NESF to move ahead with 150MW subsidy free portfolio despite ‘challenging power price environment’

NESF to move ahead with 150MW subsidy free portfolio despite ‘challenging power price environment’

NextEnergy Solar Fund (NESF) has outlined how it is continuing to pursue a 150MW subsidy-free portfolio as it reports high levels of generation.

In its half year results to 30 September 2020, the company said that it had now achieved 64MW of operating subsidy-free solar in this portfolio, with the 8.5MW High Garett being energised in October 2020.

However, the company also warned that it is currently facing “a challenging power price environment” due to the second wave of COVID-19, stating that the “short-term horizon remains uncertain”.

NESF has secured fixed pricing for 87% of generation at a weighted fixed price of £49.1MWh for the remainder of the financial year ending 31 March 2021, and 58% of generation at a fixed price of £44.5/MWh for summer 2021. It has also fixed 42% for winter 2021 with a weighted average fixed price of £49.9/MWh.

It said that a significant amount of its generative capacity has been unhedged beyond winter 2020/21 in anticipation of a power price recovery.

For the six-month period ending 30 September 2020, 65% of the company’s revenues came from government subsidies, with the remaining average weighted life under the subsidies being 14.5 years.

It saw “significantly more” electricity generation than budgeted over the period, with generation coming in at 551GW, which was 11.1% over budget. This was largely due to solar irradiation being 10.8% above expectations, as well as the prices on most of its generation having been locked in, allowing it to circumvent the effects on revenue of the drop in power prices.

However, NESF disposed of two development projects – the 40MW Strensham and 75MW Llanwern projects – during the period as they had “ceased to meet the company’s annualised target returns for UK assets”.

Kevin Lyon, chairman of NESF, said it has been “a very difficult period for people and businesses globally” and that he was therefore “pleased to report a strong set of results which show the robustness and defensiveness of our business model as we continue to exceed our operational expectations”.

He pointed to the company achieving earnings of 4.04p per ordinary share and its dividend target for the current financial year of 7.05p per ordinary share remaining unchanged as successes.

The company also recorded a Net Asset Value (NAV) per ordinary share of 99.6p and an ordinary shareholders’ NAV of £583.5 million.

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