NextEnergy Solar Fund (NESF) Investor update summary

Strategic reset and dividend policy change

• A comprehensive strategic reset introduces a 75% payout-based dividend policy, freeing up £40 million over five years for reinvestment, debt reduction, and NAV stabilization.

• Capital recycling will expand, with up to 120 MW of asset sales and realization of private fund investments, targeting a total recycled capacity of over 480 MW by 2030.

• Shareholder approval will be sought to increase the energy storage investment limit from 10% to 30% of GAV, with allocation to reach 30% by 2030.

• The new policy is expected to generate 9%-11% long-term total returns through dividend income and NAV growth.

• Gearing will be reduced and maintained between 40%-45% of GAV, below the 50% policy limit.

Portfolio strategy and growth opportunities

• Focus on repowering existing solar assets, co-locating energy storage, and optimizing asset performance to drive NAV growth.

• Portfolio consists of 99 operating assets (839 MW), with 83% in the UK and 97% solar, but energy storage share will increase.

• Capital allocation prioritizes debt service, portfolio health, and value-accretive investments, maintaining gearing between 40%-45% of GAV.

• Repowering and storage investments are phased, with near-term focus on inverter replacements and medium/long-term on full asset upgrades and storage expansion.

• Assets with limited value enhancement potential will be sold, while core assets will be optimized for long-term returns.

Market context and risk management

• Persistent share price discount to NAV and constrained capital raises have driven the need for strategic change.

• Macroeconomic headwinds include higher interest rates and falling power price forecasts, but tailwinds are rising demand, policy support, and energy security needs.

• The portfolio has consistently outperformed generation forecasts and maintained a strong dividend track record.

• The strategy is designed to be resilient to political cycles and market volatility, with a focus on contracted revenues and hedging.

• Ongoing cost optimization and operational excellence initiatives are delivering savings and enhancing asset value.