NextEnergy Solar hits subsidy-free target – NextEnergy Solar Fund has reached its subsidy-free development target of about 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. The statement says that Whitecross and Hatherden were chosen from the potential development portfolio based on their attractive forecast financial returns and their relative near-term energisation.
Having hit the target, the company is looking to shed any residual development risk. Consequently, it will sell 16 potential development projects (not in construction or in operation) from its subsidy-free pipeline. The projects will be sold to a subsidiary of NextPower Development Ltd. The proceeds from the sale will be about £5.6m in total. On this basis, NextEnergy Solar will make a decent return on the money that it has invested in these projects, to date. This announcement follows on from one 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.
It is worth pointing out that NextPower and its subsidiaries are under the common control of the wider NEC Group along with NextEnergy Capital Limited (NextEnergy Solar’s investment adviser) and NextEnergy Capital IM Limited its investment manager). Based on the amounts involved, this transaction constitutes a smaller related party transaction (and so doesn’t need shareholder approval). However, NextEnergy Solar’s independent board will have reviewed the terms of the transaction.
NextEnergy Solar still has some further subsidy-free projects in its pipeline and advises that it might sell more of these 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.
[We talked about the earlier sale of subsidy free assets here. Then the company said that Strensham (40MW) & Llanwern (75MW), were sold because falling power prices compromised the business case for retaining them within the portfolio. It feels to us as though NextEnergy Solar has significantly revised its plans for developing subsidy free projects. It also underscores a message that we have heard from a number of renewable energy companies – that they will not invest in plants that they fear will not earn acceptable returns for investors.]
NESF : NextEnergy Solar hits subsidy-free target