Net Asset Value & Operating Update
LEI: 213800ZPHCBDDSQH5447
15 May 2025
NextEnergy Solar Fund Limited
("NESF" or "the Company")
Unaudited Quarterly Net Asset Value & Operational Update
NextEnergy Solar Fund, a leading specialist investor in solar energy and energy storage, announces it has today published its Q4 Net Asset Value and Operational Update for the period ended 31 March 2025.
Key Highlights
Financial:
· Net Asset Value ("NAV") per Ordinary Share of 95.1p (31 December 2024: 97.4p).
· Ordinary Shareholders' NAV of £547.4m (31 December 2024: £565.7m).
· Gross Asset Value of £1,061m (31 December 2024: £1,071m).
· Financial debt gearing (excluding Preference Shares) of 29.7% (31 December 2024: 28.6%).
· Total gearing (including Preference Shares and total look-through debt) of 48.4% 1 (31 December 2024: 47.2% 1).
· Weighted average cost of debt (including Preference Shares) of 4.9% (31 December 2024: 4.9%).
· Weighted average cost of capital of 6.6% (31 December 2024: 6.6%).
· Weighted average discount rate across the portfolio of 8.0% (31 December 2024: 8.0%).
Dividend:
· Total dividends declared of 8.43p per Ordinary Share for the twelve months ended 31 March 2025 (31 March 2024: 8.35p).
· Dividend cover for the twelve months ended 31 March 2025 was 1.1x (31 March 2024: 1.3x).
· The Board is pleased to announce its full-year dividend target guidance for the year ending 31 March 2026 of 8.43p per Ordinary Share (31 March 2024: 8.43p).
· As at 14 May 2025, the Company offers an attractive dividend yield of c.12%.
· The full-year dividend target per Ordinary Share is forecast to be covered in a range of 1.1x - 1.3x by earnings post-debt amortisation.
· Since inception the Company has declared total Ordinary Share dividends of £395m.
Portfolio:
· 101 2 operating assets (31 December 2024: 101 2).
· Total installed capacity of 937MW 2 (31 December 2024: 934MW 2).
· Remaining weighted asset life of 24.8 years (31 December 2024: 25.0 years).
Share Buyback Programme:
· As at 31 March 2025, the Company had purchased 15,125,342 Ordinary Shares for a total consideration of £11.0m through its up to £20m Share Buyback Programme, delivering a NAV uplift of 0.5p per Ordinary Share.
· As at 14 May 2025, 15,621,142 Ordinary Shares have been purchased for a total consideration of £11.5m and are currently being held in the Company's treasury account.
Capital Recycling Programme:
· The remaining 100MW of the Capital Recycling Programme is progressing through a competitive sales process to third-party buyers. The Company will publish further updates about Phase IV of the Programme in due course.
· As at 14 May 2025, the Capital Recycling Programme has:
o Sold three asset sales totalling c.145MW of capacity from the 245MW Programme.
o Raised £72.5m total capital.
o Added a total estimated Net Asset Value uplift of 2.76p per Ordinary Share.
Capital Structure:
· As announced on 12 March 2025, the Company consolidated and reduced the cost of its short-term Revolving Credit Facilities into one facility (the "RCF") at an attractive rate of 120bps over SONIA ("Sterling Overnight Index Average").
· As at 31 March 2025:
|
Debt facilities |
Original size (£m) |
Amount outstanding (£m) |
|
Long-term amortising debt |
£212.5m |
£147.1m |
|
Short-term RCF |
£205m |
£144.9m |
|
Total financial debt |
|
£292.1m |
|
Preference shares |
£200m |
£198.5m |
|
Total debt |
|
£490.5m 3 |
· Short-term RCF drawn of £144.9m (31 December 2024: £134.4m).
· Long-term amortising debt paid down by £62.2m (31 December 2024: £60.4m). The remaining outstanding long-term debt of £147.1m is on track to fully amortise in line with the remaining subsidy life of the portfolio's inflation linked government subsidies.
· Of the Company's total debt of £490.5m 3:
o 70% remains at a fixed rate of interest (including the Preference Shares).
o 30% remains at a floating rate of interest via the short-term RCF.
· Total look-through debt of £23.5m (31 December 2024: £23.6m). This represents the total combined short and long-term debt in the Company's investment into NextPower III LP, and its two co-investments (Agenor and Santarem) on a look-through equivalent basis. This is included in the Company's total gearing ratio of 48.4%.
ESG & Sustainability:
· The Company continued to maintain its Article 9 Fund classification under the EU Sustainable Finance Disclosure Regulation and EU Taxonomy Regulation.
· The Company and its Investment Adviser continue to implement activities in support of its Approach to Nature strategy benefiting biodiversity across NESF sites and continue to support industry action on supply chain sustainability, including the Solar Stewardship Initiative.
Helen Mahy, Chairwoman of NextEnergy Solar Fund Limited, commented:
"Geopolitics and macroeconomic events continued to create uncertainty over the quarter. In addition, we have seen a reduction to short-term power prices which contributed to a slight reduction to the Company's NAV over the Q4 period. Despite this volatility, NextEnergy Solar Fund continues to show resilience as a company, and solar as a reliable and tested asset class. The Board and the Company's Investment Adviser meet regularly to discuss strategy and efficient discount control mechanisms to narrow the Company's share price discount to NAV. Maximising shareholder value and return remains a key priority and we are pleased that good progress has been made with the share buyback programme with the purchase of £3.4m worth of ordinary shares in the period. Today, NextEnergy Solar Fund has also declared its fourth interim dividend bringing the total declared dividends for the financial year ended 31 March 2025 to 8.43p per Ordinary Share, in line with our guidance whilst being 1.1x cash covered, post amortisation of debt."
Ross Grier, Chief Investment Officer of NextEnergy Capital said:
"Despite the current share price discount and a slight softening in NAV, NextEnergy Solar Fund's portfolio of operational assets continues to perform in line with budget, providing a reliable and visible stream of cash flows from the sale of generated electricity. Irradiance across the period has been lower than we have seen in recent years, however, pleasingly the months that follow this quarter have benefited from excellent weather and we look forward to this being reflected in portfolio numbers in future updates. To date, NextEnergy Solar Fund has deployed approximately 11% of the UK's total ground-mount solar operating capacity making it a key vehicle in helping to increase UK energy security whilst contributing heavily towards net zero goals."
Quarterly NAV Bridge Breakdown:
|
|
NAV p/share |
NAV |
|
At 31 December 2024 |
97.4p |
£565.7m |
|
Time value |
0.9p |
£5.1m |
|
Project actuals |
(0.1p) |
(£0.4m) |
|
Power price forecasts |
(1.8p) |
(£10.7m) |
|
Changes in short-term inflation |
0.2p |
£0.9m |
|
Revaluation of NextPower III LP investment |
0.4p |
£2.1m |
|
Cash dividends paid |
(2.5p) |
(£14.6m) |
|
Share buyback |
0.2p |
(£3.4m) |
|
Capital movements (no net NAV impact) |
|
|
|
- New assets at cost |
0.8p |
£4.5m |
|
- RCF drawdown |
(1.8p) |
(£10.5m) |
|
- Proceeds from RCF net of cash used |
1.0p |
£6.0m |
|
Other movements in residual value |
0.4p |
£2.7m |
|
At 31 March 2025 |
95.1p |
£547.4m |
The movement in the NAV over the period was driven primarily by the following factors.
NAV accretive movements:
· Time Value: The time value reflects the change in the valuation as a result of changing the valuation date, prior to adjusting for any outflows of the Company. The increase in value is attributable to the unwinding of the discount applied to cash flows for the period when calculating the discounted cash flow.
· Share Buyback Programme: Shares purchased in the period as part of the Company's Share Buyback Programme of up to £20m. The Programme used £3.4m of cash on hand to purchase 5,035,939 Ordinary Shares in the period, resulting in an increase in the NAV per Ordinary Share of 0.2p.
· Inflation Forecasts: A slight increase in short-term inflation assumptions from 2025 to 2026 - now assuming 3.8% UK RPI for calendar year 2025-26. The Company continues to take a consistent approach to its inflation assumptions, using external third-party, independent inflation data from HM Treasury Forecasts and long-term implied rates from the Bank of England for its UK assets. For international assets, IMF forecasts are used. Long-term assumptions are aligned with market consensus including transition to CPI from 2030. See breakdown of UK inflation assumptions below.
· NextPower III LP Revaluation: Movements in the fair value of the holding in NextPower III LP and the two co-investments reflecting operational and macroeconomic updates.
· Other Residual Value Movements: Includes changes in FX rates, fund operating expenses, capital expenditure provisions for asset health, such as repowering inverters and module replacements, and other non-material movements.
NAV deductive movements:
· Cash Dividends Paid: The dividends paid during the period, including both Ordinary and Preference Share dividend payments.
· Power Price Forecasts: A decrease in short-term (2026-2030) UK power price forecasts provided by third-party consultants. This is due to a downwards revision of gas price forecasts, driven by an expected increase to the global gas supply from new liquefaction capacity, particularly in the US and Qatar. Medium and long-term prices have increased due to increased power demand forecasts compared to the December 2024 update. See power curve assumptions graph below.
· Project Actuals: The project actuals figure was driven by generation performance, which was impacted by lower-than-expected irradiance levels in January and February that was offset by higher-than-expected irradiance levels in March, network outages and higher operating expenses. NESF reports individual generation figures twice a year in its interim and full-year results.
Inflation Rate (UK RPI) Assumptions
|
Calendar Year |
31 March 2025 |
31 December 2024 |
|
2025/26 |
3.80% |
3.40% |
|
2026/27 |
3.10% |
3.20% |
|
2027/28 |
3.30% |
3.40% |
|
2028/29 |
3.40% |
3.50% |
|
2029/30 |
unchanged |
3.00% |
|
2030/31 onwards |
unchanged |
2.25% |
Discount Rate Assumptions
|
|
|
31 March 2025 |
31 December 2024 |
|
Solar |
UK unlevered |
unchanged |
7.50% |
|
UK levered |
unchanged |
8.20% - 8.50% |
|
|
Italy unlevered 4 |
unchanged |
9.00% |
|
|
Subsidy-free (uncontracted) 5 |
unchanged |
8.50% |
|
|
Life extensions 6 |
unchanged |
8.50% - 9.50% |
|
|
Energy Storage |
Uncontracted |
unchanged |
10.00% |
|
Contracted |
unchanged |
7.00% |
Power Curve Assumptions
31 March 2025: Blended Power Curves (Capture Price)
For the UK portfolio, the Company uses multiple sources for UK power price forecasts. Where power has been sold at a fixed price under a Power Purchase Agreement ("PPA") (a hedge), these known prices are used. For periods where no PPA hedge is in place, short-term market forward prices are used. After two years, the Company integrates a rolling blended average of leading independent energy market consultants' long-term central case projections. Recognising the increased potential for power price uncertainties driven by policy developments such as Clean Power 2030 (CP30), the ongoing Review of Electricity Market Arrangements (REMA) and other factors influencing the forward price projections produced by independent consultants generally, the Company has incorporated the projections of a fourth independent, industry-leading consultant within its long-term central case methodology. The blend of forecasts reduces volatility, presenting a fair and balanced outlook consistent with pricing methodologies used for successfully divested assets and power price assumptions across broader peer group.
For the Italian portfolio, PPAs are used in the forecast where these have been secured. In the absence of hedges, a leading independent energy market consultant's long-term projections are used to derive the power curve adopted in the valuation.
Power Purchase Agreement Strategy
c.50% of NextEnergy Solar Fund's revenues come from RPI-linked government-backed subsidies. The remaining c.50% of revenues are secured through NextEnergy Solar Fund's PPA strategy where the Company secures PPAs over a rolling 36-month period. This proactive risk mitigation helps secure and underpin both dividend commitments and dividend cover whilst reducing volatility and increasing the visibility of cash flows.
Forecasted Total Revenue Breakdown 7:
Available Capital
Out of the total £205m immediate Revolving Credit Facility available to the Company, c.£60.1m remained undrawn and available for deployment as at 31 March 2025. The Company had c.£3.2m immediate cash balance available at the Company level as at 31 March 2025 (this is separate from the cash currently held at Holdco/SPV level).
Future Pipeline
The Company owns the project rights for, or has exclusivity over, a carefully selected £500m pipeline of development projects in utility-scale solar (>400MW UK & OECD target markets) and UK energy storage (>250MW UK BESS). In addition to this proprietary £500m pipeline, the Company benefits from the right of first offer on relevant assets across both the NextEnergy Capital and Starlight development pipelines as and when projects in that pipeline have progressed to the necessary stage. The Company will evaluate future investments into the pipeline relative to the returns available from all alternative capital uses, including paying down debt and additional share buybacks.
Footnotes:
1. Includes total look-through debt of £23.5m (31 December 2024: £23.6m). This represents the total combined short and long-term debt in the Company's investment into NextPower III LP (NPIII), and its two co-investments (Agenor and Santarém) on a look-through equivalent basis.
2. On a look-through MW equivalent basis, this includes investment NPIII, where it owns 6.21%, ownership in the international co-investments (13.6% of Santarém (210MW in Portugal) and 24.5% of Agenor (50MW in Spain)), and 70% ownership of the Company's standalone energy storage asset Camilla through its joint venture partnership.
3. Excludes total look-through debt of £23.5m.
4. Unlevered discount rate for Italian operating assets implying 1.50% country risk premium to 7.50%.
5. Unlevered discount rate for subsidy-free uncontracted operating assets implying 1.0% risk premium to 7.50%.
6. 1.0% risk premium added to UK unlevered (7.50%) and UK levered assets (8.20% - 8.50%) for cash flows after 30 years where leases have been extended.
7. As at 31 March 2025, fixed revenues include subsidy income, figures are stated to the nearest 0.1% which may lead to rounding differences. NextEnergy Solar Fund minimises its merchant exposure through its active rolling PPA Programme. The Programme locks in PPAs in the liquid market to ensure maximum contracted revenues are achieved. Pie charts exclude Camilla, 50MW standalone energy storage asset. Fixed prices (£/MWh) covered 83% (776MW) of the total portfolio as at 31 March 2025. Excludes Solis portfolio.
|
For further information:
NextEnergy Capital
|
020 3746 0700
|
|
Michael Bonte-Friedheim |
|
|
Ross Grier |
|
|
Stephen Rosser |
|
|
Peter Hamid (Investor Relations) |
|
|
RBC Capital Markets |
020 7653 4000 |
|
Matthew Coakes |
|
|
Kathryn Deegan |
|
|
Cavendish |
020 7908 6000 |
|
Robert Peel |
|
|
H/Advisors Maitland |
020 7379 5151 |
|
Neil Bennett |
|
|
Finlay Donaldson |
|
|
Ocorian Administration (Guernsey) Limited |
01481 742642 |
|
Kevin Smith |
|
Notes to Editors 1:
About NextEnergy Solar Fund
NextEnergy Solar Fund is a specialist solar energy and energy storage investment company that is listed on the Main Market of the London Stock Exchange.
NextEnergy Solar Fund's investment objective is to provide Ordinary Shareholders with attractive risk-adjusted returns, principally in the form of regular dividends, by investing in a diversified portfolio of utility-scale solar energy and energy storage infrastructure assets. The majority of NESF's long-term cash flows are inflation-linked via UK government subsidies.
As at 31 March 2025, the Company had an unaudited gross asset value of £1,061m. For further information please visit www.nextenergysolarfund.com
Article 9 Fund
NextEnergy Solar Fund is classified under Article 9 of the EU Sustainable Finance Disclosure Regulation and EU Taxonomy Regulation. NextEnergy Solar Fund's sustainability-related disclosures in the financial services sector are in accordance with Regulation (EU) 2019/2088 and can be accessed on the ESG section of both the NextEnergy Solar Fund and NextEnergy Capital websites.
About NextEnergy Group
NextEnergy Solar Fund is managed by NextEnergy Capital, part of the NextEnergy Group. NextEnergy Group was founded in 2007 to become a leading market participant in the international solar sector which now employs over 370 professionals. Since its inception, NextEnergy Group has been active in the development, construction, and ownership of solar assets across multiple jurisdictions. NextEnergy Group operates via its three business units: NextEnergy Capital (Investment Management), WiseEnergy (Operating Asset Management), and Starlight (Asset Development).
· NextEnergy Capital: has over 18 years of specialist solar expertise having invested in over 530 individual solar plants across the world. NextEnergy Capital currently manages four institutional funds with a total capacity in excess of 3GW+ and has assets under management of $4.5bn. More information is available at www.nextenergycapital.com
· WiseEnergy®: is a leading specialist operating asset manager in the solar sector. Since its founding, WiseEnergy has provided solar asset management, monitoring and technical due diligence services to over 1,600 utility-scale solar power plants with an installed capacity in excess of 3.5GW. More information is available at www.wise-energy.com
· Starlight: has developed over 100 utility-scale projects internationally and continues to progress a large pipeline of c.10GW of both green and brownfield project developments across global geographies. More information is available at www.starlight-energy.com
Notes:
1: All financial data is unaudited at 31 March 2025, being the latest date in respect of which NextEnergy Solar Fund has published financial information.
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