LONDON: NextEnergy Solar Fund (NESF) announced 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 is made up of two assets: The Grange: 50MWp on a c.214-acre site, located in Yorkshire, UK; and South Lowfield: 50MWp on a c.200-acre site, located in Nottinghamshire, UK.
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 brewer. 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.
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.
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.
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
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.
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.
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.”
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.