NextEnergy Solar Fund keeps dividend target

NextEnergy Solar Fund Ltd (LSE:NESF, FRA:5NE) said its net asset value fell in the quarter to 31 December after third-party consultants cut power price forecasts, while the board reiterated its full-year dividend target of 8.43p a share.

Tony Quinlan, chair of NextEnergy Solar Fund, said: “Despite lower winter irradiation and the impact of revised power price forecasts on our NAV, the company remains on track to deliver its full year dividend target of 8.43p per ordinary share.”

Net asset value per share was 84.9p at 31 December 2025, down from 88.8p at 30 September, which the company said was “primarily driven by a reduction in power price forecasts from third-party consultants”.

NextEnergy Solar Fund said that, including the post-period impact of the UK government’s retrospective change to Renewables Obligation Certificate and Feed-in Tariff inflation indexation from the Retail Prices Index to the Consumer Prices Index, net asset value per share at 31 December 2025 would be 82.9p.

Quinlan said: “The Government’s recent confirmation to shift ROC and FiT inflation indexation from RPI to CPI has introduced an additional headwind; however, with clarity now emerging, we are confident that NESF is well positioned to navigate this transition through the strength of its diversified portfolio and disciplined capital management approach.”

Financial debt gearing, excluding preference shares, was 29.5% at the end of December, compared with 29.4% three months earlier, while total gearing, including preference shares rose to 49.9% from 49.2%.

NextEnergy declared dividends of 2.11p per share for the quarter and reaffirmed guidance for dividends of 8.43p per share for the year to 31 March 2026.

Dividend cover for the full year is forecast to be 1.1 times to 1.3 times by earnings after debt amortisation, and the company said it has declared £431 million of ordinary share dividends since inception, “the equivalent to 82.6p per ordinary share”.

Portfolio capacity was unchanged at 939 megawatts across 101 operating assets, while remaining weighted asset life slipped to 24.0 years from 24.3 years.

NextEnergy said irradiation in the UK was 9.3% below budget and electricity generation was 12.9% below budget, excluding distribution network operator outages, adding that the quarter is “typically a low-impact quarter for the Company’s revenues due to the seasonality of solar generation”.

The company said its strategic review was “progressing well” and that it would update the market on 11 March, alongside a strategy seminar at the London Stock Exchange that will be livestreamed.

It said it continued to progress the remaining phase of its capital recycling programme, which involves selling two solar assets totalling 100 megawatts, after disposing of about 145 megawatts of capacity from the 245 megawatt programme to date.

NextEnergy Solar Fund said the programme has raised £72.5 million and delivered “a total NAV uplift of 2.76p per ordinary share”.

The company said its total debt was £486.3 million at 31 December, comprising £287.7 million of financial debt and £198.6 million of preference shares.

It told investors 69% of its total debt remained at a fixed rate of interest, including preference shares, while 31% remained at a floating rate through its short-term revolving credit facility.

Ross Grier, chief investment officer of NextEnergy Capital, the fund’s investment adviser, said: “NESF’s portfolio continues to perform in line with expectations and demonstrate resilience.”

Grier added: “Although the sector faces near-term pressure from power price adjustments and shifting inflation expectations, long-term fundamentals remain robust, supported by growing demand for secure clean energy and the critical role solar plays in the UK’s energy transition.”