As Lower Power Prices Weigh on NAV
Fiona Craig Market News
18 February 2026
NextEnergy Solar Fund Limited (LSE:NESF) reported a drop in its unaudited third-quarter net asset value, with NAV per ordinary share declining to 84.9p. The decrease was mainly attributed to softer third-party power price assumptions and weaker winter irradiation, which left UK generation 12.9% below budget.
Taking into account the forthcoming impact of the UK government’s decision to shift Renewable Obligation Certificates (ROC) and Feed-in Tariff (FiT) inflation indexation from RPI to CPI, year-end NAV would have stood at 82.9p. Despite these pressures, the board reaffirmed its full-year dividend target of 8.43p per share, with forecast dividend cover of between 1.1x and 1.3x, highlighting its continued focus on delivering income amid challenging market conditions.
The fund’s capital recycling strategy and recent asset disposals have generated £72.5 million to date, contributing a positive uplift to NAV and supporting efforts to manage leverage. Gearing currently sits just under the 50% debt-to-GAV threshold, although a depressed share price has pushed the enterprise value (EV) gearing ratio above 50%.
Management intends to further reduce leverage through additional asset sales and repayment of its revolving credit facility (RCF). A broader strategic review, scheduled to be presented to investors in March, is aimed at strengthening long-term value. This will be underpinned by the fund’s Article 9 sustainability classification and its ongoing commitment to biodiversity initiatives and strong ESG standards across its supply chain.
The outlook remains constrained by sharply weaker operating performance, including falling revenues and two consecutive years of net losses, alongside negative technical indicators, with the share price trading below key moving averages and a bearish MACD signal. These headwinds are partly offset by improving operating cash flow, a debt-free balance sheet expected in 2025, and a high dividend yield, though these positives do not fully counterbalance earnings pressure and weak momentum trends.
More about NextEnergy Solar Fund Limited
NextEnergy Solar Fund Limited is a publicly listed specialist investor in utility-scale solar and energy storage assets, primarily located in the UK. The portfolio comprises more than 100 operating solar projects with significant installed capacity and long remaining asset lives, generating inflation-linked income from government-backed subsidies and electricity sales into the UK power market.
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