TRSWF Archives - Alternative Energy Stocks http://www.altenergystocks.com/archives/tag/trswf/ The Investor Resource for Solar, Wind, Efficiency, Renewable Energy Stocks Wed, 17 Jan 2024 16:04:04 +0000 en-US hourly 1 https://wordpress.org/?v=6.0.9 Yieldco Valuations Look Attractive https://www.altenergystocks.com/archives/2024/01/yieldco-valuations-look-attractive/ https://www.altenergystocks.com/archives/2024/01/yieldco-valuations-look-attractive/#comments Wed, 17 Jan 2024 16:04:04 +0000 https://www.altenergystocks.com/?p=11223 Spread the love         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 […]

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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 yield companies that own and develop clean energy assets like solar and wind farms get most of their profits from things which are already built.  New subsidies, like those included in the Inflation Reduction Act, almost exclusively target new facilities.  Because of this, changes in subsidies and interest rates will affect a Yieldco’s growth prospects, but will have limited effect on its short term earning potential.  

Yieldcos such as Brookfield Renewable Energy (BEP and BEPC), Atlantica Yield (AY), Clearway (CWEN and CWEN-A), and Nextera Energy Partners (NEP) fell as much as 50% in 2023.  At current prices, I love them all.  Collectively, these four names account for a fifth of the portfolio.  My current favorite is Nextera Energy Partners, which I have historically felt was consistently relatively overvalued because investors have had faith in its strong sponsor, Nexterea (NEE).  That valuation did not survive the effects when persistently high interest rates led NEP to sharply cut its dividend growth targets last September.

Among the Yieldcos, NEP got the least benefit of the strong rally in the fourth quarter, and it is still trading at a price that gives it an 11% dividend yield.  That high a yield would normally signal that investors are expecting a dividend cut.  I think such a cut is unlikely.  First, NEP’s liquidity and cash flow ratios are in line with other Yieldcos, and if management felt that a dividend cut might be necessary in the near future, they would have done it when they were already disappointing investors by slashing their dividend growth plans.  Instead, I expect NEP’s dividend growth to stall for several years.  But at 11%, who needs growth?  

Another likely scenario would be for NEE to buy back the outstanding shares of NEP to improve its own cash flow ratios.  This is far from unprecedented – Transalta (TA) did exactly that last year by buying back the outstanding shares of TransAlta Renewables (Toronto: RNW).  NEE, like TA, would buy NEP at a 10-20% premium to current prices.  NEP has significant convertible debt financing, much of which will need to be refinanced in 2026.  If NEP has trouble refinancing this convertible debt, I expect the most likely scenario will be a buyback by it parent, NEP.   I’d prefer to collect an 11% dividend for several years to come, but a small short term gain is not something to scoff at.

DISCLOSURE: As of 1/15/2024, Tom Konrad and funds he manages own the following securities mentioned in this article: Brookfield Renewable Energy, Atlantica Yield, Clearway, Nextera Energy Partners. He expects to add to (but not sell) some of these positions in January 2024.  This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  All investments contain risk and may lose value. Past performance is not an indication of future performance. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

ABOUT THE AUTHOR: Tom Konrad, Ph.D., CFA is the Editor of AltEnergyStocks.com (where this article first appeared) and a portfolio manager at Investment Research Partners.

 

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List of Power Production Stocks https://www.altenergystocks.com/archives/2018/08/list-of-power-production-stocks/ https://www.altenergystocks.com/archives/2018/08/list-of-power-production-stocks/#comments Sun, 12 Aug 2018 13:54:55 +0000 http://3.211.150.150/?p=8969 Spread the love        Alternative energy power production stocks are companies whose main business is the production and sale of electricity from alternative energy installations, such as solar farms, wind farms, hydroelectric generators, geothermal plants, cogeneration facilities, and nuclear plants. This list was last updated on 9/11/2020. 7C Solarparken AG (HRPK.DE) Acciona, S.A. (ANA.MC, ACXIF) Atlantica Yield […]

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Alternative energy power production stocks are companies whose main business is the production and sale of electricity from alternative energy installations, such as solar farms, wind farms, hydroelectric generators, geothermal plants, cogeneration facilities, and nuclear plants.

This list was last updated on 9/11/2020.

wind and solar
The wind energy park “Schneebergerhof” in Germany (Rhineland-Palatinate). In the foreground thin film solar cells. In the center a wind turbine Enercon E-66 (1.5 MW), on the right Enercon E-126 (7.5 MW) and at the very right side again an E-66. Photo by Kuebi = Armin Kübelbeck [CC BY-SA 3.0 ], from Wikimedia Commons
7C Solarparken AG (HRPK.DE)
Acciona, S.A. (ANA.MC, ACXIF)
Atlantica Yield plc (AY)
Algonquin Power & Utilities Corp. (AQN, AQN.TO)
Avangrid, Inc. (AGR)
Bluefield Solar Income Fund Ltd. (BSIF.L)
Boralex (BLX.TOBRLXF)
Brookfield Renewable Partners L.P. (BEP)
Capital Stage AG (CAP.DE)
Edisun Power Europe AG (ESUN.SW)
Elecnor, S.A. (ENO.MI)
Foresight Solar Fund plc (FSFL.L)
Global X YieldCo ETF (YLCO)
Greencoat UK Wind PLC (UKW.L)
Innergex Renewable Energy Inc. (INE.TO,INGXF)
John Laing Environmental Assets Group Limited (JLEN.L)
NextEra Energy Partners, LP (NEP)
Northland Power Inc. (NPI.TO, NPIFF)
Clearway Energy (CWEN, CWEN-A)
Ormat (ORA)
Polaris Infrastructure Inc. (PIF.TO, RAMPF)
Reservoir Capital Corp. (REO.CN. RSERF)
TransAlta Renewables Inc. (RNW.TO, TRSWF)
The Renewables Infrastructure Group Limited (TRIG.L, RWFRF)
US Solar Fund PLC (USF.L)
Veolia Environnement S.A. (VIE.PA, VEOEY, VEOEF)
Global X YieldCo Index ETF (YLCO)

If you know of any alternative energy power producer that is not listed here or any stock that should be removed, please let us know by leaving a comment.

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List of High Yield Alternative Energy Stocks https://www.altenergystocks.com/archives/2018/07/list-of-high-yield-alternative-energy-stocks/ https://www.altenergystocks.com/archives/2018/07/list-of-high-yield-alternative-energy-stocks/#comments Mon, 09 Jul 2018 19:18:27 +0000 L]]> http://3.211.150.150/?p=8943 Spread the love        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 […]

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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%.

wind and solar
The wind energy park “Schneebergerhof” in Germany (Rhineland-Palatinate). In the foreground thin film solar cells. In the center a wind turbine Enercon E-66 (1.5 MW), on the right Enercon E-126 (7.5 MW) and at the very right side again an E-66. Photo by Kuebi = Armin Kübelbeck [CC BY-SA 3.0 ], from Wikimedia Commons
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 Plains Partners LP (GPP)
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)
Hydro One Limited (H.TO, HRNNF)
InfraREIT, Inc. (HIFR)
Innergex Renewable Energy Inc. (INE.TO,INGXF)
John Laing Environmental Assets Group Limited (JLEN.L)
Northland Power Inc. (NPI.TO, NPIFF)
Pattern Energy Group Inc. (PEGI)
Polaris Infrastructure Inc. (PIF.TO, RAMPF)
Power REIT PFD SER A 7.75% (PW-PA)
Red Eléctrica Corporación, S.A. (REE.MC,RDEIY)
Seaspan Corporation (SSW, SSW-PD, SSW-PH, SSW-PG, SSWA, SSWN)
TerraForm Power, Inc. (TERP)
TransAlta Renewables Inc. (RNW.TO, TRSWF)
The Renewables Infrastructure Group Limited (TRIG.L, RWFRF)
Veolia Environnement S.A. (VIE.PA, VEOEY, VEOEF)

If you know of any high income (distribution yield over 4%) renewable or alternative energy stock that is not listed here, please let us know by leaving a comment. Also if you notice stocks in the list where the yield has fallen below the 4% threshold.

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List of Wind Farm Owner and Developer Stocks https://www.altenergystocks.com/archives/2018/06/list-of-wind-farm-owner-and-developer-stocks/ https://www.altenergystocks.com/archives/2018/06/list-of-wind-farm-owner-and-developer-stocks/#respond Tue, 12 Jun 2018 17:50:22 +0000 http://3.211.150.150/?p=8853 Spread the love        Wind farm owner and developer stocks are publicly traded companies that site, permit, develop, construct, own, or operate wind farms for producing electricity. This list was last updated on 3/22/2022 Acciona, S.A. (ANA.MC, ACXIF) Adani Green Energy (ADANIGREEN.NSE) Algonquin Power and Utilities (AQN, AQN.TO) Atlantica Yield PLC (AY) Atlantic Power Corporation (AT) Avangrid, […]

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Wind farm owner and developer stocks are publicly traded companies that site, permit, develop, construct, own, or operate wind farms for producing electricity.

This list was last updated on 3/22/2022

wind farm

Acciona, S.A. (ANA.MC, ACXIF)
Adani Green Energy (ADANIGREEN.NSE)
Algonquin Power and Utilities (AQN, AQN.TO)
Atlantica Yield PLC (AY)
Atlantic Power Corporation (AT)
Avangrid, Inc. (AGR)
Boralex (BLX.TO, BRLXF)
Brookfield Renewable Energy Partners (BEP)
China Longyuan Power Group Corporation Limited (0916.HK, CLPXF)
China Ruifeng Renewable Energy Holdings Limited (0527.HK)
Orsted (ORSTED.CO, formerly DENERG.CO)
E.ON AG (EONGY)
Enel SpA (ENEL.MIESOCF)
Greencoat UK Wind (UKW.L)
Infigen Energy Limited (IFN.AX, IFGNF)
Innergex Renewable Energy Inc. (INE.TO, INGXF)
Neoen S.A (NEOEN.PA)
NextEra Energy Partners, LP (NEP)
NextEra Energy, Inc. (NEE)
Nordex AG (NRDXF, NDX1.DE)
Northland Power Inc. (NPI.TO, NPIFF)
NRG Yield, Inc. (NYLD, NYLD-A)
Otter Tail Corp (OTTR)
PNE Wind AG (PNE3.DE)
ReNew Energy Global plc (RNW)
The Renewables Infrastructure Group (TRIG.L)
TransAlta Renewables, Inc. (RNW.TO, TRSWF)
Xcel Energy Inc. (XEL)
Wind Works Power Corp. (WWPW)

If you know of any wind farm owner or developer 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.

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One Week, Three YieldCo Deals. Are More Buyouts on the Horizon? https://www.altenergystocks.com/archives/2018/03/one-week-three-yieldco-deals-buyouts-horizon/ https://www.altenergystocks.com/archives/2018/03/one-week-three-yieldco-deals-buyouts-horizon/#respond Thu, 01 Mar 2018 14:30:10 +0000 http://3.211.150.150/?p=7264 Spread the love        by Tom Konrad, Ph.D., CFA It’s been a busy several days in the YieldCo space. On February 5, 8point3 Energy Partners (NASD:CAFD) announced an agreement to be acquired by an infrastructure investment fund managed by Capital Dynamics. While I was still writing an article on why the sale price was at a virtually unheard of discount relative to […]

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by Tom Konrad, Ph.D., CFA

It’s been a busy several days in the YieldCo space.

On February 5, 8point3 Energy Partners (NASD:CAFDannounced an agreement to be acquired by an infrastructure investment fund managed by Capital Dynamics. While I was still writing an article on why the sale price was at a virtually unheard of discount relative to the stock market price, two more YieldCo deals were announced: NRG Energy (NYSE:NRG) agreed to sell its sponsorship stake in NRG Yield (NYSE:NYLD and NYSE:NYLD/A) to Global Infrastructure Partners, and YieldCo TerraForm Power (NASD:TERP) made an offer to buy out Spanish YieldCo Saeta Yield (Madrid:SAY) at a 20 percent premium. In an interesting twist, Global Infrastructure Partners owns 24 percent of Saeta Yield.

Last week’s flurry of activity caps a very active five months of YieldCo buyouts. Brookfield Asset Management (NYSE:BAM) completed the acquisition of SunEdison’s stake and half of the public shares in TerraForm Power on October 17, 2017. And it acquired all of TerraForm Global on December 29. In both cases, public shareholders received a premium over the share price before the deal was announced. On November 1, Algonquin Power & Utilities (NYSE:AQNannounced the purchase of Abengoa’s sponsorship stake in Atlantica Yield (NYSE:AY.)

All of these deals are an outgrowth of the bursting the 2015 YieldCo bubble. YieldCos 8point3, Terraform Global and Saeta Yield were formed in the final months before the bubble burst, and so never had time to grow to a sustainable size while stock market money was still cheap. Now they’re being bought by larger YieldCos that had more time to grow, and are seeking greater scale to better manage the cost of being public companies.

More buyouts on the horizon?

The reason public YieldCos exist in the first place is to finance clean energy projects with cheap stock market capital sourced from a wide pool of investors. Historically, stock market capital has been significantly cheaper than the private capital deployed by infrastructure funds like Capital Dynamics and Global Infrastructure Partners. With the notable exception of NextEra Energy Partners (NEP), YieldCos’ stock prices have been so low (and the capital they raise consequently so expensive) that they have had trouble bidding against private infrastructure funds to buy solar and wind farms.

This problem for YieldCos is not solely the result of the hangover from the YieldCo bubble. Infrastructure funds are experiencing a boom, if not a bubble of their own. While bubbles in private markets are even harder to detect than stock market bubbles, there are signs that can be indicative of such an occurrence. For one, private infrastructure funds currently have access to larger amounts of lower-cost capital than they have had in the past. There is also the flurry of acquisition activity by such funds.

If the infrastructure fund boom continues, we can expect that they will continue looking at the remaining YieldCos as possible acquisition targets. There are two likely candidates: Pattern Energy Group (NASD:PEGI) and TransAlta Renewables (TSX:RNW and OTC:TRSWF).

Pattern is currently paying out nearly all its cash available for distribution (CAFD) to shareholders in its $1.69 dividend. While the company hopes to reduce the payout ratio to 80 percent over the next few years, this will be difficult to do given rising interest rates and its falling stock price. But at Friday’s closing price of $18.41, its yield is 9.2 percent.

8point3 versus NRG Yield

8point3’s guidance for first-quarter cash available for distribution is $14.5 million to $16.5 million, after $3 million of expenses related to its sale. The midpoint of $18.5 million presale CAFD is down from $22.1 million the previous year. This aligns with my 2017 analysis, which showed that 2017 CAFD was unsustainable. At the time, I estimated 8point3’s sustainable CAFD at $54 million to $60 million, or $0.68 to $0.76 per share.

Using the $12.35 per share purchase price and my high-end CAFD per share estimate, we see that Capital Dynamics was willing to pay $16.25 for each dollar of sustainable CAFD. The buyout of NRG’s sponsorship stake in NRG Yield is difficult to value on a per-share basis, because the price includes other parts of the sponsor’s renewables business.

Some of Pattern’s CAFD may also be unsustainable given rising interest rates, but PEGI is much more conservative in its CAFD estimates than 8point3. If we assume a similar valuation to 8point3, and sustainable CAFD of $1.50 per share, an infrastructure fund could pay over $24 a share for PEGI — a 32 percent premium to the current share price.

A similar calculation for TransAlta Renewables puts sustainable CAFD at $1.00 CAD to $1.10 CAD per share, and a possible buyout valuation at $17 per share. The $17 CAD is a 44 percent premium over the current market price of $11.78 CAD. While neither of these YieldCos is actively looking for a buyer, the same was true for Saeta Yield.

YieldCos are growing up

The recent flurry of YieldCo buyouts highlights a continuing trend of renewable asset developers selling their YieldCo stakes to companies and funds whose primary business is the ownership and operation of energy infrastructure. Some of these buyers are public companies (Algonquin, Brookfield, TerraForm Power), while others are private (Capital Dynamics and Global Infrastructure Partners).

This seems to be a sign that the YieldCo space is maturing, with companies specializing in either clean energy asset ownership or development. When development and asset ownership are combined in a single company, the industry is moving toward a model where a large and stable asset ownership business supports a smaller development arm. We see the beginnings of this model in Pattern Energy’s purchase of a small stake in Pattern Development 2.0, as well as in Algonquin and Brookfield Renewable Energy (NYSE:BEP), where this has been the model all along.

Finally, there are signs of a boom (or even a bubble) in infrastructure funds. As long as this continues, we are likely to see more acquisitions of independent YieldCos. Given their recent stock-price declines, TransAlta Renewables and Pattern appear to be attractive targets.

This article was first published on GreenTech Media

Disclosure: Long PEGI, NYLD/A, AY, TERP, BEP, AQN, RNW. Short NEP Puts (a net long position) and Short CAFD calls (net short).

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