NextEnergy Solar Fund Limited ($NESF)

So, good morning, and welcome to the NextEnergy Solar Fund or NESF strategic seminar. Thank you for joining us this morning, both in person and those online. Many of you will have already have read this morning's RNS and will be familiar with the key elements of the strategic review and strategic reset. You will have seen that we are making a change to the dividend, moving from a fixed pence per share to a new payout-based arrangement. We fully appreciate how important the dividend is to our shareholders. And going forward, we are setting a policy that will still offer an attractive dividend, albeit reducing the payout from the current level. This will provide NESF the capital to invest meaningfully into its portfolio to stabilize NAV. Without reinvestment, the NAV reduces over time. And very importantly, unlock growth potential, which will close the discount to NAV, strengthen the business and build value for the long term. So, going forward, NESF will offer real growth potential in a critical sector, underpinned by a strong capital structure while still offering an attractive dividend for our investors. So, before we get into the detail, here is our usual disclaimer, which you'll be believed I'm not going to read out, but it's in your deck if you want to review it. Today's speakers are myself, I joined NESF in December, and therefore, have been in place for just over three months, and I'm the Chair of the Solar Fund. Ross Grier, Chief Investment Officer at NextEnergy Capital; Tony Quinlan Ross Grier Stephen Rosser, Investment Director at NextEnergy Capital. And we also have Michael here today on the front. We also have a number of other members of the team and the Board. So maybe I could just ask them just to stand up and wave and then you know where they are in the room. They're embarrassing me. So this is today's agenda to cover the market backdrop, the portfolio, the results of the Board's strategic review and then the detail of the plans going forward to reset NESF into a vehicle that can deliver strong total returns for our shareholders, whilst playing a critical role in both the U.K.'s renewable energy mix and security of energy supply. There is a fair amount we want to cover for you this morning, but we will leave plenty of time for questions at the end. So, as I've mentioned, on a personal basis, I joined NESF at the beginning of December with a pretty strong background in the electricity sector. And I've had a good chance to get to know the Board, the manager, the challenges facing NESF and to consider the strategic options we have to move the business on, navigate through the current headwinds in the sector and create the conditions to drive long-term value and total shareholder return. And I really do believe that NESF has an exciting journey ahead of it. We have a clear strategy and an executable plan. This is not aspirational. It is really grounded in concrete actions within our control. And very importantly, we have good experienced people to deliver this. And we believe the market will recover over time. The fundamentals are strong and improving. So, why are we here? This chart shows NESF's share price discount to NAV over time, and it tells a clear story. Over the past three years, NESF and its peers have traded at persistent discounts to NAV, restricting the ability to raise new equity for growth. This, along with other external factors has led to a downward trend in NAV. Without growth, NAV erosion compounds over time. This is the fundamental challenge we are addressing. The 12-month chart on the bottom right shows the current picture. The discount remains significant and the gap between share price and NAV persists. It's not a good picture. So now is the time for change. As I said earlier, NESF's fundamentals do remain very robust. Stating the obvious, that electricity is critical to every facet of our society, and demand signals are clear with a strong upward trajectory. Solar is the cheapest form of generation and the quickest to deploy. And with growing intermittency and demand, we need energy storage, such as that offered by batteries to balance the system and deliver the power when it is most required. So why hold these assets in an investment company? Well, this structure provides a flexible liquid platform for investors to access attractive returns from what are illiquid assets. This structure remains the right one. At NESF, we have a strong delivery track record with solid returns underpinned by rigorous governance, disciplined capital management and a high-performing specialist manager. There is a clear need for change. We have a plan that addresses the discount and will deliver sustainable growth. So, on to the actions that NESF is taking. Well, firstly, the strategic review. It's important to note that this was not a quick piece of work. The Board have thoroughly assessed all potential strategic options through the lens of what delivers the best returns for our shareholders, many months of detailed work. Alongside the deep analysis carried out by the NESF team, the Board took independent advice across a full suite of options, looking at each in depth to assess viability and what would maximize value. As I noted earlier, I joined late into this process, which allowed me to take a cold-eyed view of these options, the analysis, the risks, the challenges and opportunities. And I certainly believe the Board has settled on the most value-accretive option available, the strategic reset, one which will unlock capital by changing the dividend policy, creating regular capital recycling events through an extension to the capital recycling program, alongside the planned realization of our investment in the private fund, NextEnergy III or NE III and the co-investments we have. Capital generated will focus on repowering assets, investment into value-accretive solar and energy storage opportunities, improving financial resilience and supporting long-term value creation to support the NAV and tackle the discount. We are targeting a total return between 9% and 11% through a combination of our new dividend policy and reinvigorating NAV growth. To achieve this goal, we will deliver frequent capital recycling events for reinvestment, increased energy storage capacity up to 30% of portfolio gross asset value or GAV, reduced debt down to 40% to 45% of GAV, all while maintaining our commitment to sustainability. So why is NESF implementing this change? As laid out in the 5 supporting pillars shown here, we will enhance shareholder returns. further capital raises are currently constrained, limiting our ability to reinvest. We have an opportunity to reshape the dividend policy to release capital that can deliver total return. Strengthen NAV. Historically falling power prices, large dividend distributions and stored growth are steadily reducing the NAV. We need to reverse this trend. Create optionality. NESF can pull internal levers within its portfolio to provide capital for reinvestment. We are not dependent on external markets. Access opportunities to grow NAV. NESF can unlock existing opportunities within its portfolio to grow NAV through investing in repowering, investing in value-accretive solar and stand-alone energy storage, co-locating existing sites and asset optimization and unlock value. NESF has a high-quality core portfolio that continues to perform well and hold value that can be unlocked through further asset sales. Reinvestment into high-yielding assets will add to future value. So how will NESF deliver this change? So we have a comprehensive road map that establishes a clear path over the next decade and beyond. This comprises of the dividend policy change. So following the completion of this year's target dividend of 8.43p, we will introduce a new payout policy targeting 75% distribution of operational free cash flows after debt servicing and fund and operational expenses. Further details on how this will work in practice will be unpacked later in the presentation by Stephen. This new dividend policy is expected to generate approximately GBP 40 million of cash over the next five years, which will be reinvested into our portfolio. An expansion of the capital recycling program with additional asset sales of up to 120 megawatts, plus the realization of our $50 million investment in the private solar fund mentioned earlier, NE III and the co-investments from 2027. To continue reducing debt, targeting gearing between 40% to 45% of GAV below our investment policy of 50% and to reinvigorate NAV growth, repowering solar assets to increase power output, capture high-yielding opportunities to co-locate energy storage and focus on asset optimization and health and an expansion of energy storage, increase the allocation to 30% of GAV, adding diversification to the stable revenues generated by solar assets. The company will seek shareholder approval at the AGM to increase the formal investment policy limit for energy storage from 10% to 30% of GAV. The aim of this is to provide attractive income and capital growth. As I said earlier, targeting long-term returns of 9% to 11%. Each of these options reinforces the other. This is an integrated strategy. So we now look at the big picture, the macro environment, energy, the policy landscape and the market context that underpins our strategy. The first thing to note is the future of solar and energy storage and investment companies is central to delivering net zero targets and energy security. Solar and energy storage are essential in all future energy scenarios. There is expectation of significant power demand growth with AI and data center demand yet to be properly quantified but presenting a substantial upward demand factor in the near future. Policy tailwinds are providing positive momentum. Domestic renewable energy -- renewable assets supports resilience and national targets such as clean power 2030 and net zero 2050. Solar and energy storage is scalable now. Solar is a core infrastructure asset and energy storage is no longer an emerging technology. These are proven and bankable. And the need, of course, for energy security. This continues to rise in an increasingly unstable geopolitical landscape, highlighted again by the very recent events in the Middle East. Secure domestic energy systems are essential. And for investors in this space, investment companies are the right structure, providing liquid access to diversified long-life renewable portfolios. Looking a little bit at the key headwinds and tailwinds now and positive market drivers provide a robust foundation for our strategic reset. If you look at the macroeconomics, but the headwind here has been higher interest rate cycles, driving negative impacts. The tailwind, well, rates are stabilizing with a further softening expected certainly over the long term. Policy and regulatory, the recent government consultation on ROC and FiT unhelpfully created significant uncertainty. But the tailwinds are substantial. Clean Power 2030 mandates a tripling of solar energy to 50 gigawatts and a fourfold increase in energy storage to 27 gigawatts. Looking at the market environment. I mean, headwinds in the market include falling future power price forecasts and constrained capital raises. Although to be fair, in my experience, power price forecasts consistently underprice the consequence of black swan events, impossible to price and forecast in advance, but unfortunately, all too common. Just look at the price of crude oil over the past week or so. Tailwinds here include rising electricity demand, the need for sustained large-scale generation investment and the growing criticality of domestic energy security. And then capital flow and investors and sector sentiment where headwinds are capital outflows creating an oversupply of shares and a dislocated discount to NAV. Tailwinds include the robust nature of our portfolio and the sustained investment required for the clean power transition. The balance of these factors is increasingly positive and supports our strategic reset. So let's now look at the fundamentals of our portfolio, which continue to demonstrate strength and resilience. Since IPO, NESF has provided stability and growth whilst delivering attractive dividends to our shareholders. These figures are at December 2025, actually. We have grown the portfolio to 99 operating solar and energy storage assets alongside a $50 million investment into the private solar infrastructure fund. We have an 11-year consecutive track record of delivering a cash covered dividend, a record we are proud of. GBP 431 million of dividends have been declared to ordinary shareholders since inception. That's over 80p per ordinary share. We have expanded the portfolio internationally and into energy storage assets, demonstrating our ability to evolve. The portfolio makes a significant impact, generating enough electricity to power 0.25 million homes every year. Looking at the underlying portfolio. So we have 99 operating assets and 839 megawatts of installed capacity. 83% of the portfolio is in the U.K., 11% Italy, with the remainder across Spain, Portugal and then international exposure via our investment in NE III. By technology, 97% is currently solar, 3% energy storage. We will evolve this going forward, significantly increasing the energy storage element proportion. More of that shortly. By project status, 95% are operational and 5% in construction and development. The map shows our asset locations across the U.K., Italy, the Iberian Peninsula and globally, including the NE III commitments. In summary then, this is a well-diversified, high-quality portfolio of assets, providing an excellent foundation on which to build future growth. And the portfolio continues to deliver strong performance and generation outperformance. Generation was 1.5% above forecast for the full year, demonstrating consistent outperformance. Total portfolio generation was around 722 gigawatt hours. The charts show U.K. monthly generation consistently meeting or exceeding budget and irradiation tracking above expectations. A lot of data here, but the key point is these are strong operational figures, underlying the strength of the assets and the quality of the teams maintaining and running this portfolio. So that's my overview complete. Before I hand over to Ross, a quick word actually on the importance, I believe, of an experienced Board. Strong governance is critical in all corporate structures, of course, but very much so in the investment trust space, having an independent Board providing rigorous independent oversight of the company's strategy and operations and one that is laser-focused on the shareholders. And to that end, NESF benefits from a strong experienced Board of Directors. Certainly, from my perspective, it was a critical part of my own due diligence when decided to join NESF, not only the high quality of the managers, the portfolio and the opportunity, but the ability, experience, dedication and first-class capabilities of my Board colleagues, bringing deep expertise across finance, governance, energy, infrastructure and sustainability. So I'll now hand over to Ross Grier, Chief Investment Officer at NextEnergy Capital, to start drilling down into the opportunity ahead of us.

Great. Thank you, Tony, and good morning, everybody. Thank you for joining this morning. We've set out the strategic context and the need for change. Now let's turn to the opportunity, why solar and energy storage represent such a compelling investment case for NESF. The future outlook for solar and energy storage is positive, irrespective of political change. The fundamentals are structural, not cyclical. And they speak to the societal need for domestic energy security and price stability, not just energy cleanliness. The current Clean Power 2030 action plan targets a 95% renewable grid. As you can see on the chart on the slide, we currently sit around 21 gigawatts of solar installed and around 7 gigawatts of energy storage. The action plan takes us to around 50 gigawatts of solar and 23 to 27 of storage. The growth trajectory is steep, and it requires significant investment in short order. This significant growth opportunity is right ahead of us, and it is available to established platforms like NESF. Solar remains the lowest cost and fastest to deploy form of renewable generation. It is central to delivering the U.K.'s net zero goals and also energy security objectives. To support this, the U.K. solar road map aligns government and industry with the aim to promote investment into great British energy infrastructure. Whether this is through policy certainty, giving developers and investors a clear investable pathway for future capital deployment, such as the introduction of long-term revenue support mechanisms in the form of CfDs, giving 20-year contracted inflation-linked revenue support or whether it's things like removal of zonal energy from the policy risk side of the matrix. This reduces regulatory uncertainty and it improves investor confidence in investing in the GB power markets. Delivering the plan needs rapid acceleration, and it requires approximately GBP 5 billion per annum of new investment. The scale of capital needed is clearly enormous and requires all forms of investors to be active, including platforms like our own. This is why the reset is happening now. The case for solar remains solid. Solar is the most reliable and rapidly deployable renewable energy technology, as we've said, and the investment case is robust. Deployment continues to accelerate globally with record installations occurring across many markets worldwide, including China, the EU, and we even see the U.S. demonstrating durable market momentum. This is not a niche technology anymore. It is now mainstream global infrastructure. Technology has also continued to improve as the industry has matured serving to improve yield and enable value enhancement of existing assets. Good examples of these are the efficiency gains driven by things like bifacial modules and improved technology in inverters and also hybrid solar plus energy storage configurations as well. Alongside this, costs continue to fall. Module prices and system CapEx remain near historic lows, boosting competitiveness and strengthening returns. To really highlight this, the chart on the top right shows that in the early 1980s, pricing was around $30 per watt, and that has reduced to well under $1 per watt today. With global power demand set to rise by 40% by 2035 versus today's levels, solar is now the logical default choice for new power generation, and it's expected to dominate expansion worldwide. At NextEnergy, we are pairing on-site technology improvements with off-site system evolution. This is aimed to drive maximum returns and robust revenue flows for investors across all of our funds. All these things act as tailwinds. It's also worth though pausing on some of the headwinds that NESF as a platform has experienced since 2014. So drawing your attention to the chart in the bottom right of the screen. This demonstrates two key points for me. One is the volatility in the forward power price projections that we get from third-party consultants. And the second point is the pound per megawatt hour expectations of that forward power price. As you can see or as you experienced, we have continued to do an excellent job of servicing a strong dividend from the platform over the period since the fund's inception. And that is despite the drop that you can see from the green line in 2014, showing an average power price of GBP 90 per megawatt hour to the orange line that we see today, projecting an average power price of GBP 60 per megawatt hour, a 33% decrease. Following the reset today and as we look to the future, the positive to take from this is the increased level of sophistication that we now see in those adviser models and also the fact that you see much tighter consensus between them on a rolling basis. This should give investors increased comfort around NESF's forward projections around revenue. It's also worth highlighting a point that we regularly make here, which is these adviser curves in our view also remain conservative. There are lots of reasons to be positive that the price outturn will be better, especially over the midterm than you currently see in our conservative forecast as a business. It's well publicized that global energy grids need to evolve and upgrade as part of the energy transition, and the GB Energy Grid is no different. What is very positive, though, is that our energy system operator understands that the rapid adoption and integration of energy storage makes better use of the power that is already readily available and in turn, reduces the need for new significant overhead cables, pylons and transformers, which are both costly and hugely disruptive to the consumer. As part of this journey, the national grid is getting better at utilizing batteries within the -- and things like the so-called skip rates have been coming down over recent years. That's where larger generators will being favored to support the network over lots of smaller distributed batteries. This type of change brings about robustness in the revenue profile of energy storage. Moving down to the projects themselves. The case for energy storage is becoming increasingly attractive from significant drops in costs through to improving technology for data monitoring and asset control. This leads to better asset management and improved power trading capabilities. Many of the kinks have now been removed from those early mover business models. And this paves the way for infrastructure investors to now step forward more confidently into this space. As seen in the chart on the bottom right, technology and cost improvements strengthen economics. Battery prices have fallen significantly with a 35% drop between just 2023 and '25. This is also combined with a sevenfold power density improvement in just two to three years. With new chemistry also commercializing fast, this is set to improve things still further, a fact you can see replicated in the electric vehicle market where cars are charging faster and you're able to achieve more mileage on a single charge. Energy storage generates consistent year-round revenue from both summer and winter intraday prices and volatility. Revenues are not solely dependent on any single market and are diversified and they are evolving in line with the energy transition. Put simply, the storage is needed to balance the grid from renewable energy's intermittent generation profile, delivering a 24/7 domestic energy system and supporting the uncoupling of the U.K.'s exposure to global energy market volatility. So, bringing the last two slides together, there are multiple portfolio benefits from combining solar and energy storage for NESF. This is about building out a portfolio composition that is a better fit for the energy market that we're set to operate in today and for the future. Solar exhibits a predictable generation profile. during a single day. And typically, that's around a 4- to 10-hour window. Energy storage operates on a 2- to 8-hour profile. And crucially, these are complementary, not competing. Combining the two allows the solar to generate more of its revenue during the summer, while energy storage earns more during winter. This negative correlation stabilizes revenues across the year and reduces portfolio level variability, a genuine diversification benefit for shareholders. Access to new grid connections is well understood to be one of the biggest hurdles to deploying the additional renewables and stand-alone storage that you've seen in the forecasts. DC-coupled colocation has the potential to bypass this hurdle by utilizing NESF's existing grid infrastructure. In the delivery section, Stephen will bring this concept of DC coupling to life. Colocation of energy storage alongside generation offers the potential of significant cost efficiencies compared to stand-alone deployment. And that's leveraging shared infrastructure between the two infrastructure assets. There is a specific opportunity to add storage also as part of the inverter ramping process that we do -- revamping process, sorry, that we do on our assets on a rolling basis. Linking the two together creates a more efficient investment program. Utilizing existing infrastructure to maximum capability also maintains positive public perception, allowing us to continue to drive the energy transition further forward. And crucially for NESF investors, this begins to unlock some of the inherent terminal value that is not currently captured in the NAV of our fund. Significant improvements in solar technology efficiency alongside continuous price reductions provide a compelling investment case for repowering the existing assets over the coming years. A well-structured repowering program extends asset life and creates value for shareholders by increasing NAV. This is a direct tangible value creation lever. Alongside this, upgrading systems improves asset reliability and performance, reduces operational costs and enables more intelligent data flows, improving asset level outcomes. The chart on the right-hand side is an illustrative 15-megawatt repowering set to occur as the asset reaches the end of its ROC subsidy. You can see three scenarios laid out. Current trajectory of no repowering with a 40-year asset life, repowering with 20% additional capacity on a merchant base with no life extension and repowering with 20% additional capacity plus a further 15-year life extension. The value uplift from repowering can be seen to be material, and it builds upon work we've already done on our asset to NEC and is proven value creation lever that NESF can execute using the in-house capabilities of its existing team and manager. Through the review process, the NEC team have evaluated the assets in the portfolio. This is not a top-down allocation. Instead, it's a bottom-up asset-by-asset assessment, enabling each element of the portfolio to be categorized as to how it fits within the road map that we've laid out today. As you can see from the tree map, NESF's total portfolio includes its proprietary pipeline and that offers significant potential through either value enhancement or targeted disposals to recycle capital. The portfolio breaks down into six broad categories: operational solar for value creation, operational solar for capital recycling, operational energy storage, ready-to-build solar and energy storage for capital recycling and private fund investments reaching maturity. Assets were scored against different criteria from cash flow, debt terms, future actionable optionality, strategic location and even buyer appetite in the market to identify the best fit for value creation opportunities and how they allocate strategic value to NESF, matching the right strategy to the right asset. At this point, I'll pass back to Tony to give an overview of the strategic review and the reset.

Great. Thank you, Ross. So yes, now move on to the results of our strategic review. The process we undertook are the options we assessed and the conclusions we reached. So, the NESF Board, alongside its third-party advisers and experts, evaluated a number of options during the strategic review process. We assessed maintaining the status quo, just waiting for the tide to change and then possibly the discount to NAV reducing, a managed wind down, selling down assets, realizing the value in the portfolio and returning capital to shareholders over time. Structural transformation. We explored transforming NESF into an alternative structure such as an operating company. Sector consolidation. We looked at consolidation and M&A activity amongst peers given the sector-wide discounts. Public to private. We explored the potential private acquisition of the company, delisting NESF from the London Stock Exchange. Third-party capital, we looked at using external capital alongside our development pipeline and operational assets to inject new capital into the business. And then an internal reset and strategic road map. We explored a strategic realignment of NESF to reignite growth. Every option was assessed rigorously on its merits. We didn't approach this with any predetermined conclusion. So expanding on that -- on the previous slide, our conclusions, maintaining the status quo. Our view is our shareholders require proactive measures to provide long-term total returns and narrow the share price discount to NAV. The Board concluded that doing nothing is not a good option. It's certainly we have better options. On a managed wind down, given the current opportunity for growth and the additional value that can be realized from continued proactive management of the company's existing assets, the Board does not believe a wind-down is in shareholders' best interests. We believe that this will be value destructive, becoming a full seller of assets at discounted prices, eroding rather than preserving long-term value. On the structural transformation, a strategic transformation of NESF from an investment company to an alternative operating model such as an operating company. To be frank, this was discounted at an early stage, certainly not cost effective or value creating. Sector consolidation. The Board agrees, concurs with consistent advice from third-party advisers that the strategic value case for consolidation or bilateral mergers is difficult to make in the current market. The deep discounts across the sector demonstrate a combination creating a larger vehicle would not, on its own, be a path to narrowing the discount or increasing liquidity for our shareholders. While some limited potential to unlock synergies may exist -- synergies may exist on a case-by-case basis, these are generally not of sufficient scale to justify incurring the cost, complexity and risk inherent in pursuing a NAV for NAV or all equity merger. So what are we open to and indeed pursuing? We're public to private. As I said before, the Board has an unrelenting focus to maximize value for shareholders. It has not excluded such a transaction where there is an opportunity to accelerate shareholder returns. Third-party capital, the Board and investment adviser are exploring the opportunities to use third-party private capital alongside the company's existing development pipeline to inject new capital, capture growth and extract value. We will continue to explore this option alongside the strategic reset to unlock potential additional value. And then the strategic reset. This is plan A. It allows the company to utilize levers entirely within its control, changing the dividend policy and creating regular capital recycling events through additional asset sales will free up capital to drive asset performance and secure value-accretive opportunities. This is the option that currently represents the best path for shareholders. So, in summary, strategic change is necessary for growth. Without this strategic change, NAV would naturally decline as the company continues to pay out dividends without reinvestment into portfolio growth. The Clean Power 2030 growth opportunity would be missed entirely due to the persistent share price discount preventing new equity raises. Capital constraints would intensify, restricting allocation flexibility without significant capital recycling. Doing nothing is not a viable path. The downward trajectory is clear and the need for action is now. This is precisely why the Board has chosen to pursue this strategic reset to break this cycle and redirect the company towards sustainable growth. I'll now pass you over to Stephen, who will go on to the details of our plans.

Thank you, Tony, and good morning, everyone. The strategic road map is formed of six pillars. The first two pillars comprise the reset, changing our dividend policy and creating regular recycling of capital from within the portfolio. As you've already heard, following completion of the target dividend of 8.43p for this financial year, we'll introduce a new payout dividend policy, targeting a 75% distribution of operational free cash flows. This is expected to generate approximately GBP 40 million of cash that's investable over the next five years while maintaining a healthy income for investors. The company will also expand its capital recycling program by up to 120 megawatts, increasing its flexibility to pay down debt and reinvest into higher returning opportunities. Together, we expect these actions to catalyze delivery of the broader strategic road map. Looking more closely at that payout dividend policy then. The chart on screen provides an illustrative view of the new policy based only on the actions we have laid out today. This reflects the expansion of capital recycling in the near term with reinvestment into asset repowering and incorporation of additional energy storage over the medium to longer term. It is deliberately conservative, and we see multiple opportunities to outperform as well as to lift the tail end by taking further actions as the ROC and FiT in tariff subsidies roll off. I'll touch on some of those opportunities later in this presentation. The indicative range of outcomes reflects different power price and reinvestment scenarios, providing additional transparency. In the context of the strategic road map, the transition to a payout dividend policy ensures that a healthy dividend is always covered by income generated from the portfolio with a portion of free cash flows being reinvested to drive value for investors over the long term. As I mentioned, the indicative dividend range on the previous slide assumes only the actions we've laid out today. By continuing to reinvest 25% of its expected cash flows into enhancement and optimization of the portfolio as the subsidies roll off, the company would expect to sustain higher distributions beyond the end of the road map we're announcing today. Importantly, the actions we're taking now mean that this stability, sustainability and future optionality can be self-generated without assuming fresh inflows of capital. The key takeaway in terms of the income portion of an investor's return is that NESF is able to sustain a healthy and attractive dividend and by continually reinvesting a portion of its free cash flows into the portfolio, expects to continue delivering predictable income for investors far beyond the end of the road map. To illustrate how the payout policy works in practice, we can step through the diagram on the screen, which works from left to right. To the left, recurring operating cash flow is generated by our portfolio of assets. Portfolio debt service, OpEx and fund OpEx are deducted to arrive at free cash flow. 75% of that cash flow will be distributed to shareholders as dividends. The remaining 25% plus any excess cash after payment of the dividend, proceeds from capital recycling via asset sales and the realization of the investments in NextEnergy III and the related co-investments flows into a disciplined capital allocation framework, which I'll cover later in this presentation. This creates a self-reinforcing cycle of taking actions within our control to drive growth while maintaining a healthy and sustainable dividend. To further contextualize the payout dividend policy, we back tested it over the past three financial years, April '22 to March '25. As can be seen on screen, NESF would still have delivered a healthy dividend of between 7.2p to 8.2p in every year. The lower chart illustrates that NESF's resilient and carefully curated portfolio has consistently supported a cash covered dividend, reinforcing our confidence that the guidance we provided today is towards conservative with opportunities to deliver outperformance whilst also catalyzing growth. Moving on then to capital recycling. We've identified up to 120 megawatts of assets from which capital can be recycled in the next three years. These assets have been selected on the basis Ross was describing earlier on, particularly their expected attractiveness to the evolving market of buyers, balanced against the need to retain a core of high-quality assets, generating predictable cash flows within the portfolio. We will also realize our investment in NE III and the related co-investments at the end of the holding period from 2027 onwards. Combined with the disposals we've already completed, this will bring the cumulative total of recycled capacity to over 480 megawatts by 2030. These additional disposals and the planned realization of existing investments provide significant capital to fund the objectives of the road map, debt reduction, asset repowering and investment into energy storage. Since announcing the initial capital recycling program in April 2023, NESF has successfully recycled around GBP 190 million at an average rate of 82 megawatts per year. Phasing of sales has been influenced by macro impacts on the M&A market. That market is, however, starting to move again as more buyers come to understand the importance of energy security and the long-term value creation opportunities surrounding these assets and particularly the evergreen grid connections. The expanded program forecasts an average rate of 37 megawatts per year. It's around half the rate of the recycling program to date. It's deliberately conservative and highly achievable. We will not, however, be resting on our laurels. The first of the next wave of assets are already being prepared for sale. Our confidence in the deliverability of the expanded program is enhanced through the sales we've completed so far. In that context, it's worth pausing to remind ourselves of what that included. NESF was amongst the first to invest in post-subsidy solar assets and was uniquely placed to tap into a pool of buyers and investors looking to avoid the uncertainty around grid connections by investing in new or recently built assets. Across four phases and 245 megawatts, returns from five of those post-subsidy solar investments have now been realized, generating a cumulative NAV uplift of around 2.5p per share. The GBP 119 million of proceeds have been reinvested to reduce short-term debt, support share buybacks, reinvest in asset health and to progress NESF's solar and energy storage development projects. The sales completed to date have also provided invaluable experience, which we will carry forward into the expanded program. I've touched briefly on the planned realization of the investment in NextEnergy III and the related co-investments. Let's take a closer look briefly at those investments. NE III is a private OECD solar strategy with roughly 1.2 gigawatts of capacity across 158 assets around the world. The portfolio is well diversified across our core OECD markets. As part of its strategy to seek derisked exposure to attractive returns from international solar and energy storage, NESF invested $50 million into NE III and owns around 6% of the fund. NESF is also a direct co-investor in two assets and holds around 25% of a 50-megawatt project in Spain and around 14% of a 210-megawatt project in Portugal. The realization of the investment in NextEnergy III is expected to provide a significant inflow of capital for NESF from 2027 onwards. NextEnergy Capital, the manager of NextEnergy III, has a proven track record of exiting private vehicles successfully. The exit of NextEnergy II in 2022, having delivered an exit multiple of more than 2x invested capital. The combined effect of the dividend policy change and the expansion of the capital recycling program unlocks significant cash flows, which the company will use to deliver its strategic road map. The chart on screen now shows indicative long-term cash flow guidance from 2027 to 2040. The green area, operational free cash flow, illustrates the capital created specifically from the strategic reset announced today. Fund expenses and preference share dividends are accounted for as is the ordinary dividend, in line with the indicative guidance provided earlier. The key takeaway here is that the strategic reset generates a predictable and continuous pool of investable capital, which can be deployed into now accretive opportunities to drive growth. This pool of investable capital is what powers the delivery side of our road map, debt reduction, asset repowering and further investment into energy storage. Turning then to how we'll deliver the strategic road map we've set out today. Delivery will be underpinned by the company's disciplined capital allocation framework. This framework creates a hierarchy of different possible uses for capital, maintaining flexibility and optionality to drive value. It is dynamic and changes depending on market conditions and the fund situation at any given time. Capital freed up by the reset flows into the framework, which we then direct towards debt reduction, maintaining portfolio health and driving NAV growth through repowering and further investment into energy storage. This ensures that every pound of capital is deployed where it creates the most value for shareholders. Let's look then at the capital allocation framework in a little more detail. It is built on five core principles. Returns-based prioritization, optionality value, capital efficiency, strategic alignment and stakeholder balance. NESF's investment objective, combined with external market conditions determine the capital allocation hierarchy at any point in time. At the top of the hierarchy, we have mandatory obligations, debt service, regulatory requirements and committed expenditure, including to maintain portfolio health. Next is the base distribution, maintaining our stated 70% payout policy. Then committed growth capital, contracted acquisitions and construction commitments. Balance sheet optimization comes next, including opportunities to further optimize the fund's capital structure. Where returns on new noncommitted investments are compelling, we would then direct capital to discretionary growth investments and consider off-cycle returns of capital or additional distributions to shareholders where capital availability permits. Beyond that, any surplus would be used to build cash reserves for future optionality. This structured approach ensures disciplined deployment of capital while preserving the flexibility to respond to market opportunities. Using proceeds from recycled capital, the company will repay a proportion of its short-term revolving credit facilities. The company's long-term debt of around GBP 144 million is on track to fully amortize in line with the remaining life of the subsidies. We plan to maintain gearing between 40% to 50% of gross asset value below the company's investment policy limit of 50%. The chart on screen shows the projected long-term debt repayment and gearing trajectory for the next 10 years based on the road map we have set out today. As you can see, we expect financial gearing to decrease over time as long-term debt amortizes and the RCF is repaid. In this road map, preference shares remain a consistent component of the share capital structure -- sorry, the capital structure. So we'll look at those next. NESF's preference shares remain an attractive source of capital relative to the current and forecast SONIA rate. From March 2030, NESF has optionality to either fully refinance the preference shares with another source of capital or to use free cash flows to pay down the par value. From 2036, the preference shareholders have the option to convert into ordinary shares using a NAV-based calculation. This optionality gives ample time for NESF to actively manage its capital stack. Turning then to how we'll drive NAV growth through repowering solar assets. NESF will actively pursue repowering across three time horizons. In the near term, 2026 to 2028, we remain focused on maximizing asset health through the scheduled replacement of inverters, whilst also looking at tactical opportunities for deeper interventions that deliver the greatest impact on an individual asset's performance or make better use of grid connection capacity. We'll also look at tactical opportunities to expand the existing asset base through modest acquisitions. For the medium term, 2029 to 2034, we're already conducting desktop assessments of site suitability for early repowering, targeting assets approaching 12 to 15 years of age that will benefit from early full replacement of key components, particularly where there's optionality to add co-located storage solutions. In the longer term, 2035 onwards, the work we have already done and will continue to do to extend the duration of land rights and planning permissions will really come into its own, enabling full repowering of existing assets towards the end of their subsidy life, adding co-located storage at greater scale and making optimal use of their existing evergreen grid connections. Beyond 2035, we expect additional grid import and export capacity to become available, presenting a further opportunity to expand generation capacity and introduce further energy storage across the wider portfolio. This phased approach ensures value capture at each future stage of the asset life cycle. To bring the repowering opportunity into sharper focus, we have a short case study of an asset that NESF has already fully repowered. Balhearty was a 5-megawatt solar plant originally, the maximum size permissible under the feed-in tariff scheme. It was built in 2016 in Southern Scotland, but suffered significant damage during a 1 in 100-year storm. Using the proceeds from insurance, the site was successfully reenergized in 2024. The lease was also extended as part of the rebuild process, adding long-term value. In light of the continuing subsidy under the feed-in tariff scheme and the size of its current grid connection, the rebuild capacity remains 5 megawatts. However, by using power dense bifacial panels and string inverters, we achieved a 3% increase in expected energy yield, whilst also reducing the footprint of the asset by over 1/3. In fact, there's enough spare land at Balhearty to install another 2 megawatts of solar capacity and energy storage when grid conditions permit. For the time being, the land freed up through this repairing is currently designated as a biodiversity area under NESF's natural capital program. This is a real well-executed example of how tactical repowering can create value, more power from less land with longer asset life and options for further expansion. Beyond the core actions we're outlining today, we're also exploring innovative opportunities that can provide additional returns and growth. For example, as Tony has mentioned, we are exploring ways to introduce third-party capital through a structure that would allow NESF to benefit from growth capital targeting higher potentially -- potentially higher returns by combining operational assets with management expertise and a development pipeline. We're also exploring options to enhance our power market strategies, including potential to add downside revenue protection via the evolving insurance market and similar solutions, which can provide additional long-term revenue certainty. We also plan to increase NESF's development pipeline of solar and energy storage assets over time as development stage investment delivers high-value optionality and compelling returns for a low initial capital commitment. These opportunities are not core drivers of the strategy we're announcing today, but illustrate real-world opportunities to capture and layer in additional value over time. NESF continues to implement measures to optimize its portfolio and deliver value for shareholders. Inverters have been replaced at 10 sites so far, covering 62 megawatts, improving generation performance. For example, we observed a 13% increase in performance at the two assets that were repowered over the last year. Up to six additional assets, a further 65 megawatts are planned for inverter replacements over the next two years. We also remain focused on cost optimization. Future asset management cost forecasts with WiseEnergy have been reduced by 22.5%, leading to a GBP 7.4 million increase in net asset value. Our recent O&M tender has also renewed contracts covering 576 megawatts and delivered an overall cost saving of 10%, equivalent to about GBP 0.5 million per year. Alongside this, we continue our proactive management of key spare parts, particularly for components with long lead times or declining availability. This focus helps us to maximize plant uptime and minimize the impact of aging components in advance of full repowering. Our priority across these work streams is operational excellence, extracting maximum value from every asset in the portfolio. Moving on then to energy storage. Energy storage has demonstrated strong diversification benefits within our core solar PV asset base. It addresses system needs for flexibility and grid stability, adds portfolio breadth, unlocks synergies, diversifies revenue streams and strengthens NESF's risk return profile. Our analysis shows that a portfolio comprising 70% solar and 30% energy storage presents -- sorry, the optimum risk return profile, what we call the efficient frontier. The scatter plot on the right of the screen demonstrates this. The 70-30 split delivers stronger returns with reduced volatility, optimizing the balance between returns and the predictability of our cash flows. This is all about building a more resilient, higher returning portfolio for the long term. And NESF, as Tony has mentioned, will seek shareholder approval to increase its energy storage limit from 10% to 30% of gross asset value at the upcoming AGM. Energy storage has the potential to increase portfolio returns by accessing additional sources of revenue. Those revenue streams include four main markets: ancillary services contracted by the transmission system operator, system balancing to maintain grid stability, wholesale markets for buying and selling power and the capacity market for security of supply. Additional revenue streams include local flexibility markets, other stability services and regulatory benefits. The range of returns from energy storage varies depending on location, duration and whether the asset is stand-alone or co-located with generation. This diversified revenue stack is what makes energy storage such a compelling addition to our portfolio. Our investment strategy will prioritize 2- to 4-hour duration systems to maximize risk-adjusted returns. For stand-alone systems, 2-hour duration energy storage currently offers the greatest returns for NESF. Based on data from a leading adviser, stand-alone 2-hour systems deliver an average IRR of 11.7% compared to 10.7% for 4-hour and 8.9% for 8 hour. Revenues are expected to increase from 2027 to 2029 due to increasing value in the balancing mechanism as the system operator increases utilization of energy storage systems, a point that Ross mentioned earlier. Colocated storage, particularly DC-coupled, is more likely to benefit from 4-hour systems, as we'll see on the next slide. In his presentation, Ross focused on the opportunities presented by the addition of energy storage to solar portfolios and the benefit of colocation. To understand that in more detail, we can look at a case study considering DC-coupled energy storage co-located with solar PV at one of NESF's existing assets. The indicative case study on screen is based on an existing 11-megawatt asset in the East of England. It has access to sufficient land to be repowered up to 19 megawatts using the latest technology with a 5-megawatt 4-hour DC-coupled energy storage system. As the first chart demonstrates, the energy storage system charges from energy, which would otherwise be clipped during the morning to midday generation period as it would exceed the site's export limit, shown by the red line in those hours. Charging is shown by the orange bars. The energy system -- energy storage system then discharges in the evening when solar generation is falling off, as shown by the light blue bars on the right-hand side of the screen. In doing so, the energy storage system is shifting load from the point of peak generation into the point of peak demand when prices are typically highest. This results in more electricity being exported overall at an overall higher wholesale price than solar can achieve on its own. To illustrate this effect over the course of a year, the capture price at the bottom shows how DC-coupled energy storage deployed intelligently alongside solar generation achieves an overall price much closer to baseload and at a significant premium to the solar-only captured price over time. Colocation is, therefore, a core part of our strategy. With over 80 solar assets in the U.K. alone, NESF can extract maximum value from existing grid connections in a way that is not currently accounted for in the NAV. The road map we're setting out today allows NESF to unlock that additional value. NESF was one of the first renewable investment companies to have an operational battery storage asset and NextEnergy Capital has deep direct experience of successfully operating energy storage systems. Camilla, as shown on the screen, is our 50-megawatt 1-hour duration system in Southern Scotland. It has consistently been amongst the top earning assets in its class across the entire GB grid since it came online. It has been preconfigured for easy augmentation to a 2-hour duration system when the investment conditions are right. As can be seen on screen, revenues are higher during winter months given higher demand, gas prices, wind generation and therefore, price volatility. As a stand-alone energy storage asset, it brings a natural complementarity with solar generation where revenues are much more weighted to the summer. So we've been through the reset and the delivery framework. This next section will bring it all together. The goal of this strategy is to generate attractive total returns for shareholders. By combining the reset, the payout dividend policy and the expansion of the capital recycling program with the delivery, debt reduction and NAV growth through repowering and investment into energy storage, this strategy enables NESF to pursue long-term NAV growth. We're supporting long-term dividends while maintaining near-term dividend certainty. By reinvesting capital where appropriate, the strategy ensures the dividend policy remains robust and sustainable and crucially creates meaningful upside potential for total shareholder returns. It is an integrated, coherent, deliverable strategy where each component enables and reinforces the others as illustrated by the diagram on the screen. By actioning the strategy now, the company and shareholders benefit from increased total NAV returns in the long run, whilst continuing to pay an attractive dividend. The indicative cumulative long-term total NAV returns show a compound annual growth rate of over 3%, growing from approximately 80p in 2027 to over 130p by 2034. Compared to moving to a 75% payout dividend policy without reinvestment, the actions taken by the strategic reset and delivery of the road map would generate a potential total short-term trade-off. I'm on the wrong slide, am I? Okay. I'll come back. Of up to negative 1.1% from today to 2029. However, this is fully offset from 2030 onwards as the NAV growth will outweigh the initial short-term decrease in the dividend payout and will be further supported by a greater cumulative amount paid out in dividends by 2036. From 2031 onwards, the benefits compound significantly, reaching over 20% cumulative improvement in total shareholder return by 2040. The short-term cost is heavily outweighed by the long-term benefit of enhanced total NAV return. This is the fundamental case for acting now. Every year of delay reduces the long-term upside. Let me just flip back to this slide. What we're targeting, as Tony has mentioned, is returns of 9% to 11% growth. The base portfolio return is 7% to 9%, reflecting the underlying yield from our existing operational assets. Active portfolio recycling through capital recycling, repowering and energy storage adds 1% to 1.5%, delivering an optimized return of 8% to 10.5%. Reducing the share price discount to NAV to below 10% adds a further 0.5% to 0.8%. In whole percentage terms, the combination delivers the target shareholder returns of 9% to 11% growth. So, pulling all of that together, we fundamentally believe we have the right ingredients for success, the right market, the right vehicle, the right strategy and the right team to enable NESF to deliver the goals set out in the road map. I'm going to hand over to Ross now, who can take us through why NextEnergy Capital is the right manager with the right team behind it to deliver on that.

Delivering this road map with conviction requires the right people in the right place. So let me introduce you to the NEC team that remain committed to executing the NESF strategy. NESF is backed by a highly experienced expert investment adviser and manager team with deep experience across every function needed to deliver the road map. NEC has acquired in excess of 500 solar and storage assets and has established a well-trodden value creation approach that has enabled the successful exit of 116 individual assets across 27 investments, delivering a weighted average MOIC of 1.8x. This is proven repeatable track record. Over the years, NextEnergy has built a model designed around driving investor outcomes, establishing a close partnership between NESF, NextEnergy Capital and WiseEnergy, delivering comprehensive skill sets covering all components of the value chain. This model positions NESF ahead of its peers as we look to the future. NextEnergy is committed to NESF and its mission. As such, we are investing heavily in our systems and data readying our platform for the AI revolution. We can already see the advantages of trend analysis across assets. We can see AI supporting faster intervention on assets and better response times to fix, driving higher availability and in turn, more robust revenues. Predictive analysis will allow us to get in front of issues before they've even occurred. We are monitoring millions of data points each day, building out a comprehensive picture of each of our assets. We use digital twins of each of our assets to allow us to precisely track how they're performing and also how they're evolving over time, enabling robust decision-making on the right time to repower or to change specific componentry. Finally, as we look to the future, energy markets are increasingly looking for more dynamic management of assets and power flows and data underpins this. We're, therefore, working hard to ready the NextEnergy Funds to be at the very forefront of opportunity to maximize returns over the coming decade. The NextEnergy Capital team has successfully raised both public and private funds and now manages in the order of $5 billion of solar and storage assets worldwide. The diversity of funds raised allows a vastly broader and deeper team to be available to support the NESF strategy. NextEnergy Funds benefit from over 18 years of focused experience in solar, energy markets and energy storage. This is deep specialist expertise, not generalist fund management. Looking at the team on the slide before you, there is decades of experience in the energy and renewable energy sectors across the executive team alone. This deep expertise is shared with over 400 energy professionals across the group as a whole. As part of our continued progress as a business, we've been complementing our existing executive team through 2025 with resources, including new Chief People Officer and also a new Chief Technology Officer. Bringing in a new CTO helps us drive our ongoing systemization, data and AI rollout that I've just mentioned previously. Alongside this, our investment committee consists of both internal and external experienced professionals, providing robust rigor and governance within our structure and around the delivery of our road map. Finally, our investment team encompasses not just financial professionals, but also development, construction, legal, grid, power markets and even ESG and is much broader and deeper than you will find in peers across the industry. And it is ready to drive NESF to a positive future. At this point, I'll hand back to Tony for conclusions.

So, thank you, Ross. To conclude, we have laid out a comprehensive strategic reset that establishes a clear road map over the next decade and beyond. We are actioning change through a new dividend policy, delivering liquidity events, continuing to reduce debt, reinvigorating NAV growth and expanding energy storage in the goal of targeting strong total returns for our shareholders. Thank you for your attention this morning. That concludes the presentation. And I'll now hand over to Ross to begin and moderate the Q&A. We'll start with questions in the room, I think, and then -- so feel free to ask any questions on what we've covered this morning. Thank you.

Great. Thank you, Tony. We have roving microphones. If I can ask people to introduce themselves before they ask their question and just so we have a context of who you are and where you're asking question from. Thank you.

It's Alex Wheeler, RBC. Two from me, please. Just firstly, on the storage opportunity that you talk about and the up to 30% of GAV. If you could give us an idea of how quickly you would expect that to scale up. And if that is dependent on disposals, which I assume it is to an extent, how do you see the secondary market at the moment? Stephen, I know that you did say that you thought that the M&A market was improving. So interested in any additional thoughts there. And then just on the opportunity from repowering, how should we think about this coming through in terms of how you're going to communicate it? Is this going to be something that is incremental? Or will there be a point where you can give an actual number on what you think the overall opportunity is for the NAV?

Thanks. Do you want to take the first one, Stephen?

Yes. I'm just making a quick note of it, so there are a couple of it. So let me take the M&A market first. That's probably the gateway to the second part of the question. We are seeing positive movement and momentum in the M&A market, certainly since second half of last year and early this. Obviously, very pleased yesterday to announce conclusion of the fourth phase of the capital recycling program with the sale of 100-megawatt portfolio. So there are opportunities out there. There are buyers who are, as I've mentioned earlier on, starting to see now the opportunities that exist around grid connections, around repowering, around that future optionality in a way that I would say has evolved over the last year or 18 months and people with capital looking to deploy. So it's not running at full rate, but it is running, and that's a really positive sign. In terms of timing of transition into BESS -- sorry, battery energy storage systems, you're right, it is dependent slightly on the rate of recycling. One feeds the other, of course. But in the road map we've outlined today and in the projections, we see being at that 30% threshold by 2030.

And then second half of the question on how you should view repowering. So I think the first point from our perspective is we have always acted to drive as much transparency as we can from all of our reporting from all of our communication touch points with the market. That's something you should expect to continue to see from us. We've provided significant further forward clarity today. And as we move through the portfolio, identifying the opportunities and bringing them forward into that investable landscape and the capital allocation framework that Stephen mentioned, you should expect to see more detail about what we're intending to deliver over the coming 12-month period from us. Obviously, it's subject to change as market dynamics influence that capital allocation stack. So what we're -- what we'll be doing through that process is just trying to increase that transparency rather than necessarily nailing a particular asset in a particular order, right? So we are keeping a alive to opportunity to maximize value from investors and from the investment landscape. Anything else you'd add to that? Stephen?

No.

All right. Thank you.

Will Crighton, Cavendish. First question, can I just clarify something on Slide 61, that 3.2%, is that NAV capital return rather than -- is this total NAV return? Is that different to NAV total return, if you know, I mean.

Yes. So this is -- this one here is looking at total NAV return in there. So an exit position on the NAV that is forecasted at the exit at the end date that we've done the forecast over in 2040 looking in there. So it's referring there to a NAV position.

Sure. That makes sense. And then I have a few on repowerings as well. When would you say that optimum point for repowering is in terms of either asset age or remaining life? Can you give an idea on the cost to do it? And is co-locating batteries to existing sites only going to be done during repowering or separately as well?

Stephen, do you want to take that?

Yes, I think the best answer I can give you to that is that it's dynamic and very asset dependent. There are lots of different factors that drive it and the timing and the considerations. What we would obviously look to do as we work through is to optimize the sort of efficiency of any work that's being done. So even co-locating batteries certainly in a DC coupled sense, while we're replacing inverters even without replacing the modules is a possibility and makes a bunch of sense. It makes even more sense from an investment returns perspective where one is replacing the whole lot modules, inverters, all the way up to the customer substation with then the DC-coupled storage system happening at that point in time. The cost of that replacement is coming down, as Ross has talked about and you provided some guidance in your presentation, didn't you?

Yes. I think it's safe to say that we're entering that repowering window now for the type of assets that we have within the portfolio and across the sector. You're already starting to see it in other markets. So Italy is quite advanced in terms of repowering solar. You're seeing specific funds targeted repowering wind in the U.K. Obviously, they had a few years head start on the solar market. So we're definitely in that window now. But as Stephen said, it's an asset-by-asset assessment that leads to that trigger point.

It's Conor Finn from Barclays. A quick follow-up on the repowering. When you look at the near and medium-term pipeline to the end of '34, how much CapEx do you actually think you could spend here on that 478 megawatts?

Stephen, do you want to take that?

I've got nothing out my head. Let us come back to you on that offline, Conor. I think what we've looked at in terms of the pipeline is a whole host of optionality. So when we are looking at assets we're bringing through the development process, they are either there from a recycling perspective into the market or they're there for us to build out. So as we look to that growth of new assets within the portfolio, clearly, that's going to be dependent on timing of recycling and also what's going on in terms of additional revenue relative to those forward curves that we showed earlier. So it's a little bit dynamic in nature, but what we see is that opportunity to add to the portfolio.

[indiscernible] from Canaccord. Thanks for that very thorough presentation. Just on construction exposure, I think you said at the moment, you're about 5%. What would you expect that to increase to, particularly taking on board the battery expansion?

So construction is a very well-trodden path for our industry. So exposure is not something that we particularly concern ourselves with. It will always remain a very low percentage of overall exposure of the fund and we manage that against limitations within our overall risk profile for the fund as well. What you don't see in today's market is a particular premium being applied to that construction process for renewable assets because it's a very well-trodden path. As we've said, as you're entering the construction phase, you've pretty much ironed out the wobbles that are there in terms of grid connection and planning, particularly as hurdles to realizing a successful construction process. We've got a really experienced team across construction. As we've said, we've built many hundreds of assets in far harder places than the U.K. to realize. So very confident around the platform's ability to realize construction in the right way.

I would add that phasing is also important in the sense that when revamping, so replacing the inverters at an asset or repowering a whole asset, actually, it's a relatively speedy process. So we can bring things through in phases, as Ross said, without significantly increasing the overall exposure at any given point in time. It's very tightly managed.

Adam Forsyth from Longspur. Three questions, if I may. Just one just on repowering. Good to see the evergreen grid rights. But I wonder on land rights, are there particularly with early repowering, do landowners have right of reopening? And is that a risk? I mean I'm guessing it's win-win, but could it be a delaying risk and a negotiation risk? Then just on storage, I think you're right saying you don't have many import grid capability. Do you need that for DC? And is it something you would actively see if DC is a better option? And then finally, just on storage, I'm not sure Tony would agree that Drax have got a great power trading team, but they've gone and bought Flexitricity to give them extra skills in storage. Is that something either you or NEC would look to do?

Great. Thank you, Adam. Do you want to start off with the first one, definitely maybe the first two. So repowering in the context of landowners and lease extensions and then also in terms of import for DC?

Yes, sure. So we have an active program of talking to landlords, particularly around extending the lease life. We've done about 1/3 of the portfolio, I think, so far, pushing out the end dates on the land rights a lot further. So the full details of that are in the interim report that has been published. But that's a dynamic ongoing conversation and a situation vis-a-vis any given landlord changes according to their priorities, where they are in life and what they're trying to do for their families or how they see the investments. So changes over time, but where those opportunities exist, we open the door and we access them for the benefit of the fund. In terms of DC coupled and the import connections, actually, I was going to invite and introduce Dario, who's our Head of Energy Storage.

Yes. So for the analysis that you've seen on the screen, we've taken a conservative approach with our import capacity. The flip side of the business case comes because there's a huge opportunity when doing that at the same time that the replacing of the inverter -- so that cost doesn't exist in there. The other element is obviously, we've run a detailed optimization process such as the batteries under size. So even in cases where there is low radiation, the battery is utilized because obviously, that's what you want from an investment. And then we also see upside opportunity from flexible grid connections. So obviously, we do not have access as anyone in the market to firm connections 24/7, but the battery doesn't need that, obviously, because it's corrugated with solar. So we see an opportunity where also the grid will enable flexible grid connections where we can charge overnight and also realize a second cycle in the morning peak. So base levels conservative targeting 11% because of the cost reductions plus upside from flexible connections.

The key takeaway is we're not beholden to securing those important connections. And then finally, you asked about flex electricity. So, from our perspective, we see how we maximize returns for investors moving towards more management of power flows than generation of electrons. So our whole business model as NextEnergy is migrating to the right. So we are far more focused on than we've ever been on energy market evolution and how we extract value in the right way for investors based on the fundamentals of that market, what products are available, be that long-term incentives or insurance products or simply positive dynamic trading markets. And we are working with partners to deliver the right strategy in market as well as building out the comprehensive experience internally as well, also supported, as I said earlier, by the systematization that we're working on as an organization because big data underpins all of that as we know. So clean data flows through everything that we do as a business facilitates the right outcomes, whether we're trading ourselves or whether we're trading with external counterparties. We generally use route to market, so external counterparties to support the trading of our energy storage assets at the moment. What we're able to do is work in partnership with them to set the risk return profile we're seeking from the asset, and then they are running that execution process. But we'll continue to build out the skill sets on top of what we've already built as a manager over the coming few years.

And just to follow up on that, does that perhaps imply that you probably wouldn't look to using tolling agreements given that you would be picking up the value of taking on that additional risk.

So never say never. The way we view storage in our portfolio at the moment is it is more efficient for us to lever a generation asset than it is for us to lever even a toll storage asset. So when we think about how we are structuring the balance sheet most appropriately, you lean towards running them less toll, so more merchant and you look for that contracted revenue support for your leverage from your generation. Now as the portfolio composition changes, we'll be making the right decisions to support the ongoing capital structure of the vehicle.

[ James Gaither at Baillie Gifford ]. Thanks for the details so far. A couple of more questions on the batteries. So, firstly, if you could clarify for me in your projections, what percentage of the battery portfolio do you expect to be co-located? And the flip side of that, what percentage of your assets do you expect to have batteries co-located on them? And then second question is a little bit more, please, on why the 30% of the overall portfolio is battery storage. I saw the commentary on the diversification benefits and bringing down volatility. I might think that allows you to have more debt in the portfolio, but the gearing cap is saying the same indeed you're bringing debt down. So just the interplay of the 70-30, the debt limit, where you think that might get to over time?

Great. Maybe shall I pass the first one to you and Dario to take. Maybe Dario directly.

Yes, we haven't defined per se a percentage split between colocation and stand-alone yet because it will depend obviously on the opportunities we see during the revamping process. What I can say at this stage is that there will be opportunities for both. So not the whole portfolio will be part of colocated or stand-alone as the capital recycling and the cash availability emerges. We are already exploring opportunities, obviously, on the market for M&A activity, and there will be opportunities for both. Ultimately, the criteria is NAV accretive and IRR target of 11% to 12% on the battery side. So as we deploy the capital, we'll see opportunities in both. Obviously, on the revamping process, we'll target first the largest for colocation, the larger assets and those opportunities. So we'll see both at the same time moving.

Did you want to pick up the question around the 70-30 split?

Yes. I think you already described. So there is an element in there of portfolio optimization from reduction of volatility increasing on return. There is also an element of portfolio definition from what we see the energy system in the next 5 to 10 years to be more -- to mimic more, I guess, the balanced portfolio or the energy mix that you see on the system, right? So renewable penetration first, that has been the natural progression and then having flexibility on a natural progression. So going to 30% is probably still a safe limit. We've seen analysis that probably can get to 40%, 50%. But as energy matures, also you want to not deploy all the capital at the same time in storage. You want to gain from that flexibility and that optionality that maturing technology gains. So we think that 30% is that balance between reduction of volatility even further, increasing our return and then maximizing in the future as the optionality increases on the technology.

Thanks, Dario. So it's not about us pivoting to being a battery fund. This is about us thinking about portfolio composition in the future. So we still want those nice, predictable, stable returns from the generation side. We're complementing it with the storage side in order to kind of support us on that journey that we've detailed out in the road map.

It's Ashley Thomas from Winterflood. I just wanted to touch on the capital structure and the assumption that long term, the RCF and pref structure would remain in place even post 2036. And the gearing level in 2036 still above 40%. So just the view that, that's sort of why is 40% an appropriate level and just sort of taking advantage of Tony's expertise and experience at Drax because I recall back in 2015, Drax had difficulty with hybrid bond issuance even with potentially a 10% coupon. So just when we look out into the mid- to late 2030s and your revenue mix is much more merchant, is there an expectation that financing is potentially more difficult given that structure?

Do you want me to start? Are you happy to go first?

Let me start first. So I mean it's a great question. Actually, thank you. So from our perspective, the level of gearing within the portfolio even at 50% is conservative, and we see much higher levels of gearing for this asset class and across both solar and storage assets, we see them being very attractive in that leverage market. So we're not concerned about the sustainability of being able to finance this type of asset class. What we're bringing about through the repowering work and through the way in which we work the generators into stable revenues looking forward is all about supporting ongoing leverage within the structure. So what we have as we currently stand, as you know, is our long-term amortizing debt repaying within the life of the subsidies. That takes a huge amount of our debt out of our portfolio. That's not replicated across the market. We have a layer of prefs, which are very similar to what peers have in the shape of bonds in the market. So there is a refinancing opportunity around that product as we move through the 2030s. And therefore, that creates a whole bunch of optionality for us around how we deal with that refinancing exercise from continuing to add leverage to the structure through to aggressive disposals and everything in between. The other factor in there as well is the ongoing positive dialogue that we have with pref holders. So what we don't have necessarily is a motivation for pref holders to do anything other than retain that product in perpetuity as well. And given what we see in terms of the rate environment, that is very likely to be something that we have plenty of conversations with them in that time leading up to the 2030s. Critically, we have plenty of time to manage the portfolio appropriately around the management of the prefs in the platform as well. So, yes, you can anticipate to continue to see leverage in the structure in all infrastructure classes of this nature, you should expect to see leverage and this type of platform is no different. It doesn't cause any concern that we have anything near 50% leverage within the structure today or as we look to the end of this road map. Anything else you'd add.

I need the point, and it's sort of a little bit coming back to me. Clearly, yes, your point is a good one. At the end of the day, the balance sheet and capital structure and trading strategy are all interrelated. And that's the point you're making, and that's absolutely spot on, and that's the point that I think Ross is sort of making as well. So, as things evolve, we will continue to look at the right balance sheet and capital structure and financing options, but absolutely linked to the trading of the assets.

If I can add to that, you should not expect us to see merchant revenues as part of the revenue stack, right? We don't have a de minimis amount of energy that we sell under merchant terms and conditions. So you would always expect us to be forward hedging those energy volumes at prices. So when we talk about -- it's not really merchant, it's more the unsubsidized as the subsidies fall away, they will be replaced by other ways, which we are already doing now in fixing forward revenues.

[ Shayan from Gravis ]. Three questions. First one is clarification. The road map you've laid out today, is that all achievable by 2030? So that includes all disposals from both the -- within the fund and the private fund assets plus the 30% of GAV within BESS?

Is there more questions coming? You want us to answer that one first?

Fine. Sorry. Second question is, how did you get to the 75% distribution threshold? Why wasn't it 80%, why wasn't it 50%? And the final question is, you pointed out in the deck that you sort of expect a NAV CAGR around 3%. How do I think about that in terms of free cash flow of the new strategy versus the old strategy? Those are my three.

So, is it all achievable by 2030? We live in a very volatile global environment at the moment. So rather than let you hang me in 2030, Shayan, we clearly have every ingredient in that road map within the control of the vehicle or within the flight path of the vehicle. So absolutely, the reason that we've put that on paper is because we passionately believe it is the right thing for NESF today and that we have the opportunity to access it. We left flexibility in the way in which we've approach to capital allocation structure because we know things will change over that period. So, absolutely, in the updates that you'll receive from us, you can anticipate that we will be giving commentary around what is shifting around in that mix based on the factors that we know are in the real world. So, absolutely, it is -- the flight path is there for us to get what we've said done by 2030, which is why it's there. In terms of the payout strategy at 75%, maybe Ben, I'll pass to you first on that.

Yes. And so in regards to the 75% payout strategy, we ran multiple scenarios where we looked at what available capital we would need over this strategy and how that will feed into both the liquidity events we're looking at and the capital recycling cash generated from here. And we found that 75% gave the best balance in terms of that total returns figure that we're looking at in that range. but then also giving us that flexibility to be able to achieve those capital allocation framework items in there. So we looked at a range of options within there and found that 75% achieved both those goals.

And maybe also if you can kick off with the earn-out CAGR versus free cash flow in an old model versus new, and then I can build on that.

Yes. So the 3% CAGR that we have represented here looks at the implementation of the strategies going through and mainly around how that free capital is being used to input into these new assets, which will be greater returning and therefore, NAV accretive over that time. So the 3% looks at that base position of applying the 75%, 75% payout here and then comparing that against what would happen in just a 75% payout scenario against what we would do to be able to reinvest. So you can see on the graphs on Page 61, how that's then feeding through to that total NAV return that come through.

Yes, thanks. I think the key takeaway from my perspective on the policy shift is around aligning the strategy and all components of that road map with investors as we look to those future market opportunities. So, as I showed in that graph, we do see lower power pricing over the next decade versus where we started in 2014, but it is relatively stable. We think there's lots of reasons to be positive to the upside for that. And this strategy will obviously track that up the way in the good years, and that's exactly the type of upside we want to share back with investors whilst giving good comfort around the forward sustainability of the strategy that the business has adopted. Any further questions from the room? I think we may have had some submitted in advance, which I'll just try and tick through. First question, does your strategy change if there is change in government? Hopefully, I touched on this in my slides clearly. It's designed to be resilient against political cycles. It's underpinned by that long-term need for energy security and also for price stability, not just decarbonization. And we obviously benefit from a high proportion of contracted revenues and a rolling hedging strategy that allows us to deal with volatility in the market. We get asked a lot of questions around the rhetoric that you see from political parties like reform, for example, and how that threatens ongoing maintenance of the platform. When you cut into the economics behind it, a lot of these broad political statements around killing net zero really do not stand up to scrutiny. So we are confident that the portfolio is very well positioned to benefit from underlying market fundamentals over the long term and the strategy remains robust. One for you, Tony, which I think you've covered, but maybe revisit again. Have you ruled out a public to private transaction?

No, as I said, as we said in the presentation, we certainly haven't ruled this out. We're a public company, and therefore, our shares are available for anyone to go and buy if someone wish to take over NESF, then the Board will look at it very forensically and see whether that represented if whatever they offered, one, it was deliverable and two, it represented very good value for our shareholders. That's our job. So yes, not much more to say.

Thank you. Clear. And one for you, Stephen. Can you provide more color on the use of third-party capital and how that might fit into the strategy?

Yes, I touched on that a little bit in the presentation. So we know that through the work that we do on the private side that there is third-party capital looking to deploy into interesting opportunities that bring together management expertise, development pipeline and operational assets into particular types of vehicle that can target higher returns. So we're exploring those opportunities and how NESF might particularly benefit from that given that it has particularly operational capacity and some development pipeline. It's not a core part of the strategy that we're announcing today, but certainly is something that we are looking at in terms of sort of layering in that additional value and that additional upside over the years ahead.

Thank you. One other for you as well. So the -- how does the ongoing situation in Iran impact NESF? Have you seen any increase in power price?

So, in the very near term, some increase in power price volatility, particularly, Camilla as a battery has benefited from that very directly and certainly some opportunities for us to sell out clips of power where there's been liquidity in some of the elevated pricing. I think there's a lot of -- there's certainly a lot of volatility, but a lot of uncertainty as to how long the situation will be prolonged. And therefore, people, I think, are waiting and seeing certainly in terms of impacts further down the curve. So we haven't seen huge movements further out. But of course, what the power sales team do on a daily basis and within days look very carefully where those movements, where those opportunities are and where we've got liquidity and power to take advantage of that, we do.

Great. Thank you. That draws us to a conclusion on the Q&A. Thank you, everybody, for your attention today. I hope you found the session useful. We're excited about where NESF goes next. So we look forward to updating you in due course. Thank you.