NextEnergy Capital, the London-based solar energy asset manager, has closed the first round of its fifth investment vehicle, NextPower V ESG (NPV ESG) with US$480 million in investment commitments.
The NPV ESG vehicle looks to procure financing for solar and energy storage assets in Organisation for Economic Co-operation and Development (OECD) countries, specifically across Europe, North America, and Chile. The fund was launched in January with targets of US$1.5 billion and 3.5GW of solar capacity, and NextEnergy has offered investors mid-double digit returns on commitments.
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Of the US$480 million secured so far, NextEnergy said that US$330 million are direct commitments and US$150 million are co-investment allocations. Two pension funds, one Nordic and another German, are prominent investors in NPV, with others in the process of due diligence and expected to be confirmed in the second round later this year.
The fund said that it had identified a potential pipeline of 14GW worth of projects across its target areas.
Michael Bonte-Friedheim, CEO and founding partner of NextEnergy Group, said: “NPV ESG’s first close represents an important milestone as the fund secures strong investor support from the get-go. Utility-scale solar represents a very large investment opportunity set globally, with total spending in 2023 forecast to reach US$382bn, and we aim to continue our leadership role in the sector.
“We leverage our focus, experience and expertise in the solar infrastructure sector to secure and invest in attractive solar projects and portfolios and generate superior investor outcomes.”
The previous iteration of the funding vehicle, NPIII ESG, closed in January last year with US$900 million in final investment and a UK-focused round called NextPower UK ESG fund secured commitments 20% in excess of its £500 million (US$635 million) target.
The success of NextEnergy’s investment vehicles speaks to the growth in corporate solar PV investment the world over. According to industry analyst Mercom Capital Group, corporate spending in the solar PV sector rose 55% in Q1 2023 compared with the preceding three months and 11% year-on-year. US$8.4 billion of private investment went into the sector in between January and April this year, largely spurred on by overarching policy changes like the EU’s REPowerEU scheme and the headline-dominating Inflation Reduction Act in the US.
Shane Swords, NextEnergy Capital managing director and head of investor relations, said: “This first close sends a strong signal to the market that, despite the current environment, investors continue to seek a specialist investment manager with a successful track record of delivery, deployment and superior return generation.”