REG - NextEnergy Solar Fnd - Unaudited Quarterly NAV & Operational Update

NextEnergy Solar FundAnnouncement

22/08/2022 07:00

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RNS Number : 6814W  NextEnergy Solar Fund Limited  22 August 2022

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:

 NextEnergy Capital                         020 3746 0700
 Michael Bonte-Friedheim                    ir@nextenergysolarfund.com
 Aldo Beolchini
 Ross Grier
 Peter Hamid (Investor Relations)

 RBC Capital Markets                        020 7653 4000
 Matthew Coakes
 Kathryn Deegan

 Cenkos Securities                          020 7397 8900
 James King
 William Talkington

 Camarco                                    020 3781 8334
 Owen Roberts
 Eddie Livingstone-Learmonth

 Ocorian Administration (Guernsey) Limited  014 8174 2642
 Kevin Smith

 

 

Notes to Editors(1):

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
(http://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/
(http://www.nextenergysolarfund.com/esg/) ) & NEC Group website
(nextenergycapital.com/sustainability/transparency-and-reporting/
(https://www.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 (http://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%.

·     NextPower 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.

www.wise-energy.com (http://www.wise-energy.com/)

 

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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