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1、Annual Reportfor the year ended 31 March 2021 Generating a more sustainable futureOur ObjectivesInvestment ObjectiveTo provide ordinary shareholders with attractive risk-adjusted returns,principally in the form of regular dividends,by investing in a diversified portfolio of primarily UK-based solar
2、energy infrastructure assets.Strategic ObjectivesInvestment Expand the portfolio in line with the Companys Investment Policy.Demonstrate our leadership in the UK solar market and achieve superior technical and operational performance.Maintain our pricing discipline in relation to acquisitions.Operat
3、ional Optimise the value of our investments through effective portfolio and asset management.Consistently achieve operational outperformance of the portfolio attributable to effective asset management(Asset Management Alpha).Environmental Participate in climate change mitigation,enhance local biodiv
4、ersity where our assets are located,and contribute towards a zero carbon and sustainable future.Society Positively impact both the communities in which our solar assets are located and wider stakeholders.Governance To act in a manner consistent with our values of integrity,fairness and transparency.
5、Maintain strong and constructive relationships with our shareholders and other key stakeholders.PREMIUM MAIN MARKET1GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDOrdinary shareholders NAVas at 3
6、1 March 2021581m(31 March 2020:579m)NAV per ordinary shareas at 31 March 202198.9p(31 March 2020:99.0p)Financial debt gearing as at 31 March 2021124%(31 March 2020:22%)Dividends per ordinary share for the year ended 31 March 20217.05p(31 March 2020:6.87p)Cash dividend cover(pre-scripdividends)for th
7、e year ended31 March 20211.1x(31 March 2020:1.2x)Total gearing as at 31 March 2021243%(31 March 2020:42%)Total capacity installed as at 31 March 2021814MW(31 March 2020:755MW)Total electricity generation for the year ended 31 March 2021738GWh(31 March 2020:712GWh)UK homes powered for one year3195,00
8、0(31 March 2020:189,000)Operating solar assets as at 31 March 202194(31 March 2020:90)Generation above budget for the year ended 31 March 2021 6.2%(31 March 2020:4.7%)Tonnes of CO2e emissions avoided p.a.3317,600(31 March 2020:307,700)Performance HighlightsFinancial HighlightsOperational HighlightsE
9、SG Highlights1 Financial debt gearing excludes the 200m preference shares 2 Total gearing is the aggregate of financial debt and 200m of preference shares.The preference shares are equivalent to non-amortising debt with repayment in shares3 total return per ordinary share for the year ended 31 March
10、 20217.0%(31 March 2020:-4.5%)Ordinary shareholder total return for the year ended 31 March 20215.1%(31 March 2020:-7.8%)Ordinary shareholder annualised total return since IPO6.1%(31 March 2020:6.3%)ContentsOVERVIEW 3NextEnergy Solar Fund Overview 3Snapshot of Our Diversified Portfolio 4Why Invest i
11、n Solar Assets?6STRATEGIC REPORT 7Chairmans Statement 7Our Business Model 13Five Year Record 16Our Investment Strategy and Track Record 17Investment Advisers Report 22Operating Portfolio 32Portfolio Generation Performance 34Sustainability and ESG 36Stakeholder Engagement 46Risks and Risk Management
12、48Going Concern and Viability 51GOVERNANCE 54Introduction from the Chairman 54Governance Framework 55Board of Directors 56Corporate Governance Statement 58Directors Remuneration Report 66Audit Committee Report 69Directors Report 72Statement of Directors Responsibility 74Independent Auditors Report 7
13、5FINANCIAL STATEMENTS 82Statement of Comprehensive Income 82Statement of Financial Position 83Statement of Changes in Equity 84Statement of Changes in Cash Flows 85Notes to the Financial Statements 86ADDITIONAL INFORMATION 108Alternative Performance Measures 108General Shareholder Information 112Glo
14、ssary and Definitions 114Corporate Information 1172 NEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021NextEnergy Solar Fund OverviewSPECIALIST SOLAR POWER RENEWABLE ENERGY INVESTMENT COMPANY WITH A MANDATE FOR GROWTH IN LINE WITH THE COMPANYS STRATEGIC AIMSDIVERSIFIED PORTF
15、OLIO OF 94 OPERATING SOLAR PLANTSCONSISTENT OPERATING AND ASSET MANAGEMENT OUTPERFORMANCE SINCE IPOMANAGED BY THE NEXTENERGY CAPITAL GROUP,A LEADING SPECIALIST INVESTMENT AND ASSET MANAGER IN THE SOLAR ENERGY INFRASTRUCTURE SECTORTARGETING A TOTAL DIVIDEND OF 7.16P PER ORDINARY SHARE IN RESPECT OF T
16、HE YEAR ENDING 31 MARCH 2022,PAYABLE QUARTERLYPOWERING THE EQUIVALENT OF 195,000 UK HOMES(EQUIVALENT TO PORTSMOUTH AND BRIGHTON COMBINED)ANNUALLY WITH CLEAN RENEWABLE ENERGY 3GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NE
17、XTENERGY SOLAR FUND LIMITED3Annual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITED4 OverviewNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021Snapshot of Our Diversified Portfolio As at 31 March 2021By Solar Module ManufacturerBy Revenue TypeBy Subsidy
18、By Installed CapacityBy Inverter Manufacturer By Location 0.8%2.0 ROCs13.5%1.6 ROCs43.4%1.4 ROCs3.2%1.3 ROCs12.9%1.2 ROC1.0%1.4 NIROCs6.9%FiTs(UK)6.3%Long-term PPA7.8%Subsidy-free4.2%FiTs(Italy)21.6%Hanwha Q Cells14.6%TRINA11.4%Yingli8.8%REC8.0%Jinko Solar8.0%LDK Solar6.0%Canadian Solar4.4%BYD4.1%Re
19、nesola13.1%Other 88.4%UK11.6%Italy28.2%SMA18.0%Power Electronics15.9%Huawei8.6%Emerson6.8%Schneider6.0%Gamesa5.3%ABB4.1%Power-One7.1%Other 16.0%FiTs46.6%ROCs/NIROCs3.1%Embedded benefits1.4%Merchant wholesale32.4%Merchant fixed PPA0.5%Other56.4%0-5MWp20.2%6-10MWp23.4%10MWp%of assets by MW capacity%of
20、 assets%of total revenue for the year ended 31 March 2021%of assets by MW capacity%of assets by MW capacity%of invested capital21283943354220234541597567697374667072685829242630272548491112192214444692181640333132373491136180858483768781827978627163609336 15381047171265347986564897786889094575655545
21、35251505GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDSnapshot of Our Diversified Portfolio continued By LocationUnited KingdomOperating assets for further information,see pages 32 and 33.Italy6
22、 OverviewNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021ABUNDANT ENERGY SOURCE More solar energy hits the Earth in a single hour than the energy being used by the entire human population in a year.Solar energy generation is now economically viable in markets not typicall
23、y characterised by high levels of solar irradiation.PROVEN AND STABLE TECHNOLOGY Reliable and predictable source of electricity due to high consistency in yearly solar irradiation.Long useful life(25-40 years with potential to extend)with high proportion of contracted cash flows from operating solar
24、 plants.COST-EFFECTIVE ELECTRICITY GENERATION Low operating and maintenance costs and ongoing capital expenditures.Solar PV technology has benefited from a significant reduction in costs and non-subsidised solar assets are now economically competitive with fossil fuel sources and provide attractive
25、financial returns.CLIMATE CHANGE SOLUTION Fundamental to achieving a more sustainable future byaccelerating the transition to clean and sustainable energy.Meaningful contribution to reducing CO2e emissions throughthe generation of clean electricity.Why Invest in Solar Assets?6 NEXTENERGY SOLAR FUND
26、LIMITED Annual report for the year ended 31 March 2021?7GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDThe Board is proud of everyone involved with NESF and their response and performance in the
27、face of the pandemics consequences on our sector.Despite these challenges,the Company recorded its seventh consecutive year of operating outperformance,positive dividend coverage and we achieved our dividend target of 7.05p,having met the target every year since IPO.We have reset our strategy for gr
28、owth,refocusing the investment policy to allow for more international expansion,and increased risk diversification through investments in private equity structures and in different technologies such as battery storage.As we look to the future,we will keep our focus on our revised investment strategy
29、,aiming to achieve investor value creation,progressive dividend growth and positive dividend coverage.NESF also achieved key milestones in the face of the difficult operating environment,with the acquisition of the two new UK solar farms(Camden portfolio,totalling 100MW)and achieving our 150MW subsi
30、dy-free development target.We continue to create a future for solar in a subsidy-free world and are targeting long-term corporate PPAs,direct wire agreements and leveraging our electricity sales capabilities to maximise revenues generated by these plants.I am pleased to present the Annual Report for
31、 the NextEnergy Solar Fund Limited(the“Company”or“NESF”)for the year ended 31 March 2021.The year was significantly impacted by the Covid-19 pandemic and its effects on the demand for electricity,power prices and our operations.The Company,its Investment Manager,NextEnergy Capital and its operating
32、asset manager,WiseEnergy,all faced challenges on an unprecedented level but successfully transitioned to remote working.A phased return to the office is now occurring in jurisdictions where regulations permit.The uncertainty caused by Covid-19 exacerbated the power price forecasting models in the re
33、newable sector,impacting share prices.Our share price performance was disappointing in comparison to the sector,despite our assets continuing to consistently outperform generation budgets and successfully implemented our power price hedging strategy,which allowed us to reduce volatility and lock in
34、cash flows throughout the pandemic,reducing risk.Our current dividend yield and share price offers investors both current and new,an attractive opportunity to invest as we position ourselves for future growth,whilst also playing a key part in contributing to tackling global climate change.Results an
35、d Key EventsThe Company has continued to perform well operationally during the challenges of the Covid-19 pandemic,driven by the implementation of our portfolio and asset management strategy,our approach to continually improve operating efficiency and ability to manage our exposure to power price fl
36、uctuations effectively through our specialist electricity sales function.The Companys assets generated significantly more electricity and revenues than budgeted,and more than in prior periods,largely due to effective asset management,higher solar irradiation,and the proactive hedging of UK power pri
37、ces for our electricity generation.This enabled us to both minimise the impact of power price volatility and actively capture pricing opportunities in the market which contributed to our revenues during the year.At the AGM held in September 2020,shareholders overwhelmingly approved changes to the Co
38、mpanys Investment Policy,allowing the Company to invest up to 30%(previously 15%)of GAV in solar plants outside the UK in OECD countries,invest up to 15%of GAV in private equity structures and up to 10%in standalone energy storage.These changes will help us seek opportunities in markets which yield
39、significantly higher risk-adjusted financial returns than the UK solar secondary or subsidy-free markets.The Investment Adviser is actively considering opportunities to deploy capital in these areas.The Company is delighted that it has reached its subsidy-free development target of 150MW,by approval
40、 of the final two development projects for construction.Hatherden(50MW)and Whitecross(36MW)are currently being prepared for construction and are expected to be energised in late 2022.These assets will follow the successful energisation of High Garrett(8.5MW)in October 2020,and Staughton(50MW)and Hal
41、l Farm II(5MW)during the last financial year.NESFs early entry into the UK subsidy-free market has shown its ability to develop value-accretive opportunities such as long-term corporate power price agreements(“PPAs”)and secure more attractive risk-adjusted financial returns compared to acquiring ope
42、rating solar projects with subsidies.This has allowed NESF to establish its expertise and leadership position in this subsidy-free space.Kevin Lyon,ChairmanStrategic Report Chairmans Statement8 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021Similarly,NESF
43、 took significant steps in establishing a foothold in the long-term,high-credit UK corporate PPA market by acquiring the Camden portfolio,comprising two projects totaling 100MW.The Grange(50MW)is fully operational and South Lowfield(50MW)is expected to be energised this summer.The Camden portfolio h
44、as a 15-year PPA in place covering c.75%of the electricity to be generated over the life of the PPA.The PPA counterparty is AB InBev,the worlds largest brewer.The technical performance of our plants during the year has been exceptional.Generation was 6.2%above budget and Asset Management Alpha(which
45、 measures the operational outperformance attributable to effective asset management above and beyond changes in underlying solar irradiation)was 0.7%.With the majority of our electricity sold under fixed-price contracts,we achieved earnings per ordinary share of 6.87p(2020:-5.09p).During the year,th
46、e Board concluded its review of its dividend policy.To the extent the Board considers it appropriate,each year we will target increasing the total annual dividend paid to ordinary shareholders.For the financial year ending 31 March 2022,we are therefore targeting an increased total dividend of 7.16p
47、 per ordinary share.In approving this dividend target,the Board took into account the projected future power prices and associated price hedges,inflation in our markets;historic and budgeted technical and operational performance of our portfolio,the appropriate ratio of ordinary earnings and future
48、targeted dividend payments.NAV and Operating ResultsAt the year end,the ordinary shareholders NAV was 581m,equivalent to 98.9p per ordinary share(2020:579m,99.0p per ordinary share).The main detractors during the year were a decrease in long-term power price forecasts(-3.0p per ordinary share),a dow
49、nward revision in short-term inflation forecasts(-1.1p per ordinary share)and increased corporation tax rate from 2023 onwards(-1.8p per ordinary share).The main contributors during the year were a decrease in the unlevered discount rate(+3.4p per ordinary share)and the Companys operating outperform
50、ance(+1.4p per ordinary share).Profit before tax was 40.2m(2020:-29.7m)with earnings per ordinary share of 6.87p(2020:-5.09p).Cash dividend cover(pre-scrip dividends)was 1.1x(2020:1.2x).For the year,the ordinary shareholder total return was 5.1%(2020:-7.8%)and the ordinary share NAV total return was
51、 7.0%(2020:-4.5%).As at 31 March 2021,NESF had an annualised ordinary shareholder total return of 6.1%(2020:6.3%)and an annual ordinary share NAV total return of 6.0%since IPO(2020:-5.9%).At year end,the NESF share price was 99.6p,which was a 0.7%premium to the NAV per ordinary share of 98.9p(2020:s
52、hare price was 101.5p,2.5%premium to the NAV per ordinary share which was 99.0p).Power PricesAt the beginning of the financial year,the“oil price war”between the USA,Saudi Arabia and Russia,and the first effects of the Covid-19 pandemic led to sharp power price declines.In May 2020,the short-term de
53、mand-side effects stemming from the pandemic drove power prices down to unprecedented levels.A H2 2020 economic recovery,and subsequent increased demand for electricity,has driven a recovery in short and medium-term power prices;something that is currently reflected in day-ahead prices as well as 20
54、21 and 2022 pricing.Of the Companys revenues for the year,66%were derived from government subsidies and,at the end of the year,the average remaining weighted life under the relevant subsidies was 14 years.These revenues are fixed for the long-term in accordance with the terms of the relevant subsidi
55、es.The remaining 34%of the Companys revenues were derived from selling the electricity generated to carefully selected counterparties in the open market and,therefore,are exposed to market power price movements.Our Asset Managers electricity sales desk is focused on securing the best terms for our s
56、ales and minimising our exposure to short-term price fluctuations by securing fixed prices for specified time periods.The flexible PPA framework allowed us to lock in higher power prices during the year and produced a 7.0m revenue uplift compared to selling the electricity at the spot rate.Looking f
57、orward to the next two financial years,as at 16 June 2021,the Company has agreed fixed UK pricing(hedged)covering:87%of budgeted generation for the 2021/22 financial year;and 63%of budgeted generation for the 2022/23 financial year.Portfolio PerformanceEnergy generated during the year was 738GWh(202
58、0:712GWh),6.2%above budget(2020:4.7%),resulting in a seventh consecutive year of outperformance.During the year,solar irradiation across the portfolio was 5.5%above budget(2020:4.0%).Asset Management Alpha for the year was 0.7%(2020:0.7%)and would have been 1.3%(2020:1.5%)if we excluded distributor
59、network outages,over which we have no control.Our UK portfolio performed above expectations with generation outperformance of 6.3%(2020:4.6%)and an Asset Management Alpha of 0.7%(2020:0.7%).Our Italian portfolio performed above expectations with generation outperformance of 5.1%(2020:6.4%)and an Ass
60、et Management Alpha of 0.2%(2020:1.3%).Overall,we estimate this extra generation to have delivered additional revenues of c.4.8m(2020:3.5m)to the Company.Portfolio UpdateOver the year,our Investment Adviser and Asset Manager have continued to optimise the returns from the portfolio by:acquiring proj
61、ects with attractive long-term PPAs executing our electricity sales strategy to maximise revenue and reduce shorter-term power price risk;implementing technical improvements;reducing operating costs through re-negotiating contractual terms and entering into new agreements;and securing options or rig
62、hts to extend the useful life of four of our assets;Chairmans Statement continued9GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDChairmans Statement continuedOur subsidy-free asset High Garrett(8
63、.5MW)was successfully energised in October 2020.The final investment decision covering two further subsidy-free assets,Hatherden(50MW)and Whitecross(36MW),ensured our 150MW subsidy-free portfolio target was achieved,of which 64MW has been energised as at the date of this report.The full subsidy-free
64、 portfolio will amount to a total investment of c.79m(7.7%of GAV as at 31 March 2021).We are progressing strategies for the sale of electricity from these subsidy-free plants to secure attractive risk-adjusted returns using electricity sales agreements,corporate power purchase agreements or direct-w
65、ire agreements with a range of off-takers.The successful consolidation of our subsidy-free portfolio demonstrates our ability to adjust effectively to a changing UK solar market through our expertise in identifying opportunities and maximising risk-adjusted returns.Separate to the Companys subsidy-f
66、ree strategy,the Company has agreed to finance,design,build,operate and own over 30MW of solar assets on sites operated by Anglian Water Group.The power generated from these assets will be sold directly to Anglian Water under 25-year agreements at a fixed price.Sutterton(0.4MW)and Marham(1MW)were en
67、ergised in early 2021,and a further 18MW are expected to be energised during the current financial year.In addition,we acquired the 100MW long-term PPA backed Camden portfolio for a total consideration of 64.3m.The Grange(50MW)is fully operational and South Lowfield(50MW)will be energised during the
68、 summer,increasing our combined installed power to 864MW.More information on this transaction can be found on page 22 of the Investment Advisers Report.On 14 May 2020,two subsidy-free pre-construction development projects,Strensham and Llanwern,were disposed of for a combined consideration of 11.5m.
69、Construction had not started on either of these projects and they were disposed of as it became apparent during the development process they would not meet NESFs financial target return,mainly due to the decline in power price forecasts.Similarly,following the successful completion of our 150 MW sub
70、sidy-free development portfolio,on 25 March 2021,16 further development projects in the pipeline were sold for a combined consideration of 5.6m.For both disposal transactions,NESF recovered all development costs incurred and produced a return on capital invested significantly in excess of our annual
71、ised target return for UK assets.Changes to Investment PolicyAt the Companys AGM on 11 September 2020,the following changes were approved by shareholders:up to 30%of GAV may be invested in solar assets that are located outside the UK(the limit was previously up to 15%);the Company may now acquire an
72、 interest in solar assets located in non-OECD countries where those assets form part of a portfolio of solar assets in which the Company acquires an interest and subject to the Companys aggregate investment in any such assets being not greater than 3%of GAV;up to 15%of GAV may now be invested in sol
73、ar assets through private equity structures;and the Company may now also invest in standalone energy storage systems(not ancillary to or co-located with solar assets owned by the Company)up to an aggregate limit of 10%of GAV.At the time of making an investment,the cost of the investment is calculate
74、d as a percentage of GAV to ensure it does not breach the relevant limit.The Companys current Investment Policy is set out in full on pages 17 and 18.In line with its refocused investment policy,the Company is advancing a significant pipeline of both domestic and international solar assets and domes
75、tic energy storage asset opportunities,including investments in private equity structures,which complement its existing portfolio,with a view to achieving higher financial returns,additional geographical,technology,and revenue diversification.Debt StrategyAs at 31 March 2021,the Companys had 200m of
76、 preference shares(2020:200m).The Companys subsidiaries also had financial debt outstanding of 246m(2020:214m).Of the financial debt,192m comprises two long-term fully amortising debt facilities,and 54m was drawn under a short-term credit facility.The short-term credit facility of 70m was extended f
77、rom July 2020 to July 2022 during the year.At the year end,the Companys subsidiaries had 36m(2020:71.1m)undrawn from two short-term credit facilities and the Company had a cash balance of 11m(2020:25m).The total financial debt represented 24%of GAV as at 31 March 2021(2020:22%).As at 31 March 2021,t
78、he total gearing comprising the total financial debt and the preference shares represented 43%of GAV(2020:42%).DividendsThe Directors have approved a fourth interim dividend of 1.7625p per ordinary share,which will be payable on 30 June 2021 to ordinary shareholders on the register as at the close o
79、f business on 21 May 2021.Following the payment of the fourth interim dividend,the Company will have paid total dividends of 7.05p per ordinary share in respect of the year ended 31 March 2021(2020:6.87p),achieving its target for the year.The Company continues to offer a scrip dividend alternative a
80、s approved by ordinary shareholders at the 2020 AGM,details of which can be found on the Companys website().During the year,the Company paid a total of 38.1m of cash dividends(2020:36.7m)and,in addition,issued 2.9m of scrip shares to ordinary shareholders who elected for the scrip dividend alternati
81、ve(2020:3.0m),making a total of 41.0m of distributions(2020:39.7m).The Company has paid dividends since IPO that have increased annually in line with RPI.With effect from the financial year beginning 1 April 2021,to the extent the Board considers it appropriate,we will each year target increasing th
82、e total annual ordinary dividend paid to shareholders.In deciding the total annual dividend,the Board will take into account projected future power prices and associated price hedges,inflation in our markets,historic and budgeted technical and operational performance of our portfolio,and the appropr
83、iate ratio of ordinary earnings and cash cover to proposed dividend payments.10 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021For the financial year ending 31 March 2022,we are targeting an increased total dividend of 7.16p per ordinary share.Environment
84、al,Social and Governance MattersOur commitment to ESG is at the forefront of our business strategy and purpose.Our Investment Adviser is a signatory of the United Nations Principles for Responsible Investments and has integrated ESG principles into all aspects of the NEC Groups investment and asset
85、management processes.NESF integrates ESG factors in investment decisions by implementing the Investment advisers Sustainable Investment Policy1 throughout the investment cycle,from preliminary screening and exclusion to risk management during pre-investment and ownership phases.We have strengthened
86、our transparency and reporting in compliance with the EU Sustainable Finance Disclosure Regulation.The electricity generated by our portfolio during the year ended 31 March 2021 was equivalent to a saving of 317,600 tonnes of CO2 equivalent emissions(2020:307,700 tonnes CO2e)and sufficient to power
87、195,000 UK homes for an entire year(2020:189,000 homes).This is roughly equivalent to powering a city with 490,000 inhabitants(e.g.Portsmouth and Brighton combined)or taking 102,000 petrol/diesel cars off the road for an entire year(2020:99,000 cars off the road for an entire year).Our Asset Manager
88、 also actively engages in activities that enhance the environment and communities surrounding our solar plants,including,where feasible,on-site biodiversity activities such as encouraging wildflower meadows,installing bug hotels,partnering with local beekeepers and other initiatives to improve the l
89、ocal biodiversity,as well as local community programmes.Please refer to the ESG report on pages 43 and 44 for more information.The Company continues to hold the London Stock Exchange Green Economy Mark,which recognises funds which derive 50%or more of their revenues from environmental solutions,and
90、the Guernsey Green Fund Mark,due to our meaningful contribution to reducing CO2e emissions through the generation of clean solar power.In addition to the ESG activities on behalf of NESF and other clients,the NEC Group continues to donate at least 5%of its net profits to the NextEnergy Foundation,wh
91、ich it established in 2017.The NextEnergy Foundation participates proactively in the global effort to reduce carbon emissions,providing clean power sources in regions where they are not available and contributing to poverty alleviation.To find out more information please scan the below QR code.?Boar
92、d changes during the yearSue Inglis stood down from the board on the 31 March 2021.The Board would like to take this opportunity to thank Sue for her contributions during her time as a Director.We wish Sue well for the future.AppreciationOn behalf of my fellow Directors,I would like to express my si
93、ncere thanks and appreciation to the numerous people who have worked in the field and from home under difficult and testing conditions to enable our Company to continue to operate successfully in these challenging times.OutlookThe Board,our Investment Manager and our Investment Adviser believe that
94、the market environment continues to be favourable for the Company and its Investment Policy.Undoubtedly,the economic shock of Covid-19 has had a profound impact on energy demand and commodity prices.However,the near-term power price recovery during the second half of the financial year and beyond ha
95、s underlined the resilience of our sector in the current uncertain environment.The price for electricity is driven by several factors that are proving particularly difficult to predict in the current environment but is ultimately dependent on the supply and demand for electricity.A sustained upturn
96、in demand for electricity will be driven by the pace of economic recovery once the effects of the pandemic fully subside.We continue to closely monitor macro and micro economic indicators and governmental information to assess the potential future impact on the Companys activities.The Company will c
97、ontinue to focus on generating attractive financial returns for our shareholders,while having positive social and environmental impacts.With the energisation of our third subsidy-free asset(High Garrett,8.5MW)and the investment approval of Hatherden and Whitecross,both exciting subsidy-free assets o
98、f scale,NESF has reached its target of c.150MW of subsidy-free assets in the portfolio.NESF will now look to consolidate its leadership position in the growing UK long-term corporate PPA market,building upon the successes of the Anglian Water projects and the landmark 100MW Camden acquisition,with t
99、he aim of providing long-term,reliable cashflows for the Company.NextEnergy Capitals specialist energy trading desk continues to ensure that our electricity sales strategy,including our subsidy-free assets,lock in revenue prices mitigating power price risk.We are aiming to extend the useful life of
100、a further ten assets during the current financial year,adding to the 35 assets which have already secured extensions.These extensions will be value accretive and optimise our long-term revenues.We are currently advancing a pipeline of non-UK acquisitions,a direct investment in an existing private eq
101、uity fund,and investments in energy storage systems and ancillary solar technologies.These will complement our existing portfolio and diversify some of our asset-specific or market risks,whilst also adapting our portfolio to the changing dynamics of the solar markets in which our assets are located.
102、Chairmans Statement continued1 https:/ 1GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDESG continues to be a core part of our purpose,as activities mitigating climate change accelerate globally.T
103、he execution of our ESG policy is not just integrated into NESF investment decisions,it ensures we continue to lead by example and our Company and stakeholders are fully aligned to create a better environment for both current and future generations.The Company has demonstrated that it can be resilie
104、nt to the volatility that the Covid-19 pandemic has posed,and we are well placed to meet the challenge of achieving our investment objectives and the opportunity to grow the business in the future in line with our strategic aims.Kevin Lyon,Chairman16 June 2021Chairmans Statement continued12 Strategi
105、c ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021NEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021STAUGHTON50MW installedEnergised in December 2019Subsidy-free15,000 homes powered annuallyBedfordshireSHAREHOLDERSINVESTMENT ADVISERNextEner
106、gy Capital Limited(See page 15)COMPANY SECRETARY&ADMINISTRATORApex Fund and Corporate Services(Guernsey)Limited(See page 61)OTHER KEY SERVICE PROVIDERS&ADVISERSRegistrar,Financial Advisers,Legal Advisers,Corporate Broking,Public Relations(See page117)NEXTENERGY SOLAR FUND LIMITEDIndependent Board of
107、 4 Directors(See pages 56-57)INVESTMENT MANAGERNextEnergy Capital IM Limited(See page 15)(See page 15)HOLDCO100%owned by NESFIntermediate holding companies(See pages 95-97)SPVs100%owned by HoldCosHold solar assets(See pages 95-97)ASSET MANAGERWiseEnergy(Great Britain)Limited&WiseEnergy Italia SrlSHO
108、RT-&LONG-TERM FINANCIAL DEBTPROVIDERS(See page 31)INVESTMENTINVESTMENTINVESTMENT13GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDStructureThe Company is regulated by the Guernsey Financial Servic
109、es Commission as a registered closed-ended investment company.It has an indefinite life.The Companys capital structure comprises ordinary shares and preference shares.The ordinary shares are listed on the premium segment of the Official List and traded on the London Stock Exchanges Main Market.The p
110、reference shares are not listed or traded on any public market.The rights attaching to each class of shares are summarised in note 13a to the Financial Statements on page 92.The Company makes its investments through intermediate holding companies(“HoldCos”)and underlying special purpose vehicles(“SP
111、Vs”)that hold the solar assets.The Group comprises the Company,the HoldCos and the SPVs.As explained in note 2d)to the Financial Statements on page 87,as the Company is an investment entity as described by IFRS 10,the Company does not prepare consolidated accounts and,instead,holds its investments i
112、n its HoldCos and SPVs at fair value.The Company has the ability to use short-and long-term debt at the Company,HoldCo and SPV levels.Debt at the HoldCo and SPV levels is non-recourse.Operating ModelThe Companys business model follows that of an externally managed investment company.Therefore,the Co
113、mpany does not have any employees and outsources its activities to third party service providers,including the Investment Manager,Asset Manager and Administrator who are the principal service providers.The Investment Manager outsources specific services to the Investment Adviser.Our Business Model14
114、 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021Management of the CompanyThe independent Board is responsible to shareholders for the overall management of the Company,including strategy and strategic aims,corporate governance,risk management and financia
115、l reporting.The Company has outsourced the management of its day-to-day activities to the Investment Manager and the Administrator,which operate within clearly defined terms of agreements that set out their roles,responsibilities and authorities.The Investment Manager,operating under guidelines dete
116、rmined by the Board,has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment and operating performance of the Company.The Administrator provides the Company with company secretarial,fund accounting and administra
117、tion services.Further information on the division of responsibilities for the management of the Company can be found in the Corporate Governance Statement on pages 59 to 60.Management of the Companys Investment Activities and AssetsNEXTENERGY CAPITAL GROUPINVESTMENT MANAGEMENTMANAGEMENTASSETADVICEIN
118、VESTMENTThe Investment Manager,Investment Adviser and Asset Manager are shown in the diagram on the previous page and their key roles are shown on the following page.They are all members of NextEnergy Capital Group(the“NEC Group”).The NEC Group,which is privately owned,was founded in 2007 and has ev
119、olved into a leading specialist investment and asset manager in the solar energy infrastructure sector.Since its inception,it has been active in the development,construction and ownership of solar assets,which is its sole focus.As at 31 March 2021,the NEC Group had assets under management of$2.6 bil
120、lion with a cumulative generating capacity of more than 1.2GW.In addition to the Company,it manages two private equity funds,NextPower II LP(invests in solar assets in Italy)and NextPower III LP(invests in solar assets globally).The NEC Groups team of some 190 individuals has significant experience
121、in energy and infrastructure transactions across international jurisdictions.The Investment Advisers Investment Committee comprises of Michael Bonte-Friedheim,Aldo Beolchini Giulia Guidi and Ross Grier who have over 65 years industry experience.Since it was founded,the NEC Group has provided operati
122、ng asset management,monitoring,technical due diligence and other services to over 1,300 utility-scale solar power plants with an installed capacity in excess of 2.1GW.Its asset management clients include,banks,private equity funds and other specialist investors.It has created a proprietary asset man
123、agement platform which integrates all technical,financial and commercial data to analyse clients data in real-time and generates insight that help drive performance.This software and systems having been refined over the past 12 years,together with specialist staff with extensive solar experience all
124、ows WiseEnergy to be at the forefront of the digitalisation of energy.The collective experience of the NEC Group of investing and managing solar assets best positions the Company to implement efficiencies at both the investment and operating asset levels.The technical and operating outperformance of
125、 the Companys portfolio to date underlines the benefits of this comprehensive strategic relationship.Administration of the CompanyThe Board has delegated administration,fund accounting and company secretarial services to the Administrator.Apex Fund and Corporate Services(Guernsey)Limited,is part of
126、the Apex Group which was established in Bermuda in 2003 and is a global financial services provider.It has over 45 offices worldwide and 4,000+employees.Further details of the Administrators responsibilities can be found on page 61 of the Corporate Governance Report.Our Business Model continuedAldo
127、Beolchini is Managing Partner and CIO of the NEC Group.He has over 20 years experience in investment banking and renewable energy.Prior to joining the NEC Group in 2008,he was Vice President at Morgan Stanley Investment Banking.Michael Bonte-Friedheim is Founding Partner and CEO of the NEC Group.He
128、has over 20 years specialist experience in the power and energy sector and was previously Managing Director in Goldman Sachs energy and power investment banking team in London and non-executive Chairman and CEO of a number of listed energy companies.15GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMA
129、TIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDOur Business Model continuedEntityPrincipal RolesInvestment Manager(Management Agreement with the Company see note 1 in the Financial Statements on page 86)Acting as the Companys Alternative Inves
130、tment Fund Manager(“AIFM”).Discretion for making investments in accordance with the Companys Investment Policy,subject to them having been recommended by the Investment Adviser.Portfolio and risk management services as required by the EUs AIFM Directive.Reporting to the Board on all operational,fina
131、ncial and technical issues and the valuation of the investments.Investment Adviser(Advisory Agreement with the Investment Manager)Providing investment and other advice and recommendations to the Investment Manager in respect of the Companys existing and potential investments.Identify investment oppo
132、rtunities for the Company.Evaluating investment opportunities and co-ordinate external due diligence activities.Negotiating all project contracts with counterparties.Preparing investment proposals and provide general advice and recommendations to the Investment Manager concerning the Companys portfo
133、lio,financing,strategy,market developments,etc.Reviewing performance of the Companys portfolio together with the Asset Manager.Managing Investor Relations for the Company.Asset Manager(Asset Management Agreements with the SPVs)Asset management of solar power plants.Technical and financial analysis o
134、f each site to assess performance and identify potential improvements.Periodic site visits on each plant.Ensuring each SPVs suppliers perform in accordance with contracts.Managing unexpected occurrences at plants and ensures prompt response to any asset management requirements of the Company.Managin
135、g each SPVs administrative and financial functions and requirements.Periodic financial,technical and administrative reporting to the Company.Dividend Policy,Scrip Dividends and Dividend Target for Financial Year Ending 31 March 2022The Companys principal purpose is to provide ordinary shareholders w
136、ith attractive risk-adjusted returns,principally in the form of dividends that increase in line with RPI for financial year 2021 and a progressive dividend thereafter.In respect of each financial year,the Company pays quarterly interim dividends of equal amount,with dividends declared in August,Nove
137、mber,February and May and paid in or around September,December,March and June respectively.The Company offers a scrip dividend alternative to ordinary shareholders and currently anticipates that it will continue to do so.Scrip dividends provide ordinary shareholders with the flexibility to receive t
138、heir quarterly dividend in cash or newly issued ordinary shares.Details of the scrip dividend alternative for the year ending 31 March 2022 will be set out in a separate circular that is expected to be sent to ordinary shareholders in or around August 2021.Once published,a copy of the circular will
139、also be available on the Companys website().The target dividend for the financial year ending 31 March 2022 is 7.16 pence per ordinary share,an increase of 1.5%compared to the financial year ended 31 March 2021.We expect to pay four quarterly of dividends of 1.79 pence each.?16 Strategic ReportNEXTE
140、NERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021Year Ended 31 MarchFinancial Key Performance Indicators20172018201920202021Ordinary shares in issue456.4m575.7m581.7m584.2m586.9mOrdinary share price110.5p111.0p117.5p101.5p99.6pMarket capitalisation of ordinary shares504m639m683
141、m593m585mNAV per ordinary share*104.9p105.1p110.9p99.0p98.9pTotal ordinary NAV*479m605m645m579m581mPremium/(discount)to NAV*5.3%5.6%6.0%2.5%0.7%Earnings per ordinary share13.81p5.88p12.37p(5.09p)6.87pDividend per ordinary share6.31p6.42p6.65p6.87p7.05pDividend yield*5.7%5.8%5.7%6.8%7.1%Cash dividend
142、 cover-pre scrip dividends*1.1x1.1x1.3x1.2x1.1xPreference shares in issue100m200m200mFinancial debt outstanding at subsidiaries level270m270m269m214m246mFinancial debt(financial debt/GAV)*36%31%27%22%24%Gearing(financial debt+preference shares/GAV)*36%31%36%42%43%GAV749m875m1,014m991m1,025mWeighted
143、average cost of capital5.9%5.8%5.4%5.5%5.4%Ordinary shareholder total return-cumulative since IPO26.7%33.6%46.7%37.5%42.6%Ordinary shareholder total return-annualised since IPO9.1%8.5%9.5%6.3%6.1%Ordinary shareholder total return21.1%6.2%11.8%-7.8%5.1%Ordinary NAV total return*14.4%6.3%11.8%-4.5%7.0
144、%Ordinary NAV total return-annualised since IPO*4.9%7.0%8.1%5.9%6.0%Ongoing charges ratio*1.2%1.1%1.1%1.1%1.1%Weighted average discount rate7.9%7.3%7.0%6.8%6.3%Operational Key Performance IndicatorsInvested capital*522m734m896m950m999mNumber of assets4163879094Total installed capacity454MW569MW691MW
145、755MW814MWAnnual generation394 GWh451 GWh693 GWh712 GWh738 GWh%increase(year-on-year)75%14%54%3%3%Generation since IPO0.6 TWh1.1 TWh1.8 TWh2.5 TWh3.2 TWhIrradiation(delta vs.budget)-0.3%-0.9%9.0%4.0%5.5%Generation(delta vs.budget)3.3%0.9%9.1%4.7%6.2%Asset Management Alpha*3.6%1.8%0.1%0.7%0.7%Weighte
146、d average lease life24.6 years23.3 years25.2 years26.9 years27.5yearsFive Year Record*Alternative performance measures-see pages 108-11117GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDOur Invest
147、ment Strategy and Track RecordInvestment StrategyOur strategy is straightforward:Investment:We seek to own a broad range of large scale solar energy infrastructure assets,primarily located in the UK but with up to 30%of GAV in other OECD countries,that generate reliable cash flows over their useful
148、lives(typically,at least 25-40 years from energisation).Asset management:We seek to enhance the returns from our assets through effective asset management,including controlling costs,delivering operational efficiencies,extending their useful lives and executing short and medium-term electricity sale
149、s hedges to mitigate power price risk.Financing:We seek to optimise the risk-adjusted returns to our ordinary shareholders by funding our activities through an appropriate mix of shareholder equity and debt,subject to debt being capped at 50%of GAV.Risk management:We seek to actively manage potentia
150、l risks,including maintaining a diversified exposure by location,third-party suppliers,service providers and other commercial counterparties to improve the resilience of the Companys portfolio and contributing to its long-term sustainable success.Investment PolicyThe Company seeks to achieve its inv
151、estment objective by investing predominantly in solar PV assets.The Company invests in solar PV assets primarily in the UK.Not more than 30%of the Companys GAV(calculated at the time of investment)may be invested in solar PV assets that are located outside the UK.Investments in solar PV assets outsi
152、de the UK will be made in OECD countries that the Investment Manager and Investment Adviser believe have a stable solar energy regulatory environment and provide investment opportunities with similar,or better,investment characteristics and returns relative to investments in the UK,although the Comp
153、any may acquire an interest in solar PV assets located in non-OECD countries where those assets form part of a portfolio of solar PV assets in which the Company acquires an interest and where the Companys aggregate investment in any such assets is,at the time any such investment is made,not greater
154、than 3%of the GAV.The Company intends to continue to acquire solar PV assets that are primarily ground-based and utility-scale and which are on sites that may be agricultural,industrial or commercial.The Company may also acquire portfolios of residential or commercial building-integrated installatio
155、ns.The Company targets solar PV assets that are anticipated to generate stable cash flows over their asset lifespan.The Company typically seeks to acquire sole ownership of individual solar PV assets through SPVs,but may invest in solar PV assets through entering into joint ventures,acquiring minori
156、ty interests or via private equity structures,provided that not more than 15%of the GAV may be invested in private equity structures(calculated at the time of investment).Where a controlling interest of less than 100%in a particular solar PV asset is acquired,the Company intends to secure controllin
157、g shareholder rights through shareholders agreements or other legal arrangements.Where a non-controlling interest is being acquired(either directly in a solar PV asset or through a private equity structure)the Company intends to secure minority protection rights or protections through limited partne
158、rship agreements in line with typical private equity structures.Investments by the Company in solar PV assets may be either by way of equity or a mix of equity and shareholder loans.The Company has built up a diversified portfolio of solar PV assets and its Investment Policy contains restrictions to
159、 ensure risk diversification.No single investment(or,if an additional stake in an existing investment is acquired,the combined value of both the existing and the additional stake)by the Company in any one solar PV asset will constitute(at the time of investment)more than 30%of the GAV.In addition,th
160、e four largest solar PV assets will not constitute(at the time of investment)more than 75%of the GAV.The Company will continue,primarily,to acquire operating solar PV assets,but may also invest in solar PV assets that are under development(that is,at the stage of origination,project planning or cons
161、truction)when acquired.Such assets will constitute(at the time of investment)not more than 10%of the Gross Asset Value in aggregate.The Company may also agree to forward-fund by way of secured loans the construction costs of solar PV assets where it retains the right(but not the obligation)to acquir
162、e the relevant asset once operational.Such forward-funding will not fall within the 10%development restriction above but will be restricted to no more than 25%of the GAV(at the time such arrangement is entered into)in aggregate and will only be undertaken where supported by appropriate security(whic
163、h may include financial instruments as well as asset-backed guarantees).The right to forward fund,subject to the above limitations,enables the Company to retain flexibility in the event of changes in the development pipeline over time.In addition,the Company will not employ forward funding and engag
164、e in development activity in relation to the same project or asset.A significant proportion of the Groups income is expected to result from the sale of the entirety of the electricity generated by the solar PV assets within the terms of power purchase agreements(“PPAs”)to be executed from time to ti
165、me.These are expected to include the monetisation of ROCs and other regulated benefits and the sale of electricity generated by the assets to energy consumers and energy suppliers(Brown Power).Within this context,the Company expects to execute PPAs with creditworthy counterparties at the appropriate
166、 time.The Company will continue to diversify its third-party suppliers,service providers and other commercial counterparties,such as developers,engineering and procurement contractors,technical component manufacturers,PPA providers and landlords.In pursuit of the Companys investment objective,the Co
167、mpany may employ leverage,which borrowing together with the aggregate subscription monies paid in respect of all Preference Shares in issue and including any unpaid or undeclared dividends thereon will not exceed(at the time the relevant arrangement is entered into)50%of the GAV in aggregate.Such le
168、verage will be deployed for the acquisition of further solar PV assets in accordance with the Companys Investment Policy.The Company may seek to raise leverage at any of the SPV,UK Holdco or Company level.The Company invests with a view to holding its solar PV assets until the end of their useful li
169、ves.However,assets may be disposed of or otherwise realised where the Investment Manager determines,in its 18 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021discretion,that such realisation is in the best interests of the Company.Such circumstances may in
170、clude(without limitation)disposals for the purposes of realising or preserving value,or of realising cash resources for reinvestment or otherwise.The Company will seek to optimise and extend the lifespan of its assets and may invest in their repowering and/or integration of ancillary technologies(e.
171、g.energy storage)on its solar PV assets to fully utilise grid connections and balance the electricity grid with a view to generating greater revenues.The Company may also invest in standalone energy storage systems(not ancillary to or co-located with solar PV assets owned by the Company)up to an agg
172、regate limit of 10%of the GAV(calculated at the time of investment).The Company expects to re-invest any cash surplus(in excess of that required to meet the Companys dividend target and ongoing operating expenses)in further investments,thereby supporting its long-term net asset value.The Company may
173、 invest cash held for working capital purposes and pending investment or distribution in cash or near-cash equivalents,including money market funds.The Company may(but is not obliged to)enter into hedging arrangements in relation to interest rates and/or power prices.Where investments are made in cu
174、rrencies other than sterling,currency hedging may be carried out to seek to provide protection to the level of sterling dividends and other distributions that the Company aims to pay on its shares and in order to reduce the risk of currency fluctuations and the volatility of returns that may result
175、from such currency exposure.This may involve the use of forward foreign exchange contracts to hedge the income from assets that are exposed to exchange rate risk against sterling and foreign currency borrowings to finance foreign currency assets.Hedging transactions(if carried out)will only be under
176、taken for the purpose of efficient portfolio management to protect or enhance returns from the Companys portfolio and will not be carried out for speculative purposes.As required by the Listing Rules,any material change to the Investment Policy of the Company will be made only with the approval of t
177、he FCA and of the Companys Ordinary Shareholders by ordinary resolution.In the event of any breach of the Companys Investment Policy,Shareholders will be informed of the actions to be taken by an announcement issued through a Regulatory Information Service or a notice sent to Shareholders at their r
178、egistered addresses in accordance with the Articles.Future Investments As per its Investment Policy,the Company has an investment limit of 30%of the Companys GAV in solar assets outside the UK.The Company already has investments in Italy and is advancing attractive risk-adjusted investment opportuni
179、ties in other OECD jurisdictions which would enhance geographic diversification and provide attractive risk-adjusted financial returns.The Company is also permitted to invest up to 15%of its GAV into private equity structures.The Investment Adviser is considering opportunities to deploy capital in s
180、uch structures.The Company may also acquire an interest in solar assets located in non-OECD countries where those assets are part of a portfolio of solar assets in which the Company acquires an interest and subject to the Companys aggregate investment in any such assets being not greater than 3%of t
181、he Companys GAV.The Company is also permitted to invest up to 10%of its GAV in standalone energy storage,and we have commenced a detailed review of numerous opportunities in this technology that will complement its solar farm portfolio in the UK.DisposalsDuring the year,the Company disposed of sever
182、al non-operational development projects(Strensham,Llanwern,and 16 development projects)to an affiliate of NEC.This resulted in NESF recovering all development costs incurred and producing a return on capital invested significantly in excess of NESFs annualised target return for our UK assets.The Boa
183、rd of Directors reviewed each proposal alongside external advice and concluded that each transaction was in the best interests of NESF shareholders,whilst also being in line with the Companys Investment policy.Our RNS disclosures demonstrate that we have followed the appropriate process for these di
184、sposals.The disposals were undertaken as the investment manager continued to actively manage the NESF portfolio and looked to divest residual development risk that did not fit the required return profile.Full details can be found in the relevant RNS announcements.Our Investment Strategy and Track Re
185、cord continuedFY2014/15217MW414MW454MW569MW691MW755MWFY2015/16FY2016/17FY2017/18FY2018/19FY2019/20814MWFY2020/21MEGAWATT CAPACITY Installed Capacity since IPO19GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR
186、FUND LIMITEDOur Investment Strategy and Track Record continued2004006008001,0001,200m0Sep-19Mar-21Mar-20Sep-20Mar-19Sep-18Sep-17Sep-16Sep-15Mar-18Mar-17Mar-16Mar-15Apr-14Sep-14Capital DeployedDebt RaisedPreference SharesOrdinary Equity RaisedCapital Deployment Timeline since IPO Total Cumulative Gen
187、eration since IPOTWh0.00.51.01.52.02.53.03.50.020.250.641.091.792.503.242014/152015/162016/172017/182018/192019/202020/21Annual Generation since IPO232253944516937127382014/152015/162016/172017/182018/192019/202020/21MWh010020030040050060070080020 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual
188、 report for the year ended 31 March 2021Performance since IPO16080100120%140160180Oct2014Apr2014Mar2015Sep2015Feb2016Aug2016Jan2017Jul2017Dec2017Jun2018Nov2018May2019Oct2019Mar2021Apr2020Sep2020Ordinary Share NAV Total Return Ordinary Shareholder Total Return FTSE All-Share Index Total Return 1 Year
189、3 Years5 YearsSince IPOOrdinary Share NAV Total Return Ordinary Shareholder Total Return FTSE All-Share Index Total Return 0.0%20.0%40.0%60.0%1 Year3 Years5 YearsSince IPOOrdinary Share NAV Total Return Ordinary Shareholder Total Return FTSE All-Share Index Total Return 0.0%10.0%20.0%30.0%Source:Mor
190、ningstar1 To ensure like-for-like comparisons,all the total returns in the charts assume dividends have been reinvested.Cumulative Performance(%)Compound Annual Return(%)NESF Total Return vs FTSE All-Share Index Total Return Our Investment Strategy and Track Record continued21Salcey Farm(battery sto
191、rage)5.5MW installedEnergised in May 20181.4 ROC subsidy1,400 homes powered annuallyBuckinghamshireAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITED22 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021Investment Advisers ReportIntr
192、oductionAs at 31 March 2021,the NAV per ordinary share was 98.9p(2020:99.0p).The change in NAV over 12 months reflects a decrease in long-term power price forecasts(-3.0p per ordinary share),a downward revision in short-term inflation forecasts(-1.1p per ordinary share)and increased UK corporate tax
193、 rates rising to 25%from 2023,expected to remain in place for the remainder of the life of the portfolio(-1.8p per ordinary share).These movements were mainly offset by the Companys operating outperformance(+1.4p per ordinary share)and a reduction in the unlevered discount rate(+3.4p per ordinary sh
194、are).At the year end,the UK blended average power curve corresponded to an average solar capture price of approximately 45.6/MWh(2020:43.3/MWh)for the period 2021-2025 and 46.4/MWh(2020:48.6/MWh)for the period 2026-2041(at 2021 prices).In March 2020,as the pandemic took hold,the NEC Group implemente
195、d its business continuity plans for its global staff to work from home.This had minimal disruption on the operations of the NEC Group.As our employees gradually return to the office,we continue to follow multiple government guidelines and monitor closely the impact of Covid-19 on our workforce,and t
196、he countries in which we operate and are pursuing new investment opportunities.Portfolio HighlightsNEC Group continued to explore new attractive opportunities for NESF whilst actively managing NESFs existing portfolio of operating and development assets.On 14 May 2020,two subsidy-free projects under
197、 development,Strensham(40MW)and Llanwern(75MW),were disposed of for a combined consideration of 11.5m.This resulted in NESF recovering all development costs incurred and producing a return on capital invested significantly in excess of NESFs annualised target return for our UK assets.Construction ha
198、d not started on either of these projects,and they were sold when they did not meet NESFs annualised target return,partly due to the decline in power price forecasts.The transaction constituted a smaller related party transaction as set out in the FCAs Listing Rules.On 29 June 2020,a short-term revo
199、lving credit facility(“RCF”)of 70m was extended from July 2020 to July 2022.This extension provides the Company with a short-term source of capital,at an attractive cost.The Company expects to use the RCF to finance the completion of its subsidy-free pipeline,and other investment opportunities that
200、fall within the Companys Investment Policy.Pre-construction works for our third subsidy-free asset,High Garrett,began in early 2020 and full construction commenced during the summer.High Garrett,a 8.5MW extension to the 5MW ROC asset known as Kentishes acquired in 2016,was energised in October 2020.
201、The Company has agreed to finance,design,develop,build,operate and own approximately 30MW of solar assets on Anglian Water sites.During the year,construction work progressed,and the first two projects Sutterton(0.4MW)and Marham(1MW)were energised in early 2021.The power generated from these assets w
202、ill be sold direct to Anglian Water at a fixed price for a 25-year period through a private wire agreement.On 1 March 2021,two projects totaling 100MW were acquired for a consideration of 64.3m.The Grange(50MW)is fully operational whilst South Lowfield(50MW)will be energised in the summer of 2021.On
203、ce commissioned,these two assets will represent an increase of c.13%in NESFs installed capacity and produce enough clean energy combined to power the equivalent of c.29,000 UK households per year.Both assets benefit from long-term 15-year PPA in place with AB InBev for c.75%of the electricity genera
204、tion.Following the investment approval of two subsidy-free projects(Hatherden(50MW)and Whitecross(36MW)the Company successfully reached its target subsidy-free development portfolio capacity of c.150MW.Both assets are being prepared for construction and are expected to be energised in late 2022.The
205、early entry into the UK subsidy-free market reflects the Companys leadership in the space and expertise in developing attractive value-accretive opportunities.As a result of our specialist energy sales desk,NESFs subsidy-free portfolio will benefit from active hedging and greater trading flexibility
206、,thereby maximising risk-adjusted returns for shareholders by locking in future cash flows.Financial year ended 31 MarchNo.of assets monitoredIrradiation (delta vs.budget)Generation (delta vs.budget)Asset Management Alpha20156-0.4%+4.8%+5.2%201623+0.4%+4.1%+3.7%201731-0.3%+3.3%+3.6%201855-0.9%+0.9%+
207、1.8%201984+9.0%+9.1%+0.1%202085+4.0%+4.7%+0.7%202188+5.5%+6.2%+0.7%Cumulative from IPO 88+2.9%+5.2%+2.3%Investment Committee of the Investment AdviserMichael Bonte-FriedheimAldo BeolchiniGiulia GuidiRoss Grier23GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report
208、 for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDHaving achieved its target subsidy-free capacity of c.150MW,the Company has begun to eliminate any residual development risk.In March 2021,the Company divested 16 development projects(not in construction or in operation)from its subsidy-
209、free pipeline.The projects were sold to an affiliate of the NextEnergy Group through a related-party transaction as set out in the FCAs Listing Rules.The divestment amounted to a combined consideration of 5.6m and resulted in an attractive return on the capital invested into this development activit
210、y.Portfolio PerformanceDuring the pandemic,workers in the electricity sector are considered“key workers”and this enabled the Asset Manager to ensure that the technical and operational integrity of NESFs solar assets were maintained and,to date,NESF has not experienced any significant technical or op
211、erational impacts on its portfolio resulting from the effects of Covid-19.Year ended 31 March 2021 Irradiation(delta vs.budget)Generation(delta vs.budget)Asset Management AlphaUK portfolio+5.6%+6.3%+0.7%Italy portfolio+4.9%+5.1%+0.2%Total+5.5%+6.2%+0.7%During the year,irradiation across the entire p
212、ortfolio was 5.5%above expectation(2020:4.0%),and generation was 6.2%above budget(2020:4.7%).Asset Management Alpha for the year was 0.7%(2020:0.7%),which would have been 1.3%(2020:1.5%)if distributor network outages,over which we have no control,were excluded.Asset Management AlphaThe Asset Managem
213、ent Alpha is an important metric that allows the Company to identify the“real”outperformance of the portfolio due to effective asset management and excludes the effect of variation in irradiation.The“nominal”outperformance is calculated as the GWh generated by the portfolio versus the GWh expected i
214、n the assumptions used at the time of acquisition.This metric can be used for comparison with other peers in the solar industry to directly show the contribution of the Asset Manager to generation outperformance.The Asset Manager monitors actual performance versus expectations for assets operational
215、 for at least two months post completion.The three rooftop portfolios have been excluded as irradiation is not monitored.Similarly,the generation performance of assets that are yet to pass Preliminary Acceptance Certificate(“PAC”)in accordance with the EPC contract is not reported by the Asset Manag
216、er.Portfolio OptimisationAsset life extensions During the year,we secured options or rights to extend the leases and/or planning on four UK plants.The positive impact on NAV of these lease extensions amounted to 0.6p per ordinary share.As at 31 March 2021,35 UK assets(337MW),comprising c.41%of the C
217、ompanys portfolio,had secured 5,10 or 15 year lease extensions.We continue to work on extending the life of the remaining assets and are targeting a further ten assets for the remainder of the current financial year to 31 March 2022.For illustrative purposes,should the ten targeted assets be valued
218、on a 40-year lease basis from the date of connection to the grid(assuming current lease terms),the Companys NAV per ordinary share at 31 March 2021 would increase by approximately 1.6p.Asset optimisationDuring the year,three sites entered into new Operating and Maintenance O&M contracts,of which NEC
219、 actively negotiated a reduction in price of 5.5k/MW with various counterparties.This resulted in an aggregate annualised cost savings of c.20k,equivalent to a 20%reduction in contract price.Short/medium-term power purchase agreementsNECs specialist energy trading desk,along with external energy bro
220、kers,ensures that the Companys electricity sales strategy maximises revenues whilst mitigating the negative impact of short-term fluctuations in the power markets.Secured pricing comprises of fixed price contracts,hedging under the trading contracts and nine FiT sites opted into the export tariff.Du
221、ring the year,power price contract fixes provided 7.0m in additional revenue compared to baseload prices.UK hedging summary FY2021/2022FY2022/2023Budgeted generation hedged(%)187%63%1 Covers 95%of total portfolio(775MW)as at 16 June 2021For the financial year ended 31 March 2021,the Italian portfoli
222、o derived c.85%of revenues from subsidised revenues(principally FiTs)and c.15%of revenues resulted from the sale of electricity generated under short-term contracts.The Company has secured fixed price agreements covering 100%of its Italian electricity generation for calendar year 2021 at a weighted
223、average fixed price of c.45/MWh(2020:100%at 57/MWh).OFGEM auditsSince IPO,the majority of OFGEM audits have been successfully signed-off without impacting ROC accreditations.NESF continues to have regular audits and the NEC Group have experienced team who deal with the ongoing audit.Professional adv
224、isers are engaged as and when appropriate.During the year,no adjustments to the NAV were made as a result of any completed or ongoing OFGEM audits.Subsidy-free PortfolioStarting in 2018,the Company sourced a pipeline of projects to be developed into operating subsidy-free assets and set a target of
225、c.150MW to add into its portfolio.As at 31 March 2021,the Company had 64MW of operating subsidy-free assets.Following the recent investment approval of Hatherden(50MW)and Whitecross(36MW),the Company will have reached its target when the assets are energised in the financial year 2022/23.Investment
226、Advisers Report continued24 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021Investment Advisers Report continuedThe Companys subsidy-free pipeline was intentionally greater than its subsidy-free target of c.150MW.This was to ensure a broad set of investmen
227、t opportunities for NESF from which it has selected the most attractive projects for inclusion in its portfolio.The Anglian Water projects(Sutterton and Marham)and the Camden projects(The Grange and South Lowfield)are subsidy-free.However,the energy generated will be sold directly to offtakers at a
228、fixed price linked to inflation for 25 and 15 years respectively.These assets therefore have similar characteristics to subsidised assets and for that reason are not included in the 150MW subsidy-free target.The NEC Groups Head of Energy Sales is responsible for managing the strategy for the sale of
229、 electricity from the subsidy-free operating assets.Details on the power price risk management strategy can be found at the bottom of this page and in note 22b to the Financial Statements on page 101.The Italian Solis PortfolioIn December 2017 the Company acquired the portfolio of eight operating so
230、lar plants with an installed capacity of 34.5MW located in Italy for a total value of 131.9m(equivalent to 116.2m).The portfolio represented 11%of the Companys GAV as at 31 March 2021.The key benefits of the Solis portfolio continue to be:High risk-adjusted return:As at the 31 March 2021 valuation,t
231、he net IRR of the Solis portfolio was c.8.0%.Low risk-profile:The Company benefits from the portfolios operating history and the high quality of its components.In addition,it reduces NESFs exposure to merchant energy markets,as c.85%of its revenues are fixed for 15 years following the acquisition.Po
232、sitive contribution to dividend cover:The higher return on investment is coupled with an attractive cashflow generation profile,which is higher than ROC assets,and evenly spread over the life of the investment,as the Italian FiT is fully fixed.For the purposes of comparison,the Solis portfolio has a
233、 cash dividend cover equivalent metric of 1.4x.NAV accretion:As at 31 March 2021,the Solis portfolio was valued on a DCF basis with a discount rate of 7.25%(2020:7.75%)as a result of the increasing competition to acquire solar PV assets in Italy.Diversifying market risk:Italy is supported by a FiT i
234、ncentive mechanism.The FiT is granted by a state-owned company which promotes and supports renewable energy in Italy,where the sole shareholder is the Ministry of Economy and Finance.Tariffs differ depending on the capacity,type of plant and the time of commissioning which range between 195/MWh to 3
235、18/MWh.Once a PV plant is accredited,the FiT is granted over a period of 20 years and is not inflated.Low revenue risk:Of the Solis portfolio revenues,c.85%result from FiTs.The FiTs specific to this portfolio expire in 2032.The remaining 15%is from the sale of the brown electricity fed into the grid
236、 at market price or via PPAs to other market participants.With this revenue mix there is low revenue risk.In addition,low operating costs result in stable EBITDA margins in excess of 80%.Changes to Investment PolicyAs explained in the Chairmans Statement on page 9,the following changes to the Compan
237、ys Investment Policy were approved by shareholders at the Companys AGM on 11 September 2020:up to 30%of GAV may be invested in solar assets that are located outside the UK(the limit was previously 15%);the Company may now acquire an interest in solar assets located in non-OECD countries where those
238、assets form part of a portfolio of solar assets in which the Company acquires an interest and subject to the Companys aggregate investment in any such assets being not greater than 3%of GAV;up to 15%of GAV may now be invested in solar assets through private equity structures;and the Company may now
239、also invest in standalone energy storage systems(not ancillary to or co-located with solar assets owned by the Company)up to an aggregate limit of 10%of GAV.We have identified and are advancing value creating opportunities in line with the refocused Investment Policy to maximise shareholder returns
240、and increase geographical diversification.PPA sourcing and structuringEnergy and market risk managementRun competitive off-taker selection processes through our extensive network in the solar industryQuantitative evaluation of the offers in term of risk and reward and devise optimal project-specific
241、 solutionsIndividual view of market price risks and opportunities and delivery obligations in order to find the optimal PPA structureWe measure,monitor and manage merchant exposure through selling at spot,entering into short-term,medium-term and long-term PPAsConstant dialogue with investors,banks a
242、nd off-takers on developing new and innovative structures for risk diversification to enable us to increase portfolio returnsMarket and pricing analysisNEC provides pricing for NESF projects,supported by multiple independent short and long-term third-party power price forecastsUndertake rigorous ana
243、lysis and monitoring of the main drivers for power prices in target marketsMonitor policy/regulatory developments in the UK and other OECD target markets to obtain an holistic energy market overviewManaging NESFs merchant market exposure25GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWS
244、TRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDPortfolio ValuationIntroductionThe Investment Adviser carries out the fair market valuation of the Companys underlying investment portfolio in line with its accounting policies.This valuation is then presented
245、 to the Board of the Investment Manager,before being presented to the Companys Board for review and final approval.The valuation is carried out quarterly(ad hoc valuations may also be undertaken from time to time,for example in conjunction with an equity fund raising).The valuation principles used a
246、re based on a discounted cash flow methodology.Assets not yet operational or where the completion of the acquisition is not imminent at the time of valuation use the acquisition cost as a proxy for fair value.The Board reviews the operating and financial assumptions used in the valuation of the Comp
247、anys underlying portfolio.Portfolio valuation key assumptionsAs at 31 March 2021As at 31 March 2020UK long-term inflation3.0%3.0%UK short-term inflation(1 year horizon)3.0%2.2%Weighted average discount rate6.3%6.8%Weighted average asset life27.5 years26.9 yearsUK short-term power price average(2021-
248、2025)45.6/MWh(real 2021)43.3/MWh(real 2021)UK long-term power price average(2026-2041)46.4/MWh(real 2021)48.6/MWh(real 2021)Italy power price average(20 years)46.8/MWh(real 2021)46.9/MWh(real 2021)UK corporation tax rate19%until 2023,25%thereafter19%Forecasted power price methodologyFor the UK portf
249、olio,we use multiple sources for UK power price forecasts.At the short end,where PPAs exist we use the PPA prices that have been achieved,for periods where there are no PPAs in place,we use the short-term market forward prices.After this we use a simple average of three leading independent energy ma
250、rket consultants long-term projections.This approach allows mitigation of any delay in response from the Consultants in publishing periodic(quarterly)or ad hoc updates following any significant market development.For the Italian portfolio,a leading independent energy market consultants long-term pro
251、jections are used to derive the power curve adopted in the valuation.The power price forecasts used also include a“solar capture”discount which reflects the difference between the prices available in the market in the daylight hours of operation of a solar plant versus the baseload prices included i
252、n the power price estimates.This solar capture discount is provided by the Consultants on the basis of a typical load profile of a solar plant and is reviewed as frequently as the baseload power price forecasts.The application of such a discount results in a lower long-term price being assumed for t
253、he energy generated by NESFs portfolio.Investment Advisers Report continuedPortfolio valuation bridge for the year ended 31 March 2021 0100200300400500600700800900Valuation(m)OpeningValuation(Mar 2020)NetAssetsat CostDistributionof saleproceedsRCFdrawdownOperatingResult1Distributionto the FundChange
254、 in InflationChange in Power PriceForecastChange inTax rateChange inDiscount rateMovement inResidualValueand Balanceof DCF ValuationClosingvaluation(Mar 2021)753.6+62.5(7.5)(35.2)+68.2(60.0)(17.3)(6.4)(10.3)+20.0+2.0769.61 Operating result includes excess cash generated for the period of 9.5m.26 Str
255、ategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 202130354045505560NAV Mar 21 Italian portfolio power curve/MWh20212023202520272029203120332039203520372041NAV Mar 20 Italian portfolio power curve(real 2021)Investment Advisers Report continued0%20%40%60%80%100%Apr-
256、21May-21Jun-21Jul-21Aug-21Sep-21Oct-21Nov-21Feb-22Dec-21Jan-22Mar-22Merchant Revenues Fixed Revenues from SubsidiesFixed Revenues from PPAsHistoric-UK power pricesUK electricity day ahead prices increased from c.24.2/MWh in April 2020 to c.57.0/MWh in March 2021(see graph below)./MWhUK day ahead auc
257、tion price(monthly)Apr-20May-20Jun-20Aug-20Sep-20Oct-20Nov-20Feb-21Dec-20Jan-21Mar-21UK gross weighted average PPA price(monthly)20304050607080Jul-20Forecast UK power prices(real 2021)The Companys current UK long-term(2026-2041)average power price forecast represents a decrease of 4.5%compared to th
258、ose used at the end of the previous financial year(real 2021).Overall,the 20-year UK average power price forecast is 49%below the assumptions employed at IPO.3540455055NAV Mar 21 Weighted Average Blended Power Curve/MWh20212023202520272029203120332039203520372041NAV Mar 20 Weighted Average Blended P
259、ower Curve(real 2021)Historic-Italian power pricesThe Italian price of electricity increased from approximately 24.8/MWh in April 2020 to c.60.4/MWh in March 2021(see graph below).Forecast Italian power price(real 2021)The Companys current Italian 20-year average power price forecast represents a de
260、crease of 0.2%compared to those used at the end of the previous financial year(real 2021).%of NESF revenue fixed until 31 March 2022NESF 15-year forecast revenue breakdown/MWhItaly day ahead auction price(monthly)Apr-20May-20Jun-20Aug-20Sep-20Oct-20Nov-20Feb-21Dec-20Jan-21Mar-21Italy gross weighted
261、average PPA price(monthly)20304050607080Jul-20020,00040,00060,00080,000100,000120,000Revenues(000)202120242027203020332036Merchant Revenues Fixed Revenues from SubsidiesFixed Revenues from PPAsSource:N2EX-UK baseload day ahead.Source:Gestore Marcati Energetici purchasing price.27GOVERNANCEFINANCIAL
262、STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDInvestment Advisers Report continuedDiscount rateDuring the year,the Company has reduced the discount rate for unlevered operating UK solar assets to 5.75%(2020:6.25%).
263、In the context of high liquidity provided by international investors,a maturing renewable energy market,a scarcity of subsidised assets and the lack of any incentive framework for new installations,the demand for operating solar assets remained strong resulting in sustained pressure on prices in the
264、 last twelve months.These changing dynamics were evidenced by the experience of the Investment Adviser when bidding for solar assets in the UK.Discount rate assumptions PremiumAs at 31 March 2021As at 31 March 2020UK unlevered5.75%6.25%UK levered0.7-1.0%6.45-6.75%6.95-7.25%Italy unlevered11.5%7.25%7
265、.75%Subsidy-free(uncontracted)21.0%6.75%7.25%Life extensions31.0%6.75-7.75%7.25-8.25%1 Unlevered discount rate for Italian operating assets implying 1.50%country risk premium.2 Unlevered discount rate for subsidy-free uncontracted operating assets implying 1.0%risk premium.3 1.0%risk premium for cas
266、h flows after 30 years where leases have been extended.The resulting weighted average discount rate for the Companys portfolio was 6.3%(2020:6.8%).The Company does not use the weighted average cost of capital(“WACC”)as the discount rate for its investments as it believes that the reduction in WACC d
267、eriving from the introduction of long-term debt financing does not reflect the greater level of risk to equity investors associated with leverage assets or levered portfolios.However,for the purposes of transparency,the Companys pre-tax WACC as at 31 March 2021 was 5.4%(2020:5.5%).Asset lifeThe disc
268、ounted cash flow methodology implemented in the portfolio valuation assumes a valuation time-horizon capped to the current terms of the lease and planning permission on the properties where each individual solar asset is located.These leases have been typically entered into for a 25-year period from
269、 commissioning of the relevant solar plants(specific terms may vary).However,the useful operating life of the Companys portfolio of solar assets is expected to be longer than 25 years.This is due to many factors,including:solar assets with technology components similar to the ones deployed in the Co
270、mpanys portfolio have been demonstrated to be capable of operating for over 45 years,with levels of the technical degradation lower than those assumed or guaranteed by the manufacturers;local planning authorities have already granted initial planning consents that do not expire and/or have granted p
271、ermissions to extend initial consented periods;the Company owns rights to supply electricity into the grid through connection agreements that do not expire,and discounted cash flow valuation assumes a zero-terminal value at the end of the lease term for each asset or the end of the planning permissi
272、on,whichever is the earlier.Operating performanceThe Company values each solar asset on the basis of the minimum performance ratio(“PR”)guaranteed by the vendor,or that estimated by the appointed technical adviser during the acquisition due diligence.These estimates have been generally lower than th
273、e actual PR that the Company has been experiencing during subsequent operations.We therefore deem it appropriate to adopt the actual PR after two years of operating history when,typically,the plants have satisfied tests and received Final Acceptance Certification(“FAC”).During the year,FACs were clo
274、sed across 41.1MW,with 617k retentions secured.These funds have been held back at the SPV to remedy any issues which remain outstanding.As at 31 March 2021,69 UK solar assets and all eight Italian solar assets(totalling 557MW)achieved FAC and their actual PR was used in the discounted cash flow valu
275、ation.FAC timeline for remaining assetsCapacity(MW)Financial quarter ending June 202183Financial quarter ending September 202112Financial quarter ending December 202192022 onwards111Total21528 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021Investment Advi
276、sers Report continuedNAVThe Companys NAV is calculated quarterly and based on the valuation of the investment portfolio provided by the Investment Adviser and the other assets and liabilities of the Company calculated by the Administrator.The NAV is reviewed and approved by the Investment Manager an
277、d the Board.All variables relating to the performance of the underlying assets are reviewed and incorporated in the process of identifying relevant drivers of the discounted cash flow valuation.In accordance with IFRS 10,the Company reports its financial results as an Investment entity and on a non-
278、consolidated basis(see note 2d to the Financial Statements on page 87).The change in fair value of its assets during the year is taken through the Statement of Comprehensive Income.0100200300400500600700NAV(m)OpeningNESF NAV(Mar 2020)Pref.shares dividendOrdinary sharescash dividendIncome frominvestm
279、entsChange in fair valueof investmentsNet operatingcostsClosingNESF NAV(Mar 2021)Ordinary NAV per share(p)99.0p98.9p578.6(9.5)(38.1)+60.0(3.4)(6.8)580.81%3%5%7%9%(9%)(7%)(5%)(3%)(1%)(3.4%)(3.5p)3.8p6.8p5.3p2.0p7.0p(6.9%)(7.2p)(6.6%)(6.9p)(2.0%)(2.0p)(4.7%)(4.9p)Discount rate(+/-0.5%)Power price(-/+1
280、0%)Energy generation(-/+5%)RPI inflation(-/+0.5%)Operating costs(+/-10%)NAV per Share3.7%6.7%6.5%5.0%1.9%NAV sensitivity analysis as at 31 March 2021NAV bridge for the year ended 31 March 2021The movement in the NAV was driven by the following factors:a decrease in long-term(2026-2041)UK power price
281、s forecasts provided by three Consultants(2020:two Consultants),being 4.5%lower than prior year.The Company used the forecasts released by the Consultants up to the date of preparation of this Annual Report;the uplift resulting from a decrease in the unlevered discount rate from 6.25%to 5.75%during
282、the year;the increase in UK corporate tax rates from 2023 onwards;the downward revision in short-term inflation forecasts;the minor uplift arising from lease extensions;the operating results achieved by the Companys solar assets;and the dividends and operating costs paid during the year.The chart be
283、low shows the impact of the key sensitivities on the NAV per ordinary share.Additional sensitivity analyses can be found in note 19b to the Financial Statements on pages 97 to 100.The UK Government is consulting on an alignment of the RPI to the lower consumer price index(“CPI”).Any change agreed af
284、ter the consultation would not take effect until between 2025-30.The NAV does not take into account this potential change as it is not certain.However,for illustrative purposes,a CPI transition sensitivity for the year would equate to-6.2%reduction in ordinary NAV per share which is the equivalent o
285、f-6.4p per ordinary share.29GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITEDInvestment Advisers Report continuedCash flow generationThe Company generates revenues through the sale of electricity t
286、o the markets and the subsidies provided under different subsidy regimes(ROC,NIROC and FiT).Both revenue streams are underpinned by two main factors:the actual energy output(measured as amount of KWh of energy generated),which is mainly driven by the solar irradiation,technical performance and avail
287、ability of the plant;and the actual price at which the energy generated is sold to the markets,as well as the subsidies received for the same generation.The performance of a plant in terms of revenues is therefore a product of both the operational performance and the commercial terms of the PPAs in
288、place.Before taking into account tax payments and financing considerations,the cash flow generation of solar assets is also influenced by operating expenses,which are usually governed by long-term contracts and characterised by low volatility over the long-term.Operating resultsProfit before tax was
289、 40.2m(2020:-29.7m)with earnings per ordinary share of 6.87p(2020:-5.09p).Operating expenses and ongoing chargesThe operating expenses,excluding preference share dividends paid by the Company,for the year amounted to 6.8m(2020:7.2m).The Companys ongoing charges ratio(“OCR”)was 1.1%(2020:1.1%).The bu
290、dgeted OCR for the financial year ending 31 March 2022 is 1.1%.The OCR,which has been calculated in accordance with the Association of Investment Companies recommended methodology,is an Alternative Performance Measure(see page 111).For the year ended 31 March 2021,the fourth quarterly dividend of 1.
291、7625p per ordinary share is expected to be paid on 30 June 2021 to ordinary shareholders on the register at the close of business on 21 May 2021.The Company offers scrip dividends,details of which can be found on the Companys website().Year ended 31 March 2021Actual per MW1Budget per MW1Delta vs.Bud
292、getCommentsSolar IrradiationA(kWh/m2)1,2691,203+5.5%Actual irradiation for the yearConversion Factor2B(%)80.3%79.8%+0.7%Positive delta represents Asset Management Alpha for the yearMetered GenerationC=A x B(kWh)1,020960+6.2%Actual generation measured at the meter for the year Power priceSubsidiesPow
293、er priceSubsidiesRealised PricesD(/MWh)47.290.648.488.9+2.0%Implied average power price and subsidies across entire Revenues(Subsidies,PPAs,Etc.)E=C x D(000)48.192.446.585.3+8.3%portfolio(including ROC recycle and embedded benefitsTotal RevenuesE(000)140.5131.8+6.6%Actual revenues at portfolio level
294、 for the year(unaudited figures per MW)Operating ExpensesF(000)(28.9)(30.8)4(6.2%)Actual costs at portfolio level for the year(unaudited figures per MW)EBITDA3G=E F(000)111.6101.0+10.5%Actual EBITDA for the year(unaudited figures per MW)EBITDA Margin379.5%76.7%1 Based on the average installed capaci
295、ty(721MW)over the financial year.Given the different composition of the growing portfolio,this information is not directly comparable with what was provided in the previous Annual Report.2 Ratio captures the solar plant performance ratio as well as the availability(which reflects all system shut dow
296、ns for maintenance or one-off events such as DNO outages).3 EBITDA is a reference to EBITDA at the SPV levels.4 Budgeted operating expenses are based on the acquisition case of the assets.?30 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021Cash flow analys
297、isAs at 31 March 2021,the Company held cash of 10.8m at high credit rated financial institutions.Cash received from assets in the year covered the operating expenses,the preference shares dividend,the dividends declared to ordinary shareholders in respect of the year ended 31 March 2021 and part of
298、the Investment into HoldCos.Cash flows of the CompanyYear end 31 March 2021 000Year end 31 March 2020 000Company cash balance at 1 April25,12819,285Investment in HoldCos(35,570)(42,098)Proceeds from preference shares98,650Received from HoldCos77,814Directors fees(253)(224)Investment Manager fees(5,1
299、57)(5,629)Administration fees(3,565)(1,487)Dividends paid in cash to ordinary shareholders(38,062)(36,771)Preference share dividends(9,526)(6,598)Company cash balance at 31 March 10,80925,128NESF Group operating SPVsThe below table represents the unaudited consolidated financial results of the Compa
300、nys SPVs.Year ended March 2021(unaudited)000Year ended March 2020000Total Group revenue101,302108,001EBITDA78,28985,966EBIT26,42221,233Cash income for the year159,49061,1921 Cash distributed to the fund during the year.Cash dividend coverYear ended 31 March 2021000Pre-scrip dividends 000Cash income
301、for year159,490Net operating expenses for year(6,825)Preference shares dividend(9,526)Net cash income available for distribution43,139Ordinary shares dividend paid during year41,011Cash dividend cover21.1x1 Cash income differs from the Income in the Statement of Comprehensive Income as the latter is
302、 prepared on an accruals basis.See page 109 for further information.2 Alternative Performance Measure.0.01.02.03.04.05.06.07.08.05.25(1)6.256.316.426.656.877.16(2)7.052014/152015/162016/172017/182018/192019/202020/21Pence2021/221 The period 2014/2015 was the first financial year following the Compan
303、ys IPO.2 Target dividends for the financial year ending 31 March 2022.Dividend per ordinary share track recordInvestment Advisers Report continued31GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31 March 2021 NEXTENERGY SOLAR FUND LIMITED
304、Investment Advisers Report continuedFinancing Financial debtAt 31 March 2021,the Companys subsidiaries had financial debt outstanding of 246m(2020:214m),on a look-through basis,as shown in the table below.Due to a combination of low debt levels,and RPI linked subsidies,debt covenants at the HoldCos
305、level would only be breached at very low power prices(less than c.20/MWh).Preference sharesAt 31 March 2021,the Company had 200m of preference shares outstanding(2020:200m).The preference shares are non-redeemable(except in limited exceptional circumstances),non-voting and convertible into ordinary
306、shares from 1 April 2036 at their issue price(200m in aggregate)plus any unpaid preference share dividends at the date of conversion.For financial accounting purposes,and in line with IFRS the preference shares are classified as long-term liabilities.The preference shares are equivalent to non-amort
307、ising debt with repayment in shares,and the Company is not required to use cashflow,or raise funds,to repay them at the end of their life.The absence of amortisation enhances the ability to pay the ordinary share dividend,and repayment in shares removes refinancing risk.The investment management fee
308、 is calculated based on the ordinary share NAV and,accordingly,no management fee is payable in respect of the preference shares.The terms of the preference shares can be found in note 9 to the Financial Statements on page 104.Total gearingThe financial debt,together with the preference shares,repres
309、ented a total gearing level of 43%(2020:42%),which is below the maximum limit of 50%in the Companys Investment Policy.Provider/arrangerTypeBorrowerNo.of power plants secured1Loan to Value2(%)TranchesFacility amount(m)Amount out-standing(m)Termi-nation(inc.options to extend)Applicable rateMIDIS/CBA/N
310、ABFully-amortising long-term debt3NESH21(241MW)51.4%Medium-term48.448.4Dec-262.91%4Floating long-term24.224.2Jun-353.68%4Index-linked long-term38.735.15Jun-35RPI+0.36%Fixed long-term38.738.7Jun-353.82%Debt service reserve facility7.5Jun-261.50%MIDISFully-amortising long-term debt3NESH IV5(84MW)47.5%
311、Inflation-linked27.521.55Sep-34RPI+1.44%Fixed long-term27.524.3Sep-344.11%Total long-term debt192.2NIBCRevolving credit facilityNESH II2(28MW)N/a20.0Feb-22LIBOR+2.20%Banco SantanderRevolving credit facilityNESH VI13(100MW)N/a70.054.1 Jul-22LIBOR+1.90%Total short-term debt54.1Total debt246.31 NESF ha
312、s 325MW under long-term debt financing,128MW under short-term debt financing and 359MW without debt financing.2 Loan to Value defined as Debt outstanding/GAV.3 Long-term debt is fully amortised over the period secured assets receive subsidies(ROCs and others).4 Applicable rate represents the swap ra
313、te.5 Represents the“real”outstanding debt balance.The“nominal”outstanding debt balances are included in the debt balances provided in Note 23 b)to the financial statements.Alignment of interestAs at 16 June 2021,NextEnergy Capital Group employees held 394,561 shares in NESF.Events After the Balance
314、Sheet DateOn 13 May 2021,the Directors approved an interim dividend of 1.7625p per ordinary share for the quarter ended 31 March 2021 to be paid on 30 June 2021 to ordinary shareholders on the register as at the close of business on 21 May 2021.NextEnergy Capital Limited16 June 2021 32 Strategic Rep
315、ortNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021 Power plantLocationAnnouncement dateSubsidy/PPA1Installed capacity(MW)Cost(m)Remaining life of plant(Years)1Higher HatherleighSomersetMay-141.66.17.3317.02Shacks BarnNorthamptonshireMay-142.06.38.2316.33Gover FarmCornwal
316、lJun-141.49.411.1318.74BilshamWest SussexJul-141.415.218.9323.25BrickyardWarwickshireJul-141.43.84.1318.66ElloughSuffolkJul-141.614.920.0327.97PoulshotWiltshireSep-141.414.515.7317.98CondoverShropshireOct-141.410.211.7318.69LlywnduCeredigionDec-141.48.09.428.710Cock Hill FarmWiltshireDec-141.420.023
317、.6318.411Boxted AirfieldEssexDec-141.418.820.6319.012LangenhoeEssexMar-151.421.222.9334.013Park ViewDevonMar-151.46.57.7333.814CroydonCambridgeshireMar-151.416.517.8318.715Hawkers FarmSomersetApr-151.411.914.5319.016Glebe FarmBedfordshireApr-151.433.740.5328.717BowerhouseSomersetApr-151.49.311.1334.
318、018WellingboroughNorthamptonshireJun-151.48.510.8318.219Birch FarmEssexOct-15FiTs UK5.05.3319.220Thurlestone LeicesterLeicestershireOct-15FiTs UK1.82.312.121North FarmDorsetOct-151.411.514.5333.722Ellough Phase 2SuffolkNov-151.38.08.0334.623Hall FarmLeicestershireNov-15FiTs UK5.05.0339.424Decoy Farm
319、LincolnshireNov-15FiTs UK5.05.2335.025Green FarmEssexNov-15FiTs UK5.05.820.026FenlandCambridgeshireJan-161.420.423.92,419.327Green EndCambridgeshireJan-161.424.829.02,420.028Tower HillGloucestershireJan-161.48.18.82,419.029BranstonLincolnshireApr-161.418.933.630Great WilbrahamCambridgeshireApr-161.4
320、38.133.931BerwickEast SussexApr-161.48.297.92,520.532Bottom PlainDorsetApr-161.410.134.233EmbertonBuckinghamshireApr-161.49.039.134KentishesEssexNov-161.25.04.540.535Mill FarmHertfordshireJan-171.25.04.235.836BowdenSomersetJan-171.25.05.635.737StalbridgeDorsetJan-171.25.05.435.738Aller CourtSomerset
321、Apr-171.25.05.521.039RampishamDorsetApr-171.25.05.821.540WasingBerkshireApr-171.25.05.325.741FlixboroughSouth HumbersideApr-171.25.05.126.842Hill FarmOxfordshireApr-171.25.05.530.943Forest FarmHampshireApr-17FiTs UK3.03.331.044Birch CICEssexJun-17FiTs UK1.71.719.245BarnbyNottinghamshireJun-171.25.05
322、.421.346BilsthorpeNottinghamshireJun-171.25.05.421.747WickfieldWiltshireJun-171.24.95.622.148Bay FarmSuffolkAug-171.68.110.532.949HoningtonSuffolkAug-171.613.616.032.8Operating Portfolio=33GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOVERVIEWSTRATEGIC REPORTAnnual report for the year ended 31
323、 March 2021 NEXTENERGY SOLAR FUND LIMITED Power plantLocationAnnouncement dateSubsidy/PPA1Installed capacity(MW)Cost(m)Remaining life of plant(Years)50Macchia RotondaApuliaNov-17FiTs Italy6.614.851IacovangeloApuliaNov-17FiTs Italy3.515.152ArmientoApuliaNov-17FiTs Italy1.915.153InicorbafApuliaNov-17F
324、iTs Italy3.0116.22,614.954Gioia del ColleCampaniaNov-17FiTs Italy6.515.655CarinolaApuliaNov-17FiTs Italy3.015.656MarcianiseCampaniaNov-17FiTs Italy5.015.557RiardoCampaniaNov-17FiTs Italy5.015.558Gilleys DamCornwallDec-171.35.06.433.759Pickhill BridgeClwydDec-171.23.63.736.560North NorfolkNorfolkFeb-
325、181.611.014.623.661Axe ViewDevonFeb-181.25.05.626.462Low BenthamLancashireFeb-181.25.05.424.963HenleyShropshireFeb-181.25.05.225.264Pierces FarmBerkshireMay-18FiTs UK1.71.218.165Salcey FarmBuckinghamshireMay-181.45.56.518.166ThornboroughBuckinghamshireJun-181.25.05.720.067Temple NormatonDerbyshireJu
326、n-181.24.95.620.368Fiskerton Phase 1LincolnshireJun-181.313.016.629.069Huddlesford HFStaffordshireJun-181.20.90.919.870Little IrchesterNorthamptonshireJun-181.24.75.920.871BalheartyClackmannanshireJun-18FiTs UK4.82.629.872BrafieldNorthamptonshireJun-181.24.95.835.273Huddlesford PLStaffordshireJun-18
327、1.20.90.920.074SywellNorthamptonshireJun-181.25.05.920.175Coton ParkDerbyshireJun-18FiTs UK2.51.120.176HookSomersetJul-181.615.321.8233.077BlenchesWiltshireJul-181.66.17.8217.778WhitleySomersetJul-181.67.610.4232.779BurrowtonDevonJul-181.65.47.3232.580SaundercroftDevonJul-181.67.29.6232.981Raglingto
328、nHampshireJul-181.65.78.1232.882KnockworthyCornwallJul-18FiTs UK4.66.6217.083Chilton CanetelloSomersetJul-18FiTs UK5.09.0231.384CrosswaysDorsetJul-18FiTs UK5.010.0231.385Wyld MeadowDorsetJul-18FiTs UK4.87.1232.386ErmisRooftop PortfolioAug-18FiTs UK1.03.015.687AngeliaRooftop PortfolioAug-18FiTs UK0.2
329、0.615.588BallygarveyCounty AntrimAug-191.4 NIROCs8.28.526.889Hall Farm 2LeicestershireAug-19Subsidy-free5.42.538.390StaughtonBedfordshireDec-19Subsidy-free50.027.437.991High GarretEssexOct-20Subsidy-free8.54.134.092AWS-MarhamNorfolkMar-21Long-term PPA1.00.724.793AWS-SuttertonLincolnshireMar-21Long-t
330、erm PPA0.40.324.994The GrangeNottinghamshireMar-21Long-term PPA50.032.139.8Total81496927.571 ROCs,unless otherwise stated.An explanation of the ROC subsidy is available at www.ofgem.gov.uk/environmental-programmes/renewables-obligation-ro.2 With project level debt.3 Part of the Apollo portfolio.4 Pa
331、rt of the Thirteen Kings portfolio.5 Part of the Radius portfolio.6 Part of the Solis portfolio7 Weighted average remaining life of the portfolio=Operating Portfolio continued34 Strategic ReportNEXTENERGY SOLAR FUND LIMITED Annual report for the year ended 31 March 2021 Power plantOperational dateAc
332、quisition dateYear ended 31 March 2021Since acquisitionGeneration(GWh)Irradiation delta(%)Generation delta(%)Irradiation delta(%)Generation delta(%)1Higher HatherleighApr-14May-146.15.96.31.05.02Shacks BarnMay-14May-146.14.98.12.98.33Gover FarmJan-15Jun-149.84.99.02.71.04BilshamJan-15Jul-1416.48.56.
333、84.85.35BrickyardJan-15Jul-143.76.510.33.36.06ElloughJul-14Jul-1415.01.95.00.76.27PoulshotApr-15Sep-1414.76.310.80.95.28CondoverMay-15Oct-149.63.62.90.00.69LlywnduJul-15Dec-147.9(1.2)6.0(3.6)2.710Cock Hill FarmJul-15Dec-1420.87.39.52.94.611Boxted AirfieldApr-15Dec-1419.05.97.83.55.712LangenhoeApr-15Mar-1522.27.810.86.19.113Park ViewJul-15Mar-156.83.55.8(2.0)0.714CroydonApr-15Mar-1516.68.712.26.17.
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