NextEnergy Solar Fund (NESF) has taken its first step into the Spanish market with a co-investment transaction for a 25% stake in a 50MW project under construction in Cádiz.
The move follows the company making a commitment of £37 million to NextPower III ESG, a private ESG solar fund that is focused on utility scale solar assets in OECD markets, in June 2021. NESF launched a £500 million UK focused arm of the fund in December, thanks in part to £250 million of funding from the UK Infrastructure Bank.
The project, dubbed Agenor, represents a total investment of £8.8 million, which will be funded using headroom from available revolving credit facilities, with the remaining 75% state being funded directly by NPIII ESG and another investor in the fund.
It is expected to be energised later in the first half of 2022, following which it will benefit from a power purchase agreement (PPA) with a counterparty for around 70% of its output over an initial five-year period.
NESF confirmed its focus on long-term corporate PPA’s within its interim results for the period ended 30 September 2021, given the strong appetite from corporates and the reliable cashflows they provide.
"We expect 2022 to be a very exciting year of growth for NESF,” said Kevin Lyon, chairman of NextEnergy Solar Fund.
“Through NESF's commitment into NPIII ESG, we were able to harness and benefit from NextEnergy Capital's international experience and expertise in the Spanish solar PV market. Co-investment opportunities can offer a unique, return-enhancing portfolio benefit and Agenor marks NESF's first co-investment with NPIII ESG and its first international investment outside of Italy. This is a very attractive co-investment opportunity for NESF whilst further diversifying the growing NESF portfolio."
NESF is set to continue to pursue a pipeline of international growth opportunities, both on a direct and co-investment basis, as well as a pipeline of electricity storage assets in the UK, as it work to diversify its portfolio.