UK’s NextEnergy Capital Raises Record $896 M for Solar Infra Fund

Investment in Solar Power to Exceed Investment in Oil in 2023: World Energy Report, IEA

London-based NextEnergy Capital recently said that it had raised a record $896 million for its NextPower III ESG fund, focused on solar infrastructure investments in OECD countries – its biggest private fund to date.

While there may exist larger solar-focused funds with more restrictive geographic focus, the firm assured that its latest was the biggest of its kind to be raised with the broader remit.

The hard close of the fund is above its target of $750 million. This comes as the cost of solar continues to fall, driving growing demand as countries look forward to meet tough carbon emissions targets.

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At global climate talks in Scotland in November, countries agreed to accelerate efforts to curb global warming by decarbonizing their economies and shifting from fossil fuels to more sustainable forms of energy.

These commitments continue to underpin investor demand for investments that aim to help fix environmental, social and governance (ESG)-related challenges such as climate change.

“There was an enormous amount of investor interest,” said Michael Bonte-Friedheim, group CEO and founding partner.

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“I am looking forward to the continued development of the fund’s portfolio given the depth and quality of its current pipeline,” he added.

NextEnergy said that the fund would target projects in countries including the US, Portugal, Spain, Chile, and Poland. It has already started making investments, with an installed capacity of 742 megawatts across 23 projects and two portfolios.

Earlier this month, NextEnergy announced the sale of the entire 149 MW solar portfolio owned by NextPower II — the precursor to the latest NextPower III — that was launched in 2016 to consolidate the fragmented Italian market of operating solar projects.

Investors in the new NextPower III fund include pension schemes, insurance companies, family offices, and others from nine countries. Together with money committed outside of the fund itself, total capital available to NextEnergy is around $905 million.

When fully invested, with installed capacity of around 2.5 GW, the fund will be able to replace the annual fossil fuel-based energy needs of around 1.3 million homes, it said. It further added that the hard close of the NextPower III fund follows the recent sale of 105 solar plants totalling 149 MW from its NextPower II fund, which helped generate internal rate of return to investors of more than 25%.

The hard close of the NextPower III ESG fund follows the recent sale of 105 solar plants totalling 149 megawatts from its NextPower II fund, which helped generate an internal rate of return to investors of more than 25%, it said.