Foresight Env says NAV could fall on indexation switch to CPI from RPI
Foresight Environmental Infrastructure Ltd on Friday said its net asset value could reduce as a result of the UK government’s mulled changes to the inflation indexation of renewable obligation scheme and feed-in tariffs.
The Guernsey-registered environmental infrastructure investment fund with a portfolio of assets located across the UK and Europe noted that from 2030, renewable obligation, RO, and feed-in tariff, FiT, schemes will switch to using the Consumer Prices Index instead of the Retail Price Index.
Payments are currently adjusted annually for inflation using the RPI, using the previous year’s RPI figure, and takes effect from April 1 every year.
However, UK government consultation outlined two main options for adjusting the RO and FiT schemes. The first option is to bring forward the change to 2026 instead of 2030. The second option would be a temporary freeze on existing RO and FiT pricing until CPI inflation catches up with RPI, which Foresight Environmental said it estimated to occur around 2034 or 2035. After that, CPI indexation would apply.
The company said under option 1, it expects a reduction in net asset value of around 0.5%, while under option 2, NAV would be reduced by 6.3%. Foresight Environmental assumed a flat CPI rate of 2.25%. The UK’s annual CPI rate was at 3.8% as of September.
The company added that estimates are based on currently available information and may evolve as the consultation progresses.
Foresight Environmental will publish its results for the six months to September 30 on November 28.
Foresight Environmental shares were down 1.1% at 62.50 pence each on Friday morning in London.
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