The True Story of Clean Renewable Energy Bonds
Sean Kidney Where did all the CREBs and QCEBs go? Mystery solved. The US has for a long time used tax credits to promote the development of oil and gas and other industries. With tax credits the bond issuer still pays a coupon, but their payment is subsidized, effectively lowering the rate of interest paid. The Obama administration brought in a big program of credits for renewable energy bonds. The plan was that States, large local governments, tribal governments and public power bodies would issue bonds to finance energy efficiency or renewable energy. The US ...
Unlocking Solar Energy’s Value as an Asset Class
by James Montgomery
2014 is predicted to be a breakout year for solar financing, as the industry eagerly pursues finance innovations. Many of these methods aren't really new to other industries, but they are potentially game-changing when applied in the solar industry.
Retail Renewable Energy Bonds Proliferating
by Sean Kidney Renewable Energy Finance via BigStockPhoto There has been a bit of interest recently about rapidly expanding options for retail investors to get involved in renewable energy projects. While we still see retail bonds as making a relatively modest contribution to the transition to a low carbon economy, they are important in engaging the public and creating awareness for green thematic investments which can only be good. Here’s a round up of some of the activity going on in the retail bond market (please note, this...
The Status of The Yieldco
by Tom Konrad, Ph.D., CFA Last week I delivered the keynote at Yieldcon USA, a conference put on by Solar Plaza entirely focused on Yieldcos. (Yieldcos are companies that own clean energy assets such as solar and wind farms and use the cash flows to pay a high rate of current income to investors.) Given all that's gone on in the space in the last few weeks, the conference could not have been more timely. You can find the presentation here and embedded below:
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...
US Yieldcos Will Survive
by Susan Kraemer As unrealistic expectations of dividend growth are scaled back, yieldcos are now on a more sustainable path. Weaknesses in the US yieldco model came into sharp relief this summer as share prices fell along with oil and gas stocks. This was in part due to investor confusion about energy stocks but also in response to a flaw in US yieldco expectations. Manager of the Green Global Equity Income Portfolio and AltEnergyStocks.com editor Tom Konrad Ph.D., CFA had warned of the looming potential for exactly this kind of market correction in a conversation a...
List of High Yield Alternative Energy Stocks
This is a list of renewable and alternative energy stocks with dividend or distribution yields above 4%. The list includes most Yieldcos (high distribution companies that own renewable energy operations), but is not limited to Yieldcos. Some Yieldcos may be excluded if their yield is below 4%.
Atlantica Yield plc (AY)
Algonquin Power & Utilities Corp. (AQN, AQN.TO)
Bluefield Solar Income Fund Ltd. (BSIF.L)
Brookfield Renewable Partners L.P. (BEP)
Clearway Energy, Inc. (CWEN,CWEN-A)
Companhia Energética de Minas Gerais (CIG)
Covanta Holding Corporation (CVA)
Crius Energy Trust (KWH-UN.TO, CRIUF)
Enviva Partners, LP (EVA)
Foresight Solar Fund plc (FSFL.L)
GATX Corporation Series A (GMTA)
Global X YieldCo ETF (YLCO)
Greencoat UK Wind PLC (UKW.L)
Green...
Comparative Valuation of 15 Yieldcos
Tom Konrad CFA Compared to the peak of the Yieldco bubble in May, many Yieldcos have dropped by more than half, and most by more than a third. Some of this decline is because rapid dividend growth depends on an endless supply of cheap investor capital which is another way of saying that we can have rapid dividend growth or high dividend yields, but not both. Part of the decline was due to the realization that many Yeildcos (most notably Terraform Power (TERP), Terraform Global (GLBL), and Abengoa Yield (ABY)) were not immune to...
Covanta and Hannon Armstrong Earnings
by Tom Konrad, Ph.D. CFA
Two more earnings notes I shared with my Patreon followers on February 18th.
Covanta Holdings (CVA)
Leading waste-to-energy firm Covanta Holdings (CVA) announced 2020 earnings today. There will be a conference call tomorrow morning, but here is my high-level impression:
The company managed well through Covid and ended the year within it's original pre-covid guidance. Metals and energy prices, as well as increased maintenance capital expenditures were a drag on results, but prices are improving and capital expenditures will fall in 2021.
The company is conducting a strategic review which will likely result in the sale of some underperforming...
Four Clean Green Dividends
by Debra Fiakas CFA The recent pullback in stock prices in the U.S. equity market has opened the door to some interesting dividend yields. Investors with a taste for environmentally-friendly businesses have some particularly interesting alternatives that can pump up the purse as well as protect Mother Earth. AES Corporation (AES: NYSE) is a world-class power generator from mixed portfolio of conventional and renewable power sources. About 28% of its 29,352 megawatts of generation capacity is from renewable fuel sources, including hydro, biomass, solar and wind, and another 33% from plants using natural gas. The balance of...
Yieldcos: Boom, Bust, and (Now) Beyond
The Yieldco model is not broken. But investor expectations have changed. by Tom Konrad Ph.D., CFA The Yieldco bubble popped almost exactly a year ago after a virtuous cycle turned vicious. Last May, I explained how these public companies (which own solar farms, wind farms and similar assets) could grow their dividends at double-digit rates despite no internal growth or retained earnings. This “weird trick” can work so long as the Yieldco’s stock price is rising, allowing it to sell stock at higher valuations and increase the amount of money invested per share. As long...
The Greenium: Growing Evidence of a Green Bond Premium
Highlights from the latest Q4 2017 Green Bond Report from the Climate Bonds Initiative: Two years of data observations examining green bond behavior in primary markets
Climate Bonds Initiative has released the fourth “Green Bond Pricing in the Primary Market” report analysing the performance of green bonds issued in the period October-December 2017. This is the last quarterly report; future publications will be produced semi-annually allowing a more longtitudinal analysis as the market expands.
The Q4 2017 report covers USD15.1bn or almost 40% of the face value of labelled green bonds issued in Q4. 15 EUR and 8 USD labelled green bonds are...
Income From Hydroelectric Power
by Debra Fiakas CFA Are you an investor hungry for current income? Is there a green line of global warming fear running through your investment selections? I have stock that fulfills both requirements. Brookfield Renewable Energy Partners (BEP: NYSE) is a renewable power producer with assets in Canada, the U.S. and Brazil. Brookfield generates over 5,900 megawatts of power each year from plants running on river water, wind or natural gas. Another 2,000 megawatts is apparently under development in Canada and Brazil. What Brookfield does best is hydroelectric production. The company claims over 170...
Yieldco Valuations Look Attractive
By Tom Konrad Ph.D., CFA
Despite a run-up in the fourth quarter of 2023, it has been a long time since valuations of clean energy stocks have been this cheap. Perhaps it is worries about hostility towards clean energy under a new Trump administration, or disappointment at the slow implementation of the Inflation Reduction Act. Whatever the cause, prices are low, and many clean energy stocks are likely to produce good returns even if the political climate turns further against them.
This is especially true for companies that are less dependent on favorable policy or subsidies. For instance, Yieldcos, high...
Q1 Earnings Roundup: Yieldcos (AGR, BEP, CWEN, GPP)
By Tom Konrad, Ph.D., CFA
This is a roundup of first quarter earnings notes shared with my Patreon supporters over the last week. If there is any theme, it’s that low interest rates and increased interest in green investments is lowering Yieldcos’ cost of capital to the benefit of stock investors.
Avangrid Earnings
Avangrid's (AGR) Q1 earnings report showed solid progress. Key items of note were:
Increased outlook for full year 2021 Adjusted EPS a little over 5%
Key environmental approval for 800 MW offshore wind farm Vineyard Wind. Expected to begin construction later this year, with expected completion in 2024. Avangrid...
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...
