Will Investors Flock to SunEdison’s Emerging-Market YieldCo?
by Tom Konrad CFA SunEdison is proposing something entirely new: a YieldCo with a focus on projects in Africa and Asia, but it's a long way between an S-1 filing with the SEC and and IPO. The June launch of SunEdison's (SUNE) first YieldCo, TerraForm Power (NASD:TERP), transformed the parent company's prospects. Now it wants to repeat the performance with a first-of-its kind YieldCo that will focus on investment in Africa and Asia. A YieldCo is a publicly traded company that is formed to own operating clean energy assets that produce a steady cash flow,...
Buying Innergex – Texas Was Bad, But Not That Bad
By Tom Konrad, Ph.D., CFA
Last week, I published this call to buy Innergex (INGXF, INE.TO) because investors had been overreacting to the losses from the February cold snap in Texas. The stock is up since then, but still seems a decent value.
Canadian Yieldco Innergex Renewable Energy (INGXF, INE.TO) took a big financial hit from the power disruptions in Texas in March.
It's complex, but their financial hedges on power prices for three of its wind farms ended up creating enormous liabilities - more, in fact, than two of their wind farms are worth. Two of their facilities also had benefits...
Renewable Energy REITs or MLPs Would Unlock Billions
Jennifer Runyon According to Richard Kauffman, Senior Advisor to the Secretary, DOE, making REITs or MLPs available for renewable energy project financing is the key to advancing the industry. Top engineering, procurement and construction firms gathered to network, learn and do business with corporate-level project developers at the PGI Financial Forum, one of four co-located events that took place in Orlando, Fla. earlier this month. Richard Kauffman, Senior Advisor to the Secretary of the U.S. Department of Energy, gave the keynote address during a luncheon that took place during the conference. ...
Climate Bonds 2016 Highlights
by the Climate Bonds Team
A record year with green bond issuance of USD 81bn, up 92% on 2015 figures
The Trends
A maturing of the green bonds market, diversification across issuers, products and use of proceeds are the main trends identified in our Green Bonds Highlights 2016 summary.
The Big Numbers
92% – growth on 2015 making 2016 the most prolific year to date
USD 11.8bn – November issuance, the largest month on record
24 – number of countries with green bond issuers
27% – proportion of Chinese issuers
241 – number of labelled green bonds issued (median size USD133.7m)
>90 – number of new issuers
>50 – number...
Five Pioneers Mining the Sun for Income
by Jared Wiedmeyer For the past few years, solar industry stakeholders have imagined a future where the general public has the ability to invest in pure-play renewable energy real estate investment trusts (REITs) that finance and construct both utility-scale and distributed photovoltaic (PV) projects in the United States. While these stakeholders wait for this reality to come to fruition, existing REITs already have several options to own or develop solar projects that still allow them to comply with the IRS's asset and income tests. This past May, Chadbourne & Park's Kelly Kogan and Scott Bank moderated a roundtable with...
Buyer’s Guide To Community Solar in New York
by Tom Konrad Ph.D., CFA
An updated version of this article is available here.
After a painfully long wait, community solar (also called shared solar) is finally coming to New York state. After years of regulatory uncertainty, the state Public Services Commission (PSC) has put enough of the enabling regulations in place for a number of developers to move forward.
What is Community Solar?
A community solar installation is a large scale (typically 1 to 3 MW, or the size of about 150 to 800 residential solar installations) in which subscribers can sign up to lease or purchase a share of the production...
Green Asset-Backed Bond From Hannon Armstrong Has Measured GHG Savings
by the Climate Bonds Team Hannon Armstrong’s (HASI) second green ABS, $118.6m, will save 0.39 tons of GHG annually per $1,000! ($100.5m, 4.28%, 19 yr, A and $18.1m, 5.00%, 19 yr, BBB) Hannon Armstrong (NYSE:HASI) closed its second green ABS bond (Sustainable Yield Bond) following its inaugural issuance in December 2013. The ABS was a private placement split into two tranches with different credit ratings (from Kroll Bond Credit Rating Agency): $100.5m with a rating of A and 4.28% interest rate, and $18.1m with a rating of BBB and 5.00% interest rate. Both tranches have a 19-year tenor....
Solar Income, Really?
Tom Konrad CFA Disclosure: Long BEP, HASI. NRG Yield (NYSE:NYLD) was spun out of its parent, NRG Energy, Inc. (NYSE:NRG) in July, and has since been greeted with enthusiasm by investors. The stock priced at $22, 10% over the mid-point of its expected range, and the underwriters exercised their full over-allotment option. NRG Yield presents itself as an owner and operator of contracted renewable and conventional electricity generation, as well as thermal infrastructure assets. (Thermal infrastructure provides heat or cooling to businesses for use in their operations.) The company has a green tinge because of its wind and...
Capstone Infrastructure: How Bad Is The Worst Case?
Tom Konrad CFA Disclosure: I have long positions in MCQPF and AQUNF. Capstone Infrastructure Corporation (TSX:CSE, OTC:MCQPF) has been trading at a significant discount to its peers because of a power supply agreement which expires at the end of 2014. Capstone is seeking a new agreement with the Ontario Power Authority for its Cardinal gas cogeneration facility, a process which has taken much longer than management expected. The cardinal Cardinal plant currently accounts for about a third of Capstone’s revenue and a quarter of earnings before interest, taxes, and depreciation (EBITDA), but two-thirds of distributible income. The high fraction...
Fifteen Clean Energy Yield Cos: Company Structure
Tom Konrad CFA In the first article of this survey of yield cos, I looked at the possible reasons for the seemingly endless enthusiasm for US-listed clean energy yield cos. Here, I'll take a look at how these yield cos are constructed, and why investors should prefer one structure over another. Who's Your Daddy? Most yield cos have been created by clean energy project developers in order to create a ready, low-cost buyer for those projects. With the recent string of very successful IPOs, the capital available for such projects may prove...
Are YieldCos Overpaying for Their Assets?
Tom Konrad CFA YieldCos buy and own clean energy projects with the intent of using the resulting cash flows to pay a high dividend to their investors. Several such companies, often captive subsidiaries of listed project developers, have listed on U.S. markets since 2013. So far, YieldCos have been a win-win: The developers that list YieldCos have gained access to inexpensive capital, and income investors have gotten access to a new asset class paying stable and growing dividends. So far, they have also gained from significant stock price appreciation. The seven U.S.-listed YieldCos are up...
Record-Breaking $9bn Green Bonds Issued in Q1
Bridget Boulle It’s been another ground breaking quarter for green bonds – the biggest yet with just under USD9bn issued ($8.997bn). It seems our initial estimate of $20bn for the year will be met much sooner than we thought so we’ve revised it to $40bn (there are no rules). There have been new issuers, new currencies, new underwriters, new areas of issuance and, for the first time, a green bonds index. All good things, here is a summary… The development banks led the way for the quarter but not by too much: development banks = USD4.9bn while corporates =...
Wall Street Banks Promote New Green Bonds Framework
by Sean Kidney Earlier this month CitiBank (NYSE:C) and Bank of America Merrill Lynch (BoAML; NYSE:BAC) launched, via a special EuroWeek report on ‘sustainable’ capital markets, a “Framework for Green Bonds“. This is potentially a big development. In the paper the two banks laid out a ‘vision’ for the green bonds market and called for a Green Bonds Working Group of issuers, dealers and investors to be formed to drive the evolution of the nascent market. The paper calls for debate about the green bond market, especially about...
Green Dividend Yield Portfolio
By Harris Roen There is a new and growing interest in the world of alternative energy investing, the search for high-quality dividend yield among green investments. To this end, the Roen Financial Report has created a Green Dividend Yield Portfolio, a select group of high-yield alternative energy stocks. Together, this selection of companies can produce a steady stream of income for the alternative energy investor. A New Source for Dividend Yield The Green Dividend Yield Portfolio is a collection of high-yield stocks that are in the alternative energy business. Companies that fall...
Fossil Fuel Companies Should Be Issuing Green Bonds
by the Climate Bonds Team ‘Fossil fuel companies should not be issuing green bonds because they are not green businesses.’ Varying versions of this statement crops up often at green bond conferences and in articles. We disagree, and here is why: It’s use of proceeds that matter Green bonds are about use of proceeds. What matters is the green characteristics and features of the projects that are being invested in, the ‘use of proceeds’, not the balance sheet backing the bond. This is an accepted concept in the green bond market...
Capstone Infrastructure: Green Income At A Cardinal Discount
Tom Konrad CFA Capstone Infrastructure Corp.'s Gas Cogeneration facility in Cardinal, Ontario. Capstone Infrastructure Corporation (TSX:CSE, OTC:MCQPF. Disclosure: I own this stock) is an international operator and developer of green infrastructure assets and utilities which is currently selling at a significant discount to most comparable firms. I recently ran a comparison of six similar Canada-listed firms, and Capstone seemed much cheaper on several measures. The Discount The following chart compares five renewable energy and green infrastructure firms with most of their operations in Canada: Capstone, Algonquin Power and Utilities (TSX:AQN, OTC:AQUNF), Brookfield Renewable Energy Partners (NYSE:BEP),...
