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M&G’s infrastructure debt team completed a major debt refinancing for Lightsource in a deal that allocated nearly £250 million of funding for a large portfolio of operational solar projects in England.
Industry: Solar Energy
Headquarters: London, UK
Lightsource is Europe's leading company in the funding, development and long-term operation of solar electricity photovoltaic (PV) projects. Since 2010, Lightsource has deployed more than £2.2 billion into this form of renewable energy generation.
M&G’s infrastructure debt team has provided finance to 15% of the UK’s ground-mounted solar electricity capacity across 122 UK solar parks with a combined operating capacity sufficient to power over 250,000 homes*.
In October 2015, M&G provided nearly £250 million in debt refinancing for a large portfolio of fully operational solar plants located mainly in the south and east of England. The portfolio, comprising of 32 ground-mounted solar photovoltaic (PV) plants and one commercial rooftop asset, has a total installed generation capacity of just over 100 MWp – enough to power over 30,000 homes*.
The deal was widely acclaimed, winning several awards including ‘Best European Solar deal of 2015’ by Infrastructure Journal, ‘Bond of the Year for 2015’ by Environmental Finance, and was ‘Highly Commended’ in the European Energy Awards by Infrastructure Investor.
M&G’s approach to this investment included the full consideration of material ESG criteria. This involved:
Investments in solar plants on this large scale can play a major role in reducing carbon emissions, helping the UK government meet the EU target of producing 20% of total energy from renewables by 2020.
M&G's assessment of the environmental risks within each investment opportunity therefore took into account:
M&G’s infrastructure debt analysts would typically see two main social benefits of solar plants for local communities. Firstly, each solar plant can create additional jobs, and secondly, they provide landowning farmers with the security of a long-term rental income stream from the solar plant operators.
Lending to operators of UK solar parks, like Lightsource, can provide M&G’s pension fund clients with secure and stable cashflows, often linked to inflation, over long horizons. Alternatively, these investments can be structured as shorter-dated loans repaid over two to five years. Importantly, investments are secured against the solar assets themselves.
(*based on an average annual consumption of 3,300 kWh of electricity per house.)