Buyer’s Guide To Community Solar in New York

by Tom Konrad Ph.D., CFA 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 from the solar farm as a credit on...

Second Largest Quarter For Green Bonds Ever

Third quarter reflects strong growth and new market entrants Overview The green bond market has kept its strong pace in Quarter 3 2017, reaching a total of USD27.7bn from July to September. On September 28th, the total amount of green bonds issued in 2017 ytd (USD83.2bn) overtook last year’s total issuance of USD81.6bn. We covered the big moment in our Blog Post here. Lots of new issuers The top sources of issuance were: Mexico - USD4bn China - USD3.9bn France - USD3.3bn U.S. - USD2.8bn India - USD1.9bn Mexico was a surprising addition to the number one spot, after issuing no green bonds in Q1 or Q2 this year. Big...

Brookfield’s Yieldco Buying Spree

by Tom Konrad Ph.D., CFA Last week, a Bloomberg reported on a rumor that Brookfield Asset Management (BAM) was in talks to buy Abengoa's (ABGOY) stake in its former YieldCo Atlantica Yield (ABY).  Atlantica had been looking for a new sponsor for well over a year since parent Abengoa filed for bankruptcy. Purchasing Yieldcos (companies that own clean energy infrastructure and use the cash flows to pay large dividends to shareholders) is not new to Brookfield.  Not only has BAM long sponsored Brookfield Renewable Partners, LP (BEP), a limited partnership that has essentially been a Yieldco since before the term was...

Green Bonds Mid-Year Summary 2017

by the Climate Bonds Team Climate Bonds looks at the last six months numbers, the trends and our tips for the rest of 2017 Green Bonds Mid-Year Summary 2017  Headline figures for the Half Year (H1)  2017 issuance to H1: USD55.8bn Records broken: Quarter 2 (Q2) is the largest quarter of issuance on record at almost USD30bn 82 green bond deals issued in the quarter from 74 issuers Over 50% of issuers were first time issuers Green Bond transactions accounted for 3% of global bond market transactions in Q2 2017 Top 5 largest issuers of H1: Republic of France (USD7.6bn), EIB (USD2.8bn), ...

How Much Could Another Yieldco Pay For 8point3?

by Tom Konrad Ph.D., CFA When SunPower (SPWR) and First Solar's (FSLR) YieldCo, 8point3 Energy Partners (CAFD), went public two years ago, I used the financial nerd joke in 8point3's ticker symbol as a launching point to explain what "cash available for distribution," or CAFD, means. In that article, I cautioned against the risks of using a short-term cash flow measure for long-term investing decisions. That risk is becoming more and more real for investors in 8point3 because the YieldCo is using  short-term, interest-only financing to fund its long-term investments. All of 8point3's debt matures in 2020, and refinancing that debt will...

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...

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...

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...

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...

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...

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...

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...

Green Bonds: 2015 Year End Review

by the Climate Bonds Team Another successful year for the green bond market with 2015 issuance hitting $41.8bn making it the biggest year ever for green bonds. Achieving scale hasn’t been the only reason to celebrate the green bond market at the year-end; the real success is the geographical spread of green bonds across the world. Green bond markets are popping up all across the world, in Brazil, China, Estonia, Mexico and India… just to name a few! Green bond market momentum continues to build after a successful COP in Paris. ...

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...

What Yieldco Managers Are Saying About The Market Meltdown

by Tom Konrad Ph.D., CFA Note: This article was first published on GreenTechMedia on Noveber 27th. In the last six months, YieldCos have fallen from stock market darlings to pariahs.  YieldCos are companies that buy clean energy projects such as solar and wind farms, and use the majority of free cash flow from these projects to pay dividends to investors. Many are listed subsidiaries or carve-outs of large developers of clean energy projects. Last year, investors repeatedly punished leading solar developers and manufacturer First Solar and SunPower for their reluctance to launch YieldCos. When...

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: