UK solar market concentration forces NESF to look abroad

Opportunities remain in Britain though, with the fund seeking £100m to part-finance a pipeline that totals about 600MW.

The London-listed NextEnergy Solar Fund is looking to broaden its investment policy following a rush of renewables investors to the UK market.

The fund, which has a UK-based portfolio of over 500MW and is one of the sector’s largest actors, is seeking shareholder approval to allow it to invest up to 15 percent of its gross asset value in solar projects in other OECD countries.

The move has been prompted by the entry of numerous investors in the UK market, as well as increased activity from existing participants. NESF said this is buoying prices of previously constructed projects.

It will instead look to broaden its portfolio to markets that offer similar characteristics to the UK in terms of the regulatory environment and investment opportunities.

NESF said it is able to transfer its solar expertise from the UK across to other countries and pointed to several instances when its investment adviser NextEnergy Capital did so. The firm launched the NextPower II vehicle in June 2015, targeting €500 million of commitments to invest across the Italian market. It reached a €150 million first close 12 months later and last December made its maiden investments.

NESF also referred to NextEnergy’s activities in South Africa, where the company launched a €400 million renewables fund in 2011. It is unclear how much the vehicle eventually raised and NextEnergy could not be reached for comment before press time.

However, NESF remains confident in the prospects of the British market, where it began its march towards owning subsidy-free projects earlier this week. The fund is looking to raise a further £100 million ($127.7 million; €114.4 million) through a share placing to fund the acquisition of 23 plants with a 98.5MW capacity it is in advanced negotiations for. It is also targeting an additional 501MW which will see the fund potentially spend about £506 million in total.