Unaudited Quarterly NAV & Operational Update
LEI: 213800ZPHCBDDSQH5447
22 August 2022
NextEnergy Solar Fund Limited
("NESF" or the "Company")
Unaudited Quarterly Net Asset Value and Operational Update
NextEnergy Solar Fund, the specialist solar and energy storage climate impact fund, with a combined installed power capacity of 865MW, is pleased to announce its unaudited Net Asset Value ("NAV") as at 30 June 2022, and latest operational update.
Financial Highlights
· +8.2p (c.7.2%) increase in NAV per ordinary share to 121.7p (31 March 2022: 113.5p).
· +£48.7m increase in ordinary shareholders' NAV to £717.2m (31 March 2022: £668.5m).
· Gearing (including preference shares) of 40% (31 March 2022: 42%).
· Interim dividend of 1.88p per ordinary share for the quarter ended 30 June 2022 (30 June 2021: 1.79p).
· FY22/23 target dividend of 7.52p per ordinary share.
· Estimated dividend cover of between 1.3x and 1.5x for FY22/23.
NAV Movements
The main contributors to the increase in the Company's NAV from 31 March 2022 to 30 June 2022 were an increase in power price forecast assumptions (+6.2p per ordinary share) driven by an uplift in the short to medium term power forecasts provided by the Company's three independent advisers and Power Purchase Agreements ("PPAs"), updated short-term inflation assumptions (+4.7p per ordinary share), operating result net distributions to fund (+3.0p per ordinary) and the upward revaluation of the NextPower III ESG ("NPIII ESG") investment (+0.4p per ordinary share).
31 March 2022 to 30 June 2022, NAV p/share movement:
|
NAV p/share at 31 March 2022 |
113.5p |
|
Power Forecasts |
+6.2p |
|
Inflation |
+4.7p |
|
Operating Result Net Distributions to Fund |
+3.0p |
|
Revaluation of NPIII Investment |
+0.4p |
|
Movements in residual value including payment of dividend |
-6.1p |
|
NAV p/share at 30 June 2022 |
121.7p |
Portfolio & Operational Highlights
· Total installed capacity of 865MW (31 March 2022: 865MW).
· 100 fully operating solar assets (31 March 2022: 99).
· Portfolio generation outperformance of +4.5% for the quarter ended 30 June 2022, translating into additional revenues of c.£2.0m.
· NextEnergy Capital's power sales desk continues to successfully manage risk and opportunistically secure power prices higher than forecasts in line with NESF's power sales strategy. In addition to NESF's budgeted revenues from ROCs and FITs, the Company's hedging positions (covering 716MW UK portfolio) as at 15 June 2022 were:
o 2022/23: 85% of UK budgeted generation, (average fix price of £78MWh).
o 2023/24: 74% of UK budgeted generation, (average fix price of £73MWh).
o 2024/25: 42% of UK budgeted generation, (average fix price of £86MWh).
o 2025/26: 2% of UK budgeted generation, (average fix price of £118MWh).
Inflation Linkage and Assumptions
Approximately 50% of the Company's revenues are made up of government-backed subsidies via ROCs and FITs, and this component of revenue increases in-line with RPI, whilst the remaining revenues in the portfolio are generated through the sale of budgeted power generation into the market. This portion of revenues continues to benefit from the sustained high power price environment and increases the unsubsidised revenue portion of the portfolio.
The Company continues to be consistent in its inflation assumption approach, using third party, independent inflation data from the HM Treasury Forecasts and long-term implied rates from the Bank of England for its UK assets. For international assets, IMF forecasts are used.
|
Financial year ending |
Assumptions as at 31 March 2022 |
Assumptions as at 30 June 2022 |
|
2023 |
8.00% |
11.00% |
|
2024 |
3.70% |
4.20% |
|
2025 |
3.30% |
3.60% |
|
2026 |
3.40% |
3.90% |
|
2027 |
3.30% |
4.10% |
|
2028-2030 |
3.00% |
3.00% |
|
2030 onwards |
2.25% |
2.25% |
Power Sales Strategy
To manage the sale of power into the market, NextEnergy Capital has a specialist power sales desk. This team actively manages the Company's power price contracting strategy and activities. In the current environment, the power sales desk has enabled the Company to mitigate market price volatility whilst allowing optimum weighted average price by forward hedging above forecast prices. Aggregating the amount of revenue derived from subsidies and the power hedges (as noted above), the Company has a high degree of comfort around forward revenue projections and strengthening dividend cover for the current financial year.
Future Pipeline
The Company has exclusivity over or owns the project rights for the vast majority of an attractive pipeline of £350m of domestic and international assets across the solar and battery space.
Available Capital
The Company has capital to pursue its short-term immediate pipeline, including bringing online a secured battery storage project and completing the construction of its post-subsidy solar assets. Out of the total £145m Revolving Credit Facilities ("RCF") available to the Company, £48m remains undrawn and available for deployment as of the 30 June 2022.
ESG
NESF's commitment to ESG and sustainability remains at the forefront of its strategy and purpose, it is fully integrated into the Company's operating model and remains a fundamental component of the investment process. As the UK accelerates towards its net-zero targets by 2050, the Company's Solar PV and Energy Storage assets will continue to play a huge part in this transition, and ensuring that the correct ESG framework is in place, is crucial in driving this forward both on the ground, and from an ESG reporting perspective.
Market Outlook
The UK power market continues to experience sustained high prices. Prevailing market conditions around the supply of gas continue to look challenging given continuing macroeconomic and geo-political events, highlighting the importance of energy security. Against this backdrop, NESF offers strong diversification and protection for investors in their portfolios, in conjunction with helping accelerate Net Zero ambitions following COP26 through the construction of new solar power plants in the UK. For the current financial year, NESF is targeting an attractive dividend of 7.52p per ordinary share, supported by a strong projected dividend cover.
Factsheet
The 30 June 2022 factsheet is now available on the Company's website.
Kevin Lyon, Chairman of NextEnergy Solar Fund commented:
"Today's reported NAV is the highest that NESF has ever released and it is encouraging to see that NESF's share price has started to strengthen in line with peers. We believe the current share price continues to offer investors an attractive entry point to a compelling investment opportunity. The team at NextEnergy Capital continue to work hard to deliver NESF's outstanding performance and exciting future growth pipeline."
Michael Bonte-Friedheim, CEO of NextEnergy Group said:
"I am very pleased to be able to report the third consecutive NAV uplift that NESF has released; 12 months ago NESF reported an unaudited NAV per ordinary share of 98.7p, today NESF announced 121.7p, an increase of c.23%. NESF continues to provide investors with an attractive income return protected against inflation, as well as providing an investment opportunity which makes a real difference in the fight against climate change."
For further information:
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NextEnergy Capital |
020 3746 0700 |
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Michael Bonte-Friedheim |
ir@nextenergysolarfund.com |
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Aldo Beolchini |
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Ross Grier |
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Peter Hamid (Investor Relations) |
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RBC Capital Markets |
020 7653 4000 |
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Matthew Coakes |
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Kathryn Deegan |
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Cenkos Securities |
020 7397 8900 |
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James King |
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William Talkington |
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Camarco |
020 3781 8334 |
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Owen Roberts |
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Eddie Livingstone-Learmonth |
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Ocorian Administration (Guernsey) Limited |
014 8174 2642 |
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Kevin Smith |
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Notes to Editors1 :
About NextEnergy Solar Fund
NESF is a specialist solar and energy storage climate impact fund. The Company is structured as a renewable energy investment company listed on the premium segment of the London Stock Exchange that invests in utility-scale solar power plants and energy storage. The Company may invest up to 30% of its gross asset value in non-UK OECD countries, 15% in solar-focused private infrastructure funds, and 10% in energy storage.
NESF currently has a diversified portfolio comprising of the following:
Solar PV:
· 100 operating solar assets across the UK and Italy (primarily on agricultural, industrial, and commercial sites)
· A 50MW co-investment into a Spanish solar project alongside NextPower III ESG, currently under construction
· A 210MW co-investment into a Portuguese solar project alongside NextPower III ESG, currently under construction
· A UK solar project under construction (Whitecross 36MW)
· A ready-to-build UK solar project (Hatherden 50MW)
· A $50m commitment into NextPower III ESG (a private solar infrastructure fund providing exposure to both operating and under construction, international solar assets)
Energy Storage:
· A 50MW standalone battery storage project in Fife, Scotland, currently under construction (part of a 250MW joint venture with Eelpower)
· A 6MW co-located battery storage project at North Norfolk Solar Farm
The NESF portfolio has a combined installed power capacity of 865MW (excluding NextPower III MW on an equivalent look-through basis).
As at 30 June 2022, the Company had a unaudited gross asset value of £1,198m, being the aggregate of the net asset value of the ordinary shares, the fair value of the preference shares and the amount of NESF Group debt outstanding, and an unaudited net asset value of £717.2m.
NESF'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 solar energy and energy storage infrastructure assets. The majority of NESF's long-term cash flows are inflation-linked via UK government subsidies.
For further information on NESF please visit www. nextenergysolarfund.com
Commitment to ESG
NESF is committed to ESG principles and responsible investment which make a meaningful contribution to reducing CO2 emissions through the generation of clean solar power. NESF will only select investments that meet the requirements of NEC Group's Sustainable Investment Policy. Based on this policy, NESF benefits from NEC's rigorous ESG due diligence on each investment. NESF is committed to reporting on its ESG performance in accordance with the UN Sustainable Development Goals framework and the EU Sustainable Finance Disclosure Regulation.
NESF has been awarded the London Stock Exchange's Green Economy Mark and has been designated a Guernsey Green Fund by the Guernsey Financial Services Commission.
Article 9
NESF is classified under Article 9 of the EU Sustainable Finance Disclosure Regulation and EU Taxonomy Regulation.
NESF's sustainability-related disclosures in the financial services sector in accordance with Regulation (EU) 2019/2088 can be accessed on the ESG section of both the NESF website ( nextenergysolarfund.com/esg/ ) & NEC Group website ( nextenergycapital.com/sustainability/transparency-and-reporting/ ).
About NextEnergy Group
NESF 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. Since its inception, it 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
NextEnergy Capital comprises the Group's investment management activities. To date, NEC has invested in over 325 individual solar plants for a capacity in excess of 2.3GW across it institutional funds.
www.nextenergycapital.com
· NextEnergy Solar Fund ("NESF") is a solar infrastructure investment company focused on the UK and other OECD countries, which is listed on the premium segment of the London Stock Exchange. It currently owns 865MW spread among 100 individual operating assets in the UK and Italy, comprising an unaudited gross asset value of £1,198m. NESF is one of the largest listed solar energy investment companies in the world.
· NextPower II ("NPII")a private fund made up of 105 individual operating solar power plants and an installed capacity of 149MW, focused on consolidating the substantial, highly fragmented Italian solar market. NPII was successfully divested in January 2022, a 2016 vintage vehicle that generated net IRRs in excess of its gross target of 10-12%.
· N extPower III ESG ("NPIII") is a private fund exclusively focused on the international solar infrastructure sector, principally targeting projects in carefully selected OECD countries, including the US, Portugal, Spain, Chile, Poland and Italy. NPIII is a fund that provides a positive social and environmental impact to the countries it has and will invest into. NPIII completed its fundraise with a total of $896m, including a SMA raised. The target of the fund was $750m.
· NextPower UK ESG ("NPUK") is a private unlevered fund investing in greenfield subsidy-free solar projects, with PPA's, in the UK. NPUK was launched in December 2021. The UK Infrastructure Bank is providing financing to the initial seed assets of the fund, and plans to invest up to £250m, half of the fund's total target fund size, on a match-funding basis.
WiseEnergy
WiseEnergy® is NextEnergy Capital Group's operating asset manager. 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 1,400 utility-scale solar power plants with an installed capacity in excess of 1.8GW. WiseEnergy clients comprise leading banks and equity financiers in the energy and infrastructure sector.
Starlight
Starlight is NextEnergy Group's development company that is active in the development phase of solar projects. It has developed over 100 utility-scale projects internationally and continues to progress a large pipeline of c.5GW of both green and brownfield project developments across global geographies.
Notes:
1: All financial data is unaudited at 30 June 2022, being the latest date in respect of which NESF has published financial information
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