Income Investments

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...

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...

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...

DTE Energy Company (DTE:  NYSE) recently priced a ‘green bond’ issuance of $525 million to support renewable energy and energy efficiency.  The thirty-year bonds provide a coupon payment at 4.05%.  DTE is planning to buy solar arrays and wind turbines with its newly flush cash kitty.  The capital raise is of significance less for its size and purpose and more for the fact that a U.S. electric utility company is tapping this unusual financing vehicle. True enough, green bonds are nothing new.  Created to fund projects with environmental or climatic benefits, the first green bonds were issued in May 2007 by the European Investment Bank (EIB).  The...

By Tom Konrad, Ph.D. CFA Here are a couple earnings notes I shared last week with my Patreon followers. Eneti, Inc. (NETI) - formerly Scorpio Bulkers (SALT) Eneti completed its name and ticker change on February 8th. New ticker is NETI (formerly Scorpio Bulkers (SALT), which I recently wrote about here. Highlights from February 2nd earnings report: 37 of the 47 vessels owned at the 3rd quarter have been sold or have completed sale agreements. Net asset value is $23.94/share. Since most assets are cash or vessels held for sale, this number is basically accurate. The stock is still a good buy...

By Tom Konrad, Ph.D., CFA Here are two more updates from last week on Patreon.  Also, I realize I neglected to publish the monthly performance chart for my 10 Clean Energy Stocks model portfolio here at the start of the month, so here it is as well: Atlantica Sustainable Infrastructure Earnings (published May 11th) Atlantica Sustainable Infrastructure (AY) released its first quarter earnings announcement and financial statements on May 6th. Atlantica is one of the higher yielding Yieldcos, 5.3% at the new quarterly dividend rate of $0.43 and a $32.50 stock price.  The dividend is safe, since most of Atlantica's debt is fixed rate,...

by Tom Konrad Ph.D., CFA Sustainable infrastructure financier Hannon Armstrong (NYSE:HASI) is not in my Ten Clean Energy Stocks model portfolio for the first year since its IPO in 2013. I still love the company and its business model, but I have become concerned about its short term prospects. Dividend Disappointment? In my last update on the 2017 portfolio, I wrote, “Sustainable infrastructure and clean energy financier Hannon Armstrong reported earnings on November 1st. The headline numbers were lower than expected, but for a very good reason. The company has spent the last few months locking in low interest rates by refinancing its...

Tom Konrad, Ph.D., CFA A reader asked: Read your recent article on Pattern Energy (PEGI). Great summary and thoughts. Would like to ask your view on TERP potential takeover by BEP (via shares swap) and whether you reckon the recent run-up on TERP is too excessive? It's a good question, and one that Robbert Manders on Seeking Alpha did a thorough analysis of here.  For the details of the merger, I refer you to his work. While his analysis is careful and complete, I disagree with his conclusion.  TERP shares are not trading at a significant premium to the merger value.  The reason is...