NextEnergy Solar Fund Ltd (LSE:NESF, FRA:5NE), the specialist solar energy and storage investor, has reported a 10% decline in net asset value to £437.5 million for the quarter ended 31 March 2026, as government subsidy changes and a higher discount rate took their toll.
NAV per share fell from 84.9p to 76.1p over the period, with the shift from RPI to CPI indexation on Renewables Obligation Certificate and Feed-in Tariff payments accounting for a 2.0p decline, and a 50 basis point increase in the discount rate for UK unlevered projects to 8.0% contributing a further 1.6p fall.
The company has revised its dividend guidance for the financial year ending March 2027 to a range of 4.5p to 5.1p per share, equivalent to a yield of approximately 9% to 11%, after transitioning to a policy of distributing 75% of operating free cash flows.
Total gearing rose to 51.2% of gross asset value, marginally above the company's 50% target, though the board said this reflected NAV compression rather than additional borrowing.
NESF completed the sale of a 100MW portfolio for £46.2m during the period and has identified a further 120MW of assets for disposal over the next 36 months as part of its expanded capital recycling programme.
Chair Tony Quinlan said: "This has been a very difficult period for the sector, NESF and for our shareholders.
"The wider renewables backdrop has been uncertain, and recent government consultations and announcements have not helped to provide the clarity the sector needs and therefore had a detrimental effect on the company's net asset value.
"We announced in March a strategic reset. To re-base the dividend policy at a sustainable but still healthy level, reduce gearing and reinvest a modest level of incremental capital into the existing portfolio, including complementary battery storage.
"We believe this will, over time, strengthen NESF and deliver long-term growth, unlocking opportunities within the asset base, over and above current cash flow forecasts.
The company operates 99 solar and storage assets with a combined installed capacity of 838MW.
