Clean energy investing is on the rise!
There is a new class of companies called YieldCos which own clean energy assets and use the reliable cash flows from those assets to pay dividends to investors. Many offer yields well above that available from most other stocks (including the fossil fuel-based master limited partnerships, upon which many YieldCos are modeled) which make them very attractive to investors. Additionally, developers of clean energy projects find YieldCos attractive because the stock market provides capital for clean energy projects at a much lower cost than they have historically been able to obtain.
Because the cash flows from clean energy projects are still well above the amount YieldCos need to pay to attract investors, many project developers and aggregators of clean energy assets are currently working to develop their own YieldCos.
If you are interested in learning more or investing in clean energy projects, please contact us.
See below for more information on recent YieldCos.
“Although not every clean energy developer needs to form its own YieldCo, U.S. investors cannot seem to get enough of the IPOs and secondary offerings. This can be seen in the low yields of U.S.-listed YieldCos, since yields fall as investor buying causes the stocks to rise. Most U.S.-listed YieldCos have annual dividend yields below 4 percent, while Canadian-listed YieldCos offer yields in the 5 percent to 6 percent range.
The launch last year of NRG Energy’s YieldCo, NRG Yield (NYSE:NYLD), and the subsequent near-doubling of its price, set off a feeding frenzy on Wall Street. Since its listing, NRG Yield has been joined in U.S. markets by Hannon Armstrong Sustainable Infrastructure (NYSE:HASI), Brookfield Renewable Energy (NYSE:BEP), Pattern Energy Group (NASD:PEGI), NextEra Energy Partners (NYSE:NEP), and TerraForm Power (NASD:TERP). In Canada, YieldCo TransAlta Renewables (TSX:RNW) joined a number of established clean energy producers like Innergex Renewable Energy (TSX:INE), Capstone Infrastructure Corp (TSX:CSE) and Brookfield and Patten, which are listed in both New York and Toronto.
The flood has not stopped there. Analysts are now habitually asking large solar companies and other clean energy developers if they are considering forming a YieldCo. SunPower (NASD:SPWR) has been retaining more of its own solar farms in preparation for a possible YieldCo launch in 2015 or 2016. First Solar (NASD:FSLR), German developer PNE Wind, and Sempra Energy (NYSE:SRE) are all contemplating launching YieldCos as a home for some of their power generation assets.”