Foresight Solar Fund Ltd (LSE:FSFL, FRA:1F5), the listed solar and battery storage investment company, has moved to reassure investors that the UK government's decision to remove the Carbon Price Support (CPS) mechanism from April 2028 will have only a modest effect on its net asset value (NAV).
The Carbon Price Support is a tax applied to fossil fuel-based electricity generation that has historically underpinned higher wholesale power prices by increasing the cost of generating electricity from gas and coal.
Foresight Solar said the removal is expected to reduce its NAV by between 0.5p and 1.0p per share, based on a December 2025 NAV of 99.2p per share, equivalent to a maximum impact of around 1%.
The company said its dividend target and expected dividend cover of 1.1 times for 2026 are unaffected by the change.
Several factors limit the impact on the portfolio, the company said, including its active hedging strategy, which has locked in 87% of forecast revenues for 2026, 75% for 2027 and 63% for 2028.
Geographic diversification also provides a partial buffer, with approximately 25% of portfolio capacity located outside the UK.
The company added that two of its three independent power price consultants had already assumed a reduction or removal of the CPS in their forecasts, meaning the policy change was partially reflected in existing valuations.
The effect is expected to be concentrated in the period between 2028 and 2030, with minimal impact on near-term cash flows.
Foresight Solar said it will provide a further update as independent power price forecasters revise their assumptions.