for Climanomics’ analysis is the Shared

Socioeconomic Pathways (“SSPs”) generated by the

Intergovernmental Panel on Climate Change (“IPCC”).

The SSPs are an evolution of the earlier Representative

Concentration Pathways (“RCPs”) and represent a range

of possible outcomes not only in future anthropogenic

greenhouse gas emissions and their effects on

atmospheric concentrations of CO, but also their potential

societal, demographical and economical impacts.

The scenarios are best summarised as:

•

SSP 1/RCP 2.6 assumes aggressive mitigation and total

GHG emissions reducing to Net Zero by 2050, resulting

in a global average temperature increase of 1.3°C to

2.4°C by 2100.

•

SSP 2/RCP 4.5 implies aggressive mitigation with

total GHG stabilising at current levels until 2050 and

then declining to 2100. This results in a global average

temperature increase of 2.1°C to 3.5°C by 2100.

•

SSP 3/RCP 7.0 estimates limited mitigation with total

GHG emissions doubling by 2100 and global average

temperatures increasing by 2.8°C to 4.6°C.

•

SSP 5/RCP 8.5 assumes low mitigation, total GHG

emissions tripling by 2075 and global average

temperatures increasing by 3.3°C to 5.7°C.

Methodology

Climanomics integrates econometric assumptions driven

by high resolution geographic, climate, socioeconomic,

business and sector-specific data to the SSPs to quantify

climate risk. The models assess both the risks and the

opportunities associated with each scenario and generate

outputs dependent on asset type. These results can then

be applied to the Company’s valuation model to estimate

the potential financial impact.

In terms of categorisation of risks and opportunities,

the Climanomics platform fully aligns with the TCFD

framework:

1. Physical risk – Analysing atmospheric data related to

acute and chronic climate hazards across temperature,

precipitation, drought, wildfire, coastal flooding,

tropical cyclones, water stress and fluvial-basin

flooding to provide a rigorous estimate of risk under

various conditions.

2. Transitional risk – Incorporating modelling of hazards

associated with a global transition to a low-carbon

economy via litigation, reputational, technology and

market risk

3. Opportunity modelling – Calculating opportunities

derived from resource efficiencies, energy sourcing,

changing markets and resilience.

Climanomics’ methodology estimates direct financial

impacts that the hazards are expected to incur on

each asset type. Each technology’s vulnerability is

characterised by the specific ways in which it is likely to

be impacted by a given climate-related variable. An asset

type’s overall “impact function” is comprised of these

individual impact pathways. The platform has developed

an extensive library of detailed impact functions for a wide

variety of sectors, all of which are based on peer-reviewed

and government-published research papers.

The science of scenario analysis is evolving quickly, and

current assessments are made with the most credible

existing frameworks and input data available. Given the

nature of these estimates, limitations remain. However,

the Company is committed to using best-in-class

methodologies to accurately estimate its performance

under different climate futures and will continue making

the necessary adjustments as the methodologies progress.

1. Due to the immaterial emissions associated with the portfolio’s business activities (disclosed on page 50), carbon pricing has been excluded.

RISK AND RISK MANAGEMENT CONTINUED

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Climate‑related scenarios and resilience continued

Estimates

Assuming SSP 2 as the most likely outcome due to the current global emissions trajectory, the chart below shows the

assessed central case and the potential variations between the three remaining scenarios

RISK AND RISK MANAGEMENT CONTINUED

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

SSP 1/RCP 2.6 v SSP 2/RCP 4.5

1.0%

0.0%

0.5%

-1.0%

-0.5%

1.5%

’24 ’26 ’29 ’32 ’35 ’38 ’47’44’41

’50

SSP3/RCP7.0 v SSP 2/RCP 4.5 SSP 5/RCP 8.5 v SSP 2/RCP 4.5

’54

’28 ’31 ’34 ’37 ’40 ’49’46’43

’52

’25 ’27 ’30 ‘33 ’36 ’45’42’39

’48

’51 ’53

Applying these estimates to the Company’s NAV, it is possible to calculate the potential financial impact in each of the

RCPs over assets’ lives until 2050.

The data show a direct relationship between the opportunities and risks of a worsening emissions world and the

Company’s valuation. The central case, SSP 2, demonstrates an assumed NAV 1.3pps lower than what would be

expected under a less severe SSP 1 scenario that now appears unlikely. Shifting to SSP 3 and SSP 4 results in a further

negative impact of 0.1pps and 1.0pps, respectively. That means a combined reduction of 2.4pps against a future in which

the SSP 1 scenario is deemed achievable.

The analysis for 2023 contrasts with the previous year’s results, when minimal impact was observed between the

equivalent SSP 1 to SSP 3 scenarios. The more pronounced downside related to the equivalent SSP 4 estimate,

suggesting a NAV 2.1pps lower. The drivers of change from one year to the other are a slight increase in the projected

physical impacts and a change in methodology to incorporate a greater range of climate models.

LOS PICOS, SPAIN

1. The opportunity scenario analysis results tend to be less variable than the risk data results, so using the latest Coupled Model

Intercomparison Project 5 information will not have materially influenced estimates.

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Risk framework

The Investment Manager is responsible for creating and

managing the framework that ensures the systematic

integration and assessment of climate-related risks and

opportunities. The primary system for achieving this is

Foresight Group’s proprietary Sustainability Evaluation

Tool (described on page 77) which ensures that a given

asset’s resilience to climate-related risk is considered from

the earliest stages of due diligence during the investment

process. This is covered under the “Climate Change

Resilience” parameter within the tool and is completed for

all assets, both at the investment stageand during each

site’s periodic review as part of ongoing management.

Climate-related risks are also identified in the Company’s

Business Risk Assessment and reviewed by the Audit and

Risk Committee.

These relevant physical risks are plotted onto a risk

heatmap (see the solar risk heatmap opposite). A suite of

tools can then be employed to assess the severity of an

asset’s susceptibility to the most material risks and identify

mitigation measures to reduce the overall score.

Transition risks: Risks related to the transition to a lower carbon economy

Policy and legal Technology Market Reputation

Transition risks

•

Increased pricing

of greenhouse gas

(“GHG”) emissions

•

Enhanced emissions-

reporting obligations

•

Mandates on, and

regulation of, existing

products and services

•

Exposure to litigation

•

Substitution of existing

products and services

with lower emissions

options

•

Costs to transition

to lower emissions

technology

•

Changing customer

behaviour

•

Uncertainty in

market signals

•

Increased cost

of raw materials

•

Increased competition

for solar and

battery assets

•

Shifts in consumer

preferences

•

Stigmatisation of

sector

•

Increased stakeholder

concern or negative

stakeholder feedback

Physical risks: Risks related to the physical impacts of climate change

Temperature related Wind related Water related Solid mass related

Chronic

•

Changing

temperatures

•

Heat stress

•

Changing wind

patterns

•

Changing precipitation

•

Landslide

Acute

•

Heat wave

•

Wildfire

•

Storm

•

Heavy precipitation/

flood

Probability

5 Almost certain

4 Likely

Changing

precipitation

patterns

Changing

temperatures

Heat wave

Heat stress

3 Possible

Storm

Changing wind

patterns

2 Unlikely Heavy

precipitation

Wildfire

Flood

1 Rare

Landslide

1 Negligible 2 Minor 3 Major 4 Hazardous 5 Catastrophic

Solar

Impact

RISK AND RISK MANAGEMENT CONTINUED

As is industry standard, Foresight Solar’s climate-related risks can be categorised in two principal ways:

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

Risk management

Disclose how the Company identifies, assesses

and manages climate-related risks.

• Describe the Company’s processes for identifying

and assessing climate-related risks

• Explain the Company’s processes for managing

climate-related risks

• Detail how processes for identifying, assessing and

managing climate-related risks are integrated into

the Company’s overall risk management

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Managing climate risk

All potential investments are evaluated in accordance with

the Sustainability Evaluation Tool (“SET”) to ensure they

meet the Investment Manager’s definition of sustainable

infrastructure and that climate-related risks are identified,

assessed and managed. The SET comprises five criteria

that cover the key areas of sustainability and ESG

considerations to be assessed:

•

Sustainable development contribution: The

contribution made towards the global sustainability

agenda, including an assessment of its resilience to

climate change-related risk and opportunity

•

Environmental footprint: The environmental impacts of

an investment

•

Social welfare: The interaction with local communities

and the welfare of employees

•

Governance: The compliance with relevant laws and

regulations

•

Third-party interactions: The sustainability of key

counterparties and the broader supply chain

The SET is an evolving tool. It has been designed

with flexibility in mind, making it adaptable to new

sectors, industry frameworks and impact standards as

sustainability, ESG and climate change agendas continue

to develop. The materiality of certain issues within each of

these areas is subject to change, therefore a framework

that can adapt easily to reflect these alterations is

important. The Investment Manager carries out regular

in-house consultations to decide on the individual

“weighting” for each metric within the assessment

parameters. The weighting dictates the materiality of the

metric in the overall asset score, which can be updated

based on new information.

The SET draws on IRIS+ indicators, developed by

the Global Impact Investing Network (“GIIN”), which

are an aggregation of several widely recognised,

externalsustainability and ESG-focused frameworks

to measure, manage and optimise sustainability and

climate-related performance.

These frameworks include, amongst others, the Global

Reporting Initiative (“GRI”), the Sustainability Accounting

Standards Board (“SASB”), the UN SDGs and the

Principles for Responsible Investment (“PRI”).

Before any new investment proceeds, an assessment of

both physical and transition climate-related risk is made in

the Climate Change Resilience assessment parameter of

the SET.

This parameter is made up of multiple metrics, with each

weighted based on internal materiality assessments and

scored in line with response bands corresponding to a

five-point scale:

•

1 = Low performance

•

2 = Below average

•

3 = Average performance

•

4 = Above average

•

5 = High performance

An average is then calculated to produce an overall

score for the Climate Change Resilience parameter,

which is reviewed and updated periodically by the asset

management team to track a project’s sustainability

performance. This can be tabled at the Company’s Board

meetings to enable implementation of an asset-specific

plan to manage any material risks as required.

Every solar or battery asset the Company invests in

must be justified as contributing to a set of measurable

sustainability goals and must demonstrate how its

resilience to climate change-related risk has

been assessed.

If the information required to complete the assessment

is not readily available through project documentation,

Foresight Solar tasks technical advisors with conducting

further investigation to address any specific queries.

When it comes to physical risks, a climate risk heatmap is

produced and used to identify the most material physical

risks assets face. This allows the asset management team

to conduct further investigation or put in place

mitigation measures.

During the investment stage, it is the Investment

Manager’s responsibility to complete the SET and use it

to establish an asset’s sustainability credentials. Crucially,

risks need to be accurately assessed and satisfactorily

addressed in the final submission to the Investment

Committee with an accompanying risk re-profiling or

mitigation measures if necessary.

Via the various IC processes, relevant issues will be

reported to the Investment Manager’s senior leadership,

wherein any updated thinking can be more effectively

applied across the wider portfolio of assets.

Once the investment has been made, the asset undergoes

a comprehensive handover to the asset management

team, who also take over the responsibility for identifying,

managing and assessing climate-related risks and

opportunities. It is the role of the Asset Manager to ensure

periodic updates of the SET are completed to ensure the

physical and transition risks the asset is exposed to are

appropriately measured.

The Investment Manager is responsible for the periodic

review of the portfolio’s exposure to risk, ranging from

health and safety to climate change. Material changes

to the ratings of any risk are considered in line with the

periodic reassessment and, where possible, are

mitigated accordingly.

RISK AND RISK MANAGEMENT CONTINUED

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pages 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

TCFD core metrics (more on page 48)

As recommended by the TCFD, the Company reports its

quantitative exposure to climate-related risk using the

universally accepted core metrics. These include:

•

Weighted average carbon intensity

•

Total carbon emissions

•

Carbon footprint

•

Carbon intensity

•

Exposure to carbon-related assets

In line with guidance from the Financial Conduct Authority,

the calculation of these metrics is performed using Scope

1 and Scope 2 emissions only. In using these core metrics,

the Company can compare performance amongst its

assets and against those of its wider peer group.

For Foresight Solar, the results were:

TCFD core metrics

Metric

Description Expressed as 2023 2022

Weighted average

carbon intensity

Exposure to carbon-

intensive assets

tCOe/£m revenue 1.51 5.17

Total carbon emissions

Absolute greenhouse gas

emissions

tCOe 283.44 897.11

Carbon footprint

Total carbon emissions

adjusted to its market

value

tCOe/£m invested 0.41 1.16

Carbon intensity

Volume of carbon

emissions per million

pounds of revenue

tCOe/£m revenue 1.75 5.51

Exposure to

carbon-related assets

Percentage of

carbon-related assets

% 0 0

Data drawn from the calculation of the core metrics is used to drive decarbonisation across the portfolio and to highlight

carbon hotspots in specific business areas as a means of influencing decision making across the business.

Absolute emissions (more on page 50)

The Greenhouse Gas Protocol separates emissions into the following categories:

Scope 1 Scope 2 Scope 3

•

All direct emissions from the activities

of a company under its control

•

Includes fuel combustion on site

such as gas boilers, fleet vehicles and

air-conditioning leaks

•

Indirect emissions from electricity

purchased and used by the Company

•

Emissions are created during the

production of the energy eventually

used by the Company

•

All other indirect emissions, occurring

from sources that are not owned or

controlled

•

Includes purchased goods and

services, business travel, employee

commuting, waste disposal, use of sold

products, transportation, distribution

and investments

The portfolio sustainability metrics, collected quarterly at the asset level, enable accurate calculation of both Scope 1

and 2 emissions. Meanwhile, the Investment Manager continues to develop its relationships with suppliers to gain more

granular understanding of its Scope 3 emissions. It has used the PCAF methodology and the associated geographic and

sector-specific emissions factors to estimate its Scope 3 emissions throughout this report.

RISK AND RISK MANAGEMENT CONTINUED

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

Metrics and targets

Disclose the metrics and targets used to assess

and manage relevant climate-related risks

and opportunities where such information is

material.

• Disclose the metrics used by the Company to

assess climate-related risks and opportunities in

line with its strategy and risk management process

• Publish Scope 1, Scope 2 and, if appropriate, Scope

3 greenhouse gas (“GHG”) emissions and the

related risks

• Describe the targets used by the Company to

manage climate-related risks and opportunities and

performance against targets

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pageS 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Targets

Foresight Solar regularly evaluates assets’ sustainability

performance, tracking changes over time and acting

to improve operational factors when needed. This

constant analysis helps develop an understanding of the

sustainability characteristics of the portfolio.

Short‑term targets

In 2023, the Investment Manager had a target to:

•

Undertake a full scenario analysis with support from

external consultants (the results from this exercise are

available on page 74)

•

Conduct Scope 3 emissions calculation

Both goals were achieved, and the results are being used

to better understand Foresight Solar’s environmental

footprint and the potential climate change impacts on

its portfolio. The conclusions are also likely to feed into

the development of specific targets aimed at managing

climate-related risks and opportunities.

Absolute emissions (more on page 50) continued

All amounts in tCOe 2023

Scope 1 118.56

Scope 2 164.88

Total 283.44

Scope 3 122,049

Sustainable impact reporting (more on page 48)

Tracked against the UN SDGs, the sustainable impact reporting metrics demonstrate the positive environmental and

social benefits created by Foresight Solar’s investments, helping drive the global sustainability agenda.

The analysis includes the Investment Manager’s estimates for the portfolio’s decarbonisation benefit according to its

approach, which is aligned to the IFI’s Harmonised GHG Accounting methodology. The process also factors lifecycle

emissions intensity figures, drawing on the data presented in the IPCC’s Special Report on Renewable Energy. The

report uses a variety of peer-reviewed research papers to establish median figures for the lifecycle CO intensities of

different renewable energy technologies, measured in kgCOe/MWh.

The Company intends to continue delivering sustainable impact in line with its growth to ensure it is regularly moving

forward the decarbonisation agenda.

RISK AND RISK MANAGEMENT CONTINUED

1. Annex III: https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_annex-iii.pdf

SDG Description Metric(s)

Good health and well-being 649,711kg

NOx (nitrous oxide) vs energy

generated from gas

476,455kg

SOx (sulphur dioxide)

11,310kg

PM10 (m10 particulate matter)

5,174kg

PM2.5 (m2.5 particulate matter)

Affordable and clean energy 1,088GWh

Renewable energy generated

402,754

Equivalent UK homes powered for a year

Industry, innovation and infrastructure 969MW

Renewable energy capacity connected to the electricity grid

Climate action 378,486 tCO

Emissions avoided compared to country-specific grid

Life on land 103,454 ToE

Contribution to the avoidance of fossil fuel use (in tonnes of oil equivalent)

TASK FORCE ON CLIMATE‑RELATED FINANCIAL DISCLOSURES CONTINUED

METRICS AND TARGETS

pages 78 and 79

RISK MANAGEMENT

pages 76 and 77

STRATEGY

pages 68 to 75

GOVERNANCE

pageS 66 and 67

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Going concern

The Directors are confident that the Company will have

sufficient funds to continue to meet its liabilities as they

fall due for the going concern assessment period and

have, therefore, prepared the Financial Statements on a

going concern basis.

The Board has decided the going concern assessment

period should extend to 30 June 2025. Due to the nature

of the fixed price, subsidised revenues and the long-term

debt in place across the portfolio, the Board believes it is

appropriate to evaluate a period longer than the typical

requirement of 12 months.

Foresight Solar’s business activities, together with

the factors likely to affect its future development,

performance and position, are set out in this report.

The Company’s financial position, including its financial

performance, cash flows, liquidity and borrowing facilities,

are referred to in the Chair’s Statement (from page 6),

Investment Manager’s Report (starting on page 13)

and Notes to the Financial Statements (see page 131).

The Financial Statements (from page 127) also include

Foresight Solar’s objectives, policies and procedures

for managing its capital, its financial risk management

objectives and its exposure to credit and liquidity risks.

A detailed evaluation of the cash flow impact for the going

concern assessment period took into consideration the

following individual scenarios:

1. All assets consistently generate a P90 level (90%

probability of exceeding expected production over a

ten-year period) of electricity output. The Directors

consider this is an appropriate, market standard

downside scenario with relevant examples being

the recent extremely high temperatures in Southern

Europe, leading to wildfires and severe weather

warnings issued by the UK Government, in relation to

storms; both of which have the potential to reduce solar

generation.

2. Power prices reduce by 20% across the portfolio. This

downside scenario emulates merchant power prices

remaining elevated but gradually decreasing from

historic highs.

3. The Group’s biggest PPA provider fails to settle

revenues under its contract. This downside evaluation

represents the risk of offtaker insolvencies in response

to several bankruptcies in recent years – a concern that

may continue into 2024 based on above-average power

prices, especially under fixed price contracts.

4. Inflation-linked debt and the portfolio’s costs are

assumed to increase by more than 5% year-on-year. This

downside test represents the possibility of high inflation

continuing into the going concern assessment period

based on the RPI increase registered in 2023.

5. The removal of any distributions from the Australian

assets and the prepayment of debt service from surplus

cash for the entire going concern assessment period

due to ongoing market-wide economic curtailment.

If any of these sensitivities or scenarios were to materialise,

the Company could still meet its target dividend per share

for 2024 and a progressive dividend for the remaining

going concern assessment period. However, the Board

would continue to periodically review whether paying the

dividend would be appropriate considering the potential

for reduced cash flow.

The downside, plausible scenarios forecasts show that

operating costs would still be covered, but the cash

balance would fall gradually during the going concern

assessment period, albeit without causing any

operational issues.

The evaluation demonstrated that Foresight Solar would

be able to meet its liabilities without breaching any debt

covenants and could continue to satisfy the dividend

target for 2024 and a progressive dividend thereafter

during the going concern assessment period.

Due to Foresight Solar’s share price trading at a discount

of more than 10% to NAV, the Company will hold a

discontinuation vote at its June 2024 AGM, in line with

its Articles of Association. Recent interactions with

Shareholders do not indicate any concerns about the vote

for Foresight Solar continuing operations.

GOING CONCERN AND VIABILITY STATEMENT

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

GOING CONCERN AND VIABILITY STATEMENT CONTINUED

Viability statement

The Directors confirm that they have a reasonable

expectation the Company will be able to continue

operating and meet its liabilities as they fall due through

2028. In accordance with the UK Corporate Governance

Code, the Board has assessed FSFL’s viability over a

five-year period to 31 December 2028 on the basis that it

has significant long-term fixed and subsidised revenues

and long-term debt in place.

This is the period the Directors focused on during the

strategic planning process and is considered reasonable

for a business of the Company’s size and nature. Whilst

the Board has no reason to believe the Company will not

be viable over a longer period, they believe this presents

readers of the Annual Report with a reasonable degree of

confidence whilst still providing a longer-term perspective.

The Board considers the Company’s ability to raise debt

and equity and deploy capital. As part of this process,

the Directors have considered the ongoing viability

of Foresight Solar’s long-term and short-term debt

strategies.

The Directors have considered the emerging and principal

risks, identified from page 56, in relation to the Company’s

resilience over a five-year period. In doing so, the Board

believes the key direct principal risks to Foresight Solar’s

financial viability are: changes to the level of political

support for subsidies across the Company’s markets,

energy prices and the impact of climate and changes to

weather patterns.

In addition to these principal risks, the Directors have also

specifically reviewed the sustainability-related risks that

consider environmental, social and governance factors

in line with the recommendations of the Task Force on

Climate-related Financial Disclosures (“TCFD”), discussed

in detail from page 66.

Government-backed subsidy revenue comprises 47% of

the portfolio’s turnover for the period to 31 December

2028. Whilst this is a considerable proportion, the

subsidies are split across two different jurisdictions

(United Kingdom and Australia), with the majority coming

from the United Kingdom. It is expected the respective

governments, in light of considering commitments to

tackling the climate emergency and the renewable energy

sector’s crucial contribution to decarbonisation, will

continue to meet their obligations. In terms of prospective

regime changes, such as the closure of the Renewables

Obligation scheme for projects commissioned after

31 March 2017, these are not expected to affect the

viability of the Company. In the UK, the government has

been considering more fundamental changes to energy

markets with the Department for Energy Security and

Net Zero (“DESNZ”) publishing its consultation on the

Review of Electricity Market Arrangements (“REMA”).

Any potential change will develop over the five-year

period, and the outcome remains unclear. However, the

Directors do not expect this process or related outcomes

to materially weaken the existing subsidy regime as this

would significantly undermine investment in the UK

renewable energy market. Whilst changes are possible,

they are not expected to threaten the viability of the

Company.

For the period to 31 December 2028, 66% of the portfolio

revenue is contracted through government subsidies or

forward electricity sales at a fixed price, leaving 34% of

revenues exposed to power price volatility. The Directors

believe this risk is sufficiently mitigated through the

Company’s price fixing strategy, which is reviewed on a

regular basis by the Investment Manager.

Foresight Solar owns assets across three international

markets, and therefore considers short and medium-term

changes in localised weather patterns to be a risk.

Relevant examples include the recent extremely high

temperatures in Southern Europe, leading to wildfires and

severe weather warnings issued by the UK Government, in

relation to storms. Whilst very limited action can be taken

by the Company to address weather and broader climate

shifts, aside from specific, local protective measures at

each asset, the Directors and the Investment Manager

continue to monitor and assess the potential impacts on

an ongoing basis.

In making this statement, the Directors have reviewed

Foresight Solar’s summary five-year cash projections,

including cash balances, dividend cover and debt

covenants. Sensitivity analysis covered the potential

impact of the Company’s principal risks occurring and

how those risks would threaten its business model,

future performance, solvency or liquidity. A summary of

key valuation sensitivities is set out earlier in the Annual

Report (see pages 41 and 42 for the full details). These

forecasts are based on the Investment Manager’s view

of future asset performance, income and costs, and are

consistent with the methodology applied to produce the

valuation of the investments.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Foresight Solar applies IFRS 10 and Investment Entities:

Amendments to IFRS 10, IFRS 12 and IAS 28, which

states that investment entities should measure all their

subsidiaries that are themselves investment entities at fair

value. The Company accounts for its interest in its wholly

owned direct subsidiary Foresight Solar (UK HoldCo)

Limited as an investment at fair value through profit

orloss.

The primary impact of this application, in comparison

to consolidating subsidiaries, is that the balances, the

working capital balances and the borrowings in the

intermediate holding companies are presented as part of

Foresight Solar’s fair value of investments.

Foresight Solar’s intermediate holding companies provide

services that relate to the Company’s investment activities

on behalf of the parent which are incidental to the

management of the portfolio.

The Company and its intermediate holding companies

(the “Group”) hold investments in 61 assets which

make distributions in the form of interest on loans and

equity dividends, as well as loan repayments and equity

redemptions.

For more information on the basis of accounting and

Company structure, please refer to the Notes to the

Financial Statements starting on page 131.

FINANCIAL REVIEW

Key metrics for the year ended 31 December 2023

All amounts presented in £million (except as noted)

Year ended

31 December

2023

Year ended

31 December

2022

Net Asset Value (“NAV”) 697.9 771.5

Gross Asset Value (“GAV”) 1,140.5 1,296.3

Operating income and gains and losses on fair value of investments (1.0) 163.0

Net assets per share (pence) 118.4 126.5

Cash distributions from solar investments 120.4 111.8

Profit/(loss) after tax (9.3) 154.5

1. Total net assets as per the Statement of Financial Position on page 128.

2. Calculated as the sum of the NAV and total outstanding debt on page 85.

Net assets

Net assets decreased 9.5% to £697.9 million at

31 December 2023 from £771.5 million at 31 December

2022, primarily due to lower power price forecasts and

higher discount rates. This is detailed in the Investment

Manager’s Report from page 13.

The net assets of £697.9million comprise the £1,061.9

million portfolio of UK, Australian and Spanish solar and

UK battery storage investments, the Group’s cash balance

of £81.2 million offset by £367.6 million long-term debt,

£75.0 million of outstanding RCF and other net liabilities

of £2.6 million.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

FINANCIAL REVIEW CONTINUED

Third‑party debt arrangements

and gearing position

As at 31 December 2023, total outstanding long-term debt

was £367.6 million, representing 32.2% of GAV (calculated

as NAV plus outstanding debt) of the Company and its

subsidiaries (31 December 2022: £409.8 million or 31.6%

ofGAV).

As at 31 December 2023, total outstanding debt including

the RCF was £442.6 million, representing 38.8% of GAV

(31 December 2022: £524.8 million or 40.5% of GAV).

The Group’s net debt position, after deducting existing

cash balances, is £361.4 million, representing 31.7% of GAV

(31 December 2022: £423.7 million or 32.7% of GAV).

Long‑term facilities

As at 31 December 2023, of the £367.6 million long-term

debt facilities, a total of £88.1 million was linked to

inflation.

Analysis of the Group’s net assets at 31 December 2023

All amounts presented in £million (except as noted)

Year ended

31 December

2023

Year ended

31 December

2022

Gross portfolio value 1,061.9 1,196.9

Intermediate holding companies’ cash 79.2 90.1

Intermediate holding companies’ long-term debt (367.6) (409. 8)

Intermediate holding companies’ revolving credit facility (75.0) (115.0)

Intermediate holding companies’ other liabilities (1.7) (1.5)

Fair value of the Company’s investment in portfolio

696.8 760.7

Company’s cash 2.0 11.1

Company’s other net liabilities (0.9) (0.3)

Net Asset Value 697.9 771.5

Number of Ordinary Shares 589,239,345 609,958,720

Net Asset Value per share 118.4p 126.5p

1. Classified as the gross fair value of the underlying assets in the portfolio.

2. Equal to investments held at fair value through profit or loss and interest receivable as per the Statement of Financial

Position on page 128.

As at 31 December 2023, the average cost of long-term

debt was 4.15% per annum, including the inflationary

increase of the nominal balances of the indexed-linked

facilities of £88.1 million. The cost of these facilities is

expected to increase over time assuming the Company’s

long-term annual Retail Price Index expectations of 3% in

the medium term and 2.25% post-2030.

The Foresight Solar portfolio is largely hedged against

interest rate exposure. However, the £2.3 million variable

rate loan for FS Holdco, which is scheduled to be repaid in

full by March 2024, remains 20% unhedged, which means

the Company’s long-term debt is 99.7% hedged against

interest rate exposure.

Revolving credit facilities

As at 31 December 2023, the Company had used

£75.0million of its RCF, with £75.0 million remaining

undrawn following £40.0 million repayments during the

year. Of the undrawn balance, £1.6 million was allocated

toletters of credit.

During the year, Foresight Solar pushed out refinancing

risk by agreeing a one-year extension of its revolving

credit facility under the existing terms, until February

2026.

As at 31 December 2023, the weighted total cost of the

RCF was 6.62% per annum (2022: 2.08%), as a result of

high SONIA rates on the drawn balance.

Net assets continued

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

FINANCIAL REVIEW CONTINUED

Debt structure

Note: simplified for illustrative purposes. For outstanding debt balances please refer to the table on the following page.

Foresight Solar Fund Limited (Jersey)

Foresight Solar (UK Hold Co) Limited

RCF Debtco

Includes £150 million RCF

FS Holdco 1 FS Holdco 2 FS Holdco 4FS Holdco 3

Project Investments Project Investments Project Investments Project Investments

Includes first 16 UK

asset acquisitions.

Original long-term

debt facility of

£160 million

Includes 28 assets

following refinancing

in August 2019.

Original long-term debt

facility of £170 million

at FS Debtco

Includes six assets.

Original long-term debt

facilities of

£45.1 million

Includes Australian

and Spanish assets

and respective debt at

project level

LOS LLANOS, SPAIN

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Debt structure continued

The following table summarises the debt position of the Company as at 31 December 2023.

Borrower

Holding

vehicle Provider

Facility

type

Outstanding

(m) Maturity

Interest

rate hedge Applicable rate

FS Holdco FS Intermediate Holdco

MIDIS Fixed rate, fully amortising £54.5 Mar-34 100% 3.78%

MIDIS Inflation linked, fully amortising £62.4

Mar-34 N/A RPI Index + 1.08%

Santander Term loan, fully amortising £2.3 Mar-24 80% SONIA + 1.70%

Total £119.2

FS Debtco FS Holdco 2 SMBC/Heleba Term loan, fully amortising £142.7

Mar-36 100%

SONIA + 1.30% (margin

step to 1.35% in 2029)

Total £142.7

Second Generation

Portfolio 1

FS Holdco 3 MIDIS

Fixed rate, fully amortising

£3.1 Aug-34 100% 4.40%

Inflation linked, fully amortising £25.7

Aug-34 N/A RPI Index + 1.70%

Total £28.8

Global Solar Energy

27 SL (Lorca)

FS Holdco 4 BayernLB Term loan €12.3

3,4

Dec-31 100%

Double tranche: €9.5m

at 1.61% fixed rate,

€2.8m at Euribor +

2.10%

Foresight Solar Australia

Pty Ltd

FS Holdco 4

CEFC Term loan A$36.4

Jun-26 100%

Base rate (0.96375%) +

2.00%

Longreach ANZ/Deutsche Term loan A$21.2 Apr-27 100% BBSY Base rate + 1.20%

Oakey 1 ANZ/Deutsche Term loan A$34.2 Apr-27 100% BBSY Base rate + 1.20%

Oakey 2 Finco Pty Ltd CEFC Term loan A$32.0 Jun-24 100%

Base rate (4.49%) + 2.25%

Total A$123.8

Total long-term debt £367.6

FS RCF Debtco UK Hold Co

AIB, Barclays,

Lloyds, NatWest

Revolving credit £75.0 Feb-26 0% SONIA + 1.9%

Total revolving debt £75.0

Total outstanding debt £442.6

1. Nominal loan balance as at 31 December 2023 with the applicable RPI applied.

2. Interest rate swap for 100% of the outstanding debt during the initial five years, 75% from years six to ten and 50% thereafter.

3. EUR/GBP exchange rate of 0.8666 as at 31 December 2023.

4. Australian and Spanish debt prorated for Company’s share of asset ownership.

5. AUD/GBP exchange rate of 0.5353 as at 31 December 2023.

FINANCIAL REVIEW CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Debt structure continued

The Company continues to have limited exposure to

benchmark interest rate movements in the UK, Australia

and Spain as a result of long-term interest rate swaps in

place. In total, 99.7% of the £367.6 million of long-term

debt is hedged against interest rates movements. The

short-term £75.0 million RCF, equivalent to 16.9% of total

debt, is subject to interest rate volatility.

Sterling-denominated long-term debt facilities priced over

SONIA benefit from interest rate swaps hedging between

80% and 100% of the outstanding debt during the terms of

the loans, depending on the facility.

In Australia, debt facilities with CEFC have no exposure to

the Bank Bill Swap Bid Rate (“BBSY”) as the rate was fixed

at financial close or upon loan extension. All debt facilities

have interest rate swaps in place on a decreasing nominal

amount for a notional tenor of 20years. The Australian

portfolio was impacted by unexpectedly high economic

curtailment in the second half of the year that reduced

revenues and placed pressure on debt covenant ratios.

This has been addressed with lenders (see the Operational

Review on page 37).

In Spain, the debt facility priced over Euribor benefits from

100% interest rate swaps of the outstanding debt during

the term of the loan.

FINANCIAL REVIEW CONTINUED

Company profit and loss

The Company’s loss after tax for the year ended

31December 2023 was £9.3 million or 1.5 pence per share

(31 December 2022: profit £154.5 million or 25.3 pence

pershare).

For the year to 31 December 2023, the operating loss on

fair value of investments was £1.0 million, which comprised

the receipt of £31.8 million of interest on the Foresight

Solar (UK Hold Co) loan notes and £32.8 million net losses

on investments at fair value incurred in the period.

Operating expenses included in the income statement

for the period were £8.3 million, in line with expectations.

These comprise investment management fees of

£7.0million and £1.3 million of operating expenses.

Thedetails on how the investment management fees are

charged are set out in note 5 to the Financial Statements.

Company cash flow

The Company had a total cash balance at 31 December

2023 of £2.0 million (31 December 2022: £11.1 million).

Thisamount excludes cash held in subsidiaries.

All amounts presented in

£million (except as noted)

Year ended

31 December

2023

Year ended

31 December

2022

Interest received on

Foresight Solar (UK

Hold Co) Limited loan

notes 31.8 36.2

Net (losses)/profits

on investments at fair

value (32.8) 126.8

Operating income and

gains/losses on fair

value of investments (1.0) 163.0

Operating expenses (8.3) (8.5)

(Loss)/profit after tax (9.3) 154.5

(Losses)/earnings

pershare (1.5p) 25.3p

Cash flows of the Company only for the year

to 31 December 2023

All amounts presented in

£million (except as noted)

Year ended

31 December

2023

Year ended

31 December

2022

Cash balance at

1January 11.1 11.0

Interest on loan

notes received from

Foresight Solar (UK

Hold Co) Limited 62.9 51.5

Directors’ fees and

expenses (0.3) (0.3)

Investment

management fees (7.0) (7.4)

Purchase of own

Ordinary Shares (19.2) —

Administrative

expenses (1.1) (0.7)

Dividends paid in cash

to Shareholders (4 4.4 ) (43.0)

Company cash balance

at 31 December 2.0 11.1

1. This figure represents the cash payments made

to Jefferies International Limited by 31 December

2023. The total differs to the figure presented in the

Statement of Cash Flows by £0.7 million because of

theshare value purchased yet to be paid to Jefferies.

Assuch, this difference is within the change in trade

and other payables line of the Statement ofCashFlows.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

For the year ended

31 December 2023

£m

Australia

A$m

Spain

€m

Consolidated

£m

2022

Consolidated

£m

Revenue

Wholesale revenue 77.5 11.7 11.2 93.5 95.4

Subsidised revenue 62.5 2.9 — 64.1 66.0

Other income 4.3 0.6 0.1 4.6 3.1

Total operating revenue 144.3 15.2 11.3 162.2 164.5

Operating expenditure

O&M fixed (5.8) (1.3) (0.5) (6.9) (6.8)

O&M variable (1.0) (0.6) — (1.4) (1.3)

Other operating expenditure (14.2) (4.3) (1.4) (17. 8) (15.2)

Total operating expenditure (21.0) (6.2) (1.9) (26.1) (23.3)

Total operating profit 123.3 9.0 9.4 136.1 141.2

1. The profit and loss accounts of the Australian assets are combined based on the Company’s ownership, using an average

AUD/GBP exchange rate of 0.5338.

2. The profit and loss accounts of the Spanish assets are combined based on the Company’s ownership, using an average

EUR/GBP exchange rate of 0.8695.

3. Subsidised revenue consists of ROC, ROC recycle, Feed-in Tariff, embedded benefits and Large-Scale Generation

Certificates.

FINANCIAL REVIEW CONTINUED

Combined profit and loss of underlying

investments

During the year, on a combined basis, the underlying

assets earned £162.2 million of revenues (2022:

£164.5 million). UK subsidised revenue was consistent

with expected production. Other income was above

expectation due to significantly higher prices received for

Renewable Energy Guarantees of Origin (“REGOs”) during

the year. Wholesale revenue was impacted by lower global

merchant power prices across all markets in 2023.

Operating expenditure of £26.1 million (2022:

£23.3million) was consistent with contractual

arrangements, some of which were renegotiated during

the year. This resulted in combined operating profit for the

year of £136.2 million (2022: £141.2 million).

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Cash flows of the Company and intermediate

holding companies for the year to

31 December 2023

During the year to 31 December 2023, the underlying

solar assets paid £120.4 million of ordinary distributions

to the intermediate holding companies. Distributions were

received from entities in the UK, Australia and Spain.

Cash received from underlying solar investments covers

the long-term debt repayments, financing costs and the

operating and administrative expenses of the Company

and the intermediate holding companies, as well as the

dividends declared to Shareholders.

Electricity Generator Levy (“EGL”) payments of

£7.8 million were paid to HMRC during 2023 in relation to

generation revenue over £10 million and above a

£75/MWh cap.

The acquisition costs of £10.8 million relate to

the investments in the Lorca portfolio, Sandridge

Battery Storage Limited, Clayfords Energy Storage

Limited and Lunanhead Energy Storage Limited, and

further investment to secure the rights to a 467MWp

development-stage solar pipeline in Spain.

During the year to 31 December 2023, Foresight Solar

repurchased 20.7 million of its shares through its

announced £40 million share buyback programme. The

process proved to be in Shareholders’ interest, delivering

NAV accretion of 1.1 pence per share.

In November 2023, FS Holdco 4 disposed of 50.0% of

its investment in the Lorca portfolio for net proceeds of

£24.0 million. During the year, £40.0 million was repaid on

the RCF using free cash and proceeds from the divestment

of the Lorca portfolio.

Cash flows of the Group for the year to 31 December 202 (£million)

Year ended

31 December

2023

Cash distributions from solar investments 120.4

Electricity Generator Levy (7.8)

Administrative expenses (2.3)

Directors’ fees and expenses (0.3)

Investment management fees (7.0)

Financing costs (net of interest income) (13.5)

Repayments of long-term debt facilities (18.2)

Cash flow from operations 71.3

Acquisition of new assets (10.8)

Disposals 24.0

Net drawings and repayments of RCF (40.0)

Debt arrangement fees and refinancing fees (0.5)

Purchase of own Ordinary Shares (19.2)

Other 1.0

Dividends paid in cash to Shareholders (44.4)

Cash movement in the period (20.0)

Group cash balance at 1 January 101.2

Group cash balance at 31 December 81.2

FINANCIAL REVIEW CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Dividend cover

Total dividends of £44.4 million were paid during the year

ended 31 December 2023. Compared with the relevant

net cash flows from operations of the Company and

underlying investments of £71.3 million, these dividends

were covered 1.61 times (31 December 2022: 1.74 times).

Dividends

The Company has declared dividends of 7.55 pence for

the year ended 31 December 2023, representing a 6.0%

increase to the dividend paid relative to 2022.

The Company has met all target dividends since IPO and

follows a progressive dividend policy, aiming to grow its

dividend over time.

Dividend timetable for FY2023

Dividend Amount Status Payment date

Interim 1 1.880p Paid 25 August 2023

Interim 2 1.895p Paid 24 November 2023

Interim 3 1.880p Paid 23 February 2024

Interim 4 1.895p Targeted 24 May 2024

Total 7.550p

On 12 March 2024, the Company announced its final interim dividend of 1.895 pence per share for the 2023

financial year. The timetable for this payment is set out below:

Dividend timetable – Final Date

Ex-dividend date 25 April 2024

Record date 26 April 2024

Dividend payment date 24 May 2024

The Board will continue to assess the possibility of offering scrip dividends with respect to future quarterly

payments where the scrip reference price is above NAV per Ordinary Share.

FINANCIAL REVIEW CONTINUED

Foreign exchange

The Company is exposed to foreign exchange movements

in respect to its investments in Australia and Spain.

Assuch, the Company continues to implement a hedging

strategy to reduce the possible impact of currency

fluctuations and to minimise the volatility of equity returns

and cash flow distributions.

Foreign exchange hedging will not be applied to the cost

of the equity investments, considering the Company’s

long-term investment strategy.

For the Australian assets, Foresight Solar has entered

a rolling two-year forward contracts strategy for an

amount equivalent to approximately 75% of its expected

distributable foreign currency cash flows at project level.

For the Spanish projects, meanwhile, the Company has

implemented a ten-year rolling foreign currency hedging

strategy covering c.80% of the annual future cash flows

generated.

The Company reviews its foreign exchange strategy

on a regular basis to limit the short-term volatility in

sterling-distributable cash flows caused by foreign

exchange fluctuations and to optimise the costs of the

hedging instruments.

WYMESWOLD, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Ongoing charges

The ongoing charges ratio for the year to 31 December

2023 was 1.15% (31 December 2022: 1.14%). This has been

calculated using methodology as recommended by the

Association of Investment Companies.

Asset management fees charged by Foresight Group LLP

on an arm’s length basis at project level are excluded from

the ongoing charges ratio.

Ongoing charges

FSFL

£’000

UK Hold Co

£’000

Investment management fees 7,037 —

Directors’ fees 284 —

Administration fees 210 15

Audit fees 173 24

Other legal and professional fees 323 —

Other ongoing expenses 181 94

Total 8,341

Ongoing charges ratio 1.15%

Net Asset Value (“NAV”) £m

31 March 2023 757.5

30 June 2023 726.6

30 September 2023 706.9

31 December 2023 697.9

Average 722.2

FINANCIAL REVIEW CONTINUED

SHOTWICK, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

ALTERNATIVE PERFORMANCE MEASURES (“APMS”)

APM Purpose Calculation APM value Reconciliation to IFRS

Annualised total NAV return

since IPO

Annualised measure of financial performance,

indicating the movement of the value of the

Fund since IPO and expressed as a percentage

Closing NAV per Ordinary Share as at

31 December 2023 plus all dividends since

IPO assumed reinvested, divided by the NAV

at IPO, to the power of 1 over the number of

years since IPO, expressed as a percentage

8.0% The calculation uses the closing NAV per

Ordinary Share as per the Statement of

Financial Position on page 128

Annualised total shareholder

return since IPO

Annualised measure of financial performance,

indicating the total return derived from

holding the stock since IPO and expressed as

a percentage

Closing share price as at 31 December

2023 plus all dividends since IPO assumed

reinvested, divided by the share price at IPO,

to the power of 1 over the number of years

since IPO, expressed as a percentage

6.2% The calculation uses the closing share price as

per key investment metric table on page 18

Cash distributions from solar

investments

A measure of performance from the

underlying portfolio

Total cash received from investments in the

period

£120.4 million As per cash flows of the Company and

intermediate holding companies on page 88

Cash/net dividend cover A measure of excess cash generated from the

Group after payment of dividend

Net operating cash flow divided by dividend

paid within the period

1.61x The calculation uses the net cash flows from

operations as per cash flows of the Company

and intermediate holding companies on page

88 and the cash dividends paid as per the

Statement of Cash Flows on page 130

Gearing A measure of financial risk on the balance

sheet of the Company

Total debt of the Group and underlying

investments as shown on page 85 as a

percentage of GAV

38.8% The calculation uses the total debt on page 85

and the Net Asset Value as per the Statement

of Financial Position on page 128

Gross Asset Value (“GAV”) A measure of the value of the Company’s total

assets

The sum of total assets of the Company as

shown on the Statement of Financial Position

and the total debt of the Group and underlying

investments as shown on page 85

£1,140.5 million The calculation uses the total debt on page 85

and the Net Asset Value as per the Statement

of Financial Position on page 128

Market capitalisation Provides an indication of the size of the

Company

Closing share price as at 31 December 2023

multiplied by the closing number of Ordinary

Shares in issuance

£602.2 million The calculation uses the closing share price

as per key investment metric table on page 18

and closing number of Ordinary Shares as per

note 17 to the Financial Statements on page

153

NAV per Ordinary Share A measure of the value of one Ordinary Share The net assets divided by the number of

Ordinary Shares

118.4p As per the closing NAV per Ordinary Share

and as per the Statement of Financial Position

on page 128

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

APM Purpose Calculation APM value Reconciliation to IFRS

Ongoing charges ratio A measure of the annual reduction in

shareholder returns because of operational

expenses based on historical data

Total ongoing expenses including Investment

Manager fees, legal and professional fees,

administration fees, Directors’ fees and audit

fees expressed as a percentage of average

NAV through the year shown on page 90

1.15% Detailed calculation on page 90

Total NAV return Measure of financial performance, indicating

the movement of the value of the Fund in the

year and expressed as a percentage

Closing NAV per share as at 31 December

2023 plus all dividends in the year assumed

reinvested, divided by the NAV at

31 December 2022, expressed as a percentage

(0.6)% The calculation uses the Net Asset Value as

per the Statement of Financial Position on

page 128 and the cash dividends paid as per

the Statement of Cash Flows on page 130

Total shareholder return Annualised measure of financial performance,

indicating the total return derived from

holding the stock in the year and expressed

asa percentage

Closing share price as at 31 December

2023 plus all dividends in the year assumed

reinvested, divided by the share price at

31 December 2022, expressed as a percentage

(7.6)% The calculation uses the closing share price

as per key investment metric table on page

18 and the cash dividends paid as per the

Statement of Cash Flows on page 130

ALTERNATIVE PERFORMANCE MEASURES (“APMS”) CONTINUED

YARDWALL, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

PARK FARM, UK

GOVERNANCE

WHAT’S IN THIS SECTION

BOARD OF DIRECTORS 94

CORPORATE GOVERNANCE REPORT 96

MANAGEMENT ENGAGEMENT

COMMITTEE REPORT 104

NOMINATION COMMITTEE REPORT 106

AUDIT AND RISK COMMITTEE REPORT 109

DIRECTORS’ REMUNERATION REPORT 113

DIRECTORS’ REPORT 115

STATEMENT OF DIRECTORS’

RESPONSIBILITIES 118

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

BOARD OF DIRECTORS

The Directors are responsible for determining the Company’s investment

policy, have overall responsibility for its activities, and oversee performance.

Alexander Ohlsson

Chair

Chris Ambler

Senior Independent Director

Background

Mr Ohlsson is Group Managing Partner of the international

offshore law firm Carey Olsen. He is recognised as a leading

expert in corporate and finance law in Jersey and is regularly

instructed by leading global law firms and financial institutions.

Mr Ohlsson is the Chair of GCP Asset Backed Income Fund

Limited; an Advisory Board member of Jersey Finance,

Jersey’s promotional body; and Treasurer of the Jersey Law

Society. Hehas previously served as the independent Chair of

the States of Jersey’s Audit Committee. He was educated at

Victoria College, Jersey and at Queens’ College, Cambridge,

where he obtained an MA (Hons) in Law. He has also been an

Advocate of the Royal Court of Jersey since 1995.

Mr Ohlsson was appointed as a Non-Executive Director and

Chair on 16 August 2013 and was re-elected on 14 June 2023.

External directorships

GCP Asset Backed Income Fund Limited.

Background

Mr Ambler has been the Chief Executive of Jersey Electricity

plc since 1 October 2008. He has extensive experience from

several senior positions in the global industrial, energy and

materials sectors, where he worked for major corporations,

including ICI/Zeneca, the BOC Group and Centrica/British

Gas, as well as from strategic consulting roles. Mr Ambler is

a Chartered Director, a Chartered Engineer and a Member of

the Institution of Mechanical Engineers. He holds a First Class

Honours Degree from Queens’ College, Cambridge and an MBA

from INSEAD.

Mr Ambler was appointed as a Non-Executive Director on

16 August 2013 and was re-elected on 14 June 2023.

External directorships

Jersey Electricity plc.

Audit and Risk Committee

Management Engagement

Committee

Nomination Committee

Remuneration Committee

Chair

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

BOARD OF DIRECTORS CONTINUED

Lynn Cleary

Non-Executive Director

Monique O’Keefe

Non-Executive Director

Ann Markey

Non-Executive Director

Background

Ms Markey is an experienced business leader and Non-Executive

Director with a strong financial background. She has over

25years’ experience as a senior executive and as a board

member. Ms Markey has extensive experience in the electricity

industry, particularly in thermal and renewable generation,

including solar PV and wind. She was a senior executive with

ESB, a leading Irish utility company, and with Greencoat

Capital, a large renewable energy investment manager. She

holds several Non-Executive Director positions, chairing Audit

and Risk Committees. Ms Markey is a Chartered Accountant,

having trained and qualified with Arthur Andersen.

Ms Markey was appointed as a Non-Executive Director on

1September 2020 and was re-elected on 14 June 2023.

External directorships

Land Development Agency, Sustainable Energy Authority of

Ireland.

Background

Mrs O’Keefe is an Executive Director of Arrow Global Group

Capital Management Limited, the fund manager for the Arrow

Global Group business, and is the Chief Risk and Governance

Officer for Arrow Global Group. She is also Deputy Chair of

the Board of Commissioners at the Jersey Financial Services

Commission, as well as sitting on the Board of the Jersey

Resolution Authority.

Mrs O’Keefe was appointed as a Non-Executive Director on

1June 2019 and was re-elected on 14 June 2023.

External directorships

Arrow Global Group Capital Management Limited (and related

entities), Board of Commissioners at the Jersey Financial

Services Commission, and Board of the Jersey Resolution

Authority.

Background

Ms Cleary is an experienced senior executive with vast financial

knowledge. As a former CFO of the Royal Bank of Scotland

International, one of the largest in the Crown Dependencies,

she steered the firm through the financial crash and led its

transformation to comply with ring-fencing. An influential

member of the Channel Islands’ business community, Ms Cleary

was a recent President of the Jersey Bankers Association

and is current Chair of the Treasury Advisory Panel for the

Government of Jersey and of the Audit Committee for Ports

ofJersey.

Ms Cleary was appointed as a Non-Executive Director on

18September 2023 and will stand for election by Shareholders

at the next AGM in June 2024.

External directorships

Treasury Advisory Panel for the Government of Jersey, Board

of the Ports of Jersey.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

On behalf of the Board, I am pleased to introduce the

Company’s Corporate Governance Statement for the

reporting period ended 31 December 2023.

Board leadership

The Board has overall responsibility for the management

of the Company’s affairs and is responsible for its

long-term sustainable success.

Foresight Solar’s Board is made up of five independent

Non-Executive Directors. (Their profiles are set out

on pages 94 and 95.) The Nomination Committee has

considered the Board’s independence in detail and is

confident of its autonomy. More detail on this analysis can

be found from page 106.

The Board evaluates its effectiveness annually and, as part

of that analysis, the Directors have confirmed they have

adequate time to commit to their roles and responsibilities.

Further details of this assessment are set out in the

Nomination Committee Report from page 106.

The Directors believe that they have an appropriate

balance of skills, experience and knowledge to

oversee Foresight Solar’s affairs and act in the best

interest of its stakeholders. Diversity of experience

and approach amongst members is important, and it

is the Company’s policy to give careful consideration

to Board representation and diversity when making

new appointments. (Details of the succession plan and

recruitment initiatives are set out in the Nomination

Committee Report from page 106.)

Board operation

The Board is responsible to Shareholders for the proper

management of the Company. Meetings are held at least

quarterly, with further ad hoc sessions scheduled as

required. In the year under review, 11 ad hoc gatherings

were held in addition to the usual four quarterly sessions.

As part of its responsibilities, at each meeting, the Board

monitors the Company’s investment performance in

comparison to its objectives. The Directors also review

Foresight Solar’s activities since the previous gathering

to ensure the Investment Manager adheres to the agreed

investment policy and to the approved investment

guidelines, and, if necessary, approves changes to such

policy and guidelines.

At the Company’s quarterly Board meetings, the Directors

typically consider the following business:

•

Update from the Investment Manager, including:

•

Market commentary

•

Company portfolio overview

•

Portfolio performance reports

•

Independent power price estimates

•

Financial performance analysis, including cash flow

analysis and dividend cover forecasts

•

Pipeline, acquisitions and disposals

•

Health and safety

•

Gearing and debt compliance

•

Shareholder and analyst feedback and reports

•

Sustainability reporting

CORPORATE GOVERNANCE REPORT

BOARD LEADERSHIP AND COMPANY PURPOSE

A successful company is led by an effective

board. Foresight Solar’s Directors promote

its long-term sustainable success, generating

value for Shareholders and contributing to

society.

Alexander Ohlsson

Chair

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Board operation continued

•

Commentary from the Company’s brokers, including:

•

Market update

•

Share price performance against peers

•

Sales and trading report

•

Contribution from the Compliance Officer and

Company Secretary, including:

•

Compliance monitoring

•

Regulatory and governance updates

The Investment Management Agreement between

Foresight Solar and Foresight Group sets out the matters

over which the Investment Manager has authority, such

as monitoring and managing the existing investment

portfolio and the limits above which Board approval must

be sought.

Full details of the Directors’ duties and obligations are

provided at the time of appointment and supplemented by

further details as requirements change.

A formal induction programme for all new appointees is

in place. The Board has also instigated an ongoing annual

training programme for Directors on topics relevant to the

business.

Purpose and culture

Foresight Solar’s purpose is to offer investors access to a

sustainable, progressive quarterly dividend and enhanced

capital value by investing in a diversified portfolio of

ground-based solar PV and battery storage assets,

including development-stage solar and BESS projects,

inthe UK and abroad.

To achieve this purpose, the Company’s culture creates

openness, integrity and transparency in all business

relationships, creating an environment of proactive

engagement between Directors and stakeholders, a place

for constructive challenge of the Investment Manager, and

fostering ways to hold key service providers accountable.

The Board has sustainability responsibilities and

aims, with the support of the Investment Manager, to

continually improve the Company’s ability to deliver

attractive financial returns to investors alongside strong

environmental and social benefits.

Governance

The Board’s governance framework continues to improve.

The Directors work closely with the Company Secretary to

review and refresh policies and procedures, ensuring they

remain up to date and fit for purpose.

Statement of compliance with the AIC Code

Foresight Solar is a member of the Association of

Investment Companies (“AIC”) and the Board has

considered the principles and provisions of the AIC Code

of Corporate Governance (“AIC Code”).

The AIC Code addresses the relevant requirements set

out in the UK Corporate Governance Code ("UK Code”),

as well as setting out additional provisions on issues of

specific relevance to investment trusts and to Foresight

Solar.

The Board considers that reporting against the principles

and provisions of the AIC Code, which has been endorsed

by the Financial Reporting Council and is supported by

the Jersey Financial Services Commission, provides more

relevant information to Shareholders than if the Company

applied the UK Code.

Therefore, FSFL has applied the principles and complied

with the provisions of the AIC Code, available on

www.theaic.co.uk/aic-code-of-corporate-governance

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD LEADERSHIP AND COMPANY PURPOSE

Directors’ attendance at Board and Committee meetings:

Board Audit and Risk

Management

Engagement Remuneration Nomination

Alexander Ohlsson 14/15 — 1/1 — 5/6

Chris Ambler 15/15 7/7 1/1 1/1 6/6

Ann Markey

14/15 7/7 1/1 — 3/4

Monique O’Keefe 9/15 5/7 1/1 1/1 6/6

Lynn Cleary

4/4 2/2 — — —

Peter Dicks

8/8 3/3 1/1 1/1 —

1. Ann Markey was appointed to the Nomination Committee

with effect from 22 February 2023.

2. Lynn Cleary was appointed to the Board with effect from

18September 2023, joined the Audit and Risk Committee

with effect from 23 November 2023 and became a member

of the Remuneration Committee with effect from

29 February 2024.

3. Peter Dicks stepped down from the Board on 14 June 2023.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Governance framework:

The role of the Board and division of responsibilities

Foresight Solar’s Board of Directors oversees the Investment Manager in delivering the Company’s purpose, engages

with key stakeholders to understand how it can best represent their interests, and works closely with the main service

providers to maintain strong operational performance.

Board roles Role overview

Chair The Chair leads the Board and is responsible for its overall effectiveness.

Senior Independent

Director

The SID provides a sounding board for the Chair and serves as an intermediary for the

other Directors and Shareholders.

Non-Executive Director NEDs provide constructive challenge and strategic guidance, as well as offering

specialist advice and holding service providers to account.

Company Secretary The Company Secretary supports the Board and ensures the Company has the

policies, processes, information, time and resources needed to function effectively

andefficiently.

Foresight Solar’s governance structure supports

its purpose and creates a framework to bolster

its culture and sustainability initiatives.

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD LEADERSHIP AND COMPANY PURPOSE

COPLEY FARM, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Board committees

The Board has four standing committees: Audit and Risk, Management Engagement, Remuneration, and Nomination.

Each committee has adopted formal terms of reference, which dictate how to make recommendations to the Board.

(Individuals interested in viewing these terms can request a copy by writing to the Company Secretary at Foresight

Solar’s registered office.)

The role of each committee, along with its membership, is set out below:

Audit and Risk Management Engagement

Responsible for ensuring the Company maintains the highest

standards of integrity, financial reporting, internal and risk

management systems, and corporate governance.

Responsible for reviewing the performance of the Investment

Manager, as well as evaluating other key service providers.

Composition:

Ann Markey (Chair)

Monique O’Keefe

Chris Ambler

Lynn Cleary

Composition:

Alexander Ohlsson (Chair)

Chris Ambler

Ann Markey

Monique O’Keefe

Nomination Remuneration

Responsible for leading the process for Board appointments,

evaluation, succession planning, and ensuring a diverse

candidate pipeline.

Responsible for the development of remuneration policies and

practices that support the Company’s strategy and promote its

long-term success.

Composition:

Monique O’Keefe (Chair)

Alexander Ohlsson

Chris Ambler

Ann Markey

Composition:

Monique O’Keefe (Chair)

Chris Ambler

Lynn Cleary

Reports from the Company’s Committees are available from page 104.

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD LEADERSHIP AND COMPANY PURPOSE

AIFM Directive

The Company is categorised as a self-managed non-EEA

AIF for the purposes of the Alternative Investment Fund

Managers Regulation 2013 and the AIFM Directive. As

such, neither it nor the Investment Manager are required

to seek authorisation under the AIFM Directive. The Board

retains responsibility for most of the Company’s risk

management and portfolio management functions and

performs several of its management functions through its

various committees.

PARK FARM, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

Stakeholders

The Board seeks to encourage a culture that

promotes integrity and openness, that values

diversity, and that is responsive to the views of

the Company’s stakeholders.

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD LEADERSHIP AND COMPANY PURPOSE

Communicating with Shareholders

Shareholders are the Company’s primary

stakeholders, and Board decisions are carefully

considered with their long-term interests in mind.

With the support of its Investment Manager

and brokers, Foresight Solar maintains regular

communication with them and always welcomes

their views.

During the year, the Board, the Investment Manager

and the brokers held sessions with existing and

prospective Shareholders. The main topics of

interest were the macroeconomic environment,

its effects on the business, and the actions being

taken to reduce the share price discount to the Net

Asset Value. This led to thorough explanations of

FSFL’s phased divestment plan and its expanded

buyback programme. Spokespeople also touched

on the approach to capital recycling to position the

Company for growth once equity markets reopen,

and its international footprint.

In addition to asking for and collecting feedback

in every meeting, in 2023 Foresight Solar for the

first time engaged an independent consultant to

gather current and prospective investors’ views

in a perception audit. Questions covered a range

of topics from performance to governance and

brand to sustainability. The Board believes these

studies are an important tool for planning because

they offer an unbiased channel for Shareholders to

provide views and opinions, resulting in improved

communication with the market and an impartial

measure of understanding of the Company’s

investment proposition. The survey’s conclusions

will be used to inform decision-making and strategy

development.

Directors are required to act in good faith and to behave in

a way that promotes Foresight Solar’s long-term success

for the benefit of all its stakeholders. Fostering healthy and

constructive relationships with the Company’s different

audiences and taking their interests into consideration

as part of the decision-making process should result in

increased shareholder value over the long term.

Whilst Foresight Solar is an investment company with no

employees, the Board has identified its key stakeholders

and dedicated resources to interact with them, collect and

process their views before making relevant decisions.

It does so by tapping the Investment Manager, the joint

brokers and the Company Secretary as the main points of

contact. They are tasked with interacting with the different

stakeholders, gathering input, communicating concerns

and, ultimately, delivering the Board’s decisions to achieve

the best possible outcomes.

As part of its regular course of business, the Board

receives updates on matters relevant to stakeholders

and discusses those topics in depth during meetings and

throughout the year, taking into consideration:

•

The likely consequences of any decision in the

longterm

•

The need to foster and retain business relationships

with suppliers, customers and other stakeholders

•

The impact of the Company’s operations on local

communities and the wider environment

•

The importance of maintaining a reputation for high

standards of business conduct

•

The need to act fairly towards and ensure equal

treatment of Shareholders

A description of Foresight Solar’s main stakeholder

groups, their interests and how the Directors have taken

these into account when making determinations is set out

on the following pages.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

100

Stakeholder group Engagement and communication Results and decisions

Shareholders

•

Institutional and retail Shareholders

•

Hosted the Annual General Meeting

•

Held regular conversations, attended ad hoc investor

meetings and conducted roadshows

•

Addressed current and prospective retail investors with its

first exclusive meeting

•

Responded to queries on financial, strategic and sustainability

topics

•

Commissioned an independent investor audit to assess

opinions of current and prospective Shareholders

•

Presented financial updates, including Annual and Interim

Reports and factsheets

•

Published announcements via RNS

•

Updated the dedicated Foresight Solar website

•

Launched the Company’s LinkedIn page to foster two-way,

digital communication

•

Declared dividend target of 7.55pps for 2023

•

Launched a phased divestment programme of about

200MW of operational projects

•

Completed the first sale in Foresight Solar’s history at

a 21% premium

•

Initiated, and then expanded, a share buyback

programme of up to £40 million

•

Used extra cash from operations to pay down

variable-rate debt

•

Started building a robust development-stage pipeline

with the acquisition of rights to 467MWp of projects

in Spain

meetings with institutional

investors

Foresight Solar’s first

independent investor survey

Lenders

•

Banks

•

Updated regularly on covenant compliance and cash flow

positioning

•

Negotiated a one-year extension to the

sustainability-linked revolving credit facility at current

terms, limiting refinancing risk

•

Delivered positively on the RCF’s sustainability

metrics

debt providers to the Company

and its SPVs

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD LEADERSHIP AND COMPANY PURPOSE

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

101

Stakeholder group Engagement and communication Results and decisions

Investment Manager

•

Foresight Group

•

Held regular and ad hoc Board meetings to discuss Company

business

•

Hosted a Strategy Day to discuss and agree Foresight Solar’s

position and measures to further its competitiveness

•

Debated the potential impacts of government measures, such

as the Review of Electricity Market Arrangements and the

consultation on fixed-term contracts

•

Assessed the Investment Manager’s contractual relationship

and its performance

•

Monitored the effectiveness of the parameters for delegated

authority to make investment decisions

•

Oversaw internal controls arrangements

•

Established the Investment Manager maintains robust

internal controls

•

Confirmed the continued appropriateness of the

Investment Manager’s delegated authority to make

investment decisions

•

Determined the continued appointment of Foresight

Group was in the best interest of Shareholders

10‑YEAR

partnership with the Investment

Manager

Commercial service providers

•

Administrator and Company

Secretary

•

Joint corporate brokers

•

Legal advisors

•

Public relations agency

•

Tax advisors

•

Held regular meetings and calls, as well as various

interactions, on strategic actions

•

Consulted on regulatory, governance, accounting and

taxation matters

•

Monitored the internal control environment of the

Administrator and of the Company Secretary

•

Sought opportunities to engage with journalists, build brand

awareness and enhance Foresight Solar’s reputation

•

Conducted annual service provider performance reviews

•

Retained services of all key service providers

•

Concluded a competitive tender process to identify

best value for external audit works, reappointing

KPMG

•

Managed a request for proposals to appoint a new

public relations agency, selecting Powerscourt

tender processes to identify

better quality and secure

improved terms

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD LEADERSHIP AND COMPANY PURPOSE

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

102

Stakeholder group Engagement and communication Results and decisions

Regulators

•

Jersey Financial Services

Commission

•

Oversaw service providers to ensure successful operations

and regulatory reporting

•

Interacted with the JFSC to ensure legal and financial

compliance

•

Took appropriate measures and guaranteed

compliance

interactions with the JFSC

Asset‑level counterparties

•

Supply chain counterparties

•

Landowners

•

O&M contractors

•

PPA counterparties

•

Focused engagement on value enhancement opportunities,

including rationalisation of service provision for cost savings

and/or improved services

•

Hosted regular calls with O&M providers to ensure adequate

oversight of portfolio operations

•

Maintained regular contact with the owners of the land on

which Foresight Solar’s assets operate

•

Increased emphasis on internal control frameworks to ensure

they are robust and effective

•

Increased scrutiny of, and resource allocated to, emerging

risks

•

Re-evaluated contracts to improve service levels and

reduce costs

•

Implemented value enhancement projects to improve

portfolio operations

•

Engaged with select landowners to extend asset

leases

•

Grew commercial relationships through new

acquisitions and development opportunities

60+

different providers

Local communities

•

Local authorities and agencies

•

Area residents

•

Interacted with local authorities to ensure safe and compliant

asset operations

•

Conducted educational site visits for schools and colleges

•

Contributed £392,816 to local community funds

£392,816

contributions made to local

communities

Alexander Ohlsson

Chair

11 March 2024

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD LEADERSHIP AND COMPANY PURPOSE

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

103

MANAGEMENT ENGAGEMENT COMMITTEE REPORT

Meeting at least once per year, the Management

Engagement Committee’s main responsibility is to assess

the Investment Manager’s performance in the context

of the Investment Management Agreement between the

Company and Foresight Group.

The Directors evaluate the Investment Manager’s ability to

provide income and growth, deliver financial performance

for the desired risk profile, manage the Company’s assets

effectively, and distribute a sustainable, progressive

dividend.

In addition to its main task, the Committee is also charged

with analysing the delivery of key service providers’ work.

Performance of the Investment Manager

To analyse the Investment Manager’s overall performance,

the Committee investigates:

•

The Company’s results relative to its peers

•

The Investment Manager’s remuneration for services

rendered for the period

•

Foresight Group’s ability to support the Board in

delivering the Company’s purpose

The Committee conducted a detailed review and

concluded that, whilst the Board should continue to

challenge the Investment Manager, the ongoing retention

of Foresight Group at current remuneration levels

remained in the Company’s best interest.

The Committee is responsible for reviewing

the performance of key service providers,

especially the Investment Manager, to ensure

the Company is effectively supported.

Alexander Ohlsson

Chair

•

Alexander Ohlsson

•

Chris Ambler

•

Ann Markey

•

Monique O’Keefe

•

Review the terms of appointment and fees paid to

the Investment Manager

•

Oversee the performance of and hold the Investment

Manager accountable for its service delivery

•

Review the terms of appointment and fees paid

to key service providers, including the Company

Secretary, Administrator, registrar, legal and public

relations advisors, and brokers

•

Oversee the performance of and hold key service

providers accountable for their work

Membership:

Roles and responsibilities:

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

104

MANAGEMENT ENGAGEMENT COMMITTEE REPORT CONTINUED

Performance of key service providers

The complex macroeconomic backdrop increased

competition for capital even more, leading the Board

to appoint Singer Capital Markets as a joint broker to

the Company. They were selected for their extensive

network and recognised sales capabilities, and tasked

with expanding Foresight Solar’s investor reach. Singer

will work alongside Jefferies to strengthen existing

relationships and form new connections with potential

Shareholders.

After five and a half years of partnership, Foresight Solar

and public relations firm Citigate Dewe Rogerson ended

their relationship. After a competitive process between

five providers, Powerscourt was selected to represent the

Company based on its team’s experience, creative ideas

and value for money. The new PR adviser is providing a

targeted approach to relay FSFL’s key messages externally

and reach specific investor audiences.

The Committee also conducted a review of other key

service providers, including the Company Secretary and

Administrator, brokers, legal advisors and registrar. It

concluded that it would continue to work with them to

address potential performance concerns and to ensure

that the fees paid remained in line with the stipulated

budget and the contractual agreements.

Overall, the Committee was comfortable that the dues

paid were broadly in line with market rates for comparable

services.

Conclusion

Following these reviews, the Committee determined that it

was in the Company’s and its Shareholders’ best interests

for the Investment Manager’s appointment to continue,

and the Board has since ratified this decision.

Alexander Ohlsson

Chair of the Management Engagement Committee

11 March 2024

ATHERSTONE, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

105

The Nomination Committee is responsible for ensuring

the Company sets formal, rigorous and transparent

procedures to select new Board members. The succession

pipeline is fostered using objective selection criteria that

seek to promote diversity of gender, social and ethnic

backgrounds, cognitive and personal strengths.

The Board reviews, at least once a year, its effectiveness

and its combination of skills, experience and knowledge.

Appointments and succession planning

The Board bid farewell to Peter Dicks in 2023 after he

stepped down at the AGM in June. Mr Dicks served as a

Director since the Company’s Initial Public Offering in 2013

and made a significant contribution to Foresight Solar and

its success during his tenure.

The Committee reviewed the tenure of Alexander Ohlsson

and Chris Ambler, who have been in position since the

Company’s IPO in 2013, scrutinised their independence

and performance, and is satisfied that both remain

independent and continue to perform well.

NOMINATION COMMITTEE REPORT

The Committee is responsible for ensuring

rigorous and transparent procedures, along

with objective selection criteria for Board

appointments and succession plans.

Monique O’Keefe

Chair of the Nomination Committee

•

Monique O’Keefe

•

Alexander Ohlsson

•

Chris Ambler

•

Ann Markey

•

Lead the process for new Board appointments

•

Ensure plans are in place for orderly succession

•

Oversee the development of a diverse candidate

pipeline

•

Lead annual Board effectiveness review

Membership:

Roles and responsibilities:

Mr Ohlsson and Mr Ambler are expected to remain on

the Board for the next 12 to 24 months as the Company

pursues its succession plan. The retention of the two

Directors is beneficial to support this phased rotation as it

ensures an orderly handover to new Board members.

In addition to the continued strong performance of

Mr Ohlsson and Mr Ambler, the longer term nature of

Foresight Solar’s assets and the desire to retain corporate

history, knowledge and experience, the Committee

recommended to the Board their continued service.

Further, with the upcoming discontinuation vote at the

June AGM, the Committee considers it necessary to

ensure stability and continuity on the Board.

During the year, the Committee engaged the Green

Recruitment Company to support the first part of the

phased succession plan. Unfortunately, this process failed

to identify suitable candidates to match the criteria set for

the role and had to be brought to an end.

The Board will engage an alternative independent search

consultant to support the recruitment of a Non-Executive

Director with skills similar to Mr Dicks’ to join in 2024.

The Committee is open to exploring an appointment in

jurisdictions other than Jersey.

The Company, supported by Satori Executive Search,

identified an appropriate Jersey-based candidate and we

are pleased to announce the conclusion of the process to

select a Non-Executive Director. Following due process,

which included reviews of long and short lists, as well as

interviews with Directors and the Investment Manager,

Lynn Cleary was recognised as a strong candidate with

complementary skills and experience.

COMPOSITION, SUCCESSION AND EVALUATION

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

106

Appointments and succession planning continued

The Committee proceeded to make its recommendation

and Ms Cleary was appointed to the Board with effect

from 18 September 2023. She was also appointed to the

Company’s Audit and Risk and Remuneration committees.

Ms Cleary will stand for election by Shareholders at the

AGM in June 2024.

Board and committee composition

The Committee reviewed the composition of the current

Board and concluded that the Directors work effectively

together and possess a desirable balance of skills,

experience and expertise. The Committee will continue to

pursue the Company’s succession plan with due regard to

maintaining the current effective working dynamics.

The composition of the Company’s committees was also

analysed and the Committee recommended that Ann

Markey join the Nomination Committee and that Lynn

Cleary be a member of the Remuneration Committee. The

committees needs will continue to be reviewed against the

skills, experience and workload of the Directors to ensure

they remain appropriately supported.

Board performance evaluation

The Board undertakes an annual evaluation of its own

performance and of its committees through an evaluation

questionnaire. The Chair then discusses the results with

the Board and its committees, and takes appropriate

action to address any issues.

During 2023, the Board conducted an internally facilitated

evaluation managed by the Company Secretary. The

review involved the completion of a questionnaire by all

Directors and a review of the actions from the external

Board evaluation held the previous year. The key

recommendations from the 2022 evaluation were:

•

The Company’s policies should be reviewed annually

and be further refined to its business

•

The Board could benefit from clarification of the

division of responsibilities and the matters reserved for

the Directors

•

The committees should more clearly and formally

report to the Board with a summary of their work and

key recommendations

With the Company Secretary’s support, the Board

reviewed Foresight Solar’s policies and formalised a

refreshed schedule of matters reserved for the Directors.

The governance reporting between the Board and its

committees has also been more clearly defined and more

consistently implemented during the year.

The key development points identified during the 2023

evaluation were:

•

Continued implementation and evolution of the

Company’s succession plan to ensure appropriate

Board rotation

•

Ongoing training and support on the evolving

Anti-Money Laundering and Counter Financing

ofTerrorism regulations in Jersey

•

Development of the Board’s review of the Company’s

risk management framework and internal controls, in

line with corporate governance requirements

The Committee will continue to support the

implementation and review of these recommendations,

and the Board will consider conducting another externally

facilitated evaluation in 2025.

Overall, the Board, the Chair, the Directors and the

committees have performed well during the year. The

Board continues to work well with the Investment Manager

in developing the Company’s growth strategy and

promoting its long-term success.

Directors’ professional development

Full details of duties and obligations are provided

to the Directors at the time of appointment and are

supplemented by additional information as requirements

change. Changes affecting Directors’ responsibilities are

advised to the Board as they arise.

A formal induction programme for new appointees is

in place, helping bring them up to speed on Company

developments and accelerate competency-building. In

any case, Directors are provided with key information

on the Company’s policies, regulatory and statutory

requirements, and internal controls on a regular basis.

Directors also attend industry seminars, as well as

participating in an ongoing annual training programme on

topics relevant to the Company’s business. This helps build

necessary skills and creates opportunities for exchanges

of experience between Board members.

Further, as Directors of a Regulated Fund in Jersey,

the members of the Board are required to undertake

a minimum of 25 hours’ continuous professional

development per year. All Directors met this requirement

in 2023.

NOMINATION COMMITTEE REPORT CONTINUED

COMPOSITION, SUCCESSION AND EVALUATION

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

107

Diversity

The Board has adopted a Diversity Policy to support the

Company’s commitment to increase diversity. This policy

is reviewed by the Nomination Committee each year to

ensure it remains fit for purpose.

With the appointment of Ms Cleary and the resignation

of Mr Dicks, the Committee noted that the Company

had 60% female representation but had limited ethnic

diversity. Addressing this is part of the goal of the current

recruitment initiatives.

As the Company continues to progress its succession

plan, the Committee is considering candidates from the

UK and continental Europe. Foresight Solar continues to

be committed to run a process targeted at attracting the

most qualified, most diverse applicant pool possible.

Conflicts of interest

The Directors are obligated to notify the Company

Secretary as soon as they become aware of any actual or

potential new conflict of interest. Only Directors who have

no material interest in the matter being considered will be

able to participate in the Board approval process.

Other business relationships, including those that

conflict or may potentially conflict with the interests of

the Company, are considered when appointing Board

members and are monitored on a regular basis. The terms

of each Director’s appointment letter require that they

seek prior approval from the Board before taking up any

other external appointments.

The Board recognises Directors’ holdings of Ordinary

Shares in the Company, details of which are set out on

page 114. The Board considers these interests at each

scheduled meeting and remains satisfied that they do

not affect members’ objectivity or their ability to exercise

independent judgement.

Re‑election of Directors

Mr Ohlsson, Mr Ambler, Mrs O’Keefe and Ms Markey were

all reappointed at the Annual General Meeting held on

14June 2023. The Committee was pleased to see the

strong Shareholder support, with each Director receiving

more than 95% of votes in favour.

Ms Cleary, who was appointed in September 2023, will

stand for election at the next AGM in June 2024. All other

Directors will offer themselves for re-election at the same

meeting.

Monique O’Keefe

Chair of the Nomination Committee

11 March 2024

NOMINATION COMMITTEE REPORT CONTINUED

Number

of Board

members

Percentage of

the Board

Number

of senior

positions

Male 2 40% 2

Female 3 60% —

Number

of Board

members

Percentage of

the Board

Number

of senior

positions

White British

or other White

(including

minority-white

groups) 5 100% 2

1. Chair and Senior Independent Director.

Board member diversity

COMPOSITION, SUCCESSION AND EVALUATION

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

108

AUDIT AND RISK COMMITTEE REPORT

The Committee operates within clearly defined terms of

reference, which are reviewed annually and include the

Company’s reporting on sustainability.

During the year, the Committee finalised its framework

on risk management and internal controls. This work

has improved the transparency of Foresight Solar’s risk

management systems and processes, and has more

clearly delineated risk responsibilities. The Committee

will consider the impact from the recent changes to the

UK Corporate Governance Code and any potential future

updates to the AIC Code on its work.

The Committee ensures the Company

maintains the highest standards of

integrity, financial reporting, internal and

risk management systems, and corporate

governance.

Ann Markey

Chair of the Audit and Risk Committee

•

Ann Markey

•

Chris Ambler

•

Monique O’Keefe

•

Lynn Cleary

•

Monitor the integrity of the Financial Statements and

approve the accounts

•

Review Foresight Solar’s internal control and risk

management systems

•

Make recommendations to the Board about the

appointment of the external Auditor

•

Oversee the external Auditor and monitor its

independence

•

Implement and review the policy on the engagement

of the external Auditor to supply non-audit services

Membership:

Roles and responsibilities:

The Committee is charged with maintaining an open and

effective relationship with the Company’s Auditor. The

Chair of the Committee stays in regular contact with the

Auditor during the audit process and the Auditor attends

meetings in which the Annual Financial Statements are

considered.

KPMG LLP (“KPMG”) has completed the Company’s

external audit for 2023 and has not performed any

non-audit services during the year. JTC (Jersey) Limited

(“JTC”) prepares all necessary tax returns following

sign-off of the annual accounts.

Meetings are scheduled to coincide with Foresight Solar’s

reporting cycle and the Committee met seven times

during the year, reflecting its work on the tender for audit

services.

None of the members of the Committee have any

involvement in the preparation of the Company’s Financial

Statements. The Committee reports directly to the Board,

which retains the ultimate responsibility for the Financial

Statements.

Significant issues considered

The Committee has identified and considered the

following principal key risk in relation to Foresight Solar’s

activities and to the Annual Financial Statements:

•

Valuation of unquoted investments. This issue was

discussed with the Investment Manager and the Auditor

at the planning and conclusion of the audit of the

Annual Financial Statements. (It is also considered

by the Committee in relation to the Interim Financial

Statements.)

AUDIT, RISK AND INTERNAL CONTROL

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

109

Significant issues considered continued

Valuation of unquoted investments

The unquoted investment is a 100% controlling interest in

Foresight Solar (‘UK Hold Co’) Limited, a non-consolidated

subsidiary company which is measured at fair value. The

majority of UK Hold Co’s total assets (by value) are in

companies in which no quoted market price is readily

available.

The total controlling interests of the Company’s assets

are held through its subsidiary, Foresight Solar ('UK Hold

Co') Limited: FS Top Holdco 1 Limited (“FS Topco 1”), FS

Top Holdco 2 Limited (“FS Topco 2”), FS Holdco Limited

(“FS Holdco”) and FS Holdco 3 Limited (“FS Holdco 3”)

(through RCF Debtco), FS Holdco 4 Limited (“FS Holdco

4”) and SBSHL. (See note 1 to the Financial Statements

on page 131 for details.) FS Topco 1, in turn, holds an

indirect 100% controlling interest in FS Holdco Limited

(“FS Holdco”), FS Topco 2 has an indirect 100% controlling

interest investment in FS Debtco Limited (“FS Debtco”),

and FS Holdco 3 has an indirect 100% controlling interest

in SGP 1.

These are all non-consolidated subsidiary companies

which are also measured at fair value, established by using

the fair value of their net assets.

The majority of the total assets (by value) of FS

Holdco, FS Debtco, SGP 1 and FS Holdco 4 are held in

investments in which no quoted market price is available

and are valued by using discounted cash flow models.

SBSHL’s investments are held at cost as they are not yet

operational.

The valuations of underlying investments are an area of

inherent risk and judgement. There is an inherent risk of

the Investment Manager unfairly valuing the assets due to

its fee being linked to Foresight Solar’s Net Asset Value.

During the valuation process, the Board, the Committee

and the Investment Manager follow the valuation

methodologies for unlisted investments as set out in the

International Private Equity and Venture Capital Valuation

Guidelines, as well as appropriate industry benchmarks.

These policies are set out in note 2 to the Financial

Statements, from page 132.

The Committee reviews the Investment Manager’s

valuations, including changes in assumptions. The

Investment Manager confirmed the underlying valuations

had been calculated consistently throughout the year and

in accordance with industry guidelines, taking account of

the latest available information about investee companies

and current market data. The Investment Manager also

held discussions regarding the investment valuations with

the Auditor.

The Investment Manager has agreed the valuation

assumptions with the Committee. Key assumptions

used in the valuation forecasts are detailed in note 16 to

the Financial Statements. The Investment Manager has

provided sensitivities around those assumptions, which are

also detailed in note 16.

The Investment Manager employs three independent

energy consultants to provide forward-looking power

price forecasts, which are a key input into portfolio

valuations.

Annual Financial Statements

The Investment Manager confirmed to the Committee

that it was not aware of any material misstatements in the

Company’s financial reporting.

Having reviewed the reports from the Investment Manager

and from the Auditor, the Committee is satisfied that the

key areas of risk and judgement have been addressed

appropriately in the Annual Financial Statements and that

the significant assumptions used in determining the value

of assets and liabilities have been properly appraised and

are sufficiently robust.

The Committee has concluded that the Annual Report

and Financial Statements are fair, balanced and

understandable, and that they provide the information

necessary for Shareholders to assess Foresight Solar’s

position, performance, business model and strategy.

External Auditor

During the year, the Committee assessed the effectiveness

of the current external audit process by assessing and

discussing specific documentation presented to it in

accordance with the relevant guidance. It also assessed

the quality and effectiveness of the engagement

between the Auditor, the Investment Manager and the

Administrator.

The Committee considered the performance of the

Auditor and agreed that KPMG provided a high level of

service and maintained a good knowledge of the market,

ensuring audit quality. Overall, KPMG has carried out its

duties in a diligent and professional manner.

AUDIT AND RISK COMMITTEE REPORT CONTINUED

AUDIT, RISK AND INTERNAL CONTROL

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

110

AUDIT AND RISK COMMITTEE REPORT CONTINUED

External Auditor continued

The Committee also conducted a review of KPMG’s

independence and objectivity, which included an

analysis of the firm’s own objectivity and independence

assessment, and was satisfied that it was objective and

independent. The current audit partner took over the role

in November 2020, and so is within the five-year permitted

period. She will rotate off the account at the end of the

2024 audit.

The Financial Reporting Council (“FRC”), the UK regulator

for auditors, accountants and actuaries, conducted a

randomised inspection of KPMG’s audit of the Company’s

2022 Financial Statements. The investigation covered

audit risk assessment and planning; execution of the audit

plan; completion and reporting, including the quality of

communication with the Audit and Risk Committee; and

focused on:

•

Key audit matters

•

Valuation of unquoted investments

•

Other audit areas

•

Revenue recognition

•

Journal entry testing

The FRC concluded the audit was “good”, which is the

highest quality rating available, and indicated no key or

other findings were identified. (The background and scope

of the FRC’s inspections, its approach to assessing audit

quality, together with its confidentiality obligations, are

set out on its website: www.frc.org.uk/auditors/audit-

quality-review.)

Audit tender

KPMG has audited the Company since it listed in 2013,

overseeing the process from the first financial year end

on 31 December 2014 to the one covered in this report,

which ended on 31 December 2023. According to the

FRC’s “Audit Committees and the External Audit: Minimum

Standard”, Foresight Solar was obliged to tender its

independent audit work for the financial year ending on

31 December 2024 and will be obliged to rotate its Auditor

again in ten years’ time.

The Company, therefore, commenced a tender for audit

services in July 2023 and concluded the process in

December. The selection was managed by a Steering

Committee consisting of Ann Markey and Chris Ambler,

and was closely supported by the Investment Manager

and the Company Secretary. To ensure all members

of the Audit and Risk Committee were involved, the

Steering Committee provided regular updates and shared

proposals for review and comment.

The tender started with an invitation to four shortlisted

audit firms. The names were derived from consultation

with Foresight Group and from a review of the prospective

firms’ credentials and capabilities of auditing listed

renewable energy investment companies. A key

consideration was whether candidates had a valuations

team with experience in renewable energy transactions.

The shortlist also included a “challenger” firm from outside

the “big four”.

Foresight Solar’s current auditors, KPMG, were asked

to re-tender because of their institutional knowledge,

understanding of the audit engagement and scope, and

working relationship with the Company’s key advisors.

The Audit and Risk Committee set the following selection

criteria to objectively evaluate each proposal:

•

Sector expertise well suited to the Company’s asset

class and multi-geography presence, as well as

consideration for Foresight Solar’s acquisition pipeline

•

Experience and audit quality record of the firm and of

the lead partner proposed

•

Experience in transitioning similar audit mandates

•

Planned use of technology in the process to deliver

quality and efficiency

•

Proposed fees

Ultimately, three auditors submitted proposals, with one

firm declining to tender due to potential conflicts. The

Steering Committee carefully reviewed the documents

in October and, the following month, the three tendering

firms were invited to present their proposals. The Steering

Committee then recommended a preferred option, along

with a secondary choice, to the Audit and Risk Committee.

The full Audit and Risk Committee met in December to

review the process and consider the recommendation.

Following due consideration, and having satisfied itself

that the tender was fair, objective and transparent, the

Audit and Risk Committee approved the recommendation

of the two prospective firms to the Board. The Directors

then reviewed the recommendation and resolved to

reappoint KPMG LLP for the audit of the financial year

ending 31 December 2024.

The decision to reappoint KPMG was supported by the

fact that the firm achieved the best results against the

evaluation criteria. The Board also took into consideration

KPMG’s “good” mark in the FRC’s Audit Quality Review for

the Company’s 2022 audit.

AUDIT, RISK AND INTERNAL CONTROL

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

111

AUDIT AND RISK COMMITTEE REPORT CONTINUED

Audit tender continued

All firms that participated in the tender process produced

strong proposals. The Committee would like to thank each

one for taking part and thoroughly engaging with the

selection process.

KPMG will stand for reappointment at the Company’s AGM

in June 2024.

Internal control and risk management

The Directors have responsibility for the Company’s

internal controls and for the review of their effectiveness.

The internal controls system is designed to manage,

rather than eliminate, the risks of failure to achieve the

Company’s business objectives.

The system is designed to meet the Company’s needs

and its risks. By its nature, however, the system can

provide reasonable but not absolute assurance against

misstatement or loss.

The Board has appointed JTC as Accountant and

Administrator, effectively delegating the Company’s

financial management. There is an established system of

controls in place to ensure proper records are maintained

and financial information is accurate and reliable, and that

Foresight Solar’s assets are safeguarded.

Directors have access to the advice and services of the

Company Secretary, who is responsible for ensuring

compliance with procedures and applicable rules and

regulations.

Pursuant to the terms of its appointment, the Investment

Manager provides the Board with a pipeline of potential

investment opportunities for it to consider and has

physical custody of documents of title relating to the

equity investments involved.

The Investment Manager confirmed that there is a

continuous process for identifying, evaluating and

managing the Company’s risks. This has been in place for

the year under review and up to the date of approval of

the Annual Report and Financial Statements. This process

is also regularly reviewed by the Audit and Risk Committee

and the Board.

The risk management process uses a risk-based approach

to internal control whereby a Business Risk Assessment

is maintained with a risk matrix that identifies the key

functions carried out by the Investment Manager and

by other service providers; the individual activities

undertaken within those functions; the risks associated

with each activity; and the controls employed to minimise

those risks.

The Board receives regular reports highlighting all material

changes to the risk ratings and confirming the actions

that have been or are being taken. This process covers

Foresight Solar’s key business, operational, compliance

and financial risks, and includes consideration of the

risks associated with its arrangements with professional

advisors.

The Audit and Risk Committee reviewed the effectiveness

of the system of internal controls, along with a review

of the operational and compliance controls and risk

management. The Committee reported its conclusions to

the Board, which was satisfied with the overall outcome

and with the quality of the internal controls.

The Committee has, however, recommended

improvements to the Company’s Anti-Money Laundering

and Counter Financing of Terrorism risk management

policies and processes in line with the relevant Jersey

regulations.

The Audit and Risk Committee also analysed the need for

an internal audit function and decided that the systems

and procedures employed by the Investment Manager,

the Accountant and Administrator, the Audit and Risk

Committee and other third-party advisors provide

sufficient assurance to safeguard Shareholders’ investment

and the Company’s assets.

Other matters

During the year, the Committee investigated the benefit

of having the Company’s Interim Report and Financial

Statements reviewed by the external Auditor and

concluded that, on balance, there was limited advantage.

This decision will be revised annually to ensure it remains

appropriate.

Cybersecurity risks and measures were also reviewed

during 2023 and the Committee was satisfied that

the Company has adequate protections in place.

Cybersecurity breaches are an ongoing threat and the

Committee works with its key service providers to ensure

protective measures remain effective and fit for purpose.

Ann Markey

Chair of the Audit and Risk Committee

11 March 2024

AUDIT, RISK AND INTERNAL CONTROL

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

112

DIRECTORS’ REMUNERATION REPORT

Introduction

The Board has prepared this report in line with the AIC

Code. An ordinary resolution to approve it will be put to

Shareholders at the forthcoming 2024 Annual General

Meeting.

Remuneration considerations

The Committee considers the Board’s fees at least

once per year, undertaking – when necessary – external

comparisons to ensure Directors’ remuneration is in line

with industry standards. During 2023, neither the Board

nor the Committee have been provided with external

advice or services about remuneration. The Directors have,

however, received peer information for comparison from

the Investment Manager.

The Committee considered seeking guidance from an

independent consultant but concluded that, due to the

Investment Manager’s analysis and the availability of

appropriate benchmark data, a third-party contribution

was not required. The Committee considers the need for

external input every year.

The Committee has responsibility for reviewing

and establishing Directors’ remuneration,

specifically reflecting the responsibilities and

time commitment of their roles.

Monique O’Keefe

Chair of the Remuneration Committee

•

Monique O’Keefe

•

Chris Ambler

•

Lynn Cleary

•

Set remuneration policies and practices to support

strategy

•

Determine the remuneration policy

•

Decide compensation for the Directors

Membership:

Roles and responsibilities:

Directors had an increase of 5% in fees for 2023.

Followingits latest review, the Committee concluded that

a below-inflation rise of 4% should be applied to Directors'

remuneration for this year. The policy guiding these

changes is described on the next page.

When determining the appropriate level of compensation

for the Directors, the Committee took into consideration a

multitude of factors, including the inflationary landscape,

the complex regulatory environment, the significant

increase in responsibilities due to the Company’s growth

agenda, and the growing time commitment required

of Directors. The Committee also considered feedback

received during the recruitment of new Directors.

The detailed fees proposed for 2024 are set out on the

next page. The Committee considered this compensation

to be justified against the Company’s performance and the

available peer data. The Committee also concluded that

these fees enable Foresight Solar to competitively pursue

its succession plan within the overall limit set out in the

Company’s Articles.

The Committee analysed the fee levels for the Senior

Independent Director (“SID”) and concluded that, whilst

the role came with more responsibility, no additional

ongoing remuneration was required. However, the

Committee recognised that one-off compensation may

be paid for additional work should the SID be required to

provide extra support to the Board or to the Chair on a

temporary basis.

Finally, it’s important to note that the Directors are not

involved in deciding their own individual remuneration,

with each Board member abstaining from voting ontheir

own compensation.

REMUNERATION

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

113

DIRECTORS’ REMUNERATION REPORT CONTINUED

Remuneration policy

The remuneration of Non-Executive Directors should reflect time spent and the

responsibilities borne by the Directors for the Company’s affairs. It should also be

sufficient to enable the recruitment of high calibre candidates that, at a minimum,

maintain the existing Board’s high standards. It is considered appropriate that no aspect

of Director remuneration should include share options or should be performance-related

due to their Non-Executive status.

Directors’ fixed annual fees are set in accordance with Foresight Solar’s Articles of

Association, which establishes the limit for compensation.

The Company pays Directors every quarter, in arrears. Mr Ohlsson’s remuneration is paid

to Carey Olsen Corporate Services Jersey Limited and Mr Ambler is obliged to direct 20%

of his fees to Jersey Electricity plc.

None of the Directors have a service contract but, under their individual letters of

appointment, may resign at any time by mutual consent. No compensation is payable

to Directors leaving office. As they are not appointed for a fixed length of time, there is

no unexpired term to their appointment. The Directors are also entitled to be paid their

reasonable expenses incurred whilst engaged on Company business.

Shareholders approved the remuneration policy at the Annual General Meeting held on

14 June 2023 for the financial year to 31 December 2023 and it will apply to subsequent

years. Shareholders’ views about remuneration are communicated at the AGM and

considered in formulating the policy.

Individual emoluments and compensation

The emoluments in respect of qualifying services of each person who served as a

Director during the year and those forecast for the year ahead are shown in the following

table. No Director waived any fees in the year under review. No other remuneration was

paid or payable during the period nor were any expenses claimed by or paid to them

other than for expenses incurred wholly, necessarily and exclusively in furtherance of

their duties as Directors of the Company.

The Company’s Articles of Association set a £400,000 per annum limit on aggregate

Director fees, but compensation must also be considered within the wider remuneration

policy. Foresight Solar also holds Directors’ liability insurance.

Anticipated

Directors’

fees for the year

ending

31 December 2024

(Unaudited)

Directors’

fees for

the year ended

31 December 2023

(Audited)

Directors’

fees for

the year ended

31 December 2022

(Audited)

Alexander Ohlsson (Chair) £83,000 £79,800 £76,000

Chris Ambler £53,550 £51,450 £49,000

Ann Markey £65,550 £63,000 £60,000

Monique O’Keefe £53,550 £51,450 £49,000

Lynn Cleary

£53,550 £14,801 —

Peter Dicks

— £23,322 £49,000

Total £309,200 £283,823 £283,000

1. Lynn Cleary was appointed to the Board with effect from 18 September 2023, joined the

Audit and Risk Committee with effect from 23 November 2023 and became a member of the

Remuneration Committee with effect from 29 February 2024.

2. Peter Dicks stepped down from the Board on 14 June 2023.

Company interest

Directors who had interests in the shares of the Company on 31 December 2023 are

shown below. As noted earlier, Directors do not have any options over shares.

Ordinary Shares

of nil par

value held on

31 December 2023

Ordinary Shares

of nil par

value held on

31 December 2022

Alexander Ohlsson (Chair)

75,000 25,000

Chris Ambler 51,691 36,162

Ann Markey 10,000 —

Monique O’Keefe — —

Lynn Cleary — —

1. Shares legally and beneficially owned by a personal pension company.

Approval of report

The Board will propose a resolution at the forthcoming AGM that this Remuneration

Report be approved, including the Directors’ fees for the year to 31 December 2024.

Monique O’Keefe

Chair of the Remuneration Committee

11 March 2024

REMUNERATION

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

114

DIRECTORS’ REPORT

The Directors present their report and the audited Financial Statements

of the Company for the year ended 31 December 2023.

The Company

Foresight Solar Fund Limited is a closed-ended company with an indefinite life. It was

incorporated in Jersey under the Companies (Jersey) Law 1991, as amended on 13 August

2013, with registration number 113721, and, as such, is regulated in Jersey as a listed fund

in accordance with the JFSC’s Listed Fund Guide.

The registered office’s address is: 28 Esplanade, St. Helier, Jersey, JE4 2QP.

Share capital and voting rights

The Company’s capital structure and details of share movements during the year are

shown in note 17 to the Financial Statements.

As at 11 March 2024 there were 581,569,316 Ordinary Shares in issue of nil par value.

The shares are quoted on the Premium Listing Segment of the Official List of the Main

Market of the London Stock Exchange.

Significant Shareholders

The Company’s Shareholders include a mix of institutional and retail investors. Those with

a holding of more than 5% as at 31 December 2023 were:

Investor

% shareholding

as at

31 December 2023

BlackRock Investment Management Ltd 12.32%

Gravis Capital Management Ltd 6.61%

Cazenove Capital Management Ltd 5.22%

Charles Stanley & Co Ltd 5.12%

Total 29.27%

1. This table reflects the information available as at the date of publication. No further

disclosures have been made to the Company under DTR5.

Allotment of shares

The Shareholders have authorised Directors to issue new shares equivalent of up to

10%of Foresight Solar’s share capital. It is the Directors’ intention to seek the renewal

of this authority by Shareholder resolution, which will be set out in the notice of the

forthcoming AGM.

The Shareholders also authorised Directors to allot shares without application of the

pre-emption rights, as set out in Article 10.2 of the Company’s Articles of Association and

in the Financial Conduct Authority’s Listing Rules under Part VI of the Financial Services

and Markets Act 2000 (as amended), equivalent to 10% of the Company’s issued share

capital until the conclusion of the forthcoming AGM. The Directors will also seek to renew

this authority by proposing a special resolution be passed at the Annual General Meeting.

No shares were allotted under this authority during the year.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

115

DIRECTORS’ REPORT CONTINUED

Purchase of own shares

The Company has been authorised to make market

purchases of its own Ordinary Shares of up to 14.99% of

its issued Ordinary Share capital immediately prior to the

passing of the resolution (excluding treasury shares) on

such terms and in such manner as the Directors shall from

time to time determine, subject always to the terms of any

class rights in the Articles and provided that:

The maximum aggregate number of Ordinary Shares

hereby authorised to be purchased shall be such

number as represents 14.99% of the aggregate

number of Ordinary Shares in issue as at 26 May 2023,

equivalent to 91,493,198

The minimum price which may be paid for an Ordinary

Share shall be £0.01

The maximum price, exclusive of any expenses, which

may be paid for an Ordinary Share is an amount

equal to the higher of (i) 14.99% of the average of the

middle market quotations for an Ordinary Share (as

derived from the Daily Official List of the London Stock

Exchange plc) for the five business days immediately

preceding the date on which such Ordinary Share

is contracted to be purchased; and (ii) the higher of

the last independent trade and the highest current

independent bid on the trading venue on which the

purchase is carried out

The authority hereby conferred is in addition to all and

any authorities in place in respect of market purchases

by the Company and shall expire at the conclusion of

the Company’s next Annual General Meeting or on the

date falling 18 months from the date of the passing of

this resolution, whichever is earlier, unless previously

revoked, varied or renewed by the Company in general

meeting

The Company may at any time prior to the expiry

of such authority make a contract or contracts to

purchase Ordinary Shares under such authority which

will or might be completed or executed wholly or partly

after the expiration of such authority and may make a

purchase of Ordinary Shares in pursuance of any such

contract or contracts

The Directors of the Company provide a statement

of solvency in accordance with Articles 55 and 57

of the Law

Any repurchase of Ordinary Shares will only be made

through the market for cash at prices below the estimated

prevailing Net Asset Value per Ordinary Share. These

transactions will only happen in the instances in which the

Directors believe such purchases will result in an increase

in the NAV per Ordinary Share and where the Board

believes such purchases are in Shareholders’ interests

because they are addressing an imbalance in the demand

and supply of shares available in the market.

On 4 May 2023, the Company announced a £10 million

share buyback programme to address the disconnect

between asset values inferred by the share price and the

asset pricing supported by third-party transactions. The

programme was extended twice to a total of up to

£40 million. By 31 December 2023, the Company had

utilised half of its allocation to repurchase 20,719,375

Ordinary Shares. The Board will keep buybacks under

review to ensure its continuation remains in Shareholders’

best interests.

As at the date of this report, 28,389,404 Ordinary

Shares had been repurchased under this authority, which

will expire on the earlier of 15 September 2024 or the

Company’s next AGM.

Treasury shares

Jersey Company Law allows companies to hold shares

acquired in the market as treasury shares, rather than

having to cancel them.

Up to 10% of the issued shares may be held in treasury

and may be subsequently cancelled or sold for cash in the

market. This gives Foresight Solar the ability to reissue

shares quickly and cost efficiently, improving liquidity and

providing additional flexibility in the management of its

capital base.

As at the date of this report, 28,389,404 shares were held

in treasury.

Dividends

Under the Articles, the Board is authorised to approve

the payment of interim dividends without the need

for Shareholder approval. However, having regard to

best practice, the Company seeks permission from

Shareholders for its dividend policy to pay four interim

dividends per year at each Annual General Meeting. This

authority was duly approved at the AGM on 14 June 2023.

Scrip dividend option

At the Company’s 2019 Annual General Meeting, held

on 25 June of that year, Shareholders granted approval

for Directors to offer Shareholders the opportunity to

take dividends in the form of new Ordinary Shares rather

than cash. Foresight Solar was also authorised to offer

an ongoing Scrip Dividend Scheme for a period of three

years. This authority was renewed at the AGM held on

15June 2022.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

116

DIRECTORS’ REPORT CONTINUED

Scrip dividend option continued

To date, approximately 6.1 million new Ordinary Shares

have been allotted to existing Shareholders under the

Scrip Dividend Scheme, and this has resulted in a cash

saving, net of admission fees, of £5.9 million.

Whilst the Scrip Dividend Scheme has been suspended,

the Directors keep it under review with the objective of

reinstating it as soon as it is appropriate to do so.

Share dealing code, policy and manual

In accordance with the UK Market Abuse Regulations,

Foresight Solar has adopted a share dealing code, policy

and manual to ensure compliance when Directors, being

Persons Discharging Managerial Responsibilities, deal in

itsshares.

Financial risk management

Information about the Company’s financial risk

management objectives and policies is set out in note 19 to

the Financial Statements.

Bribery Act 2010

Foresight Solar is committed to carrying out business

fairly, honestly and openly. The Investment Manager has

established policies and procedures to prevent bribery

within its organisation.

Criminal Finances Act 2017

The Company has committed to conduct all its business in

an honest and ethical manner. FSFL takes a zero-tolerance

approach to facilitation of tax evasion, whether under UK

law or under the law of any foreign country.

It is committed to acting professionally, fairly and with

integrity in all its business dealings and relationships,

wherever it operates, and implementing and enforcing

effective systems to counter tax evasion facilitation.

Foresight Solar will uphold all laws relevant to countering

tax evasion, including the Criminal Finances Act 2017, in all

the jurisdictions in which it operates.

Requirements of the Listing Rules

Listing Rule 9.8.4 requires the Company to include

specified information in a single identifiable section of the

Annual Report or a cross-reference table indicating where

the information is set out. The Directors confirm that there

are no disclosures required in relation to Listing Rule 9.8.4.

Directors’ indemnity

The Company has procured a directors’ and officers’

liability insurance policy on behalf of Directors,

indemnifying them in case of certain liabilities which may

be incurred in connection with its business activities. This

policy, however, does not provide cover for fraudulent or

dishonest actions.

Articles of Association

Foresight Solar’s Articles of Association are available upon

request from the Company Secretary and at the AGM.

Website publication

The Board is responsible for publishing the Company’s

audited Annual Report and Financial Statements on

the website, in accordance with applicable legislation

governing their preparation and dissemination.

The Directors are responsible for the maintenance

and integrity of the website, as well as the information

published therein, including the Financial Statements.

Legislation in Jersey governing the preparation and

dissemination of financial statements may differ from that

in other jurisdictions.

Post‑balance sheet events

Further details on these events can be found in note 25 to

the Financial Statements.

Annual General Meeting

The AGM is expected to be held on 12 June 2024 at

the Company’s registered office at 28 Esplanade,

St. Helier, Jersey, JE2 3QA.

Further details on how Shareholders can participate will

be set out in the Notice of Annual General Meeting that

will be published in due course.

By order of the Board

Alexander Ohlsson

Chair

For and on behalf of

Foresight Solar Fund Limited

11 March 2024



STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

117

IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing

the Financial Statements in accordance with

applicable law and regulations.

Jersey Company Law requires directors to prepare

financial statements that give a true and fair view of a

company’s state of affairs and of its profit or loss for

each financial year. Under that law, and as permitted by

UK Disclosure Guidance and Transparency Rules, the

Directors have elected to prepare the Financial Statements

in accordance with standards issued by the International

Accounting Standards Board and applicable law.

In preparing the Financial Statements, the Directors are

required to:

•

Select suitable accounting policies and then apply them

consistently

•

Make judgements and estimates that are reasonable,

relevant and reliable

•

State whether applicable accounting standards have

been followed, subject to any material departures

disclosed and explained in the Financial Statements

•

Assess the Company’s ability to continue as a going

concern, disclosing, as applicable, matters related to

going concern

•

Use the going concern basis of accounting unless they

either intend to liquidate the Company or to cease

operations, or have no realistic alternative but to do so

The Directors are responsible for keeping sufficient

accounting records that disclose the Company’s financial

position with reasonable accuracy at any time, and to

enable them to ensure that the Financial Statements

comply with the Companies (Jersey) Law 1991.

They are responsible for such internal control as they

determine is necessary to enable the preparation

of financial statements that are free from material

misstatement, whether due to fraud or error, and have

general responsibility for taking such steps as are

reasonably open to them to safeguard the Company’s

assets and to prevent and detect irregularities.

The maintenance and integrity of the corporate and

financial information included on Foresight Solar’s website

is the Directors’ responsibility; the Auditor’s work carried

out does not involve consideration of these matters and,

accordingly, KPMG LLP accepts no responsibility for

any changes that may have occurred to the Financial

Statements or its audit report since 11March 2024.

KPMG LLP has carried out no procedures of any nature

subsequent to 11 March 2024 which in any way extends

this date.

Legislation in Jersey governing the preparation and

dissemination of financial statements may differ from

legislation in other jurisdictions. The Directors shall remain

responsible for establishing and controlling the process for

doing so, and for ensuring that the Financial Statements

are complete and unaltered.

Responsibility statement of the Directors

in respect of the annual financial report

We confirm that to the best of our knowledge:

•

The Financial Statements, prepared in accordance with

the applicable set of accounting standards, give a true

and fair view of the assets, liabilities, financial position

and profit or loss of the Company

•

The Annual Report includes a fair review of the

development and performance of the business and the

position of the issuer, together with a description of the

principal risks and uncertainties they face

We consider the Annual Report and Financial Statements,

taken as a whole, are fair, balanced and understandable

and provide the information necessary for Shareholders

to assess Foresight Solar’s position and performance,

business model and strategy.

Alexander Ohlsson

Chair

For and on behalf of

Foresight Solar Fund Limited

11 March 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

118

WHAT’S IN THIS SECTION

INDEPENDENT AUDITOR’S REPORT 120

STATEMENT OF PROFIT AND LOSS AND

OTHER COMPREHENSIVE INCOME 127

STATEMENT OF FINANCIAL POSITION 128

STATEMENT OF CHANGES IN EQUITY 129

STATEMENT OF CASH FLOWS 130

NOTES TO THE FINANCIAL STATEMENTS 131

AIFMD DISCLOSURES (UNAUDITED) 163

ADVISORS 164

GLOSSARY OF TERMS 165

FINANCIAL

STATEMENTS

PARK FARM, UK

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

119

1. Our opinion is unmodified

We have audited the financial statements of Foresight

Solar Fund Limited (“the Company”) for the year ended

31 December 2023, which comprise the Statement of

Profit and Loss and Other Comprehensive Income,

Statement of Financial Position, Statement of Changes in

Equity, Statement of Cash Flows and the related notes,

including the accounting policies in note 2.

In our opinion the financial statements:

•

give a true and fair view, in accordance with

International Financial Reporting Standards adopted

pursuant to Regulation (EC) No. 1606/2002 as it

applies in the European Union, of the state of the

Company’s affairs as at 31 December 2023, and of its

loss for the year then ended; and

•

have been properly prepared in accordance with the

Companies (Jersey) Law, 1991.

Basis for opinion

We conducted our audit in accordance with International

Standards on Auditing (UK) (“ISAs (UK)”) and

applicable law. Our responsibilities are described below.

We have fulfilled our ethical responsibilities under, and

are independent of the Company in accordance with, UK

ethical requirements including the FRC Ethical Standard

as applied to listed public interest entities. We believe

that the audit evidence we have obtained is a sufficient

and appropriate basis for our opinion.

2. Key audit matters: our assessment of risks of

material misstatement

Key audit matters are those matters that, in our

professional judgement, were of most significance in

the audit of the financial statements and include the

most significant assessed risks of material misstatement

(whether or not due to fraud) identified by us, including

those which had the greatest effect on: the overall

audit strategy; the allocation of resources in the audit;

and directing the efforts of the engagement team. We

summarise below the key audit matter (unchanged from

2022), in arriving at our audit opinion above, together

with our key audit procedures to address those matters

and our findings from those procedures in order that the

Company’s members, as a body, may better understand

the process by which we arrived at our audit opinion.

This matter was addressed, and our findings are based

on procedures undertaken, in the context of, and solely

for the purpose of, our audit of the financial statements

as a whole, and in forming our opinion thereon, and

consequently are incidental to that opinion, and we do

not provide a separate opinion on this matter. In arriving

at our audit opinion above, the key audit matter was as

follows (unchanged from 2022):

TO THE MEMBERS OF FORESIGHT SOLAR FUND LIMITED

INDEPENDENT AUDITOR’S REPORT

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

120

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF FORESIGHT SOLAR FUND LIMITED

Valuation of

unquoted

investments Subjective valuation: Our procedures included:

(£683.1 million;

2022: £715.9

million)

Refer to page

109 (Audit &

Risk Committee

Report), page

136 (accounting

policy) and page

140 (financial

disclosures).

Risk level

remains

unchanged from

prior year.

Subjective valuation:

98% (2022: 93%) of the Company’s total assets (by

value) is held in investments where no quoted market

price is available.

The unquoted investment at fair value through

profit or loss represents a 100% holding in Foresight

Solar (UK Holdco) Ltd. This entity in turn makes its

investments through intermediate holding companies

and underlying Special Purpose Vehicles.

As these investments are unquoted and illiquid,

in order to determine the fair value, the directors

adopted a number of assumptions and data points

which are unobservable in the market.

These include:

Significant assumptions:

The discount rate and power price curve assumptions

have a high degree of estimation uncertainty with a

potential range of reasonable outcomes (valuations)

greater than our materiality for the financial

statements as a whole, and possibly many times that

amount.

Non-significant assumptions and data points:

Whilst we do not consider other assumptions and

data points to be at a significant risk of misstatement,

due to the relevance of these elements in terms of

the overall valuation and associated audit effort, we

consider the following areas to also have the greatest

effect on the overall audit strategy and planning of the

audit:

•

Useful economic life assumption

•

Inflation assumption

•

Revenue and costs data

The financial statements (note 16) disclose the

sensitivity estimated by the Company.

Control design:

•

We obtained an understanding of the Company’s processes for determining the fair value of unquoted investments. We

evaluated the design and implementation of the investment valuation processes and controls.

•

We performed the tests below rather than seeking to rely on any of the Company’s controls because the nature of the

balance is such that we would expect to obtain audit evidence primarily through the detailed procedures described.

Our procedures for significant assumptions included:

Our valuations experience:

•

We critically evaluated and challenged the significant assumptions affecting the valuation of the underlying assets,

namely, discount rates and power price curves (including the capture discount curve). We assessed whether the

discount rates are within a reasonable range independently developed by us based on market data. We assessed if the

power price curve used is in line with external consultants forecasted curves, with reference to publicly available market

information.

Our procedures in respect of the non-significant assumptions and data points included:

Test of detail:

We agreed key inputs to the forecast cash flows for each investment to external sources, such as the due diligence

reports prepared by third party engineers when the assets were constructed. We evaluated the competence, objectivity

and independence of the third-party engineers engaged by the company. We agreed the subsidy revenue and wholesale

revenue to agreements in place such as Power Purchase Agreements. Material expenses were agreed to the supplier

invoices received and where possible to underlying agreements for leases and operations and maintenance contracts.

We reperformed the valuation using the Company’s inputs and assumptions. We constructed our own discounted cash flow

models for each underlying asset and compared the results with the Company’s valuation.

Our valuations experience:

We critically evaluated and challenged other assumptions affecting the valuation of the underlying assets, useful

economic life and inflation rates. We evaluated the appropriateness of the useful economic life for individual assets, taking

into consideration factors such as the life cycle of the asset and length of the leases. We compared the inflation rates

assumption to the relevant forecast.

Assessing transparency:

We considered the appropriateness, in accordance with relevant accounting standards, of the disclosures in respect

of unquoted investments and the effect of changing one or more inputs to reasonably possible alternative valuation

assumptions.

Our findings:

We found the Company’s valuation of unquoted investments to be balanced (2022: balanced).

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

121

3. Our application of materiality and an overview of the scope of our audit

Materiality for the financial statements as a whole was set at £6.9 million (2022:

£7.70 million), determined with reference to a benchmark of total assets, of which it

represents 1% (2022: 1%).

In line with our audit methodology, our procedures on individual account balances

and disclosures were performed to a lower threshold, performance materiality, so as

to reduce to an acceptable level the risk that individually immaterial misstatements in

individual account balances add up to a material amount across the financial statements

as a whole.

Performance materiality was set at 75% (2022 : 75%) of materiality for the financial

statements as a whole, which equates to £5.10 million (2022 : £5.77m). We applied this

percentage in our determination of performance materiality because we did not identify

any factors indicating an elevated level of risk.

We agreed to report to the Audit & Risk Committee any corrected or uncorrected

identified misstatements exceeding £0.35 million (2022: £0.38 million), in addition to

other identified misstatements that warranted reporting on qualitative grounds.

Our audit of the company was undertaken to the materiality and performance

materiality levels specified above and was performed by a single audit team.

The scope of the audit work performed was fully substantive as we did not rely upon

theCompany’s internal control over financial reporting.

4. The impact of climate change on our audit

In planning our audit we have considered the potential impacts of climate change on the

Company’s business and its financial statements.

Climate change impacts the Company principally through the valuation of investments

and through potential reputational risk associated with the Company’s strategy. The

Company’s exposure to climate change is primarily through the solar farms invested

through SPVs, as the key valuation assumptions and estimates could be impacted by

climate risks, for example where a new legislation on solar farms is introduced and have

an impact on the forecast cash flow.

As part of our audit we have made enquiries of directors to understand the extent of the

potential impact of climate change risk on the Company’s financial statements and the

Company’s preparedness. We have performed a risk assessment of how the impact of

climate change may affect the financial statements and our audit, in particular over the

valuation of unquoted investments and the related key audit matter above.

Given the nature of the current investment portfolio, the valuation methods and

investing strategy of the Company, we consider that climate risks do not have a

significant effect on our key audit matter.

We have read the disclosure of climate related information in the front half of the

annual report and considered consistency with the financial statements and our

auditknowledge.

5. Going concern

The Directors have prepared the financial statements on the going concern basis as

they do not intend to liquidate the Company or to cease its operations, and as they have

concluded that the Company’s financial position means that this is realistic. They have

also concluded that there are no material uncertainties that could have cast significant

doubt over its ability to continue as a going concern for at least a year from the date of

approval of the financial statements (“the going concern period”).

We used our knowledge of the Company, its industry, and the general economic

environment to identify the inherent risks to its business model and analysed how those

risks might affect the Company’s financial resources or ability to continue operations

over the going concern period. The risks that we considered most likely to adversely

affect the Company’s available financial resources, metrics relevant to debt covenants

and its ability to operate over this period were:

•

The discontinuation vote at the Annual General Meeting in June 2024, which is

triggered by the level of discount between the Company’s net asset value and its

share price;

•

The impact of a significant reduction in the valuation of the assets in the portfolio,

driven predominately by decreases in revenue and production, which impact the

Company and its subsidiaries’ ability to meet the covenants in place; and

•

The deterioration of the liquidity of the investment portfolio which will impact the

Company and its subsidiaries’ ability to meet their liabilities as they fall due.

TO THE MEMBERS OF FORESIGHT SOLAR FUND LIMITED

INDEPENDENT AUDITOR’S REPORT CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

122

5. Going concern continued

In relation to the discontinuation vote, we considered the likely outcome of the

discontinuation vote with reference to the following information:

•

The outcome of the recent survey of investors commissioned by the Company, and

conducted by an independent third party;

•

The performance of the Company, with reference to the performance of

the underlying assets. We have also considered this in light of the current

macroeconomic conditions and compared to competitors/similar asset funds in the

same sector;

•

The voting history in the Company’s Annual General Meetings;

•

The profile of the shareholders; and

•

Our knowledge of the industry and market the Company operates in.

In relation to the valuation of the assets and the liquidity of the investment portfolio,

we considered whether these risks could plausibly affect the liquidity and covenant

compliance of the Company and its subsidiaries in the going concern period by

comparing severe, but plausible downside scenarios that could arise from these risks

individually and collectively against the level of available financial resources and

covenants indicated by the Company’s financial forecasts. We considered whether

the going concern disclosure in note 2.2 to the Financial Statements gives a full and

accurate description of the Directors’ assessment of going concern, including the

identified risks and related sensitivities.

Our conclusions based on this work:

•

we consider that the Directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate;

•

we have not identified, and concur with the Directors’ assessment that there is not, a

material uncertainty related to events or conditions that, individually or collectively,

may cast significant doubt on the Company’s ability to continue as a going concern

for the going concern period; and

•

we have nothing material to add or draw attention to in relation to the Directors’

statement in note 2.2 to the financial statements on the use of the going concern

basis of accounting with no material uncertainties that may cast significant doubt

over the Company’s use of that basis for the going concern period, and we found the

going concern disclosure in note 2.2 to be acceptable.

However, as we cannot predict all future events or conditions and as subsequent events

may result in outcomes that are inconsistent with judgements that were reasonable at

the time they were made, the above conclusions are not a guarantee that the Company

will continue in operation.

6. Fraud and breaches of laws and regulations – ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed

events or conditions that could indicate an incentive or pressure to commit fraud or

provide an opportunity to commit fraud. Our risk assessment procedures included:

•

Enquiring of the Directors and Administrator as to the Company’s high-level policies

and procedures to prevent and detect fraud, as well as whether they have knowledge

of any actual, suspected or alleged fraud;

•

Assessing the segregation of duties in place between the Directors, the Administrator

and the Company’s Investment Manager; and

•

Reading Board minutes and Audit & Risk Committee minutes.

We communicated identified fraud risks throughout the audit team and remained alert

to any indications of fraud throughout the audit.

As required by auditing standards, we perform procedures to address the risk of

management override of controls, in particular to the risk that management may be

in a position to make inappropriate accounting entries. We evaluated the design and

implementation of the controls over journal entries and other adjustments and made

inquiries of the Administrator about inappropriate or unusual activity relating to the

processing of journal entries and other adjustments.

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF FORESIGHT SOLAR FUND LIMITED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

123

6. Fraud and breaches of laws and regulations – ability to detect continued

Identifying and responding to risks of material misstatement due to fraud

continued

We substantively tested all material post-closing entries by comparing the identified

entries to supporting documentation and, based on the results of our risk assessment

procedures and understanding of the process, including evaluating the design and

implementation of controls over journals entries at the Administrator, no further

high-risk journal entries or other adjustments were identified.

On this audit we have rebutted the fraud risk related to revenue recognition because

the revenue is non-judgemental and straightforward, with limited opportunity for

manipulation. We did not identify any additional fraud risks.

Identifying and responding to risks of material misstatement related to

compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have

a material effect on the financial statements from our general commercial and sector

experience and through discussion with the Directors and the Administrator (as required

by auditing standards) and discussed with the Directors the policies and procedures

regarding compliance with laws and regulations.

As the Company is regulated, our assessment of risks involved gaining an understanding

of the control environment including the entity’s procedures for complying with

regulatory requirements.

The potential effect of these laws and regulations on the financial statements varies

considerably.

Firstly, the Company is subject to laws and regulations that directly affect the financial

statements including financial reporting legislation (including related Companies

legislation), distributable profits legislation, and the Listing Rules, and we assessed the

extent of compliance with these laws and regulations as part of our procedures on the

related financial statement items.

Secondly, the Company is subject to many other laws and regulations where the

consequences of non-compliance could have a material effect on amounts or

disclosures in the financial statements, for instance through the imposition of fines or

litigation. We identified the following areas as those most likely to have such an effect:

anti-bribery, data protection, anti-money laundering, market abuse regulations and

certain aspects of Company legislation recognising the financial and regulated nature

ofthe Company’s activities and its legal form.

Auditing standards limit the required audit procedures to identify non-compliance

with these laws and regulations to enquiry of the Directors and the Administrator and

inspection of regulatory and legal correspondence, if any. Therefore, if a breach of

operational regulations is not disclosed to us or evident from relevant correspondence,

an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law

or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may

not have detected some material misstatements in the financial statements, even

though we have properly planned and performed our audit in accordance with auditing

standards. For example, the further removed non-compliance with laws and regulations

is from the events and transactions reflected in the financial statements, the less likely

the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or

the override of internal controls. Our audit procedures are designed to detect material

misstatement. We are not responsible for preventing non-compliance or fraud and

cannot be expected to detect non-compliance with all laws and regulations.

TO THE MEMBERS OF FORESIGHT SOLAR FUND LIMITED

INDEPENDENT AUDITOR’S REPORT CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

124

TO THE MEMBERS OF FORESIGHT SOLAR FUND LIMITED

INDEPENDENT AUDITOR’S REPORT CONTINUED

7. We have nothing to report on the other information in the Annual Report

The Directors are responsible for the other information presented in the Annual Report

together with the financial statements. Our opinion on the financial statements does

not cover the other information and, accordingly, we do not express an audit opinion or,

except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether,

based on our financial statements audit work, the information therein is materially

misstated or inconsistent with the financial statements or our audit knowledge.

Based solely on that work we have not identified material misstatements in the

otherinformation.

Directors’ remuneration report

In addition to our audit of the financial statements, the directors have engaged us to

audit the information in the Directors’ Remuneration Report that is described as having

been audited, which the directors have decided to prepare as if the Company were

required to comply with the requirements of Schedule 8 to The Large and Medium-sized

Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008 No. 410)

made under the UK Companies Act 2006.

In our opinion the part of the Directors’ Remuneration Report to be audited has

been properly prepared in accordance with the UK Companies Act 2006, as if those

requirements applied to the Company.

Under the terms of our engagement, we are also required to report to you if, in our

opinion, the part of the Directors’ Remuneration Report which we were engaged to

audit is not in agreement with the accounting records and returns. We have nothing to

report in these respects.

Disclosures of emerging and principal risks and longer-term viability

We are required to perform procedures to identify whether there is a material

inconsistency between the Directors’ disclosures in respect of emerging and principal

risks and the viability statement, and the financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or draw attention to in

relation to:

•

the Directors’ confirmation within the viability statement on page 81 that they

have carried out a robust assessment of the emerging and principal risks facing

the Company, including those that would threaten its business model, future

performance, solvency and liquidity;

•

the Principal and Emerging risks disclosures describing these risks and how emerging

risks are identified, and explaining how they are being managed and mitigated; and

•

the Directors’ explanation in the viability statement of how they have assessed

the prospects of the Company, over what period they have done so and why

they considered that period to be appropriate, and their statement as to whether

they have a reasonable expectation that the Company will be able to continue in

operation and meet its liabilities as they fall due over the period of their assessment,

including any related disclosures drawing attention to any necessary qualifications or

assumptions.

Our work is limited to assessing these matters in the context of only the knowledge

acquired during our financial statements audit. As we cannot predict all future events

or conditions and as subsequent events may result in outcomes that are inconsistent

with judgements that were reasonable at the time they were made, the absence

of anything to report on these statements is not a guarantee as to the Company’s

longer-term viability.

Corporate governance disclosures

We are required to perform procedures to identify whether there is a material

inconsistency between the Directors’ corporate governance disclosures and the

financial statements and our audit knowledge.

Based on those procedures, we have concluded that each of the following is materially

consistent with the financial statements and our audit knowledge:

•

the Directors’ statement that they consider that the annual report and financial

statements taken as a whole is fair, balanced and understandable, and provides

the information necessary for shareholders to assess the Company’s position and

performance, business model and strategy;

•

the section of the annual report describing the work of the Audit and Risk

Committee, including the significant issues that the Audit and Risk Committee

considered in relation to the financial statements, and how these issues were

addressed; and

•

the section of the annual report that describes the review of the effectiveness of the

Company’s risk management and internal control systems.

We are required to review the part of the Corporate Governance Statement relating to

the Company’s compliance with the provisions of the UK Corporate Governance Code

specified by the Listing Rules for our review. We have nothing to report in this respect.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

125

8. We have nothing to report on the other matters on which we are

required to report by exception

Under the Companies (Jersey) Law 1991 we are required to report to you if, in our

opinion:

•

proper accounting records have not been kept by the company, or

•

proper returns adequate for our audit have not been received from branches not

visited by us; or

•

the financial statements are not in agreement with the accounting records and

returns; or

•

we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

9. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 118, the Directors are

responsible for: the preparation of financial statements that give a true and fair view;

such internal control as they determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud

or error; assessing the Company’s ability to continue as a going concern, disclosing,

as applicable, matters related to going concern; and using the going concern basis of

accounting unless they either intend to liquidate the Company or to cease operations,

orhave no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial

statements as a whole are free from material misstatement, whether due to fraud or

error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high

level of assurance but does not guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can

arise from fraud or error and are considered material if, individually or in aggregate, they

could reasonably be expected to influence the economic decisions of users taken on the

basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities.

The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with

Article 113A of the Companies (Jersey) Law 1991 and the terms of our engagement

by the Company. Our audit work has been undertaken so that we might state to the

company’s members those matters we are required to state to them in an auditor’s

report, and the further matters we are required to state to them in accordance with

the terms agreed with the Company, and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the

Company and the Company’s members, as a body, for our audit work, for this report,

orfor the opinions we have formed.

Fang Fang Zhou

for and on behalf of KPMG LLP

Chartered Accountants and Recognised Auditor

15 Canada Square

Canary Wharf

London

E14 5GL

11 March 2024

TO THE MEMBERS OF FORESIGHT SOLAR FUND LIMITED

INDEPENDENT AUDITOR’S REPORT CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

126

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

Notes

31 December

2023

£’000

31 December

2022

£’000

Revenue

Interest earned on cash in bank 54 6

Interest income 4 31,820 36,146

(Loss)/gains on investments held at fair value through profit or loss 14 (32,838) 126,840

Total revenue (964) 162,992

Expenditure

Administration fees 6 (208) (200)

Directors’ fees 7 (284) (283)

Management fees 5 (7,037) (7,418)

Other expenses 8 (791) (620)

Total expenditure (8,320) (8,521)

(Loss)/profit before tax for the year (9,284) 154,471

Taxation 2.7 — —

(Loss)/profit for the year (9,284) 154,471

Other comprehensive income — —

(Loss)/profit and other comprehensive (loss)/profit for the year (9,284) 154,471

(Loss)/earnings per Ordinary Share (pence per share) 9 (1.54) 25.32

All items above arise from continuing operations, there have been no discontinued operations during the year.

The accompanying notes on pages 131 to 162 form an integral part of these Financial Statements.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

127

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

Notes

31 December

2023

£’000

31 December

2022

£’000

Assets

Non-current assets

Investments held at fair value through profit or loss 14 683,104 715,942

Total non-current assets 683,104 715,942

Current assets

Interest receivable 10 13,651 44,731

Trade and other receivables 11 290 279

Cash and cash equivalents 12 2,041 11,052

Total current assets 15,982 56,062

Total assets 699,086 772,004

Equity

Retained earnings 67, 997 141,575

Stated capital and treasury shares 17 629,892 629,892

Total equity 697,889 771,467

Liabilities

Current liabilities

Trade and other payables 13 1,197 537

Total current liabilities 1,197 537

Total liabilities 1,197 537

Total equity and liabilities 699,086 772,004

Net Asset Value per Ordinary Share 18 118.4 126.5

The Financial Statements on pages 127 to 130 were approved by the Board of Directors and signed on its behalf on 11 March 2024 by:

Alexander Ohlsson

Chair

The accompanying notes on pages 131 to 162 form an integral part of these Financial Statements.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

128

FOR THE YEAR ENDED 31 DECEMBER 2023

STATEMENT OF CHANGES IN EQUITY

Notes

Issued

Ordinary Shares

£’000

Treasury

£’000

Retained

earnings

£’000

Total

£’000

Balance as at 1 January 2023 629,892 — 141,575 771,467

Total comprehensive loss for the year:

Loss for the year — — (9,284) (9,284)

Transactions with owners, recognised directly in equity:

Dividends paid in the year 21 — (44,385) (44,385)

Purchase of treasury shares

17 (19,909) 19,909 (19,909) (19,909)

Balance as at 31 December 2023 609,983 19,909 67, 997 697,889

1. This figure represents the cash payments made to Jefferies International Limited by 31 December 2023.

FOR THE YEAR ENDED 31 DECEMBER 2022

Notes

Stated capital

£’000

Retained

earnings

£’000

Total

£’000

Balance as at 1 January 2022 629,892 30,108 660,000

Total comprehensive profit for the year:

Profit for the year — 154,471 154,471

Transactions with owners, recognised directly in equity:

Dividends paid in the year 21 — (43,004) (43,004)

Balance as at 31 December 2022 629,892 141,575 771,467

2. The stated capital of the Company comprises issued Ordinary Shares, share premium and treasury shares.

The accompanying notes on pages 131 to 162 form an integral part of these Financial Statements.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

129

FOR THE YEAR ENDED 31 DECEMBER 2023

STATEMENT OF CASH FLOWS

Notes

31 December

2023

£’000

31 December

2022

£’000

(Loss)/profit for the year after tax (9,284) 154,471

Adjustments for:

Unrealised loss/(gains) on investments 14 32,838 (126,840)

Operating cash flows before changes in working capital 23,554 27,631

Decrease in interest receivables 10 31,080 15,372

Increase in trade and other receivables 11 (11) (4)

Increase in trade and other payables 13 660 93

Net cash inflow from operating activities 55,283 43,092

Financing activities

Purchase of treasury shares (19,909) —

Dividends paid 21 (44,385) (43,004)

Net cash outflow from financing activities (64,294) (43,004)

Net (decrease)/increase in cash and cash equivalents (9,011) 88

Cash and cash equivalents at the beginning of the year 11,052 10,964

Cash and cash equivalents at the end of the year 12 2,041 11,052

The accompanying notes on pages 131 to 162 form an integral part of these Financial Statements.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

130

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS

1. Company information

Foresight Solar Fund Limited (the “Company”) is a closed-ended public company with

an indefinite life and was incorporated in Jersey under the Companies Law (Jersey)

1991, as amended, on 13 August 2013, with registered number 113721. The address of

theregistered office is: 28 Esplanade, St Helier, Jersey, JE4 2QP.

The Company has one investment, Foresight Solar (UK Hold Co) Limited (“UK Hold

Co”). The principal activity of the Company through its direct and indirect subsidiaries,

as per the structure chart, is investing in operational and development-stage

ground-based solar power plants and battery storage systems in the UK, Australia

andSpain.

UK Hold Co has three investments: FS RCF Debtco Limited (“RCF Debtco”), FS Holdco

4 Limited (“FS Holdco 4”) and Foresight Battery Storage Holding Limited, formerly

Sandridge Battery Storage Holding Limited (“FBSHL”).

RCF Debtco has three investments: FS Top Holdco 1 Limited (“FS Topco 1”), FS Top

Holdco 2 Limited (“FS Topco 2”) and FS Holdco 3 Limited (“FS Holdco 3”).

FS Topco 1 has one investment in FS Intermediate Holdco Limited (“FIHC”). FIHC in turn

has one investment in FS Holdco Limited (“FS Holdco”).

FS Topco 2 has one investment in Foresight Intermediate Solar Holdings Limited

(“FISH”). In turn, FISH has one investment in FS Holdco 2 Limited (“FS Holdco 2”) which

has one investment in FS Debtco Limited (“FS Debtco”).

FS Holdco 3 has one investment in Second Generation Portfolio 1 Holdings Limited

(“SGP Holdings 1”). SGP Holdings 1 in turn invests in Second Generation Portfolio 1

(“SGP 1”) which invests directly into underlying solar investments.

FS Holdco, FS Debtco and FS Holdco 4 invest in further holding companies (the “SPVs”)

which then invest in the underlying solar investments.

Structure chart

The following chart shows the Group structure as at 31 December 2023:

Foresight Solar Fund Limited

FS Topco 1 FS Topco 2 FS Holdco 3 FBSHL 50%

FIHC

SPVs SPVs SPVs SPVs

FISH SGP Holdings 1

FS Holdco 2

SPVs

UK Hold Co

RCF Debtco

SGP 1FS DebtcoFS Holdco FS Holdco 4

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

131

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. Summary of significant accounting policies

2.1 Basis of presentation

The Financial Statements for the year ended 31 December 2023 (the “Financial

Statements”) have been prepared in accordance with International Financial Reporting

Standards as adopted by the European Union (“IFRS”) .The Financial Statements have

been prepared on the historical cost convention as modified for the measurement of

certain financial instruments at fair value through profit or loss and in accordance with

the provisions of the Companies (Jersey) Law 1991. The investment in UK Hold Co is held

at Net Asset Value on the Statement of Financial Position in line with the International

Private Equity and Venture Capital 2022 (“IPEV”) Valuation Guidelines.

2.2 Going concern

As set out in the Company’s Articles of Association, as the Company’s share price

traded at more than a 10% discount to NAV during the year, shareholders will have

the opportunity to vote on a special resolution at the AGM of the Company to be held

in June 2024 on whether the Company should cease to continue in its present form.

TheDirectors have considered this when evaluating the going concern assessment

forthe Company.

Recent Interactions with shareholders do not indicate any concerns in respect to

the discontinuation vote. The Directors have no reason to believe that such special

resolution will be passed by shareholders, as the discount to share price is driven

bymacroeconomic and geopolitical factors which is consistent with the entire

renewables sector.

The Investment Manager anonymously surveyed, through an independent third party,

shareholders representing approximately a quarter of Ordinary Shares outstanding

to receive feedback and better understand the sentiment around the Company’s

discontinuation vote. The survey was conducted through individual meetings. The result

of the survey showed that the majority of the participants indicated that they intend to

vote against the discontinuation of the Company, and that no shareholders indicated

that they will vote for the discontinuation of the Company. As a result, the Directors

and the Investment Manager do not consider the discontinuation vote will impact the

Company’s ability to continue as a going concern.

The Company’s exposure to wholesale energy prices is reduced in the medium

term by maintaining a substantial proportion of electricity generation on fixed price

arrangements. This provides protection if merchant power prices continue to decline.

As the Company’s power purchase agreements (“PPAs”) are all contracted across a

pool of five UK, five Australian and two Spanish energy suppliers, the counterparty

risk on existing energy suppliers is required to be continually monitored by the

InvestmentManager.

The high energy price environment has likely increased the risk of insolvency of the

energy suppliers that provide PPAs to renewable energy generators. This is a key risk

for the Company due to the high proportion of revenues that are contracted with

these energy suppliers. Accordingly, the Investment Manager periodically monitors the

counterparty risk on the Company’s energy suppliers and will consider new PPAs if the

counterparty risk of existing energy suppliers is of concern.

The 2022 Annual Report presented an initial commentary of the Review of Electricity

Market Arrangements (“REMA”). In November 2023, pursuant to responses received

from market participants in relation to the REMA consultation, the UK government

decided to not take forward a number of options originally proposed in the REMA

framework.

Despite more clarity on the REMA initiative, the changes required to the UK wholesale

power market are still uncertain in terms of timing and impact on corporate power price

agreements. The Investment Manager expects any market changes will take years to

implement and will therefore fall outside of the going concern assessment period.

The Company’s business activities, together with the factors likely to affect its future

development, performance and position are set out in this report. The financial position

of the Company, the financial performance, its cash flows, liquidity position and

borrowing facilities are referred to in the Chairman’s Statement, Investment Manager’s

Report and Notes to the Financial Statements. In addition, the Financial Statements

include the Company’s objectives, policies and procedures for managing its capital, its

financial risk management objectives and its exposures to credit and liquidity risk. Three

Group subsidiaries, FS Holdco, FS Debtco and RCF Debtco, are all required to complete

semi-annual debt compliance reporting. The covenants that FS Holdco and FS Debtco

are required to report on are the look-back debt service cover ratio, the look-forward

debt service cover ratio and the loan life cover ratio.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

132

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

2. Summary of significant accounting policies continued

2.2 Going concern continued

The debt service cover ratio (“DSCR”), calculated at investment entity subsidiaries

level, is a measure of how each portfolio can use its generated cash to repay its debt

obligations in any given six-month calculation period. It is calculated as the cash

generated from operations and available to pay debt service divided by the debt

principal and interest in any given six-month period.

RCF Debtco is required to report an interest cover ratio (“ICR”) and a Loan to Value

(“LtV”) ratio. These must be compliant semi-annually to permit the movement of

UK project company distributions to UK Hold Co and FSFL. Without these project

distributions, FSFL would unlikely be able to pay quarterly dividends to investors at the

current dividend per share.

A breach at RCF Debtco would restrict more cash moving up the structure than

a breach at either Holdco or Debtco. While the Investment Manager considers

non-compliance of the RCF covenants as unlikely, it was considered prudent to

investigate this via two reverse stress tests as detailed below:

The base case SONIA interest rate was gradually increased until the increased

finance costs caused the ICR threshold to be breached

The valuation of the RCF Debtco qualifying portfolio was gradually decreased until

the LtV covenant was breached. This investigation has been deemed necessary

considering falling merchant energy prices, rising discount rates and associated

falling project valuations

An evaluation of the going concern was prepared by the Company’s Investment

Manager, then approved by the Audit and Risk Committee and subsequently by the

Board. This included cash flow workings for the going concern assessment period

clearly demonstrating that the Company can continue operations for the going concern

assessment period, even when five separate downside economic sensitivities and two

severe but plausible downside economic scenarios were applied. Cash flow analysis

was completed to consider the following downside scenarios. These scenarios were

completed individually as well as combined. In each of the scenarios, the forecasts

display a significant level of headroom above minimum cash and debt covenant

requirements throughout the going concern assessment period.

All investments consistently generate a P90 level (90% probability of exceeding

expected production over a ten-year period) of electricity output. The Directors

deem this is an appropriate, market standard stress test with a relevant example

being the La Niña weather pattern that brought cool temperatures and record

breaking rain to Australia’s east coast leading to lower than budgeted irradiation

andgeneration.

Power prices were reduced by 20% across the portfolio. This downside scenario

represents the volatility of power prices seen during 2022 with prices reaching four

times the forecasted price within the portfolio before dropping again.

The PPA provider that the Group is most exposed to fails to settle merchant revenue

under the PPA contract. This downside scenario represents the risk of insolvencies of

PPA counterparties in response to the high number of energy company insolvencies

during the last three years, linked to the high-power price market.

Retail Price Index (“RPI”) is assumed to continue at 5.2% on costs and inflation-linked

debt, in line with the actual RPI for the 2023 calendar year.

Removal of any distributions from the Australian SPVs for the going concern

assessment period, due to economic curtailment being experienced in Australia.

If any of these sensitivities or scenarios were to materialise, the Company could still pay

a progressive dividend per share for the going concern assessment period. However, the

Board would continue to review on a periodic basis whether the dividend paid per share

is appropriate considering the reduced cash flow. The cash flow forecasts show that

operating costs would be settled as they fall due, but the cash balance would reduce

gradually during the going concern assessment period, without affecting the ability to

pay dividends.

The Board is also pleased to confirm that there were no instances of non-compliance of

debt covenants throughout the period or during the scenarios as well as a combination

of scenarios tested in the going concern assessment period, except for in two ‘severe

but plausible’ scenarios tested. In both cases, challenges can be effectively managed to

avoid a breach of covenants.

Consequently, the Board is confident that the cash flows have been appropriately

challenged and therefore the Company will have sufficient funds to continue to meet

its liabilities as they fall due for the going concern assessment period and has therefore

prepared the Financial Statements on a going concern basis.

The Financial Statements do not include any adjustments that would result from the

basis of preparation being inappropriate.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

133

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

2. Summary of significant accounting policies continued

2.3 Changes in accounting policies and disclosures

New and revised IFRS adopted by the Company

The accounting policies adopted are consistent with those of the previous financial

year. Management have assessed all new standards and amendments to standards and

interpretations that are effective for annual periods after 1 January 2023 and considered

none to be applicable to the Company.

The following standards have been issued but are not effective for this accounting

period and have not been adopted early:

•

IAS 1 (amended) Non-current liabilities with covenants – These amendments

clarify how conditions with which an entity must comply within 12 months after the

reporting period affect the classification of a liability – effective from 1 January 2024

•

IAS 7 and IFRS 7 (amended) Supplier finance – These amendments require

disclosures to enhance the transparency of supplier finance arrangements and their

effects on an entity’s liabilities, cash flows and exposure to liquidity risk – effective

from 1 January 2024

There are no standards, amendments or interpretations in issue at the reporting date

which are effective after 1 January 2024 that are deemed to have a material impact on

the Financial Statements.

2.4 Consolidation

Subsidiaries

Subsidiaries are entities over which the Company has control. The Company controls an

entity when the Company is exposed to, or has the rights to, variable returns from its

involvement with the entity and has the ability to affect those returns through its power

over the entity.

Associates

Associates are entities over which the Company has significant influence, being the

power to participate in the financial and operating policy decisions of the investee (but

not control or joint control).

Investment entity exemption

Qualifying entities that meet the definition of an investment entity are not required to

produce a consolidated set of financial statements and instead account for subsidiaries,

joint ventures and associates at fair value through profit or loss.

Under the definition of an investment entity, the entity should satisfy all three of the

following tests:

•

Obtains funds from one or more investors for the purpose of providing those

investors with investment management services

•

Commits to its investors that its business purpose is to invest funds solely for returns

from capital appreciation, investment income, or both (including having an exit

strategy for investments)

•

Measures and evaluates the performance of substantially all of its investments on a

fair value basis

In assessing whether the Company meets the definition of an investment entity set out

in IFRS 10, the Directors note that:

•

The Company is an investment company that invests funds obtained from multiple

investors in a diversified portfolio of solar energy infrastructure assets and related

infrastructure assets and has appointed the Investment Manager to manage the

Company’s investments

•

The Company’s purpose is to invest funds for investment income and potential

capital appreciation and will exit its investments at the end of their economic lives

or when their planning permissions or leasehold land interests expire (unless it has

repowered their sites) and may also exit investments earlier for reasons of portfolio

balance or profit

•

The Board evaluates the performance of the Company’s investments on a fair value

basis as part of the quarterly management accounts review. The Company values its

investments on a fair value basis twice a year for inclusion in its Annual and Interim

Financial Statements with the movement in the valuations taken to the Income

Statement and, therefore, is measured within its earnings

Taking these factors into account, the Directors are of the opinion that the Company has

all the typical characteristics of an investment entity and meets the definition set out in

IFRS 10.

The Directors believe the treatment outlined above provides the most relevant

information to investors.

As UK Hold Co is not consolidated, its subsidiaries – plus their underlying investments

– are not separately presented at fair value through profit or loss in the Company’s

accounts. The Directors have evaluated whether the subsidiaries are investment

entities and have concluded that they meet the definition set out in IFRS 10. Should

subsidiaries fail to meet the definition of an investment entity, the Company would have

to consolidate its subsidiaries.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

134

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

2. Summary of significant accounting policies continued

2.5 Income

Income comprises interest income (loan interest) and income in the form of realised

and/or unrealised gains on investments held at fair value through profit or loss. Interest

income is recognised when it is probable that the economic benefits will flow to the

Company and the amount of revenue can be measured reliably. Loan interest income is

accrued on a time basis, by reference to the principal outstanding and at the effective

interest rate applicable. Unrealised gains arising from changes in the fair value of the

investments held at fair value through profit or loss are recognised in the period in

which they arise.

2.6 Expenses

Operating expenses are the Company’s costs incurred in connection with the ongoing

management of the Company’s investments and administrative costs. Operating

expenses are accounted for on an accruals basis.

The Company’s operating expenses are charged through the Statement of Profit and

Loss and Other Comprehensive Income.

Acquisition costs of assets are capitalised on purchase of assets. Costs directly relating

to the issue of Ordinary Shares are charged to the Company’s share capital and share

premium reserve.

2.7 Taxation

The Company is currently registered in Jersey. The Company is taxed at 0%, which is the

general rate of corporation tax in Jersey. No tax has been charged in the current year

(2022: £nil).

2.8 Treasury shares

The Company recognises the purchase of its own equity instruments in treasury

shares, which are deducted from retained earnings. No gain or loss is recognised in

profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity

instruments.

2.9 Functional and presentational currency

The Directors consider the Company’s functional currency to be pounds sterling

(“GBP”) as this is the currency in which the majority of the Company’s assets and

liabilities and significant transactions are denominated. The Directors have selected

GBP as the Company’s presentation currency.

Indirect subsidiaries of the Company may have assets and liabilities relating to foreign

operations which will impact the investment value on the Company’s balance sheet.

The assets and liabilities relating to these foreign operations, including fair value

adjustments arising on investments, are translated into GBP at the exchange rates at the

reporting date. The income and expenses relating to foreign operations are translated

into GBP at the exchange rates at the dates of the transactions.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

135

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

2. Summary of significant accounting policies continued

2.10 Financial instruments

Recognition and initial measurement

Financial assets and financial liabilities are initially recognised when the Company

becomes a party to the contractual provisions of the instrument.

A financial asset or financial liability is initially measured at fair value plus, for an item

not at fair value through profit or loss, transaction costs that are directly attributable to

its acquisition or issue.

Classification and subsequent measurement

Investments held at fair value through profit or loss

The investments held at fair value through profit or loss consist of one investment in UK

Hold Co. The asset in this category is classified as non-current.

Fair value is defined as the amount for which an asset could be exchanged between

knowledgeable willing parties in an arm’s length transaction.

The fair value of UK Hold Co is made up of the fair value of its net assets which are,

in turn, determined by the fair value of its underlying assets. The subsidiaries of UK Hold

Co are disclosed in note 1. FS Holdco and FS Debtco are valued using their Net Asset

Value as reported at year end, with adjustments to their long-term external debt to

reflect the fact that the carrying value at amortised cost is not considered to be the best

approximation of their fair value. FS Holdco 3, FS Holdco 4, FS Topco 2, FISH, FS Holdco

2, FS Topco 1, FIHC, FBSHL and RCF Debtco are fair valued using their Net Asset Value

as reported at year end.

The fair value of the underlying investments held by the Company’s subsidiaries,

which impact the value of the Company’s subsidiaries, are determined by using

valuation techniques. The Directors calculate the fair value of the investments based

on information received from the Investment Manager. In accordance with IFRS 13,

the Investment Manager’s assessment of fair value of investments is determined in

accordance with the International Private Equity and Venture Capital 2022 (“IPEV”)

Valuation Guidelines, using a discounted cash flow valuation methodology.

The Board and the Investment Manager consider that the discounted cash flow

valuation methodology used in deriving a fair value of the underlying assets is in

accordance with the fair value requirements of IFRS 9. Investments not yet operational

are measured at cost less any impairment as this is considered the best approximation

of fair value. Gains or losses arising from changes in the fair value of the “investments

held at fair value through profit or loss” are presented in the Statement of Profit and

Loss and Other Comprehensive Income within “gains/(losses) on investments held at

fair value through profit or loss” in the period in which they arise.

The financial instruments at amortised cost are non-derivative financial assets and

liabilities with fixed or determinable payments that are not quoted in an active

market. They comprise trade and other receivables, interest receivable, cash and cash

equivalents and trade and other payables.

Trade and other receivables are rights to receive compensation for goods or services

that have been provided in the ordinary course of business to customers. Accounts

receivable are classified as current assets if receipt is due within one year or less

(orinthe normal operating cycle of the business if longer). If not, they are presented

asnon-current assets.

Other financial instruments at amortised cost

Interest receivable is the right to receive payments at fixed or variable interest rates on

loans issued by the Company. Interest receivable is classified as current if the receipt is

due within one year or less. If not, it is presented as a non-current asset.

Cash and cash equivalents comprise cash on hand.

Trade and other payables are obligations to pay for goods or services that have been

acquired in the ordinary course of business from suppliers. Accounts payable are

classified as current liabilities if payment is due within one year or less (in the normal

operating cycle of the business if longer). If not, they are presented as non-current

liabilities.

All of the above are subsequently held at amortised cost.

Derecognition

The Company derecognises a financial asset when the contractual rights to the cash

flows from the financial asset expire. The Company also derecognises a financial asset

when it transfers the rights to receive the contractual cash flows in a transaction in

which substantially all of the risks and rewards of ownership of the financial asset are

transferred.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

136

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

3. Critical accounting estimates and judgements

The preparation of Financial Statements in conformity with IFRS requires the use

of certain critical accounting estimates. It also requires management to exercise its

judgement in the process of applying the Company’s accounting policies.

The Board considers that the only areas in which management make critical estimates

thatmay have a significant effect on the Financial Statements are in relation to the

valuation of investments held at fair value through profit and loss; the most significant

judgement is related to the determination that the Company meets the definition of an

investment entity.

The estimates and associated assumptions are based on historical experience and

various other factors that are believed to be reasonable under the circumstances, the

results of which form the basis of making judgements about the carrying value of assets

and liabilities that are not readily apparent from other sources. Actual results

may differ from these estimates and underlying assumptions are reviewed on an

ongoing basis.

Key judgements

The Board considers that the determination that the Company meets the definition

of an investment entity involves significant judgement. The Board has concluded that

the Company continues to meet the definition of an investment entity, as its strategic

objective of investing in portfolio investments and providing investment management

services to investors for the purpose of generating returns in the form of investment

income and capital appreciation remains unchanged.

Key source of estimation uncertainty: Investments at fair value through

profit or loss

The Company recognises its investment in UK Hold Co at fair value, which requires the

determination of fair value of the underlying investments. The Board considers that

determining the fair value of the underlying investments not quoted in an active market

involves critical accounting estimates. The discount rate, power price curve, inflation

and useful economical life of assets are considered the most significant unobservable

inputs through which an increase or decrease would have a material impact on the fair

value of the investments at fair value through profit or loss.

2. Summary of significant accounting policies continued

2.10 Financial instruments continued

Derecognition continued

Lastly, the Company also derecognises the financial asset when it neither transfers nor

retains substantially all of the risks and rewards of ownership and it does not retain

control of the financial asset.

The Company derecognises a financial liability when its contractual obligations

are discharged or cancelled, or expire. The Company also derecognises a financial

liability when its terms are modified and the cash flows or the modified liability are

subsequently different, in which case a new financial liability based on the modified

terms is recognised at fair value. Any gain or loss on derecognition is recognised in

profit or loss.

Impairment of financial assets

The Company applies the simplified approach to measuring expected credit losses,

as permitted by IFRS 9, which uses a 12-month expected loss allowance for all trade

receivables and interest receivable.

2.11 Share capital

Ordinary Shares are classified as equity. Incremental costs directly attributable to the

issue of new Ordinary Shares are shown in equity as a deduction, net of tax, from the

proceeds. Ordinary Shares have a nil par value.

2.12 Dividend distribution

Dividend distributions to the Company’s Shareholders are recognised through equity in

the Company’s Financial Statements in the period in which the dividends are approved

by the Company’s Shareholders.

Under Jersey Law, the Company can pay dividends in excess of its retained earnings

provided it satisfies the solvency test prescribed under the Companies Law (Jersey)

1991. The solvency test considers whether the Company is able to pay its debts when

they fall due, and whether the value of the Company’s assets is greater than its liabilities.

The Company satisfied the solvency test in respect of all dividends declared or paid in

the year.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

137

4. Interest income

31 December

2023

£’000

31 December

2022

£’000

Interest on loan notes 25,649 29,975

Interest on Shareholder loans 6,171 6,171

31,820 36,146

Loan notes were issued by the Company to UK Hold Co for the purchase of

investments. Interest accrues at 9% per annum in arrears on each Interest Payment Date

(28/29February and 31 August each year). Where interest is not paid on the payment

date, it will compound and future interest shall accrue at 11% per annum from the due

date up to the date of actual payment compounding on each Interest Payment Date.

The loan notes balance at year end on which interest is charged is £250,000,000

(2022:£250,000,000). These loans form part of the fair value of the investments as

per note 14. On 28 February 2023, UK Hold Co had unpaid interest which therefore

compounded and changed the interest rate to 11%. On 31 August 2023, all outstanding

interest up to date was paid, resulting in no compounding interest. Subsequently the

interest rate was changed back to 9%.

A Shareholder loan is created when the total amount paid by the Company on behalf

of UK Hold Co to acquire the underlying investments is more than the total loan notes

issued by the Company to UK Hold Co. Interest accrues at 2% per annum, and is

repayable in full on demand. The Shareholder loan balance at year end is £304,316,450

(2022: £304,316,450). These loans form part of the fair value of the investments as per

note 14.

5. Management fees

The Investment Manager of the Fund is Foresight Group LLP.

The Investment Manager of the Company receives an annual fee of 1% of the Net Asset

Value (“NAV”) of the Company up to £500 million – NAV in excess of this is charged

at 0.9% per annum. This is payable quarterly in arrears and is calculated based on

the published quarterly NAV. For the year ended 31 December 2023, the Investment

Manager was entitled to a management fee of £7,036,782 (2022: £7,418,165) of which

£nil was outstanding as at 31 December 2023 (2022: £nil).

3. Critical accounting estimates and judgements continued

Key source of estimation uncertainty: Investments at fair value through

profit or loss continued

The discount rates are subjective and therefore it is feasible that a reasonable

alternative assumption may be used, resulting in a different value. The discount rates

applied to the cash flow are reviewed by the Investment Manager and approved by the

Board on a quarterly basis, taking into consideration market transactions with similar

nature and related market data. Independent advisors are used to provide evidenced

forward power price curves and therefore it is feasible that a reasonable alternative

assumption may be used, resulting in a different value. The power price curves are

reviewed by the Investment Manager and approved by the Board on a quarterly basis.

Inflation forecasts, such as those of the Office for Budget Responsibility, are used

alongside in-house views of the Investment Manager to determine this assumption,

therefore it is feasible that a reasonable alternative assumption may be used, resulting

in a different value. Theinflation assumptions are reviewed by the Investment Manager

and approved by theBoard on a quarterly basis.

Useful economic lives (“UELs”) of assets are based on the Investment Manager’s

estimates of the period over which the assets will generate revenue, which are

periodically reviewed for continued appropriateness. The UELs of the assets are based

on the underlying lease contract of the individual assets. The expected weighted

average life of the UK portfolio as at 31 December 2023 is 31.1 years from the date

of commissioning. The UELs of the Australian and Spanish portfolios are 37.0 and

40.0years respectively. The Investment Manager fully expects to be able to renew any

lease of the underlying investments. These key assumptions used in determining the fair

value of underlying investment and the associated sensitivities are disclosed in note 16.

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

138

10. Interest receivable

31 December

2023

£’000

31 December

2022

£’000

Interest receivable on loan notes 10,973 8,429

Interest receivable on Shareholder loans 2,678 36,302

13,651 44,731

Information about the Company’s exposure to credit and market risk and impairment

losses for interest receivable is included in note 19.

11. Trade and other receivables

31 December

2023

£’000

31 December

2022

£’000

Prepaid expenses 35 23

Other receivables 255 256

290 279

Information about the Company’s exposure to credit and market risk and impairment

losses for trade and other receivables is included in note 19.

12. Cash and cash equivalents

31 December

2023

£’000

31 December

2022

£’000

Cash at bank 2,041 11,052

2,041 11,052

Information about the Company’s exposure to credit and market risk and impairment

losses for cash and cash equivalents is included in note 19.

6. Administration fees

Under an Administration Agreement, the Administrator of the Company, JTC (Jersey)

Limited, is entitled to receive minimum annual administration and accountancy

fees of £182,000 (2022: £182,000) payable quarterly in arrears. For the year

ended 31December 2023, total administration and accountancy fees, including

disbursements, were £207,526 (2022: £199,711) of which £45,000 was outstanding as

at31December2023 (2022: £91,000).

7. Staff costs and Directors’ fees

No members of staff were employed during the year (2022: nil).

Total Directors’ fees were £283,823 (2022: £283,000).

8. Other expenses

31 December

2023

£’000

31 December

2022

£’000

Legal and professional fees 626 491

Other expenses 165 129

791 620

Included within legal and professional fees is £173,189 (2022: £154,554) relating to the

audit of these Financial Statements. The total audit fee paid to KPMG LLP in relation

to the audit of the Group is £338,943 for the year ended 31 December 2023 (2022:

£302,120). There were no other fees paid to the Auditor for non-audit services during

the year (2022: £nil).

9. Earnings per Ordinary Share – basic and diluted

The basic and diluted loss per Ordinary Share for the Company is (1.54) pence per

share (2022: basic profit of 25.32 pence per share). This is based on the loss for the year

of £9,284,495 (2022: £154,470,462 profit) and on 603,598,450 (2022: 609,958,720)

Ordinary Shares, being the weighted average number of shares in issue during the year,

excluding treasury shares.

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

139

14. Investments held at fair value through profit or loss

The following table presents the Company’s investments held at fair value through

profit or loss:

31 December

2023

£’000

31 December

2022

£’000

Investment in UK Hold Co Equity — —

Loans 683,104 715,942

683,104 715,942

Book cost as at 1 January 554,315 554,315

Opening investment holding gains 161,627 34,787

Valuation as at 1 January 715,942 589,102

Movements during the year:

Unrealised investment holding (losses)/gains (32,838) 126,840

Valuation as at 31 December 683,104 715,942

Book cost as at 31 December 554,315 554,315

Closing investment holding gains 128,789 161,627

683,104 715,942

The Company has one investment in UK Hold Co. This investment consists of both debt

and equity (share capital of £100) and is not quoted in an active market. Accordingly,

the investment in UK Hold Co has been fair valued using its net assets.

UK Hold Co has three investments in RCF Debtco, FS Holdco 4 and FBSHL. RCFDebtco

has three investments in FS Topco 1, FS Topco 2 and FS Holdco 3. FS Topco 1 has

one investment in FIHC. FIHC has one investment in FS Holdco. FS Topco 2 has one

investment in FISH. FISH has one investment in FS Holdco 2. FS Holdco 2 has one

investment in FS Debtco. FS Holdco 3 has one investment in SGP Holdings 1 which

in turn has one investment in SGP 1. These investments also consist of both debt

and equity and are not quoted in an active market. FS Holdco and FS Debtco are

fair valued using their net assets as reported at year end, with adjustments to their

long-term external debt to reflect the fact that the carrying value at amortised cost is

not considered to be the best approximation of their fair value. FSTopco 1, FS Topco 2,

FSHoldco 4, FIHC, FS Holdco 3 and FISH are fair valued using their net assets.

13. Trade and other payables

31 December

2023

£’000

31 December

2022

£’000

Accrued expenses 238 350

Amounts due to subsidiaries

187 187

Unsettled treasury shares 772 —

1,197 537

1. Amounts due to subsidiaries are unsecured, interest free and repayable on demand.

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

140

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

14. Investments held at fair value through profit or loss continued

FS Holdco, FS Debtco, SGP Holdings 1 and FS Holdco 3’s investment portfolios consist

of unquoted investments in solar projects, the valuations of which are based on a

discounted cash flow methodology (as set out in note 16) for solar projects that are

operational. FS Holdco 4 consists of operational Australian and Spanish assets, the

valuations of which are also based on a discounted cash flow methodology, and a

Spanish development pipeline which is held at cost.

Foresight Battery Storage Holding Limited, formerly Sandridge Battery Storage Holding

Limited (“FBSHL”) is held at cost as the underlying SPVs are not yet operational and the

price of the recent investment acquired by the Group approximates its fair value.

Fair value hierarchy

IFRS 13 Fair Value Measurement requires disclosures relating to fair value measurements

using a three-level fair value hierarchy. The level within which the fair value

measurement is categorised in its entirety is determined on the basis of the lowest level

input that is significant to the fair value measurement.

Assessing the significance of a particular input requires judgement, considering factors

specific to the asset or liability. The following table shows investments recognised at fair

value, categorised between those whose fair value is based on:

(a) Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or

liabilities

(b) Level 2 – Valuation techniques for which the lowest level input that is significant to

the fair value measurement is directly or indirectly observable

the fair value measurement is unobservable

All investments held at fair value through profit or loss are classified as level 3 within the

fair value hierarchy.

As UK Hold Co’s Net Asset Value is not considered observable market data, the

investment in UK Hold Co has been classified as level 3. There were no movements

between levels during the year, categorised between those whose fair value is based on:

As at 31 December 2023:

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Investments held at fair value

through profit or loss — — 683,104 683,104

— — 683,104 683,104

As at 31 December 2022:

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Investments held at fair value

through profit or loss — — 715,942 715,942

— — 715,942 715,942

Sensitivity analysis

Due to the nature of the Group structure and the underlying valuation basis of UK

Hold Co, RCF Debtco, FS Topco 1, FIHC, FS Holdco, FS Topco 2, FS Debtco, FS

Holdco 3, FSHoldco 4 and the underlying solar project investments, the valuation

of the Company’s investment at fair value through profit or loss is directly linked to

the valuation of the underlying solar and battery storage investments. Therefore, the

unobservable inputs driving the valuation of the Company’s investments in UK Hold

Co are directly attributable to the valuation of the unquoted investments in FS Holdco,

FSDebtco, FS Holdco 3 and FS Holdco 4, which are discussed further in note 16.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

141

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

15. Subsidiaries and associates

Investments in subsidiaries

Name

Direct or

indirect holding

Country of

incorporation Principal activity

Proportion

of shares

and voting

rights held

Foresight Solar (UK Hold Co) Limited (“UK Hold Co”) Direct UK Holding Company 100%

FS Holdco Limited (“FS Holdco”) Indirect UK Holding Company 100%

FS Top Holdco 2 Limited (“FS Topco 2”) Indirect UK Holding Company 100%

Foresight Intermediate Solar Holdings Limited (“FISH”) Indirect UK Holding Company 100%

FS Holdco 2 Limited (“FS Holdco 2”) Indirect UK Holding Company 100%

FS Debtco Limited (“FS Debtco”) Indirect UK Holding Company 100%

FS Holdco 3 Limited (“FS Holdco 3”) Indirect UK Holding Company 100%

FS Holdco 4 Limited (“FS Holdco 4”) Indirect UK Holding Company 100%

Foresight Battery Storage Holding Limited (“FBSHL”) Indirect UK Holding Company 50%

FS RCF Debtco Limited (“RCF Debtco”) Indirect UK Holding Company 100%

FS Top Holdco 1 Limited (“FS Topco 1”) Indirect UK Holding Company 100%

FS Intermediate Holdco Limited (“FIHC”) Indirect UK Holding Company 100%

FS Wymeswold Limited Indirect UK SPV Holding Company 100%

FS Castle Eaton Limited Indirect UK SPV Holding Company 100%

FS Pitworthy Limited Indirect UK SPV Holding Company 100%

Foresight Solar Germany Holding GmbH Indirect Germany SPV Holding Company 100%

FS Highfields Limited Indirect UK SPV Holding Company 100%

FS High Penn Limited Indirect UK SPV Holding Company 100%

FS Hunter’s Race Limited Indirect UK SPV Holding Company 100%

FS Spriggs Limited Indirect UK SPV Holding Company 100%

FS Bournemouth Limited Indirect UK SPV Holding Company 100%

FS Landmead Limited Indirect UK SPV Holding Company 100%

FS Kencot Limited Indirect UK SPV Holding Company 100%

FS Copley Limited Indirect UK SPV Holding Company 100%

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

142

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

Name

Direct or

indirect holding

Country of

incorporation Principal activity

Proportion

of shares

and voting

rights held

FS Port Farms Solar Limited Indirect UK SPV Holding Company 100%

FS Membury Limited Indirect UK SPV Holding Company 100%

FS Southam Solar Limited Indirect UK SPV Holding Company 100%

FS Atherstone Solar Limited Indirect UK SPV Holding Company 100%

FS Paddock Wood Solar Farm Limited Indirect UK SPV Holding Company 100%

Southam Holdco Limited Indirect UK SPV Holding Company 100%

Atherstone Holdco Limited Indirect UK SPV Holding Company 100%

Paddock Wood Holdco Limited Indirect UK SPV Holding Company 100%

FS Shotwick Limited Indirect UK SPV Holding Company 100%

FS Sandridge Limited Indirect UK SPV Holding Company 100%

FS Wally Corner Limited Indirect UK SPV Holding Company 100%

FS Holdco 5 Limited Indirect UK SPV Holding Company 100%

FS Welbeck Limited Indirect UK SPV Holding Company 100%

FS Trehawke Limited Indirect UK SPV Holding Company 100%

FS Homeland Limited Indirect UK SPV Holding Company 100%

FS Marsh Farm Limited Indirect UK SPV Holding Company 100%

FS Steventon Limited Indirect UK SPV Holding Company 100%

FS Fields Farm Limited Indirect UK SPV Holding Company 100%

FS Gedling Limited Indirect UK SPV Holding Company 100%

FS Sheepbridge Limited Indirect UK SPV Holding Company 100%

FS Tengore Limited Indirect UK SPV Holding Company 100%

FS Cuckoo Limited Indirect UK SPV Holding Company 100%

FS Field House Limited Indirect UK SPV Holding Company 100%

FS Upper Huntingford Limited Indirect UK SPV Holding Company 100%

FS Abergelli Limited Indirect UK SPV Holding Company 100%

FS Crow Trees Limited Indirect UK SPV Holding Company 100%

15. Subsidiaries and associates continued

Investments in subsidiaries continued

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

143

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

Name

Direct or

indirect holding

Country of

incorporation Principal activity

Proportion

of shares

and voting

rights held

FS Yarburgh Limited Indirect UK SPV Holding Company 100%

FS Nowhere Solar Limited Indirect UK SPV Holding Company 100%

FS Bilsthorpe Solar Limited Indirect UK SPV Holding Company 100%

FS Bulls Head Solar Limited Indirect UK SPV Holding Company 100%

FS Roskrow Solar Limited Indirect UK SPV Holding Company 100%

FS Abbeyfields Solar Limited Indirect UK SPV Holding Company 100%

FS Lindridge Solar Limited Indirect UK SPV Holding Company 100%

FS Misson Solar Limited Indirect UK SPV Holding Company 100%

FS Playters Solar Limited Indirect UK SPV Holding Company 100%

FS PS Manor Farm Solar Limited Indirect UK SPV Holding Company 100%

FS SV Ash Solar Park Limited Indirect UK SPV Holding Company 100%

FS Pen Y Cae Solar Limited Indirect UK SPV Holding Company 100%

Second Generation Portfolio Holdings 1 (“SGP Holdings 1”) Indirect UK SPV Holding Company 100%

Second Generation Portfolio 1 (“SGP 1”) Indirect UK SPV Holding Company 100%

FS Oakey 2 Pty Limited Indirect Australia SPV Holding Company 100%

Foresight Solar Spain Holding S.L (“FSSH”) Indirect Spain SPV Holding Company 100%

Wymeswold Solar Farm Limited (“Wymeswold”) Indirect UK Investment 100%

Castle Eaton Solar Farm Limited (“Castle Eaton”) Indirect UK Investment 100%

Pitworthy Solar Farm Limited (“Pitworthy”) Indirect UK Investment 100%

Highfields Solar Farm Limited (“Highfields”) Indirect UK Investment 100%

High Penn Solar Farm Limited (“High Penn”) Indirect UK Investment 100%

Hunter’s Race Solar Farm Limited (“Hunter’s Race”) Indirect UK Investment 100%

Spriggs Solar Farm Limited (“Spriggs”) Indirect UK Investment 100%

Bournemouth Solar Farm Limited (“Bournemouth”) Indirect UK Investment 100%

Landmead Solar Farm Limited (“Landmead”) Indirect UK Investment 100%

Kencot Hill Solar Farm Limited (“Kencot”) Indirect UK Investment 100%

15. Subsidiaries and associates continued

Investments in subsidiaries continued

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

144

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

Name

Direct or

indirect holding

Country of

incorporation Principal activity

Proportion

of shares

and voting

rights held

Copley Solar Limited (“Copley”) Indirect UK Investment 100%

Ports Farms Limited (“Port Farms”) Indirect UK Investment 100%

Membury Solar Limited (“Membury”) Indirect UK Investment 100%

Atherstone Solar Farm Ltd (“Atherstone”) Indirect UK Investment 100%

Southam Solar Farm Ltd (“Southam”) Indirect UK Investment 100%

Paddock Wood Solar Farm Ltd (“Paddock Wood”) Indirect UK Investment 100%

Shotwick Solar Limited (“Shotwick Solar”) Indirect UK Investment 100%

Sandridge Solar Power Limited (“Sandridge”) Indirect UK Investment 100%

Wally Corner Limited (“Wally”) Indirect UK Investment 100%

Foresight Solar Australia Pty Limited Indirect Australia Investment 100%

RE Oakey Pty Limited Indirect Australia Investment 100%

Oakey Network Pty Limited Indirect Australia Investment 100%

Longreach Asset Company Pty Limited Indirect Australia Investment 100%

Second Generation Yardwall Limited (“Yardwall”) Indirect UK Investment 100%

Second Generation Verwood Limited (“Verwood”) Indirect UK Investment 100%

Second Generation Park Farm Limited (“Park Farm”) Indirect UK Investment 100%

Second Generation Coombeshead Limited (“Coombeshead”) Indirect UK Investment 100%

Second Generation Sawmills Limited (“Sawmills”) Indirect UK Investment 100%

Welbeck Limited (“Welbeck”) Indirect UK Investment 100%

Trehawke Limited (“Trehawke”) Indirect UK Investment 100%

Homeland Limited (“Homeland”) Indirect UK Investment 100%

Marsh Farm Limited (“Marsh Farm”) Indirect UK Investment 100%

Steventon Limited (“Steventon”) Indirect UK Investment 100%

Fields Farm Limited (“Fields Farm”) Indirect UK Investment 100%

Gedling Limited (“Gedling”) Indirect UK Investment 100%

Sheepbridge Limited (“Sheepbridge”) Indirect UK Investment 100%

15. Subsidiaries and associates continued

Investments in subsidiaries continued

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

145

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

Name

Direct or

indirect holding

Country of

incorporation Principal activity

Proportion

of shares

and voting

rights held

Tengore Limited (“Tengore”) Indirect UK Investment 100%

Cuckoo Limited (“Cuckoo”) Indirect UK Investment 100%

Field House Limited (“Field House”) Indirect UK Investment 100%

Upper Huntingford Limited (“Upper Huntingford”) Indirect UK Investment 100%

Abergelli Limited (“Abergelli”) Indirect UK Investment 100%

Crow Trees Limited (“Crow Trees”) Indirect UK Investment 100%

Yarburgh Limited (“Yarburgh”) Indirect UK Investment 100%

Nowhere Solar Limited (“Nowhere Solar”) Indirect UK Investment 100%

Bilsthorpe Solar Limited (“Bilsthorpe Solar”) Indirect UK Investment 100%

Bulls Head Solar Limited (“Bulls Head Solar”) Indirect UK Investment 100%

Roskrow Solar Limited (“Roskrow Solar”) Indirect UK Investment 100%

Lindridge Solar Limited (“Lindridge Solar”) Indirect UK Investment 100%

Misson Solar Limited (“Misson Solar”) Indirect UK Investment 100%

Playters Solar Limited (“Playters Solar”) Indirect UK Investment 100%

PS Manor Farm Solar Limited (“PS Manor Farm Solar”) Indirect UK Investment 100%

SV Ash Solar Park Limited (“SV Ash Solar Park”) Indirect UK Investment 100%

Pen Y Cae Solar Limited (“Pen Y Cae Solar”) Indirect UK Investment 100%

Virgen del Carmen Solar S.L (“Virgen”) Indirect Spain Investment 100%

Fotovoltaica Puerto Cruz II.S.L Indirect Spain Investment 100%

Bailey Solar Limited Indirect UK Investment 100%

True Blue Solar Limited Indirect UK Investment 100%

Abbeyfields Solar Limited (“Abbeyfields Solar”) Indirect UK Investment 100%

Longreach New Holdco Pty Limited Indirect Australia SPV Holding Company 100%

Oakey 1 New Holdco Pty Limited Indirect Australia SPV Holding Company 100%

15. Subsidiaries and associates continued

Investments in subsidiaries continued

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

146

15. Subsidiaries and associates continued

Investments in associates

Name

Direct or

indirect holding

Country of

incorporation Principal activity

Proportion

of shares

and voting

rights held

Kiamco Hanwha Foresight Bannerton Pty Limited Indirect Australia SPV Holding Company 48.50%

Lunanhead Energy Storage Limited Indirect UK SPV Holding Company 50%

Clayfords Energy Storage Limited Indirect UK SPV Holding Company 50%

Sandridge Battery Storage Limited Indirect UK SPV Holding Company 50%

Global Solar Energy Veintisiete, S.L Indirect Spain Investment 50%

Solar de la Contraviesa 5 S.L.U Indirect Spain Investment 50%

Solar de la Contraviesa 6 S.L.U Indirect Spain Investment 50%

Solar de la Contraviesa 7 S.L.U Indirect Spain Investment 50%

16. Fair value of the investments in unconsolidated entities

Valuation process

Valuations are the responsibility of the Board of Directors. The Investment Manager is responsible for submitting fair market valuations of Group assets to the Directors. The Directors

review and approve these valuations following appropriate challenge and examination. Valuations are carried out quarterly. The current portfolio consists of non-market traded

investments and valuations are based on a discounted cash flow methodology. The Investment Manager’s assessment of fair value of investments is determined in accordance with

the International Private Equity and Venture Capital 2022 (“IPEV”) Valuation Guidelines, using levered and unlevered discounted cash flow principles. The Investment Manager and

Directors consider that the discounted cash flow methodology used in deriving a fair value is in accordance with the fair value requirements of IFRS 13. The assets in construction

were valued at cost at 31 December 2023 and have therefore been omitted from the sensitivity analysis on the following pages.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

147

16. Fair value of the investments in unconsolidated entities continued

Sensitivity analysis of significant changes in unobservable inputs within level

hierarchy of underlying investments

The majority of the Company’s underlying investments (indirectly held through its

unconsolidated subsidiaries FS Holdco, FS Debtco, FS Holdco 3 and FS Holdco 4) are

valued with reference to the discounted value of future cash flows. The Directors consider

the valuation methodology used, including the key assumptions and discount rate

applied, to be appropriate. On a quarterly basis, the Board reviews the valuation inputs

and, where possible, makes use of observable market data to ensure valuations reflect

the fair value of the investments. A broad range of assumptions are used in the valuation

models. These assumptions are based on long-term forecasts and are not affected by

short-term fluctuations in inputs, be it economic or technical. The Investment Manager

has adjusted the sensitivities calculation methodology from an asset level cash flows only

basis to a calculation based on asset level cash flow less holding company level debt cash

outflows. This has resulted mainly in a reduction of the discount rate sensitivity disclosed

below.

The base valuation of £645.1 million represents the levered discounted value of future

cash flows of the underlying operational assets with assets under construction held

at cost, less the long-term debt held at holding company level. The valuation of the

Australian assets is net of debt. The base valuation of £645.1 million is equal to the NAV

of£697.9 million less items deemed not subject to the sensitivities applied.

31 December

2023

£m

Base case for sensitivities 645.1

Items not subject to sensitivities:

Cash in assets 30.4

Assets in construction valued at cost 19.0

Company and intermediate holding companies’ cash 81.2

Funds held at group level on behalf of assets (5.0)

RCF outstanding (75.0)

Other adjustments (0.1)

Other Company and intermediate holding companies’ net assets 2.3

Net Asset Value at 31 December 2023 697.9

The Directors consider the following to be the most significant inputs to the discounted

cash flows (“DCF”) calculation.

Discount rate

The weighted average discount rate used is 6.23% (2022: 7.16%). The Directors do not

typically expect to see a significant change in the discount rates applied within the solar

infrastructure sector. Therefore, a variance of +/-0.5% is considered reasonable factored

into the analysis. In terms of the climate change risk, the discount rate is benchmarked

against a similar asset base to ensure the underlying climate risk exposure is factored

into the analysis.

-0.50% -0.25% Base +0.25% +0.50%

Portfolio valuation (£m) 668.8 656.8 645.1 633.9 622.9

Change in portfolio valuation (£m) 23.7 11.6 — (11.3) (22.2)

NAV per share change (pence) 4.0 2.0 — (1.9) (3.8)

-0.50% +0.50%Base

£m

700

600

650

610

620

640

630

+0.25%-0.25%

690

660

680

670

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

148

16. Fair value of the investments in unconsolidated entities continued

Power price

Power price DCF models assume power prices that are consistent with the power

purchase agreements (“PPAs”) currently in place. At the PPA end date, the model

reverts to the power price forecast. The power price forecasts are updated quarterly

and based on power price forecasts from leading independent sources, adjusted by the

Investment Manager for the expected capture price discounts for solar generation as

considered appropriate.

The forecast assumes an average annual decrease in power prices in real terms

of approximately 2.1% (2022: decrease of 5.5%). During the period, c.40% of the

investments’ operational revenues came from regulatory support mechanisms. The

remaining c.60% of revenue is derived from electricity sales which are partially subject

to power price movements. On a net present value basis, future electricity sales which

are subject to price movements represent c.47% of total revenues.

-20.0% -10.0% Base +10.0% +20.0%

Portfolio valuation (£m) 541.0 593.9 645.1 694.6 742.9

Change in portfolio valuation (£m) (104.1) (51.2) — 49.5 97.8

NAV per share change (pence) (17.7) (8.7) — 8.4 16.6

Base

£m

1,000

200

+10.0% +20.0%-20.0% -10.0%

800

600

400

Inflation

A variable of 0.5% to 1.0% is considered reasonable given the long-term inflation rate

of 3.50% for 2024, 3.00% from 2025 to 2030, after which it is 2.25% (2022: 3.00% and

2.25%, respectively).

-1.0% -0.5% Base +0.5% +1.0%

Portfolio valuation (£m) 587.1 616.8 645.1 675.1 706.5

Change in portfolio valuation (£m) (58.0) (28.3) — 30.0 61.3

NAV per share change (pence) (9.8) (4.8) — 5.1 10.4

-1.0% +1.0%Base

£m

750

500

550

600

700

650

+0.5%-0.5%

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

149

The Directors also consider the following to be important inputs to the discounted cash

flows calculation.

Production

Base case production is a function of a number of separate assumptions including

irradiation levels, availability of the sites and technical performance of the equipment.

A sensitivity of +/-10% is considered reasonable given stable levels of irradiation,

contractual availability guarantees and understanding of future performance levels of

the equipment.

-10.0% Base +10.0%

Portfolio valuation (£m) 530.8 645.1 751.9

Change in portfolio valuation (£m) (114.3) — 106.8

NAV per share change (pence) (19.4) — 18.1

£m

800

500

550

600

650

700

750

-10.0% +10.0%Base

16. Fair value of the investments in unconsolidated entities continued

Useful economic lives (“UELs”)

The valuation of the Company’s investments is determined based on the discounted

value of future cash flows of those investments over their UELs. The UEL of individual

assets is determined by reference to a fixed contractual lease term. However, the Board

notes that if extended contractual lease terms were negotiated for individual assets, this

would increase the value of those assets. Similarly, if the assets did not operate for the

duration of the fixed contractual period, this would reduce the value of those assets.

-1 year Base +1 year

Portfolio valuation (£m) 640.3 645.1 649.3

Change in portfolio valuation (£m) (4.8) — 4.1

NAV per share change (pence) (0.8) — 0.7

-1 year +1 yearBase

£m

670

600

610

620

630

640

660

650

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

150

Tax rate

On 1 April 2023, the rate of UK corporation tax increased from 19% to 25%. The impact

of this change is reflected in the 31 December 2023 valuation. On that basis, a variable

of 1.0% is considered reasonable given historic information.

-1.0% Base +1.0%

Portfolio valuation (£m) 649.1 645.1 641.7

Change in portfolio valuation (£m) 4.0 — (3.4)

NAV per share change (pence) 0.7 — (0.6)

-1.0% +1.0%Base

£m

630

635

640

645

650

16. Fair value of the investments in unconsolidated entities continued

Operating costs (investment level)

Operating costs include operating and maintenance (“O&M”), insurance and lease costs.

Other costs are fixed and are therefore not considered to be sensitive to changes in

unobservable inputs. Base case costs are based on current commercial agreements.

The Directors would not expect these costs to fluctuate widely over the life of the assets

and are comfortable that the base case is prudent. A variance of +/-5.0% is considered

reasonable, a variable of +/-10.0% is shown for information purposes.

-10.0% -5.0% Base +5.0% +10.0%

Portfolio valuation (£m) 662.7 654.1 645.1 636.7 627. 5

Change in portfolio valuation (£m) 17.5 9.0 — (8.4) (17.7)

NAV per share change (pence) 3.0 1.5 — (1.4) (3.0)

-10.0% +10.0%Base

£m

680

600

620

640

660

+5.0%-5.0%

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

151

-20.0% +20.0%Base

£m

680

620

630

640

650

660

670

+10.0%-10.0%

Interest rate

The Group’s interest rate received on UK bank deposits is subject to reassessment in

respect of fluctuations in the Bank of England base rate. The valuations of the assets will

be directly impacted by any changes to the UK bank deposit rate. Whilst the Directors

would not expect to see fluctuations quite this large, a variable of 1% is considered

appropriate.

-1.0% -0.5% Base +0.5% +1.0%

Portfolio valuation (£m) 643.5 644.3 645.1 646.5 647.3

Change in portfolio valuation (£m) (1.6) (0.8) — 1.4 2.2

NAV per share change (pence) (0.2) (0.1) — 0.2 0.3

16. Fair value of the investments in unconsolidated entities continued

Exchange rate

The Company’s investments are directly exposed to fluctuations in foreign currency

due to its investments in Australian dollar and Euro denominated assets. Whilst the

Group mitigates its exposure to fluctuations in AUD and EUR through the use of forward

contracts, the valuations of these assets will be directly impacted. Whilst the Directors

would not expect to see fluctuations quite this large, a variable of 20% is considered

appropriate.

AUD/GBP -20.0% -10.0% Base +10.0% +20.0%

Portfolio valuation (£m) 636.5 640.8 645.1 653.8 662.4

Change in portfolio valuation (£m) (8.6) (4. 3) — 4.4 8.7

NAV per share change (pence) (1.5) (0.7) — 0.7 1.5

-20.0% +20.0%Base

£m

600

620

640

660

680

700

+10.0%-10.0%

EUR/GBP -20.0% -10.0% Base +10.0% +20.0%

Portfolio valuation (£m) 636.5 640.8 645.1 649.4 653.7

Change in portfolio valuation (£m) (8.6) (4. 3) — 4.3 8.6

NAV per share change (pence) (1.5) (0.7) — 0.7 1.5

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

640

630

650

£m

-1.0%

+1.0%

+0.5%

Base

-0.5%

660

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

152

Issued Ordinary Share capital and treasury shares

31 December 2023

31 December

2022

£’000

Ordinary

£’000

Treasury

£’000

Opening balance 629,892 — 629,892

Less: Purchase of treasury shares

(19,909) 19,909 —

Closing balance 609,983 19,909 629,892

1. This figure represents the cash payments made to Jefferies International Limited by

31December2023. The total differs to the figure presented in the Statement of Cash Flows

by £0.8 million because of the share value purchased yet to be paid to Jefferies. As such, this

difference is within the change in trade and other payables line of the Statement of Cash Flows.

On 4 May 2023, the Company announced a share buyback programme and

allocated an initial £20 million from its available cash reserves to the programme.

On16November2023, the Company announced that this allocation of available cash

would be increased to a potential £40 million. There is no certainty that the full buyback

allocation will be utilised.

Share buybacks under the engagement will be made pursuant to the authority granted

to the Company at its General Meeting held on 14 June 2023 which limit purchases

of Ordinary Shares by the Company in the market to up to 14.99% of the Company’s

issuedcapital.

18. NAV per Ordinary Share

The Net Asset Value (“NAV”) per redeemable Ordinary Share for the Company is

118.4 (2022: 126.5) pence per Ordinary Share. This is based on the Net Asset Value at

the reporting date of £697,888,983 (2022: £771,597,780) and on 589,239,345 (2022:

609,958,720) redeemable Ordinary Shares, being the number of Ordinary Shares in

issue at 31 December 2023 excluding Ordinary Shares held in treasury.

17. Stated capital and share premium

The Company issued shares of nil par value and therefore the stated capital relates only

to share premium. The stated capital of the Company consists of Ordinary Shares and

treasury shares. At any General Meeting of the Company each Shareholder will have, on

a show of hands, one vote and on a poll one vote in respect of each Ordinary Share held.

As at the year end the total number of voting rights in the Company is 589,239,345

which excludes 20,719,375 Ordinary Shares held in treasury.

Stated capital is the net proceeds received from the issue of Ordinary Shares (net of

issue costs capitalised). The holders of the Ordinary Shares are entitled to receive

dividends from time to time.

Authorised Ordinary Shares

31 December

2023

31 December

2022

Ordinary Shares – nil par value Unlimited Unlimited

Issued Ordinary Shares

31 December 2023

31 December

2022

Ordinary

Treasury

Opening balance 609,958,720 — 609,958,720

Purchase of treasury shares (20,719,375) 20,719,375 —

Closing balance 589,239,345 20,719,375 609,958,720

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

153

The carrying amount of FS Holdco 4’s foreign currency exposure at the reporting date is

as follows:

31 December

2023

£’000

31 December

2022

£’000

AUD – Investments 47,89 8 55,432

EUR – Investments 46,577 69,296

AUD – Cash 44 1,840

EUR – Cash 2,027 7,484

The FX rate applied at 31 December 2023 was AUD/GBP 0.5353 (2022: 0.5647) and

EUR/GBP 0.8666 (2022: 0.8868).

The sensitivities linked to the assets denominated in AUD and EUR are set out in note 16

as these assets are held in the underlying investment.

(b) Price risk

The Company’s investments are susceptible to market price risk arising from

uncertainties about future values of the instruments. The Investment Manager

provides the Company with investment recommendations. The Investment Manager’s

recommendations are reviewed and approved by the Board before the investment

decisions are implemented. To manage the market price risk, the Investment Manager

reviews the performance of the investments on a regular basis and is in regular

contactwith the management of the non-current investments for business and

operational matters.

Price risk is the risk that the fair value or cash flows of a financial instrument will

fluctuate due to changes in market prices. At 31 December 2023, the Company’s only

investment was valued at net assets excluding the outstanding loans issued by the

Company. Were this value to increase by 10%, the increase in net assets attributable to

Shareholders for the year would have been £68,310,349 (2022: £71,594,174). The impact

of changes in unobservable inputs to the underlying investment is considered in note 16.

19. Financial instruments and risk profile

The Company holds cash and liquid resources as well as having receivables and

payables that arise directly from its operations. The underlying investments of the

Company’s investment activities indirectly expose it to various types of risks associated

with solar power. The main risks arising from the Company’s financial instruments are

market risk, liquidity risk, credit risk and interest rate risk.

The Directors regularly review and agree policies for managing each of these risks and

these are summarised below:

19.1 Market risk

(a) Foreign currency risk

Foreign currency risk, as defined in IFRS 7, arises as the values of recognised monetary

assets and monetary liabilities denominated in other currencies fluctuate due to

changes in foreign exchange rates. Transactions in foreign currency are translated at

the foreign exchange rate ruling at the date of the transaction. Monetary assets and

liabilities denominated in foreign currencies at the balance sheet date are translated

to GBP at the foreign exchange rate ruling at that date. Foreign exchange differences

arising on translation are recognised in income.

The Company has no direct exposure to foreign currency risk, however through its

underlying investment in FS Holdco 4 it has indirect exposure. FS Holdco 4 is directly

exposed to fluctuations in foreign currency due to its investments in assets and cash

denominated in EUR and AUD. The Group mitigates its exposure to fluctuations in

foreign currency through the use of forward exchange contracts.

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

154

The Company is also indirectly exposed to interest rate risk through its investment in UK

Hold Co. Details of the indirect interest rate risk exposure are as follows:

Total

indirect exposure

2023

£’000

Weighted

average

interest rate

2023

Weighted

average

time for which

rate is fixed

2023

Days

Investments – RCF Debtco

642,105 7.09 730

Investments – FS Holdco 4

93,401 5.64 2,781

Cash and cash equivalents 21,584 0.05 —

Total indirect exposure interest

raterisk 757,090

Total

indirect exposure

2022

£’000

Weighted

average

interest rate

2022

Weighted

average

time for which

rate is fixed

2022

Days

Investments – RCF Debtco

689,582 6.00 365

Investments – FS Holdco 4

93,401 5.00 2,781

Cash and cash equivalents 27,409 0.05 —

Total indirect exposure interest

raterisk 810,392

1. Although interest is charged on the loan portion of the investments, the risk is low as the loans

are inter-group and therefore not subject to significant fluctuations.

2. These loans do not have a repayment date and are repayable on demand. However, the Directors

do not intend to demand repayment within at least 12 months after year end.

19. Financial instruments and risk profile continued

19.1 Market risk continued

Interest rate risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate because of changes in market interest rates. The Company’s

exposure to the risk of changes in market interest rates relates primarily to the

Company’s long-term borrowing to its subsidiary. At year end the Company had no

long-term borrowings with third parties (2022: £nil).

Total portfolio

31 December 2023

£’000

Weighted average

interest rate

31 December 2023

Weighted average

time for which

rate is fixed

31 December 2023

Days

Loan notes 250,000 10.03 1,872

Shareholder loans 304,315 2.00 3,104

Cash 2,041 0.05 —

556,356

Total portfolio

31 December 2022

£’000

Weighted average

interest rate

31 December 2022

Weighted average

time for which

rate is fixed

31 December 2022

Days

Loan notes 250,000 10.09 1,516

Shareholder loans 304,316 2.00 2,748

Cash 11,052 0.05 —

565,368

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

155

19. Financial instruments and risk profile continued

19.2 Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due as a result of the maturity of assets and liabilities not matching. Anunmatched

position potentially enhances profitability but can also increase the risk of losses. Liquidity could be impaired by an inability to access secured and/or unsecured sources of financing to

meet financial commitments. The Board monitors the Company’s liquidity requirements to ensure there is sufficient cash to meet the Company’s operating needs.

The following are the expected maturities of the financial assets and liabilities at year end based on contractual undiscounted payments:

31 December 2023

Carrying

amount

£’000

Contractual

total

£’000

Less than

6 months

£’000

6 to

12 months

£’000

Greater than

12 months

£’000

Financial assets

Investments 683,104 683,104 — — 683,104

Trade and other receivables 290 290 — 290 —

Interest receivable 13,651 13,651 — 13,651 —

Cash and cash equivalents 2,041 2,041 2,041 — —

Total financial assets 699,086 699,086 2,041 13,941 683,104

Financial liabilities

Trade and other payables 1,197 1,197 1,197 — —

Total financial liabilities 1,197 1,197 1,197 — —

Net position 697,889 697,889 844 13,941 683,104

31 December 2022

Carrying

amount

£’000

Contractual

total

£’000

Less than

6 months

£’000

6 to

12 months

£’000

Greater than

12 months

£’000

Financial assets

Investments 715,942 715,942 — — 715,942

Trade and other receivables 279 279 — 279 —

Interest receivable 44,731 44,731 — 44,731 —

Cash and cash equivalents 11,052 11,052 11,052 — —

Total financial assets 772,004 772,004 11,052 45,010 715,942

Financial liabilities

Trade and other payables 537 537 537 — —

Total financial liabilities 537 537 537 — —

Net position 771,467 771,467 10,515 45,010 715,942

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

156

The Company is also indirectly exposed to credit risk through its investment in UK

Hold Co. The Board of UK Hold Co has determined that the maximum exposure to

credit risk in relation to investments is £765,269,357 (2022: £782,983,492), being the

portion of UK Hold Co investments that are made up of loans as at 31 December 2023.

Included within this are the related party loans as disclosed within note 22 as well as

long-term debt facilities entered into by FS Holdco, FS Debtco and RCF Debtco with

Santander UK plc, NatWest Group plc, Allied Irish Banks plc, Lloyds Bank plc, Macquarie

Group Limited, Landesbank Hessen-Thuringen Girozentrale, Sumitomo Mitsui Banking

Corporation, London Branch and Barclays plc. The balance of the external debt facilities

as at year end amounted to £317,419,968 (2022: £374,514,646).

The Group’s ability to meet the debt covenants described in note 2.2 is directly

impacted by power prices. If the debt covenants were not met, the Company may not

be able to repatriate cash through the structure. On the debt calculation date before the

date of this report, the DSCR for FS Holdco was 3.13:1 and for FS Debtco it was 5.96:1.

The Loan Life Cover Ratio for FS Holdco was 2.51:1. During 2023 the debt covenants

were not breached.

On the debt calculation date for RCF Debtco, the interest cover ratio was 10.83:1. This

ratio must remain higher than 3.00:1 to be compliant.

b) Expected credit loss assessment

Investments held at fair value through profit or loss are not subject to IFRS 9

impairment requirements.

The Company applies the simplified approach to measuring expected credit losses,

as permitted by IFRS 9, which uses a lifetime expected credit loss allowance for all

trade receivables. The expected credit loss on trade receivables and the balance at

year end was deemed by management to be not material and therefore no impairment

adjustments were accounted for.

19. Financial instruments and risk profile continued

19.3 Credit risk

a) Exposure to credit risk

Credit risk refers to the risk that a counterparty will default on its contractual

obligations resulting in financial loss to the Company.

The Company places cash with authorised deposit takers and is therefore potentially at

risk from the failure of such institutions.

In respect of credit risk arising from other financial assets and liabilities, which mainly

comprise of cash and cash equivalents, exposure to credit risk arises from default of

the counterparty with a maximum exposure equal to the carrying amounts of these

instruments. In order to mitigate such risks, cash is maintained with major international

financial institutions. During the year and at the reporting date, the Company

maintained relationships with the following financial institutions:

Moody’s

credit rating

31 December

2023

£’000

Cash in bank:

Royal Bank of Scotland International Limited P2 2,041

Total cash and cash equivalents 2,041

Moody’s

credit rating

31 December

2022

£’000

Cash in bank:

Royal Bank of Scotland International Limited P2 11,052

Total cash and cash equivalents 11,052

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

157

The UK government started a consultation process in 2022 on the future of the

electricity market in Great Britain. The results of REMA have been delayed and are now

expected sometime in the first half of 2024, with any radical changes coming into force

after 2030. In November 2023, pursuant to responses received from market participants

in relation to the REMA consultation, the UK government has decided to not take

forward a number of options originally proposed in the REMA framework.

Despite more clarity on the REMA initiative, the changes required to the UK wholesale

power market are still uncertain in terms of timing and impact on corporate power price

agreements.

In July 2023, the UK government launched a consultation into the Renewables

Obligation Certificate (“ROC”) scheme in which it seeks views on introducing Fixed

Price Certificates (“FPCs”) as the UK-wide RO programme starts winding down in the

next two decades. The move was envisaged in the latter years of the ROC scheme to

help provide price stability as the subsidy came to an end. The Investment Manager is

engaging with the process and responding via industry representatives to minimise any

perceived risks for the sector.

Changes to the level of political support for renewable energy generation may result

in adjustments to the levels of subsidy and incentives, whether on a prospective or

retrospective basis. The Directors continue to monitor and review this risk under the risk

management framework.

20. Capital management

The Company’s objectives when managing capital are to safeguard the Group’s ability

to continue as a going concern in order to provide returns for Shareholders and benefits

for other stakeholders and to maintain an optimal capital structure to reduce the cost of

capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount

of dividends paid to Shareholders, return capital to Shareholders, issue new shares

(up to its authorised number of shares) or sell assets to reduce debt. The Company is

permitted to purchase up to 14.99%of it’s own issued share capital.

19. Financial instruments and risk profile continued

19.4 Other risks

Political and economic risk

The value of Ordinary Shares may be affected by uncertainties such as political or

diplomatic developments, social and religious instability, changes in government

policies, taxation or interest rates, currency repatriation and other political and

economic developments in law or regulations and, in particular, the risk of expropriation,

nationalisation, and confiscation of assets and changes in legislation relating to the level

of foreign ownership.

Governmental authorities at all levels are actively involved in the promulgation and

enforcement of regulations relating to taxation, land use and zoning, and planning

restrictions, environmental protection, safety and other matters. The introduction and

enforcement of such regulations could have the effect of increasing the expense and

lowering the income or rate of return from, as well as adversely affecting the value of,

the Company’s assets.

In recent years the UK and the Company experienced a surge in power prices

partly because of the tightening of the supply of natural gas into the EU, which was

exacerbated by the continuing Russian invasion of Ukraine, which caused many

countries, including the UK, to place sanctions on the usage of Russian fossil fuels.

The Directors continue to monitor and review the geopolitical environment and its wider

impact on the Company’s business in what has the potential to be a more turbulent

period in international relations. For example, recent attacks by militant groups on

US and UK ships, as well as international commercial shipping in the Red Sea, could

potentially impact oil prices and supply uncertainty, which could impact power prices

and other macroeconomic factors affecting the Company.

During 2023, the macroeconomic environment has been the key contributing factor to

Foresight Solar’s shares trading at a discount to the net asset value. The associated risks

that have been most closely monitored are those related to direct government market

intervention, such as the effects of a higher interest rate environment and volatile power

prices.

The Directors continue to monitor and review all risks associated with near and

long-term power prices through the risk management framework.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

158

For the year ended 31 December 2022:

Opening

balance as at

1 January

2022

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2022

£’000

Interest bearing loans and

outstanding interest 614,419 (15,369) 599,050

Non-interest bearing loans 187 — 187

Transactions between UK Hold Co and its underlying subsidiaries

There were no transactions between UK Hold Co, FISH, FS Topco 1, FIHC and SGP

Holdings 1 during the current or prior year.

Transactions with RCF Debtco

For the year ended 31 December 2023:

Opening

balance as at

1 January

2023

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2023

£’000

Interest bearing loans and

outstanding interest 589,262 49,566 638,828

Non-interest bearing loans (300,459) (5,820) (306,279)

For the year ended 31 December 2022:

Opening

balance as at

1 January

2022

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2022

£’000

Interest bearing loans and

outstanding interest — 589,262 589,262

Non-interest bearing loans — (300,459) (300,459)

21. Dividends

2023

£’000

2023

Pence/Ordinary

2022

£’000

2022

Pence/Ordinary

Quarter 1 10,857 1.780 10,644 1.745

Quarter 2 10,857 1.780 10,644 1.745

Quarter 3 11,367 1.880 10,858 1.780

Quarter 4 11,304 1.895 10,858 1.780

44,385 43,004

On 24 November 2023, the Company announced the third interim dividend, in respect

of the period 1 July 2023 to 30 September 2023, of 1.880 pence per Ordinary Share. The

shares went ex-dividend on 25 January 2024 and the dividend was paid on 23 February

2024 to Shareholders on the register as at the close of business on 26 January 2024.

No shares were issued in lieu of cash dividends during the year.

22. Related party disclosures

For the purposes of these Financial Statements, a related party is an entity or entities

who are able to exercise significant influence directly or indirectly on the Company’s

operations.

As noted in note 2, the Company does not consolidate its subsidiary. However, the

Company and its subsidiaries (direct and indirect) are a Group and, therefore, are

considered to be related parties.

Transactions with UK Hold Co

For the year ended 31 December 2023:

Opening

balance as at

1 January

2023

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2023

£’000

Interest bearing loans and

outstanding interest 599,050 31,084 567,966

Non-interest bearing loans 187 — 187

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

159

Transactions with FS Debtco

For the year ended 31 December 2023:

There were no transactions between UK Hold Co and FS Debtco during the year.

For the year ended 31 December 2022:

Opening

balance as at

1 January

2022

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2022

£’000

Interest bearing loans and

outstanding interest 68,019 (68,019) —

Non-interest bearing loan 140 (140) —

Transactions with FS Holdco 3

For the year ended 31 December 2023:

There were no transactions between UK Hold Co and FS Holdco 3 during the year.

For the year ended 31 December 2022:

Opening

balance as at

1 January

2022

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2022

£’000

Interest bearing loans and

outstanding interest 37,930 (37,930) —

Non-interest bearing loan (6,165) 6,165 —

22. Related party disclosures continued

Transactions between UK Hold Co and its underlying subsidiaries continued

Transactions with FS Holdco

For the year ended 31 December 2023:

There were no transactions between UK Hold Co and FS Holdco during the year.

For the year ended 31 December 2022:

Opening

balance as at

1 January

2022

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2022

£’000

Interest bearing loans and

outstanding interest 406,930 (406,930) —

Interest bearing loans and

outstanding interest (45,253) 45,253 —

Non-interest bearing loans (143,504) 143,504 —

Non-interest bearing loans 875 (875) —

Transactions with FS Topco 2

For the year ended 31 December 2023:

There were no transactions between UK Hold Co and FS Topco 2 during the year.

For the year ended 31 December 2022:

Opening

balance as at

1 January

2022

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2022

£’000

Interest bearing loans and

outstanding interest 271,167 (271,167) —

Non-interest bearing loan (26,524) 26,524 —

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

160

22. Related party disclosures continued

Transactions between UK Hold Co and its underlying subsidiaries continued

Transactions with FS Holdco 4

For the year ended 31 December 2023:

Opening

balance as at

1 January

2023

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2023

£’000

Interest bearing loans and

outstanding interest 147,725 53 147,778

Non-interest bearing loan (9,665) (5,487) (15,152)

For the year ended 31 December 2022:

Opening

balance as at

1 January

2022

£’000

Movements

during

the year

£’000

Closing

balance as at

31 December

2022

£’000

Interest bearing loans and

outstanding interest 159,683 (11,958) 147,725

Non-interest bearing loan 1,434 (11,099) (9,665)

Transactions between FS Holdco, FS Debtco, FS Holdco 3, FS Holdco 4

and their SPVs

All of the SPVs are cash-generating solar assets (except for the non-operational Spanish

investments). On occasion, revenues are received and expenses are paid on their behalf

by FS Holdco, FS Holdco 2, FS Debtco, FS Holdco 3 and FS Holdco 4. All of these

transactions are related party transactions.

For the year ended 31 December 2023:

Opening balance

receivable/

(payable)

as at

1 January 2023

£’000

Amounts paid

on behalf of

SPV

2023

£’000

Amounts

received

from

SPV

2023

£’000

Net amount

(payable)/

receivable as at

31 December

2023

£’000

FS Holdco and

itsSPVs (50,577) 10,467 (28,398) (68,508)

FS Debtco and

itsSPVs (48,927) — (31,849) (80,776)

For the year ended 31 December 2022:

Opening balance

receivable/

(payable)

as at

1 January 2022

£’000

Amounts paid

on behalf of

SPV

2022

£’000

Amounts

received

from

SPV

2022

£’000

Net amount

(payable)/

receivable as at

31 December

2022

£’000

FS Holdco and

itsSPVs (34,191) 11,934 (28,320) (50,577)

FS Debtco and

itsSPVs (20,538) 1,230 (29,619) (48,927)

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

161

22. Related party disclosures continued

Transactions between UK Hold Co and its underlying subsidiaries continued

Transactions with FBSHL

For the year ended 31 December 2023:

Opening balance

as at

1 January 2023

£’000

Movements during

the year

2023

£’000

Closing Balance

as at 31 December

2023

£’000

Interest bearing loans and

outstanding interest 2,699 5,341 8,040

For the year ended 31 December 2022:

Opening balance

as at

1 January 2022

£’000

Movements during

the year

£’000

Closing Balance

as at 31 December

2022

£’000

Interest bearing loans and

outstanding interest 886 1,813 2,699

Transactions with the Investment Manager

The Investment Manager of Foresight Solar is Foresight Group LLP.

The Investment Manager, through its asset management subsidiary, Foresight Asset

Management Limited, charged asset management fees to the underlying projects of

£2,312,500 during the period (2022: £2,217,300).

23. Commitments and contingent liabilities

There are no commitments or contingent liabilities (2022: £nil).

24. Controlling party

In the opinion of the Directors, there is no controlling party as no one party has the

ability to direct the financial and operating policies of the Company with a view to

gaining economic benefits from its direction.

25. Post balance sheet events

There were no post balance sheet events requiring disclosure.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

162

AIFMD DISCLOSURES (UNAUDITED)

Overview of investment activities

The Company’s investment activities during the year are disclosed in full in the

Investment Manager’s Report from page 13.

The performance of Foresight Solar’s portfolio during the year is also disclosed in full

inthe Operational Review from page 37.

Meanwhile, a list of FSFL’s portfolio investments is included from page 31.

Leverage and borrowing

Leverage is defined as any method by which the Company increases its exposure

through debt, borrowed capital or the use of derivatives.

The Company and its subsidiaries’ leverage position and third-party debt arrangements

are disclosed in full in the Financial Review from page 83.

“Exposure” is defined in two ways – “gross method” and “commitment method”

–andthe Company must not exceed maximum exposures under both methods.

The Directors are required to calculate and monitor Foresight Solar’s leverage,

expressed as a ratio between the exposure of the Company and its Net Asset Value

(Exposure/NAV), under both the gross method and the commitment method.

“Gross method” exposure is calculated as the sum of all Company positions (both

positive and negative), that is, all eligible assets, liabilities and derivatives, including

derivatives held for risk reduction purposes.

“Commitment method” exposure is also calculated as the sum of all Company positions

(both positive and negative), but after netting off derivative and security positions as

specified by the Directive.

For the “gross method”, the following has been excluded:

•

The value of any cash and cash equivalents which are highly liquid investments held

in the Company’s local currency that are readily convertible to a known amount of

cash, subject to an insignificant risk of changes in value and which provide a return

no greater than the rate of the three-month high quality government bond

•

Cash borrowings that remain in cash or cash equivalents as defined above and where

the amounts of that payable are known

The total amount of leverage calculated as at 31 December 2023 is:

•

Gross method: 30%

•

Commitment method: 42%

Liquidity

Liquidity risk is the risk that the Company will not be able to meet its financial

obligations as they fall due because of the maturity of assets and liabilities not

matching. An unmatched position potentially enhances profitability but can also

increase the risk of losses. Liquidity could be impaired by an inability to access secured

and/or unsecured sources of financing to meet financial commitments. The Board

monitors Foresight Solar’s liquidity requirements to ensure there is sufficient cash to

meet operating needs.

The Company’s financial position, its cash flows, liquidity position and borrowing

facilities are referred to in the Chair’s Statement (see page 6), Strategic Report (see

page 1) and Notes to the Financial Statements (see page 131). In addition, the Financial

Statements (see page 127) include the Company’s objectives, policies and processes

for managing its capital, its financial risk management objectives, and its exposures to

credit risk and liquidity risk.

Foresight Solar has sufficient financial resources together with investments and income

generated. Consequently, the Directors believe it is able to manage its business risks.

Risk management policy note

Please refer to the principal risks section from page 56.

Remuneration

As an AIFM, the Company is subject to a remuneration code which is consistent with the

requirements of the Financial Conduct Authority. The remuneration policy is designed

to ensure that any relevant conflicts of interest can be always managed appropriately

and that the remuneration of the Directors and of senior management are in line with

the risk policies and objectives of the funds managed by the AIFM.

The Company does not directly employ any staff members. These services are provided

by Foresight Group LLP employees.

In accordance with the AIFMD, information in relation to the remuneration of the

Company’s AIFM is required to be made available to investors. In accordance with the

Directive, the AIFM’s remuneration policy and the numerical remuneration disclosures

in respect of the AIFM’s relevant reporting period (year ending December 2023) are

available from the AIFM on request.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

163

ADVISORS

Administrator & Company Secretary

JTC (Jersey) Limited

JTC House

28 Esplanade

St. Helier

Jersey JE4 2QP

Corporate Brokers

Jefferies

100 Bishopsgate

London EC2N 4JL

Singer Capital Markets

1 Bartholomew Lane

London EC2N 2AX

Independent Auditor

KPMG LLP

15 Canada Square

London E14 5GL

Investment Manager

Foresight Group LLP

The Shard

32 London Bridge Street

London SE1 9SG

Legal Advisors to the Company as to the acquisition of solar assets

Osborne Clarke

One London Wall

London EC2Y 5EB

Legal Advisors to the Company as to English Law

Dickson Minto W.S.

Broadgate Tower

20 Primrose Street

London EC2A 2EW

Legal Advisors to the Company as to Jersey Law

Ogier

Ogier House

The Esplanade

St. Helier

Jersey JE4 9WG

Public Relations

Powerscourt

1 Tudor Street

London EC4Y 0AH

Registrar

Computershare Investor Services (Jersey)

Queensway House

Hilgrove Street

St. Helier

Jersey JE1 1ES

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

164

GLOSSARY OF TERMS

AGM

Annual General Meeting

AIC

The Association of Investment Companies

AIC Code

The Association of Investment Companies Code of Corporate Governance

AIFs

Alternative Investment Funds

AIFMs

Alternative Investment Fund Managers

AIFMD

The Alternative Investment Fund Managers Directive

APMs

Alternative Performance Measures

Asset Manager

The Company’s underlying investments have appointed Foresight Group LLP, a

subsidiary of Foresight Group CI, to act as Asset Manager

BBSY

Bank Bill Swap Bid Rate

BESS

Battery storage system

CEFC

The Clean Energy Finance Corporation

Company

Foresight Solar Fund Limited

CPI

Consumer Price Index

DCF

Discounted cash flow

DNO

Distribution network operator

DSCR

Debt service cover ratio

EEA

European Economic Area

EGL

Electricity Generator Levy

EPC

Engineering, Procurement and Construction

ESG

Environmental, Social and Governance

FiT

Feed-in Tariff. The Feed-in Tariff scheme is the financial mechanism introduced

on 1 April 2010 by which the UK government incentivises the deployment of

renewable and low-carbon electricity generation of up to 5MW of installed

capacity

GAV

Gross Asset Value on investment basis including debt held at SPV level

GHG

Greenhouse gas

Group

borrowing

Group borrowing refers to all third-party debt by the Company and its subsidiaries

GWh

Gigawatt hour

IAS

International Accounting Standard

IC Investment Committee

IFRS

International Financial Reporting Standards issued by the International

Accounting Standards Board

Investment

Manager

Foresight Group CI Limited

IPCC

Intergovernmental Panel on Climate Change

IPEV

International Private Equity and Venture Capital

IPO

Initial Public Offering

ISSB

International Sustainability Standards Board

KPMG LLP

KPMG is the Company’s Auditor

LGC

Large-Scale Generation Certificate

Listing Rules

The set of FCA rules which must be followed by all companies listed intheUK

Main Market

The main securities market of the London Stock Exchange

MIDIS

Macquarie Infrastructure Debt Investment Solutions

MWh

Megawatt hour

NAV

Net Asset Value

NSW

New South Wales

Official List

The Premium Segment of the UK Listing Authority’s Official List

O&M

Operation and maintenance

P90

90% probability of exceeding expected production over a ten-year period

PNIEC

Plan Nacional Integrado de Energía y Clima

PPA

Power purchase agreement

Photovoltaic

QLD

Queensland

RCF

Revolving credit facility

RCPs

Representative Concentration Pathways

REMA

Review of Electricity Market Arrangements

ROC

Renewables Obligation Certificates

RPI

The Retail Price Index

SDGs

Sustainable Development Goals

Solar capture

price discount

The half-hourly market pricing during periods of solar generation

SPVs

The Special Purpose Vehicles which hold the Company’s investment portfolio of

underlying operating assets

SSPs

Shared Socioeconomic Pathways

TCFD

Task Force on Climate-related Financial Disclosures

UEL

Useful economic life

The United Kingdom of Great Britain and Northern Ireland

VIC

Victoria

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT SOLAR FUND LIMITED

Annual Report and Financial Statements 31 December 2023

165

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Foresight Solar Fund Limited

The Shard

32 London Bridge Street

London SE1 9SG

fsfl.foresightgroup.eu