NextEnergy Solar Fund will initiate more frequent capital recycling events as part of a strategic reset following a board strategic review.
The company said it will expand its capital recycling programme through additional asset sales of up to 120MW and will also benefit from realisations of its private solar fund investment and two co-investments from 2027 onwards representing the equivalent of 116MW.
NextEnergy Solar Fund added that the strategic reset aims to deliver a balanced total return profile targeting long-term returns of 9% to 11% for shareholders.
The company will also transition from a progressive dividend policy to a percentage-based dividend targeting a 75% distribution of operating free cashflows after debt servicing and operating expenses.
The new dividend policy is expected to free up around £40m of operational free cash flows over the next five years to support balance sheet strengthening and future net asset value growth opportunities.
NextEnergy Solar Fund will also reduce and maintain total gearing in a range between 40% and 45% of gross asset value.
The strategy targets renewed net asset value growth through repowering existing solar assets with newer technology and adding co-located energy storage.
The company said it will increase its allocation to energy storage to as much as 30% of gross asset value to diversify revenues and support income after subsidy periods end.
“NESF is a leading participant in the UK’s energy transition, owning a high-quality portfolio of attractive solar and energy storage assets primarily across the country,” said Tony Quinlan, chair of NextEnergy Solar Fund Limited.
“The strategic reset represents a pivotal moment for the Company, positioning NESF to fully capitalise on developments within the sector.”
“Following a comprehensive strategic review, the Board has concluded that recalibrating the Company’s strategy is essential to ensure NESF adapts to the evolving equity and power markets and is positioned for sustainable growth,” Quinlan added.
“This reset is designed to maximise long-term shareholder value and seize the significant opportunities emerging in the UK market.”