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...

YieldCo Bubble: The Aftermath

Readers may be interested in listening to this podcast. Where Stephen Lacey and Shayle Kann of GreenTechMedia speak with me about the current YieldCo landscape. Follow this link to The Interchange Podcast. -Tom Konrad, Editor

Comparing Community Solar Subscriptions And Yieldcos

By Tom Konrad, Ph.D. CFA Community solar is gaining traction in many states. The concept, also known as shared solar or solar gardens, originated in the mid-2000s as a way to allow broader participation in the ownership of solar photovoltaic (PV) systems, while also encouraging local development. Community solar broadens access to solar beyond homeowners with suitable roofs. A National Renewable Energy Laboratory report from 2015 estimated that 49 percent of households cannot own solar because they do not own their own home, or they live in high-rise buildings with insufficient roof space.  Rooftop solar is impractical for many...

Green Bonds From Terraform Global, SolarCity, and Hannon Armstrong

by the Climate Bonds Team Yieldco TerraForm Global (GLBL) issues a whopping $810m green bond (7 years, 9.75%, B2/B+) TerraForm Global Operating has issued an $810m green bond, with 7-year tenor, 9.75% coupon and ratings of B2 and B+ from Moodys and S&P respectively. TerraForm Global is a recent yieldco spin off (IPO last month) of SunEdison (SUNE) group (have a look here if the yieldco concept is new to you). Terraform Global owns and operates renewable energy assets - solar, wind and hydro - in emerging markets, in the following locations: Solar: China, India, South Africa,...

Solar REITs: A Better Way to Invest in Solar

Tom Konrad CFA The last day for a solar developer to submit an application for the Treasury’s 1603 grant program was September 30th, and only for grandfathered solar projects which broke ground before the end of 2011. Solar panel prices have continued to drop this year, but solar project development remains a capital-intensive business.  The 1603 program allowed solar developers to monetize the solar investment tax credit (ITC) much more quickly than they could otherwise, and this essentially reduced their cost of capital.  As the rush of projects begun before the end of 2011 are completed, developers are looking...
REITS ESG Green 2022

Five Green REITs

by Tom Konrad Ph.D., CFA Why Green Buildings are Profitable Buildings Buildings are responsible for approximately a third of greenhouse gas emissions, so making buildings more efficient and switching them to renewable sources of energy is an essential part in addressing climate change. Fortunately, new technologies such as cold climate heat pumps, heat pump water heaters, induction stoves, as well as the ever falling cost of renewable electricity and improvements to insulation and building envelopes often provide opportunities to improve buildings while achieving extremely attractive investment returns from the energy and maintenance savings alone. Because of the great financial returns, building owners who...

Has the Sell-off Created Value Stocks Among Clean Energy Conglomerates?

Tom Konrad CFA The silver lining of all market declines is the chance to buy stock in quality companies at attractive prices.  That opportunity has been notably absent over the last two years, which is why my focus has shifted to smaller and smaller companies in search of reasonable valuations over that time.  Although I still don't believe the market is cheap by any measure other than comparing it to a couple months ago, the volatility is starting to bring some individual bargains, especially on heavy selling days.  For instance, I've started to acquire some of...

Climate Bond Standard to be Released This Week

Tom Konrad CFA Conserving the planet for conservative investors. Investing in clean energy stocks has an (often well-deserved) reputation for risk.  Although energy efficiency and more inclusive progressive energy indexes have held up fairly well over the last few years, the performance of narrower clean energy sectors has been dismal, and some industry observers feel that the declines in wind and solar are structural (and hence permanent) as opposed to cyclical (and therefor temporary.) This presents a conundrum for investors with long time horizons who not only need their investments to earn a steady return...

Climate Bonds Mid-Year Roundup

by the Climate Bonds Team Halfway in 2016: Issuance Up on 2015: New Underwriters from China: And Where Will Green Bonds Land by Dec 31st? The Headline Figures: At the end of Q2, issuance for 2016 stood at USD 34.6bn – bringing it close to the total issuance for 2015 with 6 months of the year to go.  In the first two weeks since the end of Q2 - total issuance surpassed the 2015 total. We expect even more in the second half of the year.  USD 18.6bn issued in Q2 alone making it the highest single quarter of green bond...

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...

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),...

Trina Solar’s Second Convertible Bond

By Beate Sonerud and Sean Kidney China’s Trina Solar (TSL)is issuing US$100m of convertible bonds with 5-year tenor and 4% annual coupon, with semi-annual payments. An extra US$15m could be raised, as Trina has given the underwriters a 1-month window to buy additional bonds. Guess they are waiting to gauge demand. Underwriters are Deutsche Bank, Barclays, and Credit Suisse, with Roth Capital Partners as co-manager. The bonds can be converted to shares (American Depositary Shares, meaning they are listed in the US) at an initial price of US$14.69 per share. Currently, Trina’s shares are trading at US$11.40, after...

Nordex Issues First Green Schuldschein

by the Climate Bonds Team German green debt instrument raises €550m ($621m) for wind energy and gains Climate Bonds Certification. German wind company Nordex (NRDXF) is the first Schuldschein issuer to label its issue as green. The green issue is verified under the Climate Bonds Standard and sector specific Wind Standard. Assets include wind power manufacturing and infrastructure around the world. Nordex employed DNV GL to verify the green Schuldschein against the Climate Bonds Standard. The deal was split across four tranches with 3, 5, 7 and 10 year tenors. The joint underwriters were...

Solar Bonds and Other Green Income Investments Compared

by Tom Konrad CFA Clean-energy stocks’ performance over the last couple of years proves that it’s possible to do well – sometimes very well – while doing good. Unfortunately, it’s also possible to lose a lot of money. Case in point: solar installer SolarCity’s stock (SCTY) price has more than quintupled since its 2012 IPO, but has fallen 40% since the start of the year. Swings like these are just too wild for many investors to stomach. So the news that California-based SolarCity launched the first public offering of solar bonds last week likely piqued the interest of sustainability-minded...

A Flurry Of Green Muni Bonds

by Tess Olsen-Rong Green municipal bonds are set to take off in 2015 after a flurry of issuances in the latter half of 2014. With interest rates at an all time low, this is the time to finance the vast backlog of infrastructure upgrades and developments needed – and to green that infrastructure. This, according to the Financial Times, is especially so in the US. With green muni growth has come a growing diversity in the use of proceeds. Some green municipal bonds are using proceeds for projects where the green credentials are more complex to analyse...

Developments in the Solar Corporate Bond Market

by Corporate Bonder The global bond market is huge. Data from the Bank for International Settlements shows that the total size of the global debt securities market (domestic and international securities) was $99.5 trillion as at June 2011, of which $89.9 trillion were notes and bonds. Governments accounted for $43.7 trillion of outstanding debt securities, financial organizations $43.8 trillion, corporations $11.0 trillion and international organizations $1.0 trillion. Against that, Bloomberg has estimated that there are $230bn outstanding of fixed-interest securities that meet their “green bonds” definition. And of course the IEA talks of $1 trillion of investment a...
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