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NextEnergy cuts NAV on power prices

NextEnergy cuts NAV on power prices – NextEnergy Solar has published its end December NAV and it is 4.6% lower than the value at the end of September.

The NAV has fallen from 111.2p to 106.1p and the biggest contributor to this is lower power price assumptions – accounting for -3.9p. This follows a pattern set by other renewable energy funds. The other factors affecting the NAV were lower inflation -0.8p, lease extensions for some assets +0.5p and the impact of Ofgem’s target charging review -1.4p. There could be another 0.8p to come off the NAV if the budget confirms that corporation taxes are staying at 19% rather than falling to 17% as previously announced.

NextEnergy hasn’t changed the valuation of its solar plants to reflect market values (as Foresight recently did).

[NextEnergy’s share price has already fallen from a peak of 126.5p to 116.5p, Foresight has gone from 127p to 116p, Bluefield from 145.5p to 133p. Greencoat UK Wind has dropped from 152.8p to 145.75p – it has not yet quantified the power price impact on its NAV but it was the major reason behind a small drop in its NAV at the end of 2019. Renewables Infrastructure is hitting new highs however based on a rising NAV – even though it took 6.2p off its NAV to reflect falling power prices, this was offset by other factors. JLEN has fallen from 124p to 117p despite having the lowest exposure to power prices of all these funds – its revenue is dominated by subsidies, thanks to its anaerobic digestion portfolio. 

The question is, will power prices continue to trend downwards. We know that some brokers think so. All these funds are still trading on significant premiums to their NAV.]

NESF : NextEnergy cuts NAV on power prices

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