REG - NextEnergy Solar Fnd - Net Asset Value & Operating Update
15/05/2025 07:02
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RNS Number : 7211I NextEnergy Solar Fund Limited 15 May 2025
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
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=7357099&lang=en-GB&companycode=gg-nesf&v=)
, 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 ir@nextenergysolarfund.com (mailto:ir@nextenergysolarfund.com)
Ross Grier
Stephen Rosser
Peter Hamid (Investor Relations)
020 7653 4000
RBC Capital Markets
Matthew Coakes
Kathryn Deegan
020 7908 6000
Cavendish
Robert Peel
020 7379 5151
H/Advisors Maitland
Neil Bennett
Finlay Donaldson
01481 742642
Ocorian Administration (Guernsey) Limited
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
(http://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
(https://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
(https://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
(https://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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