Investors Awaken to NextEra YieldCo
by Debra Fiakas CFA Last week NextEra Energy Partners, LP (NEP: NYSE) reported financial results for the third quarter ending September 2015. The numbers were released in along with quarter results from its parent, Florida-based utility NextEra Energy, Inc. (NEE: NYSE). The partnership is the operating arm of clean energy projects originated by the NextEra parent. The ‘yieldco’ as these operating entities have been kindly dubbed by shareholders, delivered $1.0 million in reported net income, but operating cash flow was a whopping $36 million in the quarter. The consensus estimate had been for $0.24 in earnings per...
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...
Fifteen Clean Energy Yield Cos, Created Unequal
Tom Konrad CFA Renewable Energy Investing Grows Up. In January I predicted 2014 would be the year "renewable energy finance comes of age." Here's how Jennifer Runyon quoted me on Renewable Energy World: Konrad believes that 2014 will be a great year for renewable energy finance, he said. He said that we saw the beginning of it in 2013 with the securitization of a bond by Solar City (SCTY) and pointed to Hannon Armstrong’s (HASI) securitization of an energy efficiency bond in late December 2013 as another indicator that renewable energy...
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...
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....
The Sustainable Infrastructure Income Trust
Tom Konrad CFA Jeffrey Eckel Jeffrey Eckel has an investor relations problem. No, there has not been any scandal involving fudging the books or sweatshop labor. Rather, most investors simply don’t seem to “get” his company. His company recently went public as a REIT, or Real Estate Investment Trust, and the traditional REIT investor likes the familiar. They invest for income, and for many, a track record of past income and dividends is a must. While Eckel’s company manages $1.8 billion of securitized energy efficient and sustainable infrastructure...
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...
Solar Investing Grows Up
Tom Konrad CFA Disclosure: Long HASI, BEP. Short PEGI calls, NYLD calls. When I was asked in an interview last month what I thought 2014 would hold for green tech finance, I said 2014 would be the year that “renewable energy finance comes of age.” What I mean is that a new type of renewable energy investment is proliferating. Solar, other renewables, and energy efficiency investments are no longer limited to risky growth plays like Tesla Motors (NASD:TSLA.) There are now a number of yield focused investments available to small investors. As of last year,...
Four Green Dividend Stocks That IPO’d In 2013
Tom Konrad CFA Disclosure: Long BEP, HASI. Canada’s stock exchanges have long had the lead as the place for energy infrastructure companies to list. This includes green energy, as well as the fossil fueled sort. Because Canada’s reporting rules are somewhat less stringent, and its markets less liquid than those in the US, the large number of offerings trade at lower valuations and higher yields than do their (few) US-listed equivalents. In fact, it was the promise of a higher valuation which led Brookfield Renewable Energy Partners (NYSE:BEP, TSX:BEP-UN) to obtain its US listing on June...
No Longer Just Growth: Investing in Renewable Energies for Yield
by Robert Muir Given the determined investor quest for yield as the Federal Reserve maintains the benchmark Federal Funds rate at zero, and the resurgence of attention being paid to alternative energy generation, mainly solar, and to a lesser extent wind and hydro, it’s no wonder Yield Co’s have gained so much investor interest lately. In the near to mid-term, the enthusiasm may be justified. Supported by Power Purchase Agreements, energy infrastructure financing and leasing contracts, and electricity transmission and distribution concessions, all with credit-worthy counter-parties, Yield Co’s are designed specifically to pay out a large portion of...
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 Pros Pick Three Green Income Stocks For 2014
It’s now possible to invest in green stocks for income, not just for growth. Here are three picks for 2014 from green investing professionals.
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...
Power REIT’s First Solar Deal
Tom Konrad The 5.7 MW Solar Farm in Salisbury, MA is the largest solar farm in New England. The land under if was purchased by Power REIT (NYSE:PW) in December. Photo source: Power REIT I first wrote about Power REIT’s (NYSE:PW) plans to invest in renewable energy real estate in May 2012. The intent was to buy the real estate underlying a solar, wind, or other renewable energy project, charging the project owners rent. This can be done profitably because REITs often have a lower cost of capital...
Convertible Solar Bonds: Trina, SunPower Stoke Fire; Ascent Descends
by Sean Kidney Trina’s $150m 3.5% 5yr convertible solar bond In June Chinese solar manufacturer Trina announced the private placement of $150m of 5 year, 3.5% convertible bonds to “institutional investors” (no details provided). Trina weren’t clear how they would use the proceeds, but they are planning to build 400-500MW of solar plants over the rest of this year. Book-runners were Deutsche Bank, Barclays, J.P. Morgan and Goldman Sachs (Asia), with co-manager HSBC. SunPower issues $400m 7yr 0.875% (!) convertible solar bond That same month SunPower announced a private placement of $400 million, 7 year, 0.875% senior convertible bonds. What...
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...
