NextEnergy Solar Fund (NESF) Investor update summary

Strategic reset and dividend policy change

• Transitioning to a 75% payout-based dividend policy, freeing up £40 million over five years for reinvestment, debt reduction, and NAV growth.

• Capital recycling will be expanded, targeting up to 120 MW of asset sales and realization of private fund investments, with proceeds directed to high-return opportunities from 2027.

• Shareholder approval will be sought to increase the energy storage investment limit from 10% to 30% of GAV, aiming for a 70/30 solar/storage portfolio mix by 2030.

• The roadmap targets a total return of 9%-11% through dividend and NAV growth, with a focus on long-term value creation and narrowing the share price discount.

• Dividend guidance for FY26/27 is 4.0p–4.6p per share, yielding 7–8%, with undistributed cashflows accelerating debt reduction and funding higher-yielding investments.

Portfolio optimization and growth strategy

• The portfolio consists of 99 operating assets (839 MW), mainly in the UK, with a strong track record of dividend coverage and operational outperformance.

• Repowering and co-locating energy storage are key levers for NAV growth, with phased implementation based on asset age and opportunity.

• Energy storage is expected to reach 30% of GAV by 2030, with both standalone and co-located systems, optimizing risk-return and revenue diversification.

• Capital allocation prioritizes debt service, portfolio health, and high-return investments, with gearing targeted at 40%-45% of GAV.

• Operational excellence, cost optimization, and proactive asset management are emphasized to maximize value and minimize downtime.

Market context and risk management

• The strategy is designed to be resilient to political cycles, focusing on energy security, price stability, and the transition to net zero.

• UK policy targets 50GW solar and 27GW energy storage by 2030, supporting long-term investment opportunities.

• The M&A market for asset recycling is improving, supporting the capital recycling program and enabling the transition to more energy storage.

• The company maintains flexibility to use third-party capital and is open to public-to-private transactions if value-accretive.

• Risk management includes forward hedging of revenues, minimizing merchant exposure, and leveraging data and AI for asset optimization.