Income Investments

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 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...

The following interview with RE Royalties (RE.V, RROYF) CEO Bernard Tan was conducted in September by AltEnergyStocks.com Editor Tom Konrad.  Links and ticker symbols were not included in his original responses, but added by AltEnergyStocks.com as a resource for readers. Q: What exactly is a renewable energy royalty? A renewable energy royalty is a stream of cash flows generated by a renewable energy project. When the project generates electricity and sells its electricity, we receive a percentage of the revenues from the electricity sales, otherwise known as a gross revenue royalty. We receive that gross revenue royalty, on average, for about...

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 & 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...

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...

Fossil Fuel Free Claims If you are reading this, you've probably also seen advertisements for Aspriation's “Fee-free and fossil fuel free” banking services. Like the advertisements the company's product page encourages visitors to “Earn high interest on what you save with an account that is fee-free and fossil fuel free.“ As a professional green money manager, I know that “fossil fuel free” is in the eye of the beholder. For many mutual funds, “fossil fuel free” simply means avoiding the 200 largest fossil fuel companies, but investing in the 201st largest fossil fuel company, even if its primary business is mining...

by Tom Konrad, Ph.D., CFA Market Decline Last week I warned "The risks in today's stock market outweigh the possibility of future potential gains."  Looks like we're seeing those risks manifest in short order.  The last couple days' decline have me looking at a few stocks to start adding to my positions again, especially MiX Telematics (MIXT) discussed on June 2nd and Green Plain Partners (GPP), discussed below. Note that this pullback could easily be very early days of a much larger market decline.  We might even see the market fall far enough to test the March lows... any of my buying...

by Tom Konrad Ph.D., CFA This morning, hedge fund Water Island Capital called on Pattern Energy (PEGI) Shareholders to vote against the merger with the Canada Pension Plan Investment Board (CPPIB). Water Island claims the merger is undervalued compared to the recently surging prices of other Yieldcos, and that PEGI would be trading at over $30 given current valuations.  There are not a lot of other Yieldcos left, especially if we eliminate those with their own special circumstances.  These are Terraform Power (TERP) which is subject to its own buyout agreement with Brookfield Renewable Energy (BEP), and Clearway (CWEN and CWEN/A) where...

by Prashant Vaze, The Climate bonds Initiative In January, authors from several institutions under the aegis of BiS, published The Green Swan Central banking and financial stability in the age of climate change setting out their take on the epistemological foundations for, and obstacles against, central banks acting to mitigate climate change risk. The book’s early chapters provide a cogent and up-to-date analysis of climate change’s profound and irreversible impacts on ecosystems and society. The authors are critical of overly simplistic solutions such as relying on just carbon taxes. They also recognize the all-too-evident deficits in global policy to respond to the threat. In short, they accept the need for central banks to act. The Two Arguments  The paper makes two powerful arguments setting out the challenges central banks face using their usual mode of working. Firstly, climate change’s impact on financial systems is an unknowable unknown – a...

By Ishaan Goel WHY COMMUNITY SOLAR? A home solar system is a great investment, with financial returns far in excess of any financial investment that has comparable risk. It’s also a tangible step a homeowner can take to help the environment.   Unfortunately, most New Yorkers (and Americans in general) can’t install home solar.  They may be renters, or have roofs that are too old or shaded.  Or they may not be able to afford the up-front cost, or not have enough income to take advantage of the tax credits. That is why New York’s electricity regulator, the Public Service Commission, created community solar:...

by Tom Konrad, Ph.D., CFA Readers who followed my coverage of the Yieldco bubble in 2015 know the Yieldco Virtuous Cycle.   A Yieldco’s stock price rises It issues new shares, and invests the money in renewable energy projects.   Because the stock price is high, it is able to buy more project cash flow by issuing fewer shares than it has in the past. Cash flow available for distribution (CAFD) per share increases, despite the increasing number of shares outstanding. Yieldco management sets a target for continued rapid annual distribution growth, which can be met either by further share issuance (if...

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 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...

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,...