NextEnergy Capital: Solar-linked storage will be trend for ‘next five years’

• NextEnergy Capital’s NPUK fund is expected to achieve more than 400MW of operating solar and storage capacity in the UK this year
• Meanwhile, Bhagyashri Joshi, commercial and construction VP at NextEnergy says the asset manager is looking at diversifying, potentially into ‘agri-PV’
• Data centres and behind-the-meter connections also have significant potential, according to Joshi
• Co-location is also appealing, but technology and regulatory obstacles are proving challenging

It’s been a busy period for Bhagyashri Joshi. The day before we speak, Joshi, who is vice president, commercial and construction at solar and energy storage investment and asset manager NextEnergy Capital, has been called out to a project at short notice to deal with issues concerning the granting of full export by the DNO [distribution network operator]. It represents a glimpse of the intense activity at NextEnergy in recent months. In March this year, Next Energy announced that its fund NextPower UK ESG (NPUK) had acquired its fifteenth asset, ‘MereFlats’, a ready-to-build, 56MW solar and16 MW co-located battery energy storage system (BESS) project located in South Yorkshire, UK, thus increasing NPUK’s portfolio capacity to 731MW. The deal followed three acquisitions in the month of November alone last year.

And there are no signs of letting up. NextEnergy has said NPUK is expected to achieve more than 400MW of operating capacity in the UK this year, and has a further 300MW-plus of ready-to-build solar and energy storage projects, alongside further near-term acquisitions, in its pipeline. Joshi says PV and BESS projects will be the main focus for NextEnergy for the next three years, with the PV deployed being a “combination of projects that we have developed in-house or ready-to-build assets that have been acquired”.

Refocussing on BESS

In addition to PV, Joshi says NextEnergy has “refocused our energy on standalone BESS projects in the UK”. She continues: “We are getting ready to deploy one of them in Scotland with a few more that are coming out of planning and getting into the ready to build stage. It will be a combination of PV and BESS for the next three years.” However, Joshi – who has been named as a member of the judging panel for the Energy Storage Investment Awards 2025 – says that NextEnergy is looking at ways of diversifying, with one avenue potentially being ‘agri-PV’, that is, where solar power generation is combined with agricultural activities on farmland. “I think there will be a surge on the agri-PV side of things, especially if funds are ESG-backed and want to invest in a green energy concept” she says. This is an area in which NextEnergy has been previously involved– in 2022, the investment manager announced that Starlight, a company within the NextEnergy Group focused on renewable asset development globally, had developed an agri-eco-voltaics project in Campania, in the north-western area of the Province of Naples, Italy called ‘Land of the Sun’. NextEnergy is also looking at the business case for data centres as well as behind the meter connections, an area in which, there is a “lot of potential”, according to Joshi.

But it’s battery energy storage which has been the key growth area for NextEnergy in recent times. Until the last few years, in terms of construction, pure PV projects used to constitute the bulk of what NextEnergy was building, but more recently it has now seized on the BESS opportunity and now battery storage constitutes 15 to20 per cent of the portfolio. Co-located solar and battery storage is another growing trend – Joshi says that a number of proposed NextEnergy assets are going through the planning process with a view to moving to co-location at some point in the future.

Co-location facing constraints

However, co-location is not straightforward. “There are a few projects where we could be looking to go into co-location, but there are some technology constraints there,” Joshi says. “The way the regulations have been drafted, there is not a whole lot prescribed on how co-locations should work from a metering point of view.” The issue of co-location and metering is one that has been raised by industry bodies including RenewableUK, which last year published a report that called for NESO [National Energy System Operator] to “develop and provide a comprehensive grid compliance guidance that extends to operational elements around different metering, forecasting and trading that can reflect all the different operational arrangements associated with co-location”. Joshi says one of the issues is the balancing mechanism for batteries: “It runs on a completely different platform than how you would normally trade energy through PV, so I think that is where the complexity is – it has not been fully sorted, there are guidelines but they are too vague for anybody to take a chance upon. It’s more about trading, how do you manage it? Solar is not as dynamic as BESS would be in any given hour.”

Though there is uncertainty in the market, generally speaking the outlook is stable ,according to Joshi. She explains: “There are a lot of reforms, uncertainties around the grid connection offers and the dates, but while that exists there is also an indication that it’s going to be a stable policy framework at the end of the day – there are certain targets, net zero by 2050, then there would be some stable policies being put in place to achieve that.” Joshi adds that CfD auctions are “very good drivers” for investors currently, while government-backed energy security strategies “give you longer visibility from the investor’s point of view” – in addition BESS capacity markets are also giving confidence to investors. “From the policy side of things, there’s a huge opportunity,” she says. “Given the COP commitments for the government and the ESG side of it, I project the investment flows will become more solid.”

• This is an extract from an article that appears in the latest issue of Tamarindo’ Finance Quarterly – to read the article in full, download your copy FREE here