Solar power investment company NextEnergy Solar (NESF) was unchanged at 98.6p as it announced a £100 million joint venture partnership with Eelpower, a battery storage specialist.

The joint venture is targeting the establishment of up to 250MW (megawatts) in projects with £100 million in invested capital and has already signed its first acquisition of a 50MW standalone battery storage project.

The move marks the company’s first strategic step into the energy storage sector in the United Kingdom.

NextEnergy becomes the latest UK-listed solar investor to diversify its portfolio in the last six months after Foresight Solar (FSFL) announced its own battery storage investment and Bluefield Solar (BSIF) moved into batteries and wind. Numis offered insight into the reasoning behind this diversification effort.

COMPETITION FOR ASSETS DRIVES MOVE INTO BATTERY STORAGE

‘As pricing for existing subsidy-backed UK solar assets has become increasingly competitive, the listed solar funds have invest sought other technologies into which capital can be deployed adding diversification to revenue streams.’

Numis notes that while NextEnergy is trading at around its NAV (net asset value), Foresight is trading at a 2% premium and Bluefield Solar at 10%, with the broker noting Bluefield’s ‘quality of income which reflects a consistently strong performing asset base, active hedging strategy and low risk capital structure’.

Liberum commented: ‘Aside from the dedicated battery storage funds (GRID and GSF), many of the solar-focused funds have amended investment policies to enable investment in battery storage assets as project economics have improved considerably.

‘This is likely to continue across the sector given the long-term demand for storage assets and the compression in returns in other sub-sectors.’

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 17 Sep 2021