NextEnergy Solar Fund is making strategic changes in a bid to close its persistent discount, including cutting its dividend, growing asset sales and upping its focus on energy storage investment. The trust was trading at a 41% discount to net asset value (NAV) as of 31 December 2025.
The most significant change for investors is the planned reduction in the annual dividend, shifting to a payout of 75% of operating free cash. This represents a fall from its current target of 8.43p per share to an estimated range of 4p to 4.6p for the financial year ending March 2027.
According to the trust’s strategic review, reset and roadmap, the new dividend policy is expected to free up £40m of operational free cashflows over the next five years, allowing the company to strengthen its balance sheet through additional debt repayments.
In addition, the company aims to reduce and maintain its total gearing to between 40% to 45% of gross asset value (GAV) – below its investment policy limit of 50%.
To ensure NAV growth, the company said it aims to repower existing solar assets alongside investing in co-located energy storage (situating storage units at the same location as renewable energy projects), which it argued would enable long-term asset health and performance, while also adding revenue diversification. As such, the trust will be upping its allocation to energy storage from 10% to 30% of GAV.
The trust’s capital recycling programme will also be extended, selling up to an additional 120 megawatts (MW) of solar assets offering limited near-term value enhancement potential. This follows the completion of an earlier phase that disposed of 100MW.
Tony Quinlan, chair of NextEnergy Solar Fund, said: “Following a comprehensive strategic review, the board has concluded that recalibrating the company’s strategy is essential to ensure [the trust] adapts to the evolving equity and power markets and is positioned for sustainable growth.
“This reset is designed to maximise long-term shareholder value and seize the significant opportunities emerging in the UK market.”
The trust aims to deliver a balanced total return profile between 9% to 11%.