Image: NESF.
NextEnergy Solar Fund (NESF) is selling two of its subsidy-free assets to NextPower Development, part of the NEC Group, in a £11.5 million transaction.
The solar is currently under development with a capacity of 115MW, with the transaction expected to be completed today (14 May). As the solar is being sold to a NextPower Development subsidiary, it makes the sale a smaller related party transaction, with NESF moving the assets to another business within its wider Group.
The sale is in line with NESF’s aims of adding up to 150MW of operational subsidy-free capacity to its portfolio, it said, with projects which are expected to generate a rate of return in line with or in excess of NESF’s target equity annualised return range of 7% to 9%.
Projects that are in excess of that capacity or are not expected to generate financial returns in line with its target range may be divested, with NESF stating it may sell further subsidy-free assets under development as the secondary market “develops and matures”.
It was decided by NESF’s Board that the two subsidy free assets being sold to NextPower no longer met its targets, leading to the divestment.
After transaction costs, today’s sale will result in a net IRR “significantly in excess” of NESF’s annualised target return of 7-9%, it said.
NextPower was appointed developer by NESF at the time of the company’s IPO in 2014 and is under common control of the wider NEC Group. However, NESF would consider selling further assets to third-party assets as well as NextPower.
NESF switched on its first subsidy-free solar developmen in 2019 – the 5.4MW Hall Farm II – before completing what it celebrated as the UK's largest subsidy-free asset, the 50MWp Staughton site.
In an update released last month, the company said it plans on resuming construction “shortly” on an 8.5MWp subsidy-free extension, as well as outlining how its portfolio continues to outperform.