by Debra Fiakas, CFA

A stream of impressive news has been delivered by wind turbine producer Vesta Wind Systems AS  (Copenhagen: VWS.CO, US OTC: VWSYF, US ADR: VWDRY) over the last few weeks.  Over the last two months the company has received orders for wind power turbines totaling 3,781 megawatts.  Customers in the U.S. appear to be quite shy, withholding their names and the final destination of the power projects. Nonetheless, the more transparent European, Chinese and Brazilian customers provide a good view on how well regarded Vestas has become.

Business has been so good Vestas is opening a new nacelle and hub assembly factory in Chennai, India.  The company already has two production units in the area that will be combined and expanded in the new Chennai facility.  Vestas plans to begin production at the site by the end of 2020.  The company has 20 factories around the world that in providing good jobs can be used to leverage local support for its wind turbine products.

Vestas has made progress in penetrating the U.S. market with a lower-cost solution called the V138 wind turbine with 3.0 megawatt capacity.  The turbine has a tip height under 500 feet, which is frequently a limitation for wind park sites in the U.S. The turbine is expected to have 30% higher energy production than an older V120 2.2 megawatt solution.

General Electric (GE:  NYSE) is Vestas primary competition in the U.S.  Both companies have had to adjust to the expiration of government subsidies for wind power.  GE’s product line offers a range of capacities from 1.7 megawatts to 5.3 megawatts.  The company has made good progress in the wind market in the U.S. and around the world.  However, Vestas remains number one in nameplate capacity.

With all this warm breeze blowing at Vestas’ back it is no surprise to find that the shares are trading at 135 times trailing earnings on the Copenhagen market and 20.38 times trailing earnings in the U.S. equity market.  Small-cap investors who frequent this blog may find the stock entirely unaffordable.  However, the 1.25% dividend yield on the shares in the U.S. market helps make the price-earnings multiple more palatable.  The stock is underpinned with exceptional financial performance:  6% net profit margin, 20% return on equity and 10% sales-to-cash conversion.

The share price has leveled off after a steep drive higher that began in 2013 as Vestas began capturing market share with new turbine products.  However, the company is just now beginning to realize the benefits of its pioneering efforts in wind power.  Some investors might see the stock as fitting well into a buy-and-hold portfolio focused on larger companies with well established operations.

Recent Vestas Orders

• An undisclosed customer ordered 420 megawatts of V120 2.2 megawatt wind turbines for a project in the United States.  The planned commissioning is late 2020.
• PacificCorp, a subsidiary of Berkshire Hathaway Energy, ordered V136 4.2 megawatt wind turbines totaling 459 megawatts that will be installed at two wind projects in Wyoming.
• Ekola Flats in Wyoming will receive V136 4.2 megawatt wind turbines totaling 228 megawatts.  The project is owned by PacificCorp.
• EDF Renewables order 249 megawatts of V120 2.2 megawatt wind turbines for its Las Majadas wind project in Texas.
• Energy supplier Fortum will use 21 V150 4.2 megawatt turbines for its project Kalax in western Finland.
• An undisclosed customer in China ordered 20 V120 2.2 megawatt wind turbines for a project that matches a hub height record in China.
• A project in the New South Wales Southern Tablelands is to receive 54 V117 4.2 megawatt wind turbines as part of an engineering, procurement and construction project.
• Vindkraft ordered 39 of Vestas V150 4.2 megawatt wind turbines for a project in the Kherson region of southern Ukraine that will reach a total 164 megawatts when completed.
• The Rio de Ventro project in the state of Rio Grande do Norte in Brazil will receive 106 Vestas V150 4.2 megawatt wind turbines.  Project developer Casa dos Ventos placed the order in early June 2019.
• Vesta won a contract auction in Denmark to supply 16 V126 4.34 megawatt wind turbines for the Overgaard 1 Wind Park in Randers Municipality in Denmark.  Project owner SE Blue Renewables  is a joint venture of Denmark’s SE energy company and PFA Pension company.
• Vestas will supply 67 V150 4.2 wind turbines to an unnamed customer in Brazil.  The turbines will be produced at Vestas’ factory in Ceará, Brazil in cooperation with the Brazilian Development Bank.
• Brazilian energy company Echoenergia order 76 megawatts of the V150 4.2 megawatt turbines for its Serra do Mel wind project in the state of Rio Grande do Norte, Brazil.
• The first order for wind turbines in El Salvador will be installed by Ventus S.A. de C.V. and Tracia Network Corp. The order is for 15 V136 3.45 megawatt turbines.
• An undisclosed customer has contracted with Vestas America for the supply and commissioning of 454 megawatts of V120 2.2 megawatt wind turbines.
• Vestas America received an order for supply and commission of V150 4.2 megawatt wind turbines for two projects being developed by an undisclosed customer.
• A mix of V110 2.0 megawatt and V150 4.2 megawatt wind turbines will be installed for an undisclosed customer by Vestas America.  The contract includes a 25-year service agreement.
• Bürgerwindpark Rauβenköge GmbH & Co. ordered 12 V112 3.45 megawatt turbines for a wind park in Schleswig-Holstein.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 7/9/19 as “Warm Wind Blowing at Vestas’ Back”.

The post Warm Wind For Vestas appeared first on Alternative Energy Stocks.

by Tom Konrad Ph.D., CFA

Last week, I neglected to discuss Terraform Power (NASD: TERP) in the third quarter update on the other ten clean energy stocks for 2018.  I did not notice the omission until after the post had been published, so I decided to write a quick follow-up this week after I had a chance to digest the earnings announcements (including TERP’s) which were scheduled for later in the week.

Stock discussion

Clearway Energy, Inc (NYSE: CWEN and CWEN/A)
12/31/17 Price: $18.90 / $18.85.  Annual Dividend: $1.133(6.0%). Expected 2018 dividend: $1.26(6.7%)  Low Target: $14.  High Target: $25. 
10/31/18 Price: $19.61/$19.42   YTD dividend:  $0.927 (4.90%)  YTD Total Return: 9.4%/8.1%% 
11/12/18 Price:  $19.67/$19.43

Yieldco Clearway Energy, Inc reported earnings [pdf] on November 6th. The announcement held no big surprises.  Income and cash flow grew at a healthy pace from the previous year due to new investments and strong performance in renewable and thermal generation.  Under its new sponsor Global Infrastructure Partners (GIP), the Yieldco is wasting no time refinancing some of its more expensive debt and raising capital for new growth investments.

These investments should lead to continued growth in 2017, and Clearway is targeting 5 to 8 percent dividend per share growth in 2018, while affirming current 2018 guidance.   The company announced a $0.331 quarterly dividend for December. a 16.5% year over year increase.

Terraform Power (NASD: TERP)
12/31/17 Price: $11.96.  Annual Dividend: $0. Expected 2018 dividend: $0.72 (6.0%)  Low Target: $10.  High Target: $16. 
10/31/18 Price: $11.27 YTD dividend: $0.57 (4.77%)  YTD Total Return: -0.9% 
11/12/18 Price: $10.98

Yieldco Terraform Power reported third quarter results on Thursday, November 8th.  Investors were unimpressed, sending the stock down 7% on Friday.  Investors seem to have reacted to a larger than expected GAAP loss, caused largely by higher than expected maintenance costs.  The company is negotiating long term service agreements with GE, which should lower future maintenance costs.  The company has also improved its cash flow profile going forward by refinancing expensive debt from its acquisition of Saeta Yield.  It is also borrowing against some of its assets to fund future growth acquisitions.

The company expects to be able to achieve 5-8% annual dividend per share growth over the next five years, mostly driven by cost reductions and increased production at existing assets, and small acquisitions.  The opportunities for cost savings and increased production are due to the benefits of scale from the combination of Terraform and Saeta Yield assets.  With a current 7% yield likely to grow at at least 5% over the next 5 years, I consider the stock very attractive at this price, and appreciate the opportunity to increase my holdings after the sell-off on the earnings announcement.

Enviva Partners, LP. (NYSE:EVA)
12/31/17 Price: $27.65.  Annual Dividend: $2.46(8.9%). Expected 2018 dividend: $2.65 (9.6%).  Low Target: $25.  High Target: $40. 
10/31/18 Price: $30.02 YTD dividend: $1.875 (6.78%)  YTD Total Return: 15.6% 
11/12/18 Price: $30.40

Wood pellet Yieldco and Master Limited Partnership Enviva reported third quarter earnings on Friday, November 9th.  In the update last week, I stated, “I’m optimistic that third quarter earnings will give the stock a boost.”  The boost, if it came, was concealed by the general down market on Monday.  In fact, the immediate market reaction seems slightly negative, perhaps due to some disruptions in production and shipments due to hurricanes Florence and Micheal.

The partnership did not miss any deliveries or have any loss of life, however, and expects the costs should be recoverable from insurance.  While the timing and exact amount of recoveries is uncertain, I found nothing to worry about in the report.  The partnership also provided guidance for 2019 of $125 to $135 milling in Adjusted EBITDA, compared to the $118 to $122 million which it still expects to achieve for 2018.  This corresponds to growth of approximately 8% before the effects of any acquisitions.  Although the partnership’s payout ratio is inching up towards 90%, this should support continued growth in the partnership’s distribution through 2019, especially considering the impacts of the fire at the Partnership’s Chesapeake terminal and two hurricanes are not repeated in 2019.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Ten Clean Energy Stocks For 2018: Terraform, Clearway, and Enviva appeared first on Alternative Energy Stocks.

Tom Konrad Ph.D., CFA

July and August saw some mild recovery for the stock market after a difficult first half of 2018.  Clean energy income stocks continue to lag the broader market, but my Ten Clean Energy Stocks model portfolio has managed to maintain its lead over its broad market benchmark.

Through August 31st, the model portfolio is up 7.5%, compared to its broad dividend income benchmark SDY, which is up 5.3%.  Its clean energy income benchmark YLCO is down 1.2, even after dividend income.  The private portfolio I manage, the Green Global Equity Income Portfolio (GGEIP), is slightly behind the broad market of income stocks at 4.6%, but well ahead of YLCO.

Over the two months, most of these companies announced their second quarter earnings, and for most of them, there were few surprises, which no doubt contributed to the steady performance of most of the portfolio.

Details of the stocks’ performance are shown in the chart below.

Top Picks

In July, I highlighted Brookfield (BEP), Covanta (CVA) and Atlantica (AY) as my top short term picks.  These three stocks were up 2.4%, 7.1%, and 3.9% over the last two months. This average increase of 4.5% was solidly above the portfolio as a whole at 2.3%.  I currently think  CVA, GPP and TERP have the best prospects for short term gains.  Not that these prospects are great; I am taking an increasingly cautious approach towards the market as a whole and increasing my allocation to cash.

Stock discussion

Below I describe each of the stocks and groups of stocks in more detail.  I include with each stock “Low” and “High” Targets, which give the range of stock prices within which I expect each stock to end 2018.

Seaspan Corporation (NYSE:SSW)
12/31/17 Price: $6.75.  Annual Dividend: $0.50 (7.4%). Expected 2018 dividend: $0.50 (7.4%).  Low Target: $5.  High Target: $20.
8/31/18 Price: $9.22  YTD dividend: $0.375 (5.56%)  YTD Total Return: 43.3% 

Leading independent charter owner of container ships Seaspan’s gave back a little of its gains from earlier in the year.  The second quarter earnings call was “steady as she goes,” so I see the decline as mostly profit taking after the earlier large gains.  I took some gains myself.

Covanta Holding Corp. (NYSE:CVA)
12/31/17 Price: $16.90.  Annual Dividend: $1.00(5.9%). Expected 2018 dividend: $1.00 (5.9%).  Low Target: $15.  High Target: $25. 
8/31/18 Price: $17.65 YTD dividend:  $0.50 (2.96%)  YTD Total Return: 7.8% 

Covanta, the US leader in the construction and operation of energy from waste (EfW) plants reported second quarter earnings in July. The company is seeing improvements in profitability in most parts of its operations, and now expects full year results to come in at the high end of its previous guidance.

In August, the company reported several financial transactions that should improve overall profitability.  It sold  a small (13MW) hydroelectric project in Washington state to Atlantic Power (AT), and assumed the operation and maintenance of two EfW facilities in Florida.  Since Covanta already operates six other EfW facilities in Florida, it should be able to achieve synergies in these operations that were not possible for the hydroelectric plant in Washington.

The company also enlarged and lengthened the term of its senior loans, and refinanced a number of tax exempt bonds leading to a reduction in interest expense.  Given the company’s size, the move is likely to only result in a $0.01 per share improvement in annual earnings, but every improvement is good to see.

Clearway Energy, Inc (NYSE: NYLD and NYLD/A)
12/31/17 Price: $18.90 / $18.85.  Annual Dividend: $1.133(6.0%). Expected 2018 dividend: $1.26(6.7%)  Low Target: $14.  High Target: $25. 
8/31/18 Price: $18.50/$18.44   YTD dividend:  $0.927 (4.90%)  YTD Total Return: 10.1% 

Yieldco NRG Yield announced that Global Infrastructure Partners (GIP) had completed the purchase of NRG’ Energy’s (NRG) controlling stake in the Yieldco and had become its new sponsor.  NRG Yield has changed its name to  Clearway Energy, Inc, and will be holding a conference call to discuss its plans for the future on September 11th.  GIP is also acquiring NRG’s renewable energy assets and development platform.

Clearway’s stock has been advancing since the announcement, most likely in anticipation of renewed growth under its new sponsor.

Atlantica Yield, PLC (NASD:AY)
12/31/17 Price: $21.21.  Annual Dividend: $1.16(5.6%). Expected 2018 dividend: $1.39 (6.6%).  Low Target: $18.  High Target: $30. 
8/31/18 Price: $20.64 YTD dividend: $0.97 (4.57%)  YTD Total Return: 2.2% 

Atlantica Yield’s new sponsor, Algonquin Power (AQN) has been in place since early this year, and the Yieldco has been taking advantage of the stronger sponsor to refinance its debt at lower interest rates while continuing to pay down existing debt with retained cash flow.  The aftermath of Atlantica’s former sponsor Abengoa’s (ABG.MC, ABGOY, ABGOF) bankruptcy led to Atlantica focusing on paying down debt rather than growth for the last two years, but now that looks ready to change.  The company states that it is in discussions for the acquisition of $200 million in equity worth of accretive investments.

That would represent an approximate 10% increase in the company’s size if all the deals were consummated.  If we assume cash flow margins  20% to 30% above returns to current equity, we could see cash flow per share growth of 2 to 3 percent from these transactions.  I expect a return to even such modest growth will be welcomed by shareholders.

Pattern Energy Group (NASD:PEGI)

12/31/17 Price: $21.49.  Annual Dividend: $1.688(7.9%). Expected 2018 dividend: $1.70(7.9%).  Low Target: $20.  High Target: $30. 
8/31/18 Price: $20.38 YTD dividend: $0.844 (3.93%)  YTD Total Return: -0.7% 

Yieldco Pattern Energy Group’s stock is starting to recover from lows earlier this year as the company’s path to renewed dividend growth becomes clearer.  The company had been paying out nearly 100% of cash flow available for distribution (CAFD) in 2017, and has a goal of bringing this nearly unsustainable payout ratio down to 80%.  To do that without a dividend cut requires growing CAFD by approximately 25% over 2017.

Strong second quarter results increased CAFD by 8% in the first half of 2018 over the same period in 2017, despite a decline in the first quarter.  8% is a far cry from the 25% needed before Pattern is likely to resume dividend increases, but it does give the company breathing room.  Combine this with the completed sale of PEGI’s Chilean assets and the acquisition of higher yielding assets in Japan and Quebec and investors seem ready to put their fears of a dividend cut to rest.

I do not expect any dividend increases for the next year or two as Pattern brings down its payout ratio towards its 80% target, but at a current yield over 8%, increases are not necessary to make the stock an attractive investment.

Terraform Power (NASD: TERP)
12/31/17 Price: $11.96.  Annual Dividend: $0. Expected 2018 dividend: $0.72 (6.0%)  Low Target: $10.  High Target: $16. 
8/31/18 Price: $11.18 YTD dividend: $0.38 (3.18%)  YTD Total Return: -3.4% 

Yieldco Terraform Power completed its acquisition of European Yieldco Saeta Yield, and is now turning its focus on improving the operations at its fleet to improve profitability.  Terraform’s former sponsor, the now bankrupt SunEdison, operated the Yieldco’s fleet of wind and solar farms.  With the distraction of bankruptcy proceedings, such operations were doubtlessly neglected over the last two years.  Now, with a new operations agreement with General Electric (GE), TERP plans to invest in its existing fleet (which now includes Saeta’s as well) to improve operations.

The Yieldco says that these plans, along with the Saeta acquisition, give it a clear path to meeting its 5 percent to 8 percent dividend growth target through 2022 while maintaining its payout ratio below 85%.  Such a long term growth target is rare among Yieldcos, especially one which already has a 6.8% yield.

Brookfield Renewable Partners, LP (NYSE:BEP)
12/31/17 Price: $34.91.  Annual Dividend: $1.872(5.4%). Expected 2018 dividend: $2.02(5.8%).  Low Target: $28.  High Target: $45. 
8/31/18 Price: $30.77 YTD dividend: $0.98 (2.81%)  YTD Total Return: -9.0%

Brookfield Renewable Partners reported a weak second quarter results because of low production from hydropower.  The stock sold off as a result, and now looks quite attractive.  Brookfield’s large base of hydropower and limited partnership structure (you get a K-1 but it is safe to hold in a retirement account because it does not produce UBTI.)

In other words, BEP is a great diversifier in a Yieldco-heavy portfolio, and now looks like a good time to add it to that portfolio if you have not already.

Green Plains Partners, LP (NASD: GPP)
12/31/17 Price: $18.70.  Annual Dividend: $1.84(9.8%). Expected 2018 dividend: $1.90(10.2%).  Low Target: $13.  High Target: $27. 
8/31/18 Price: $15.20  YTD dividend: $0.945 (5.05%)  YTD Total Return: -14.3%

Ethanol MLP and Yieldco Green Plains Partners has been selling off in large part due to the Trump EPA’s attacks on the ethanol industry.  These include diluting the Renewable Fuel Standard, and granting waivers to oil refiners who don’t really need those waivers.  In other words, it is tough times for GPP and its parent GPRE.

At this point, however, I think much of the bad news is priced in, and there is some “good” news in the form of higher gas prices, as well as the tariffs that China and others are putting on corn.  This bad news for corn growers is good news for corn users, like Green Plains. China has also put a tariff on ethanol, but since ethanol can be substituted for gasoline (to a point), the price of gas should put a floor on the price of ethanol.  That is not true for the price of corn.

There are definitely risks with this stock, but the 12%+ yield is some very healthy compensation for those risks.

InfraREIT, Inc. (NYSE: HIFR)
12/31/17 Price: $18.58.  Annual Dividend: $1.00(5.4%). Expected 2018 dividend: $1.00 (5.4%).  Low Target: $16.  High Target: $30. 
8/31/18 Price: $20.89 YTD dividend: $0.50 (2.69%)  YTD Total Return: 15.2% 

Electricity transmission REIT InfraREIT reported much improved income and cash flow per share over the year earlier due to asset acquisitions.  The company is maintaining its $1 annual dividend while it re-evaluates its corporate structure.  It lost most of the advantages it gained by being a REIT as a result of the 2017 Republican tax bill.  At this point, the company could decide to become a normal corporation, be sold, or combine with another corporation.  There is also uncertainty around restructuring various long term lease transactions with its parent, Hunt Corporation so that they work with any new corporate structure and the new tax laws.

Earlier this year, the speculation about a possible go-private transaction drove the stock into the mid-$22 dollar range, at which point I wrote that I was “selling calls to lock in some profits in InfraREIT.”  Now that the stock has pulled back a bit, I’m happy to hold at the current price, collect my dividends, and see what happens.  I expect that there is more upside profit potential in a possible future transaction than downside risk, and I like the improving earnings numbers.  Finally, the company reached a beneficial tax settlement with the State of Texas, which was also good news.  With this positive backdrop, investor uncertainty about the company’s future corporate structure is likely leading to some current undervaluation.

Enviva Partners, LP. (NYSE:EVA)
12/31/17 Price: $27.65.  Annual Dividend: $2.46(8.9%). Expected 2018 dividend: $2.65 (9.6%).  Low Target: $25.  High Target: $40. 
8/31/18 Price: $32.00 YTD dividend: $1.875 (6.78%)  YTD Total Return: 23.2% 

Wood pellet Yieldco and Master Limited Partnership Enviva reported another strong quarter, with new long term contract signed for additional wood pellet supplies to both Europe and Japan.  Although the stock is up significantly this year, I am not ready to start taking profits, given its strong growth and and prospects.

Final Thoughts

While I’m happy that this model portfolio and GGEIP are both now comfortably up for the year, stock market valuation and political turmoil are making me increasingly cautious about the market going forward.  Although there are a few stocks here that I think are good values, I believe caution is increasingly warranted.  I see this as a great time to wait and see, while holding a healthy allocation in cash.

Disclosure: Long PEGI, NYLD/A, CVA, HIFR, AY, SSW, SSW-PRG, TERP, BEP, EVA, HIFR, GPP, AQN, GE.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

The post Ten Clean Energy Stocks For 2018: Second Quarter Earnings appeared first on Alternative Energy Stocks.

Last week NextEra Energy, Inc. (NEE:  NYSE) broke ground on its newest wind power project.  The company plans to build 71 wind towers in Wayne County, northeastern Nebraska, outfitting each with General Electric (GE:  NYSE)turbines.  Called the Sholes Wind Energy Center, the wind farm will have a collective generating capacity near 160 megawatts and require $200 million in to build.  Construction is expected to begin in March 2019, to meet a December 2019 planned operational start.

The Omaha Public Power District (OPPD) has already signed a twenty-year power purchase agreement with NextEra, making return on the Sholes project close to guaranteed.  OPPD is the twelfth largest public power utility in the U.S., serving over 374,000 customers across thirteen counties in Nebraska.

Nebraska Winds

OPPD is not new to wind power.  The public utility already sources electricity from the Grande Prairie Wind Farm in Holt County, Nebraska.  Grande Prairie is comprised of 200 turbines with a total capacity of 400 megawatts.  The wind farm is owned by Berkshire Hathaway Energy Renewables, a privately held renewable energy developer based in Des Moines, Iowa.  In 2017, wind power represented 29.5% of OPPD retail electricity sales.

Nebraska’s prairie landscape is ideal for wind power generation.  The state ranks fourth in wind energy among U.S. states, generating over four billion kilowatts hours annually.  According to the State of Nebraska Energy Office, the state has 786 operating wind turbines with total capacity of 1.4 million kilowatts.  In addition to the 71 wind turbines slated for the Sholes Wind Farm, three other projects are underway in Nebraska totaling 150 turbines with a collective generating capacity of 431.5 megawatts.  All have power purchase agreements in place.

Grousing over Prairie Grouse

Not all in Nebraska are enamored with wind power.  Legislation was introduced in the 2018 state legislative session to strip the ‘renewable’ designation from wind power, pulling wind power projects into the purview of the Nebraska Power Review Board and requiring public hearings on wind power projects.  Supporters of the legislation cited risks to wildlife and the environment that go challenged without public scrutiny.

True enough Nebraska’s iconic Sandhills do have a fragile ecology of mixed-grass prairie and sand dunes that do not hold up well under construction activities.  Wind farm operations could potentially interrupt the delicate mating dances of the greater prairie chicken or grouse.  There is also a building body of evidence on the mortality of birds and bats due to wind towers and blades.   The American Wind Wildlife Institute has been building a knowledge base and recently made available a compilation of studies that suggest bird and bat mortality in a range of 3 to 6 birds per megawatt per year.  While populations of smaller birds are apparently not at risk, large raptors and bats may be in peril given their smaller populations that could be trimmed to endangered levels by unfortunate encounters with turbine blades.

Jobs, Taxes and Cash

Nonetheless, economic growth appears to be just too rich an incentive to forestall interest in wind power.  NextEra’s Sholes Wind Farm in Nebraska is expected to create 200 construction jobs over the next year and then another 10 permanent jobs for ongoing operations. Wayne County and the adjacent Stanton Counties expect to receive $1 million in incremental annual property taxes over the Sholes planned thirty years of operation.  The icing on the cake and possibly the reason wind power is given little check in Nebraska is an estimated $1.3 million in annual payments to landowners from the Sholes.

The Nebraska project will help keep NextEra with its NextEra Energy Resources (NEER) subsidiary in its leadership position as the one of the largest operators of wind and solar power projects in the world.  NEER has over 19,000 megawatts of renewable energy generation capacity spread out across the U.S., Canada and Spain.  Wind power represented 69% of NEER net generating capacity in 2017.

NextEra Profits

NEER earns revenue from the sale of electricity and as well as renewable energy credits (REC).  However, that is not the only source of revenue for NextEra.  The company also operates the utility Florida Power and Light (FPL), which serve customers along the eastern coast of Florida as well as the western coast of the Florida peninsula.

NextEra reported $17.1 billion in total sales in the twelve months ending March 2018, providing $8.2 billion in net income or $17.34 per share.  In the same period, the company converted 37.7% of sales to operating cash flow or $6.5 billion.

The hefty cash generation figure helps support quarterly dividends that are expected total $4.44 per share in 2018.  The current price the dividend represents a yield of 2.7%.  The attractive yield helps explain why the stock is priced at 20.4 times forward earnings.  Then again the broader utility industry is trading at a forward price earnings ratio near 20.2 times.

Debt Play in Public Utility

For those investors who are not interested in a position in a large capitalization company like NextEra  –  the market cap is $80.4 billion  –  the prairie winds have blown up an investment alternative.  The Omaha Public Power District is not a public company, but it uses leverage to pay for infrastructure build-out.  Its most recent bond issue in December 2017, was composed of $220.2 million in revenue bonds that received an Aa2 rating from Moody’s and AA from Standard and Poor’s.  The bonds offered a coupon rate of 5.0% and were sold at yields to call in a range of 2.46% to 2.78%.

While OPPD does not make quarterly or annual filings with the SEC, its financial reports are made available to the public.  The district reported $1.1 billion in total revenue in 2017, providing $77.2 million in net income.  Operations generated $367.9 million in cash flow.  We estimate free cash flow after capital investment was $120.5 million.

Generation of free cash flow is important given the debt load of $3.8 billion on OPPD’s balance sheet.  Total debt has declined in recent years as OPPD engaged in debt refunding over the past four years.  The debt-to-equity ratio was 3.45 at the end of 2017, which may seem like a significant amount of leverage.  Importantly, OPPD had enough cash earnings before taxes to cover interest expense 3.19 times.

Wind Alernatives

OPPD debt may not be any more suited for a broad audience than NEE as a large cap utility is appealing to investors seeking strong growth.  The debt of OPPD is privately placed by large underwriters, and not all investors will get a taste. Nonetheless, the two companies give investors alternatives to participate in the value that blows on  prairie winds.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries. Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

The post Investing in in Prairie Winds appeared first on Alternative Energy Stocks.

Nuclear energy stocks are publicly traded companies that develop, own, or manage nuclear power plants or the technology and equipment used in such plants.

This list was last updated on 2/10/2022.

If you know of any nuclear energy stock that is not listed here, but which should be, please let us know in the comments. Also for stocks in the list that you think should be removed.

The post List of Nuclear Energy Stocks appeared first on Alternative Energy Stocks.

Electric grid stocks are publicly traded companies whose business involves electric infrastructure, including transmission, distribution, pricing, conversion, and regulation.  Includes the list of smart grid stocks.

This article was last updated on 8/12/21.

ABB Ltd (ABB)
Advanced Energy Industries (AEIS)
AMSC (AMSC)
Avangrid, Inc. (AGR)
AZZ Incorporated (AZZ)
China Ruifeng Renewable Energy Holdings Ltd (0527.HK)
Companhia Paranaense de Energia – COPEL (ELP)
Custom Truck One Source, Inc. (CTOS)
Digi International (DGII)
Echelon Corporation (ELON)
EMCORE Group, Inc (EME)
ESCO Technologies, Inc. (ESE)
Fortis, Inc. (FTS, FTS.TO)
General Electric (GE)
Hammond Power Solutions Inc. (HPS-A.TO, HMDPF)
Hubbell, Inc. (HUB-B, HUB-A)
Itron (ITRI)
Landis+Gyr Group AG (LAND.SW)
MasTec Inc. (MTZ)
MYR Group Inc. (MYRG)
National Grid PLC (NGG)
Prysmian S.P.A (PRI.MI, PRYMF)
Quanta Services Inc (PWR)
Red Electrica (RE21.SG, RDEIY)
Schneider Electric (SU.PA, SBGSF, SBGSY)
Siemens AG (SIE.DE, SIEGY)
SMA Solar Technology (S92.DE)
SolarEdge (SEDG)
Stella Jones (STLJF)
Superconducting Technologies, Inc. (SCON)
TE Connectivity, Ltd (TEL)
Terna – Rete Elettrica Nazionale Società per Azioni (TRN.MI, TERRF, TEZNY)
Valmont Industries (VMI)
WESCO International (WCC)

If you know of any electric grid stock that is not listed here and should be, please let us know by leaving a comment. Also for stocks in the list that you think should be removed.

The post List of Electric Grid Stocks appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

In a game of word association many investors might respond Veolia Environmental SA (VIE:  P or VEOEY:  OTC/PK) at the mention ‘water reclamation.’  General Electric (GE:  NYSE) and Siemens (SIE:  DE or SIEGY: OTC/PK) might be next choices.  These three companies have been ‘go to’ sources for water treatment by municipalities and industry.

Indeed, it may take a behemoth to address water issues.  In January 2015, the World Economic Forum declared water as the number one crisis impacting the world, recognizing the dire circumstances of water supplies.  Over 660 million people  –  one in ten people  –  around the world do not have access to safe water for drinking, cooking and bathing.  For some it is a matter of inadequate water supplies and for others economics prevent them from accessing quality water sources.

Some might be confused by this circumstance given the wide expanse of world waterways.  Unfortunately, 97.5% of the planet’s water is saltwater and another 1.75% is trapped in ice.  Only the remaining 0.75% is available for drinking water, coming from a mix of underground wells, rivers and lakes.  The amount of water supplies will not change, but we are expected to see an increase in fresh water demand by as much as 40% by the year 2030 as developing countries seek to improve quality of life for its citizens and new industrial and commercial processes rely on water.

The inadequacy of good quality, affordable waters supplies renders precious every water droplet, shedding light on why water treatment is big business and not just business for a few big companies.  The best water is called ‘potable water’, which historically has been provided through natural sources.  Sometimes even Mother Nature falls short of goal, leaving impurities in drinking water supplies or nature is simply overwhelmed by man-made pollution and misuse.  The need to treat water has given rise to a large market for separation, filtration and treatment solutions.

Pentair Plc. (PNR:  NYSE) is a growing player in the water treatment industry.  Unlike the big companies named in the opening paragraph of this article, Pentair is exclusively focused on water.  With corporate headquarters in the United Kingdom, Pentair keeps its primary business office in the U.S.  Among a mix of other water-related products, Pentair offers ultra-filtration and nano-filtration solutions to purify liquids.  Its products are used by water system owners, industry and homeowners.

In the fiscal year ending December 31, 2015, Pentair reported $6.5 billion in total sales and a net loss of $65 million or $0.42 per share.  Excluding a non-recurring charge of $554 million related to the write-off of intangible assets, operating income for continuing operations was $2.63 per share.  Operations generated $739.3 million in cash flow in the year, leaving $126.3 million in the bank at the end of December 2015, after investments and pay-down of debt.  Pentair has relatively leveraged with a debt-to-equity ratio of 117.49.  Management seems to have no trouble in juggling cash and debt, devoting some operating cash flows to a regular dividend.  Current yield is around 2.5%.

A true small-cap play on water treatment can be found in Calgon Carbon (CCC:  NYSE), a supplier of a broad mix of filtration and purification solutions for fluid and gas streams.   The company is probably best known for its activated carbon materials, which are widely used by water system owners to filter out contaminants.  Calgon also offers ultraviolet irradiation and ion exchange technologies for waster systems.  The company recently opened a new plant in the U.K. for the reactivation of spent carbon used in drinking water applications.  Capacity at the plant has been increased to 10,000 tons per year from 5,800, providing some insight into the promise Calgon sees in the water market for its carbon products.

Calgon also offers a dividend, but its yield of 1.4% is not as appealing as that of Pentair.  However, Calgon shares are trading at an interesting 12.9 times forward earnings, making it a relative bargain given the projected earnings growth of 19% in 2016.

Calgon reported $535 million in total sales for its water quality solutions, providing $43.5 million in net income.  That represents a net income margin of 8.1%.   The conversation of sales to operating cash was an even more impressive 13.1%.  The company is a consistent generator operating cash flow, which is probably why the company has a relatively low leverage position.  The debt-to-equity ratio is 28.3 for Calgon compared to a 90.6 ratio for the greater pollution control and treatment industry.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

The post Water Treatment Stocks appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

The post “Energy Storage Restart” highlighted General Electric (GE:  NYSE) efforts to get back into the market for renewable energy storage.  Two of the company’s most recent contract wins requires GE to install lithium-ion batteries rather than its own battery technology.  This serves up an entertaining game of ‘who’s the supplier.’  Indeed, GE has partnered with a variety of companies for battery development and any of those could be candidates. 

One of the reasons GE might have won two utility-scale contracts is its ability to manage large, complex assignments.  GE’s performance guarantee has to be attractive to solar power producers who need a fool proof storage solution.  Thus GE needs a battery supplier that can be equally reliable.
 
Robert Bosch GmbH is best known for its appliances, tools and after-market car parts.  It gets less credit for its batteries.  In 2008, Bosch entered into a joint venture with Samsung, SB LiMotive, to develop and manufacture lithium-ion batteries for all-electric and hybrid vehicles.  The joint venture set up a development center and a battery cell manufacturing plant in Korea.  A U.S. manufacturer of nickel-metal hydride batteries, Cobasys LLC, was acquired in 2010.  SB LiMotive was ready to supply BMW and Fiat with car batteries before the joint venture was dissolved in 2012.  Samsung kept the development and manufacturing facilities in Korea and Bosch walked away with the Cobasys operation and some cash.  Both partners retained access to thousands of patents covering an array of battery technologies.

Since the Samsung adventure, Bosch has moved on with additional automotive battery innovations and a new solar energy storage solution.  Bosch’s BPT-S5 Hybrid is a fully integrated storage solution with inverter and batteries rolled in to one and run by a software application.  Bosch claims its design makes it easier to install and operate.
Since GE has its own inverters and management system, it may have no interest in Bosch’s integrated storage solution.  However, Bosch claims its lithium-ion batteries are special, with exceptional storage capacity from 4.4 kilowatt-hours to 13.2 kilowatt-hours and charging power of 5 kilowatts.  Bosch says its batteries can be fully charged in one hour and that discharged can be equally rapid.  The company also claims its batteries are sturdy enough to handle the charge and discharge cycle at least 7,000 times. 

GE and Bosch compete head to head in the sale of a variety of appliances such as cook stoves and refrigerators.  A little friendly competition is not likely to be an obstacle if sourcing lithium-ion batteries from Bosch means GE can salvage its renewable energy storage effort.  It may be an exercise in futility for investors to track the potential relationship.  Bosch is privately held by the Bosch family charity.

Bosch is not the only pretty face at the prom.  The next post highlights a few other producers of grid-ready lithium-ion batteries.    

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

The post Bosch: a Strange Bedfellow for GE appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

A few years ago General Electric (GE:  NYSE) built out a manufacturing facility in Schenectady, New York for its sodium-ion batteries.  CEO Jeff Immelt declared the company a contender in the energy storage industry.  He projected that the company could ring up $500 million in annual sales by 2016, and build to $1 billion a year by 2020 by providing energy storage to utility-scale alternative energy projects.  Reality has been a bit different than Immelt’s vision.  GE ended up shuttering the plant in the Fall 2014, and all but fifty employees were finally laid-off or reassigned in early 2015. 

GE’s foray into the energy storage market appeared to be over before it began.  Energy industry watchers began an autopsy on GE’s sodium-nickel-chloride battery chemistry that had been used in large train batteries.  Others focused on the poor economics of distributed solar and wind power compared to the persistently low prices for centralized natural gas powered power plants.

Then to my surprise, what did I see on GE’s web site in early July 2015  –  recruiting notices for forty-eight new jobs in Schenectady, New York!  Is this GE’s restart in the energy storage industry?

Indeed, GE is looking for a mix of new employees to work at its battery production facility in positions such as ‘senior electrical engineer’ and ‘energy storage engineer.’  There are some administrative job openings as well.
It appears GE never left the energy storage market.  Instead, it seems leadership took a ‘practical’ pill.  In April 2015, the company won a contract to supply Con Edison Development with an 8-megawatt-hour battery storage system at a solar project in California.  The system will incorporate GE’s Mark IVe control system, GE’s Brilliance MW inverters and GE’s performance guarantees (possibly the most important feature).  What the system will not include is GE’s Durathon sodium-ion batteries.  GE will be outsourcing or acquiring lithium-ion batteries for the projects.

On a roll with its new approach to the energy storage market, GE won an order in May 2015, to supply a 7 megawatt-hour battery storage system for the Independent Energy System Operator in Ontario, Canada.  Convergent Energy + Power is the system integrator.  The batteries will be lithium-ion technology.

GE’s spokespersons have been careful to support the company’s Durathon battery, maintaining it will still have a place in GE’s energy storage business.  Durathon batteries are installed at an operational wind farm in Mills Country, Texas. Southern California Edison is also incorporating Durathon batteries in a field demonstration of a permanent load shifting application.  Princeton Power Systems is the integrator of the project, which is located near Santa Anna, California.

Where will GE source the lithium-ion batteries for the California and Ontario projects?  So far, spokespersons have been non-committal on the name.  GE has had many bedfellows in the energy industry over the years  – some strange and a few obvious. 

In the next few posts, we will look at both the strange and the obvious in lithium-ion battery storage.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

The post GE’s Energy Storage Restart appeared first on Alternative Energy Stocks.

Better technology is allowing some wind farm operators to get more out of their existing wind farms by completely repowering the farm – replacing old technology with new – or by conducting performance upgrades on their turbines.

Jennifer Runyon

There is an old piece of wisdom that states: “If it ain’t broke, don’t fix it.” But some wind farm operators, especially in Germany and North America, are finding that advice difficult to heed. That’s because technology improvements in turbines coupled with software analytics are revealing that signing up for a performance upgrade could allow them to squeeze even more wind energy – and money – out of existing wind farms.

Replacing Old Technology with New

According to the recently released Global Wind Report by the Global Wind Energy Council (GWEC), “Repowering has become a billion euro market.” The report shows that in Germany 544 wind turbines with a combined capacity of 264 MW were taken offline in 2014 and replaced by new turbines with a capacity of 1000 MW.

The Vestas V100-1.8 MW turbines at Macho Springs Wind Farm in New Mexico, USA. Credit: Vestas.

While repowering “has not become a very substantial market yet anywhere besides Germany, the potential is huge,” said Steve Sawyer, GWEC’s president and CEO. “Especially in places like California, Denmark, Germany, even in India where a lot of the best wind sites are now occupied by, in some cases, comically ancient machines that look like they belong in a museum,” he said. Sawyer predicts there will be much more action in the re-powering market in the coming years.

Performance Upgrades

It isn’t only old technology that is being upgraded, however, sometimes turbines that have been in the field for just four or five years are candidates for an upgrade.

Navigant Consulting’s Jesse Broehl is one of the authors of the recently released World Wind Energy Market Update 2015 published by BTM Navigant. He explained that wind performance upgrades are a recent development where major turbine vendors such as Vestas [VWDRY], Siemens[SIEGY], and GE[GE] (the number 1, 2 and 3 suppliers in 2014, respectively) among others “are looking for every opportunity that they can to diversify their revenue stream and increase their income beyond just turbine sales,” he said. Broehl explained that performance upgrades are taking place on relatively young turbines. He pointed to a deal in which EPD purchased GE’s PowerUp package for 402 turbines spread out over 5 different wind farms. “Maybe those [turbines] are 4 or 5 years old. Probably in that range, maybe even newer,” he said.

Ken Siddall, Director of Service Technology Americas at Siemens said that his company offers its modifications and upgrades packages on turbines that are as little as two years old. He explained that upgrades span the entire power curve. “In low-wind situations, we’ve got a reactive power offering. In the ramp of the power curve, as the wind speeds are coming up, we offer a power-curve upgrade kit, at the top, at full winds, we can offer a power boost to customers with certain turbine models,” he said. Siemens also keeps customers informed about available upgrades to its existing fleet of turbines. “Every year or so Siemens launches new turbines with new upgrades or enhancements for improved power performances and as much as we can we try to bring those back into the existing fleet that’s already out there,” he explained.

Development of the annual installed and cumulative capacity (MW) of land-based wind energy in Germany including repowering and dismantling as of December 2014. Source: Platts Power Vision 2015. Credit: GWEC’s Global Wind Report.

Wille Mildebrath, Product Manager at Vestas likened power performance upgrades to customization on a car. “With traditional maintenance, [you would, for example] change the gear oil,” he said, adding, “you could also do customization of the car and that’s what we’re doing with performance upgrades.” Mildebrath said that Vestas works with customers to do anything it can to customize and optimize the turbines that are already installed in the field.

Vestas performance upgrades take place after the company, in partnership with the wind farm owner, has conducted “a site specific analysis of that turbine to make sure we understand which upgrade or upgrades would be best.” Vestas offers a product suite called PowerPlus, which encompasses power upgrades, extended cutouts, and aerodynamic upgrades, said Mildebrath. “Power upgrades and extended cutouts are most effective on high wind sites, and aerodynamic upgrades have the most impact on low wind sites,” he explained. To date, Vestas has sold PowerPlus upgrades for more than 1,300 wind turbines – less than a year after its public launch.

Data collection and analysis of turbines in the field is a big part of both Vestas’ and Siemens’ offerings. It’s that data analysis that helps Siemens know when it is best for customers to entertain the idea of implementing these modernizations and upgrades. The company is constantly monitoring its entire fleet of turbines, according to Siddall “gathering terabytes of data from all of our turbines onshore and offshore.”

Software plays a big role in upgrades. Improving the software that controls the turbine “is probably the largest part of these performance upgrade packages,” said Navigant’s Broel. He said that better algorithms are able to improve “how the turbine operates and how it reacts to the wind environment it is experiencing.”

Attractive Costs

Since the money to perform an upgrade often comes from a wind farm owner’s O&M budget, rather than the capital expenditure budget, OEMs have made doing them quite enticing. “Vestas PowerPlus is basically free for customers to install,” said Mildebrath. The customer pays for the additional energy produced through a revenue share arrangement that is worked out before the upgrade is installed.

DinoTails can be installed directly on the rotor blades of existing wind turbines. Credit: Siemens.

The offshore Wind Farm Horns Rev in Denmark uses Siemens turbines. Credit: Siemens.

GE has a similar arrangement, said Andy Holt, general manager for global projects/services, GE Renewable Energy. “Our customers pay very little upfront costs to implement our PowerUp services platform,” he explained adding that GE only profits if its customers do. Siddall said that Siemens has a profit split arrangement where the company shares in any increased revenue they might get from the upgrades.

How much more revenue are they going to get? That is dependent on a lot of factors of course, including wind conditions, which upgrade was specified, the site itself etc. However, Siddal, Holt and Mildebrath said that a 5 percent increase in annual energy production (AEP) is a good target. “Up to 5 percent AEP increase is not uncommon,” said Mildebrath.

One Note of Caution?

With no upfront costs, performance upgrades seem to offer what everyone wants: the opportunity to gain more revenue from an existing asset. However Navigant’s Broehl offers one word of caution. “Basically if you run you
r turbine harder then there might be a compromise on its end-of-life use,” he said. “You might be taking away years on the back end in order to get that up-front increased performance.” Broehl cautioned that a tax-equity investor who plans to exit the deal after a certain rate of return has been reached, say in 10 years, and a different organization that will own the wind farm once that investor has left, may have differing financial motivations. “It’s a little bit like how you might prefer to buy a used car from the retirees down the street instead of from a college student,” he said.

Nevertheless, most OEMs are committed to a long-term relationship with their customers. Siddall talked of the 10- and 15-year O&M contracts that Siemens makes with its customers. It seems that any risk of prematurely wearing out a turbine could be mitigated with the right kind of contract in place. “We take a long-term approach to this,” Siddall said.

Jennifer Runyon is chief editor of RenewableEnergyWorld.com and Renewable Energy World magazine, coordinating, writing and/or editing columns, features, news stories and blogs for the publications. She also serves as conference chair of Renewable Energy World Conference and Expo, North America. Formerly, she was the managing editor of Innovate Forum, an online publication that focused on innovation in manufacturing. Prior to that she was the managing editor at Desktop Engineering magazine. In 2008, she won an “Eddy Award” for her editing work on an article about solar trees in Vienna. In 2010, RenewableEnergyWorld.com was awarded an American Business Media Neal Award for its eNewsletters, which were created under her direction. She holds a Master’s Degree in English Education from Boston University and a BA in English from the University of Virginia.

This article was originally published on RenewableEnergyWorld.com, and is republished with permission. 

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