NextEnergy Solar Regulatory News (NESF)

LEI: 213800ZPHCBDDSQH5447

25 March 2021

NextEnergy Solar Fund Limited

("NESF" or the "Company")

NextEnergy Solar Fund reaches c.150MWp UK subsidy-free development target

NextEnergy Solar Fund, the solar power renewable energy investment company, is delighted to announce that it has successfully reached its subsidy-free development target of c.150MWp, through two newly approved subsidy-free development assets. Both assets are currently being prepared for construction and are expected to be energised in early 2022.

The assets have an approximate investment value of £45m and comprise:

· Whitecross, a 124-acre solar project, based in Lincolnshire with an installed capacity of c.35.3MWp

· Hatherden, a 198-acre solar project, based in Hampshire with an installed capacity of c.50MWp

The two assets will cover the yearly electricity demand for approximately 25,000 UK households. NESF has selected Whitecross and Hatherden from its development portfolio based on the assets' attractive forecast financial returns and their relative near-term energisation. 

NESF's early entry into the UK subsidy-free market has shown its ability to develop attractive value-accretive opportunities and has allowed NESF to establish its expertise and leadership position in this space. Through NextEnergy Capital's ("NEC's") specialist energy sales desk, NESF's subsidy-free portfolio will benefit from active hedging and greater trading flexibility, thereby maximising risk-adjusted returns for shareholders.

Smaller Related Party Transaction

Having achieved its target subsidy-free capacity of c.150MWp, NESF is looking to divest any residual development risk and has agreed to divest 16 development projects (not in construction or in operation) from its subsidy-free pipeline. The identified projects will be sold to a subsidiary of NextPower Development Ltd ("NextPower"). The divestment amounts to a combined consideration of c.£5.6m and will result in NESF receiving an attractive return on the capital invested into this development activity. This follows NESF's announcement in May 2020 regarding the sale of two subsidy-free projects under development (not in construction or in operation) with a capacity of 115MW to NextPower for a combined total consideration of £11.5m.

NextPower and its subsidiaries are under the common control of the wider NEC Group along with NextEnergy Capital Limited (Investment Adviser to NESF) and NextEnergy Capital IM Limited (Investment Manager to NESF) and as such are related parties of the Company. Based on the amounts involved, this transaction constitutes a smaller related party transaction as set out in Listing Rule 11.1.10R.

NESF may sell further subsidy-free projects from its pipeline to subsidiaries of NextPower. All related-party disposals are at the Board's discretion and comply with the FCA's Listing Rules. There are no exclusivity arrangements in place between NESF and any member of the NEC Group in relation to this transaction or future disposals.

Kevin Lyon, Chairman of NextEnergy Solar Fund commented:

"With the investment approval of Hatherden and Whitecross, both exciting subsidy-free assets of scale, NESF has reached its target of c.150MWp of subsidy-free assets in the portfolio. The divestment is a result of NESF having achieved this target and reducing exposure to any further development risk at this time. This allows NESF to increase its focus on investment opportunities both in and outside the UK in line with the expansion of NESF's investment policy approved by shareholders last year".

Michael Bonte-Friedheim, CEO of NextEnergy Capital Group, commented:

"Reaching the c.150MWp target of subsidy-free assets in development is truly a milestone achievement for NESF, as we have shown the market that we have achieved what we set out to do. NESF has firmly demonstrated its leadership in the UK solar market and continues to achieve superior technical and operational performance. In parallel, NESF continues to focus on further growth opportunities in the UK and internationally."

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For further information:

Notes to Editors1:

About NextEnergy Solar Fund 

NextEnergy Solar Fund is a renewable energy infrastructure investment company that currently invests in operating solar power plants in the UK and Italy. The Company may invest up to 30% of its gross asset value in non-UK OECD countries, 15% in private equity structures, and 10% in standalone energy storage.

NESF has a diversified portfolio comprising 92 operating solar assets, primarily on agricultural, industrial, and commercial sites, with a combined installed power capacity of c.813MW.

As at 31 December 2020, the Company had gross assets of £1,001 million, of which 88% was invested in the UK, and net assets of £591 million. The majority of long-term cash flows from its investments are inflation-linked.

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 primarily UK-based solar energy infrastructure assets. The dividend is payable quarterly, and the Company has announced a dividend target for the year ending 31 March 2021 of 7.05p per ordinary share. 

For further information on NESF please visit 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.

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 Capital Group ("NEC Group")

NESF is managed by the NextEnergy Capital Group, a specialist solar investment manager, which has a strong track record in sourcing, acquiring, and managing operating solar assets. NEC Group is a leading player in the global solar investment sector and has over 190 team members with offices in UK, Italy, India, and the USA and assets under management of over $2.3bn across three institutional funds.

NextEnergy Capital Group donates 5% of its net annual profits to NextEnergy Foundation. NextEnergy Foundation is an international charity that was founded in 2016. Its mission is to participate proactively in the global effort to reduce carbon emissions, provide clean power sources in regions where they are not yet available, and contribute to poverty alleviation.

For further information on NEC Group please visit nextenergycapital.com  

For further information on NextEnergy Foundation visit nextenergyfoundation.org

About WiseEnergy

WiseEnergy is NEC Group's specialist operating asset management division. NESF is differentiated by its access to WiseEnergy, which has provided operating asset management, monitoring, technical due diligence, and other services to over 1,500 utility-scale solar power plants with an installed capacity in excess of 2.3GW.

For further information on Wise Energy please visit wise-energy.com  

[1] Note: All financial data is as at 31 December 2020, being the latest date in respect of which NESF has published financial information