Acquisition of 100MWp UK Camden solar PV portfolio

LEI: 213800ZPHCBDDSQH5447

1 March 2021

NextEnergy Solar Fund Limited

("NESF" or the "Company")

Acquisition of 100MWp UK Camden solar PV portfolio

·    The Grange - 50MWp

·    South Lowfield - 50MWp

NextEnergy Solar Fund, the FTSE 250 solar power renewable energy investment company, is pleased to announce the acquisition of the UK based Camden solar photovoltaic ("PV") portfolio comprising two projects totalling 100MWp for a total consideration of c.£64.3 million.

The portfolio has a 15-year power purchase agreement ("PPA") in place covering c.75% of the electricity to be generated over the life of the PPA.  The PPA counterparty is AB InBev, the world's largest brewer¹.  One project is already energised and the second is expected to be energised during the second quarter of 2021.

Once commissioned, the portfolio will represent an increase of c.13% in NESF's installed capacity The acquisition has been financed using NESF's current revolving credit facilities.

Key acquisition highlights:

§ The portfolio is made up of two assets:

1.    The Grange: 50MWp on a c.214-acre site, located in Yorkshire, UK

2.    South Lowfield: 50MWp on a c.200-acre site, located in Nottinghamshire, UK

§ 15-year PPA in place for c.75% of the electricity generation

§ PPA with AB InBev, a high-quality counterparty

§ The portfolio is expected to be commissioned in the first half of 2021

§ The portfolio will produce enough clean energy to power the equivalent of c.29,000 UK households per year

Key NESF portfolio highlights:

§ The NESF portfolio has immediately increased to 92 operating solar assets, with a combined installed power capacity of c.813MWp (from c.763MWp)

§ The NESF portfolio will increase to 93 operating solar assets, once South Lowfield is energised during the second quarter of 2021, increasing the combined installed power capacity to c.863MWp

Long-term corporate PPA

The Camden portfolio has a 15-year PPA in place with AB InBev.  This positions NESF as one of the market leaders in the nascent and growing UK PPA market with a high-quality and high-profile counterparty.  The PPA allows NESF to increase its proportion of revenues secured by long-term contracts.

Investment strategy

The Camden portfolio fits well with NESF's investment strategy of providing shareholders with an attractive risk-adjusted return from a diversified portfolio of primarily UK-based assets by adding two further ground-based and utility-scale PV assets.  These two assets should to generate stable cash flows over their 40-year lifespan.  The Camden portfolio has little construction risk attached to it as The Grange is already energised and South Lowfield is expected to be energised shortly. 

NESF sees opportunities to generate incremental value from these two assets through NextEnergy Capital Group's active asset management experience.

Portfolio benefits

The NESF portfolio will benefit from additional diversification benefits from the Camden portfolio in terms of:

·    High-quality components, by using the latest high-quality modules and inverter suppliers, NESF improves the efficiency and reliability of its technical component portfolio

·    Latest module technology, with the installation of the newest module technology, NESF is able to generate more electricity through the use of bifacial modules (double-sided solar panels) and benefit from the latest independent distribution network operator ("IDNO") solutions

Cashflow

NESF will receive the economic benefit from The Grange cashflows immediately. South Lowfield, the second asset, will benefit NESF as soon as it is energised during the second quarter of 2021.  

Financing

The Camden portfolio has been financed using NESF's revolving credit facilities.  Following the transaction, the Company's total outstanding debt is £247.4 million.

Future pipeline

NESF continues to advance a pipeline of UK and international solar assets to achieve its growth and expansion objectives.

Kevin Lyon, Chairman of NextEnergy Solar Fund commented:

"The Camden portfolio is an excellent fit for NESF and the PPA agreement with AB InBev provides long-term, reliable cashflows to the fund.  The board is excited to partner with such a high-profile global company, helping them achieve their renewable energy targets."

Ross Grier, UK Managing Director of NextEnergy Capital Group commented:

"We are very pleased to have secured the Camden portfolio.  The 15-year corporate PPA is a real highlight given the average period for corporate PPAs that we see in the market is around 7-10 years.  NESF continues to grow and we are pleased that we are increasing the total installed capacity of our portfolio to c.863MWp.  NESF will continue to look to grow its solar portfolio further, domestically and internationally, through our measured investment process, with shareholder value at the heart of our decisions."

Footnotes:

¹2019 AB InBev Annual Report

-End-

For further information:

Notes to Editors¹:

About NextEnergy Solar Fund 

A constituent of the FTSE 250 Index, 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. 

Committed 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.

For further information on NESF please visit nextenergysolarfund.com

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