UK Infrastructure Bank confirms position as cornerstone investor in UK’s largest subsidy-free solar power fund

25 August 2022

The UK Infrastructure Bank has announced that it will act as a cornerstone investor in the NextPower UK ESG (NPUK ESG) fund, which has reached first close at £327 million. The fund, which is managed by Next Energy Capital (NEC), aims to double the amount of subsidy-free solar power in the UK.

The Bank has committed to investing £162.5 million at first close, to match funding from third-party investors. Overall, the fund has a £500 million target, and a hard cap of £1 billion.

The fund will invest exclusively in solar plants based in the UK and, at hard cap, will enable the construction of up to 60 subsidy-free solar plants across the country, with the capacity to provide up to 2 GW of clean electricity annually. That is the equivalent of powering around 500,000 households each year.

In December last year, the Bank announced that it would provide the finance for two seed assets to support the fund. This enabled the construction of two subsidy-free solar plants, Llanwern in Newport, South Wales and Strensham, Worcestershire.

Once complete, NPUK ESG will be the first and largest subsidy-free private solar investment fund in the UK and will contribute significantly to the UK’s goals to increase solar power.

Solar power contributed 28% of the UK’s total renewable energy generation in 2020 and is expected to play a major role in delivering net zero, supporting the government’s ambition to enable 70 GW of solar capacity in the UK by 2035.

Financing clean energy is a core priority for the Bank, given its significance to the UK delivering on net zero and securing long term energy security.

John Flint, CEO of the UK Infrastructure Bank, said:

"Investment in subsidy-free solar is vital in order to realise our net zero ambitions and I am pleased that just eight months after we announced finance for Llanwern and Strensham, we’re part of the first close of this fund as a cornerstone investor. That means more solar plants will come online across the country, providing greater capacity to power homes and businesses in a sustainable, renewable way."

Michael Bonte-Friedheim, CEO and Founding Partner of NextEnergy Capital, said:

"I am delighted to announce the first close of NPUK ESG, which comes at a crucial time to help strengthen UK energy independence which is of the upmost importance. NPUK ESG is the first UK fund that targets purely subsidy-free utility solar assets, and I am proud that NextEnergy Group is driving this forward. NPUK ESG marks the Group’s fourth private fund, backed by an impressive track record since 2007. We continue to offer investors access to our specialism across the whole solar spectrum, from construction, investment management and operations. "

Further information

The Bank has now announced nine deals worth £920 million – mobilising over £4.5 billion of private capital, with a range of investments in line with its mandate, strategic objectives, and investment principles, which can be found on the UK Infrastructure Bank website.

The Bank is wholly owned by HM Treasury but is operationally independent from government. The Bank identifies, selects and assesses projects and approves them through its Investment Committee and Board.

In the Bank’s recently launched strategic plan, it identified that over time, clean energy is expected to emerge as the largest sector in its portfolio, reflecting the important role it has to play in the UK’s journey to Net Zero and energy security ambitions.

NextPower UK ESG

NPUK was launched in December 2021 and is a 10-year closed-ended private fund managed by NextEnergy Capital. It is a private unlevered fund investing in greenfield subsidy-free solar projects, with PPA’s, in the UK. It is targeting £500m, to invest into unsubsidised solar plants in the UK with contracted revenues.

The UK Infrastructure Bank is providing cornerstone match-funding capital for up to £250m.

NEXT Energy materials highlight this offers investors the opportunity to earn attractive risk-adjusted returns from solar PV infrastructure in the UK. They have secured a pipeline of c.1.2GW alongside access to an immediate cash-generating, operational seed portfolio of 115MW and real, measurable additionality ESG impacts, including biodiversity measures and community engagement.