NextEnergy Solar Fund Limited (LSE:NESF) reported a 3.2% decline in net asset value for the first half of its financial year, attributing the decrease mainly to reduced long-term power price assumptions.

As of 30 September, the fund’s NAV stood at 88.8p per share, down 2.9p from the previous period. The shift in power price expectations—driven by falling gas prices—cut NAV by 2.2p per share, while the quarterly dividend shaved off an additional 2.5p. These headwinds were partially offset by savings from a lower asset-management fee, which added 1.3p per share.

Despite the NAV downturn, operational performance was strong: portfolio generation came in 7.6% above budget, supported by solar irradiation levels around 13% higher than forecast.

Gearing edged up to 49.2% of gross asset value from 48.4% in March 2025, largely reflecting softer asset valuations. The company’s £205 million revolving credit facility now has roughly £151.9 million drawn, compared with £144.9 million at the March reporting date.

With gearing nearing the fund’s 50% GAV limit—and the preference share debt-to-enterprise-value ratio already above its threshold at 54.8%—NextEnergy has limited room for additional borrowing or for resuming share buybacks. Its buyback programme remains on hold after completing about 58% (£11.5 million) of planned purchases.

NextEnergy is undertaking a strategic review that may broaden its disposal plans beyond the current 100MW target to include additional subsidy-backed assets with stronger market appeal. Further details are expected in 2026.

The company reaffirmed its dividend guidance for FY26, projecting coverage of 1.1–1.3 times. With over 70% of annual generation already achieved in the first half and running ahead of budget, management highlighted strong cash-flow visibility.

Looking forward, the fund’s revenue profile remains well protected against softer power prices, with approximately 73% of FY27 revenue already contracted and about 64% contracted for FY28.

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