NextEnergy Solar Fund Ltd (LSE:NESF) has warned that proposed changes to the way government renewable energy subsidies are adjusted for inflation could reduce the value of its assets by up to 9%.
The Department for Energy Security and Net Zero (DESNZ) launched a consultation on 31 October proposing revisions to the indexation of renewable obligation certificates (ROCs) and feed-in tariffs (FiTs). These legacy schemes underpin much of the UK’s early investment in renewable power.
Under the first proposal, payments under both schemes would switch from tracking the retail price index (RPI) to the typically lower consumer price index (CPI) from April 2026.
NextEnergy Solar estimates this change would trim around 2% from its net asset value (NAV), or roughly 2p per share, based on figures from June 2025.
A second, more severe option for the DESNZ would be to temporarily freeze ROC and FiT prices at current levels before resuming CPI-based indexation once historical CPI-linked values catch up. The company calculates that this could reduce its NAV by about 8p per share, or around 9%.
About half of NextEnergy Solar’s revenue comes from these government-backed schemes, which were designed to provide predictable, inflation-linked income for renewable energy generators.
While both schemes have now closed to new entrants, they remain critical sources of cash flow for older solar and wind projects.
The company said it is preparing a detailed response to the consultation through its investment adviser, NextEnergy Capital, arguing that either proposal would be “detrimental for all stakeholders, including investors, energy consumers, HM Treasury and the UK economy more widely.”
It added that its estimates are based only on the direct financial effects of the proposed changes and do not take into account broader market impacts, such as the potential for higher electricity prices if the adjustments increase financing costs across the renewables sector.
NextEnergy Solar said it will publish its full response on its website once submitted, and continues to engage with trade associations and advisers as part of the consultation process.