NextEnergy Captial raises £327 million for subsidy-free solar fund

NextEnergy Capital (NEC) has announced the first close for NextPower UK ESG (NPUK ESG), a UK subsidy-free solar fund, at £327 million – 65% of the fund’s target of £500 million.

The commitments in the first close have been made from investors in the UK and the Middle East including the UK Infrastructure Bank (UKIB), LGPS Central Limited, Merseyside Pension Fund and Brunel Pension Partnership.

The NPUK ESG fund, launched in December 2021, is a private 10-year solar infrastructure fund focused on investing into new-build utility scale, subsidy-free solar in the UK. It has two operational seed assets based in Llanwern, South Wales, and Strensham, Worcestershire.

The projects have a combined capacity of 115MW with the Llanwern plant widely regarded as the UK’s largest operating solar power plant, said NEC.

NPUK ESG is the first subsidy-free private solar investment fund in the UK, says NEC, and has an expected generation capacity of c.2GW of power at hard cap. It is also aiming to double the amount of subsidy-free solar power in the UK making renewable energy more accessible for all.

“I am delighted to announce the first close of NPUK ESG, which comes at a crucial time to help strengthen the UK’s energy independence,” said Michael Bonte-Friedheim, CEO and founding partner of NextEnergy Capital.

“NPUK ESG is the first UK fund that targets purely new-build subsidy-free utility scale solar assets, and I am proud that NextEnergy Group is driving this forward, showing how solar assets in the UK can provide investors with a significant return while reducing the carbon footprint of the UK. 

“NPUK ESG marks the Group’s fourth fund, backed by an impressive track record since 2007.  We continue to offer investors access to our specialist focus across the solar power spectrum, from construction, investment management and operations.”

The fund runs alongside the NextEnergy Solar Fund (NESF) which recently celebrated hitting a new milestone with its portfolio having reached 100 operating solar assets.

NESF also extended its existing £70 million revolving credit facility (RCF) with Santander UK with the revised terms including a margin of 160bps over SONIA (Sterling Overnight Index Average), and an uncommitted option to extend the facility for an additional 12 months.

Commenting on this, Ross Grier, UK managing director of NextEnergy Capital, said: “The £70m RCF extension builds on our successful relationship with Santander and provides NESF with the continued firepower to take advantage of the attractive investment opportunities we are pursuing. The facility was secured on attractive terms, given the backdrop of inflation and rising interest rates.”