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NextEnergy Solar Fund says market continues to favour investment policy

Published: 07:37 17 Jun 2021 BST

NextEnergy Solar Fund - NextEnergy Solar Fund says market continues to be favourable for its investment policy

NextEnergy Solar Fund PLC (LON:NESF) said the market environment continues to be favourable for the company and its investment policy.

The investment trust said the economic shock of Coronavirus (COVID-19) has had a profound impact on energy demand and commodity prices but the near-term power price recovery during the second half of the financial year and beyond has underlined the resilience of its sector in the current uncertain environment.

READ: NextEnergy Solar Fund offers potential upside surprise from higher current power prices

The price for electricity is driven by several factors that are proving particularly difficult to predict in the current environment, it said, but is ultimately dependent on the supply and demand for electricity.

A sustained upturn in demand for electricity will be driven by the pace of economic recovery once the effects of the pandemic fully subside, the firm said.

It added that it has reached its target of 150MW of subsidy-free assets in the portfolio with the energisation of its third subsidy-free asset, High Garrett of 8.5MW, and the investment approval of Hatherden and Whitecross.

NextEnergy Capital's specialist energy trading desk ensures that the electricity sales strategy, including our subsidy-free assets, lock in revenue prices mitigating power price risk, it noted.

During the current financial year, the group aims to extend the useful life of a further ten assets, adding to the 35 assets which have already secured extensions.

It is also advancing a pipeline of non-UK acquisitions, a direct investment in an existing private equity fund, and investments in energy storage systems and ancillary solar technologies to diversify market risks.

These include 400MW pipeline of international solar assets, across North America, Portugal, Spain and Italy and a 500MW pipeline of domestic battery storage assets to complement NESF portfolio of solar assets and add revenue diversification.

The UK current hedging position as at 16 June was 87% of budgeted generation hedged for the current year, 63% for the next and 29% for the following one.

In the year ended 31 March, total group revenue of portfolio came in at £101mln from £108mln the year before, with underlying earnings (EBITDA) of £78mln compared to £86mln previously.

Cash income was £59.5mln and the achieved dividends per ordinary share were 7.05p from 6.87p a year ago.

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