NextEnergy Solar Fund (NESF) has issued a statement on the UK government’s consultation to accelerate the change in the indexation of UK solar Feed in Tariffs and Renewable Obligation Certificates to a growth rate closer to the Consumer Price Index (CPI) than the current Retail Price Index (RPI). As at 30 June c.50% of the fund’s revenues were on one of these schemes. The consultation proposes two options, both looking to reduce the escalation of these support schemes. NESF has estimated the impact if these changes were applied to the NAV at 30 June 2025. The fund expects the first option if adopted to take c.2p off the NAV, representing a 2% reduction. The second option would result in a 9% reduction taking 8p off the NAV. Both are detrimental and come at a time when all the renewable yieldcos have suffered because of higher interest rates. We see these potential changes as likely to see yieldcos continuing to buyback shares rather than invest in new assets at a time when investment is required to meet the needs of the government’s Clean Power 2030 targets. According to the consultation announcement the government is particularly mindful of impacts on renewables investment.
