Solar Power
Finance & Investment Club
Energy Sector
Senior Analyst: Saania Malik
Junior Analysts: Alex Kazhmurat, Carlos Duchicela,
Kim Tan, Sahil Bhaiwala & Yoyo Wong
Fall 2014
Agenda
Industry Definition
Industry Summary
Trends in the industry
Risks to the Industry
Multiples
Value-Weighted Index
Summary Recommendation
2
Industry Definition
Companies in this industry own and operate solar-power-generating facilities in the form of either—
 photovoltaic (PV) panels
 solar thermal power stations that make use of mirrors or lenses to concentrate the sun's energy.
>>Operators then sell the energy to downstream customers.
Some companies have also diversified to own portfolios of solar assets and to provide financial services for
other companies wishing to do the same.
First Solar Inc.
NASDAQ: FSLR
Abengoa Yield Plc
NASDAQ: ABY
NextEra Energy Inc.
NYSE: NEE
NRG Yield Inc.
NYSE: NYLD
Sources: IbisWorld, Investext, Bloomberg Finance
Ameresco Inc.
NYSE: AMRC
Canadian Solar Inc.
NASDAQ: CSIQ
TerraForm Power Inc.
NASDAQ GS: TERP
NextEra Energy Partners LP.
NASDAQ: NEP
3
Industry Summary
•
•
2019e
2018e
2017e
2016e
2015e
2014e
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
•
Revenue ($ million)
800.0
700.0
600.0
500.0
400.0
300.0
200.0
100.0
0.0
2003
•
•
Solar panel costs have dropped 80% from 2008 to 2012
Solar power’s ability to generate electricity with readily available
resources and avoid CO2 emissions allow it favorable
government and public support
PV solar power generation is approaching grid parity in the US
Industry Value Added is estimated at 30.9% over 10 years to 2019
(significantly outpacing GDP growth of 2.5%)
Solar accounted for 53% of all new electric generation capacity
added in H1 2014, whereas 30% came from natural gas, 14%
from wind and none from coal
Increasing investment from China, Japan, India and European
nations allows potential for further innovation in this industry.
By 2050, capacity to reach 3000 GW i.e. 11% of global electricity
production
2002
•
•
Key Facts
Primary Activity: solar-fueled
power generation
Major Market Segmentation
(based on revenue contribution)
Life-cycle Stage: Growth
Revenue: $491.9 M
Profit: $83.6 M
Annual Growth: (09-14) = 70%
(14-19) = 7.6%
Industry Rating: Positive
30%
36%
Utilities
Commercial users
Industrial users
34%
Sources: IbisWorld, NASDAQ: Alternative Energy Stock Outlook (Feb 2014), Solar Energy Industries Association
Characteristics:
 Decreasing operating costs
 High revenue volatility
 High capital intensity
4
Trend #1: Falling prices of photo-voltaic (PV) solar panels leading to lower costs and higher demand
500
450
400
350
300
250
200
150
100
50
0
'08 Q1
2012
-11.01
4.54
-1.12
17.71
2013
7.91
1.16
11.14
40.90
 Cost savings from falling prices have been realized by some
companies in the industry, whereas others still face volatile
margins due to growth stage. But this leaves room for future
upside potential.
'09 Q1
'10 Q1
'11 Q1
'13 Q1
'14 Q1
Regression: New PV Installations on PV Module Price
8000
7000
9
8
7
6
5
4
3
2
1
0
R-Squared: 0.8513
6000
5000
4000
3000
2000
1000
0
2006
2007
2008
2009
2010
New Installed PV Capacity
Key Takeaway
'12 Q1
2011
2012
2013
$/W
Canadian Solar
Ameresco
First Solar
NRG Yield
EBITDA Margins of Industry Operators
2008
2009
2010
2011
3.41
1.03
8.04
0.36
6.23
5.90
7.44
6.96
35.17
32.89
29.21
-2.48
13.99
17.07
Price ($/KG)
•
•
Polysilicon Prices (2008 Q1 - 2014 Q1)
Steep reduction in upstream costs as well as market
maturation are driving down costs of industry operators
Solar panel costs have dropped 80% from 2008 to 2012
Polysilicon prices, (which comprise 90% of panel inputs),
decreased from $450/kg in 2008 to $20/kg in 2014 Q1 i.e.
more than 20 times cheaper
MW of Installed Capacity
•
2014e
Average PV Module Price
 Prices are expected to continue to drop an additional 6%
throughout 2014
Technology efficiency as well as a reduction in upstream costs is leading to a decrease in cost for
operators and an increase in solar power capacity, and thus an increase in demand.
Sources: Bloomberg New Energy Finance (BNEF), Solar Energy Industries Association, Goldman Sachs: North American Energy
Summit, GTM Research, International Energy Agency: Solar PV Energy, IEA
5
Trend #2: Financial tools to support investment in solar energy driving increase in installed capacity
 Solar accounted for 74% all new electric generation
capacity added in Q1 2014
– Solar capacity reached 14.8 GW, enough to power 3
million homes
 Power Purchase Agreement (PPA)– allows small
producers to generate power with third-party investment
– No up-front cost of purchasing a PV system
– Fixed energy rates
 YieldCos– allows firms to own clean energy assets in
order to generate income to return to investors
Billions of USD
 Federal investment tax credit (ITC) – allows write-off of
30% of taxes associated with building a plant
– Expiring in 2016 to only 10% of taxes
 Renewable Portfolio Standards (RPS) require a certain
percentage of energy (4-30%) generated by downstream
utilities to be from a renewable source
– 30 states have passed RPS
 Net metering: allows customers who supply their own
electricity to receive credit on their utility bills by producing
in excess of onsite usage
– with a minimum bill enforced
New Investment in Solar
500
450
400
350
300
250
200
150
100
50
0
56%
57%
53%
44%
27%
2004
37%
2008
2009
22%
25%
31%
35%
2005
2006
2007
New Investment in Solar
2010
2011
2012
2013
Total New Investment in Renewable Energy
Tax Savings of Industry Operators
(millions of USD)
2013
Ameresco
NRG Yield
First Solar
2012
2011
$3.6
91.25%
$7
53.03%
$6.2
36.47%
$27
77.14%
--
--
--
--
$93.34
24.70%
$82.74
207.80%
$66.3
123.50%
Sources: Bloomberg New Energy Finance, Goldman Sachs: North American Energy Summit, Forbes: Clean Energy Yield Cos, IREC, International
Energy Association, Environmental Protection Agency (EPA), GTM Research, Solar Energy Information Association (SEIA),
6
Trend #2: Financial tools to support investment in solar energy driving increase in installed capacity
US PV Installation by Segment (2010-16)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2008
2009
2010
2011
Residential
2012
Non-Residential
8000
7000
6000
5000
4000
3000
2000
1000
0
2014E
2015E
2016E
Utility
7308
4520
2700
2366
1144
Residential
Non-Residential
H1 '12
Key Takeaway
2013
Cumulative US Solar PV Installations
by Market Segment (H1 '12 - H1 '14)
Installations (MW)
 Utility sector installations are driven by RPS, lower installed
costs & federal loan guarantees
– Federal loan guarantees expired in 2011, but installations
increased 43% from 2012-2013
– 57% of new installed PV capacity in 2013 came from the
utilities segment
 Q2 2013: 543 MW | Q2 2014: 625 MW
– contracted projects are on the rise
 Greater than 3 GW in the span of 6 months
– RPS increases the number of projects taken on by utilities
 Operators can thus achieve economies of scale
 Residential sector shows continuous, steady growth
– Q2 2014: 1133 MW (21% more than Q2 2013)
 Greater than 100 MW capacity installed without state
incentives
– H1 2014, >0.5 M homeowners and commercial customers
have installed solar PV
– 2014 forecast: 6512 MW (36% over ‘13 & 650% over ‘10)
Increase:
136%
1784
Utility
H1 '14
91%
310%
Government subsidies and financial tools to support capital investments in the solar power industry are on
the rise and allow operators to economically meet the increasing demand.
Sources: Bloomberg New Energy Finance, Goldman Sachs: North American Energy Summit, Forbes: Clean Energy Yield Cos, IREC, International
Energy Association, Environmental Protection Agency (EPA), GTM Research, Solar Energy Information Association (SEIA),
7
Trend #3: Solar power approaching grid-parity will allow price competitiveness with conventional
utilities and incentivize large-scale move towards clean energy
WTI Crude Oil Prices & Volatility
 Increasingly favorable move towards clean
140
energy production in the US and abroad
 Unlike oil & natural gas and nuclear-powered 120
facilities, solar facilities don’t face the
100
increased tendency of blackouts, caused by– 80
– natural disasters
60
– increasing sea-level rise
40
– global warming
20
 Solar power allows users to hedge against
0
fuel-price volatility risk
80%
70%
60%
50%
40%
30%
20%
10%
0%
CLZ4 COMB Comdty Price
CLZ4 COMB Comdty Hist Vol (10D)
CLZ4 COMB Comdty Implied Vol
Henry Hub Spot Prices & Historical Volatility
Solar's Levelized Cost Of Electricity (LCOE)
0.25
0.16
2009
2010
2011
0.13
2012
$/KWh
0.10
2013
0.08
2014
2015
16
14
12
10
8
6
4
2
0
120
100
80
60
40
20
11/25/14
12/28/12
01/28/11
NGUSHHUB INCX Index (3.) Price
02/27/09
03/30/07
04/22/05
Historical Volatility (%)
0.36
Price ($/MBtu)
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
2008
0
NGUSHHUB INCX Index (2.) Hist Vol (60W)
Sources: Bloomberg New Energy Finance, Goldman Sachs: North American Energy Summit, Forbes: Clean Energy Yield Cos, International
Energy Agency: Tech Roadmap: Solar PV Energy,
8
Trend #3: Solar power approaching grid-parity will allow price competitiveness with conventional
utilities and incentivize large-scale move towards clean energy
Cost of Electricity at Grid Parity of $3.00
$/KWh
 Solar offers a long-term solution for—
– pollution reduction
– limiting carbon emissions
– implementing higher fuel-economy standards
 Solar power may be a viable solution because–
– The price of solar power has hit grid parity in at least 10
states
– 9.4 GW of solar power can displace 9.23 Million metric tons
of CO2 emissions yearly
LCOE
$0.20
$0.15
$/KWh
Millions of metric tons of CO2
Average Cost of Electricity (2014)
Cost of Electricity at Grid Parity of $2.50
CO2 Savings from Renewable Sources & Non
Carbon-intensive Fossil Fuels
290
240
190
140
90
40
-10
$0.40
$0.35
$0.30
$0.25
$0.20
$0.15
$0.10
$0.05
$-
$0.10
$0.05
$-
2005
2006
2007
Renewable sources
Key Takeaway
2008
2009
2010
2011
2012
2013
Non-Carbon-intensive fossil fuels
LCOE
Average Cost of Electricity
While conventional utilities offer large-scale production, solar power is becoming price-competitive.
Moreover, it offers a long-term solution for depleting non-renewable resources as well as clean energy,
and allows users to hedge against fuel-price volatility risk.
Sources: Bloomberg New Energy Finance, Goldman Sachs: North American Energy Summit, Forbes: Clean Energy Yield Cos, International
Energy Agency: Tech Roadmap: Solar PV Energy, Deutsche Bank, EIA
9
Risks faced by the Industry
Heavy dependence on
subsidies
• Industry assistance through government legislation and other incentives
policies is high, and any change could impact producers entering the
industry.
• The state of the economy can create budgetary constraints leading to
subsidiary rollbacks, which are crucial for firms in this industry to cover
their high capital costs.
Small increase in overall
electricity consumption
• Electricity demand is estimated to increase at only 0.7% CAGR as it
has in the past twenty years, which could limit the need for alternate
energy sources, especially given the significant decrease in natural gas
prices coupled with increasing activity in the fracking industry.
•
Tariffs on imports of PV
modules
•
Firms that import panels or outsource their production of panels, may
see an increase in costs due to new tariffs implemented by foreign
governments.
Production of cheap panels from China and Malaysia may be cut
back if foreign firms seek profit opportunities, thus offsetting the
decrease in upstream costs
Key Takeaway
With solar power hitting grid parity and technology efficiency driving down prices, dependence on
government policy assistance will decrease. Coupled with other sector-wide risks that are not faced by
the solar power industry, such as fuel price volatility, and no need for resources like water, as well as no
harm to the environment, companies in the solar power industry have a significant upside potential in the
near future.
Sources: IbisWorld, Goldman Sachs: North American Energy Summit, NASDAQ: Alternative Energy Stock Outlook (Feb 2014)
10
Multiples
Ticker
NYLD
ABY
NEP
FSLR
AMRC
CSIQ
Name
NRG Yield Inc.
52
52 Week
Price
Week
Low
High
ADJ
ADJ
Market Enterprise EPS Est
PE
EPS Est
Cap
Value Current
Ratio
Next Yr
Yr
Price to Price To Price to
Book Sales EBITDA
Return Return
on
on
Assets Equity
47.39
36.11
54.65 3664.43 5617.28
1.60
2.04
59.42
1.23
2.43
3.89
1.36
-2.09
28.20
26.87
40.38 2256.00 5126.98
0.10
1.09
44.46
1.23
10.29
15.49
0.99
3.14
NextEra Energy Partners
LP
37.81
25.00
37.81 3521.26 2572.37
0.69
1.08
23.97
1.26
2.44
11.78
0.42
2.31
48.80
47.56
73.87 4890.31 5697.61
2.68
4.45
16.55
1.02
1.55
9.19
4.06
5.87
7.71
5.74
10.80
416.08
0.21
0.17 110.14
1.27
0.60
11.42
0.54
1.20
24.29
21.71
43.67 1333.32 2585.85
4.03
4.88
8.67
2.05
0.52
6.27
6.91
35.74
High
4.03
4.88
110.14
2.05
10.29
15.49
6.91 35.74
Mean
1.55
2.28
43.87
1.34
2.97
9.67
2.38
7.69
Median
1.14
1.57
34.22
1.25
1.99
10.30
1.18
2.73
Low
0.10
0.17
8.67
1.02
0.52
3.89
0.42
-2.09
Abengoa Yield plc
First Solar Inc.
Ameresco Inc.
Canadian Solar Inc.
357.36
*in millions of USD, except per share data
11
Value Weighted Index
Value-Weighted Index
2500.00
2000.00
1500.00
1000.00
500.00
0.00
AVG MC
S&P 500
Russell 2000 Energy Index
12
Summary Recommendation
Decreasing dependence on government subsidies
Increasing capacity and contracted projects
Decreasing upstream costs and development in
technology efficiency making solar costcompetitive with conventional utilities
Solar at its cheapest now– buy-in before
upstream costs increase or future legislation
makes it more expensive
Industry Rating: Positive
US produced enough
energy to power
1.5M homes in Q2
’13 & 3.2M in Q1 ‘14
Industry operators
experiencing
economies of scale
Solar hitting grid
parity
US well-positioned
to take advantage
of these trends
US has 9% of global PV
cumulative installed
capacity share
13
THANK YOU
14
BACK-UP SLIDES
15
Sector Overview
Investment in Renewable Energy
Energy
300
250
$bn
200
150
100
Gas, Water &
Multiutilities
Electricity
50
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Year
Govt + corporate R&D, small projects
Gas Distribution
Multiutilities
Water
Conventional
Electricity
Total Financial Investment
Total New Investment
Alternative
Electricity
Key Strengths
•
Public and private sector investment in renewable energy was $77 B in the last two years alone
•
Renewable energy (ex-hydro) made up 41.3% of new power capacity added in all technologies
in 2013, saving 1.2 billion tons of global CO2 emissions.
•
In 2013, world electricity generation from renewable resources reached 8.5%, compared to 7.8%
in 2012.
•
By 2030, this number is estimated to rise to 25%
Sources: Bloomberg New Energy Finance, IC Benchmark, Goldman Sachs: North American Energy Summit
16
Solar Power Industry: Porter’s Five Forces Analysis
Medium threat of new entrants—
 capital intensive industry
making entry difficult for
start-ups
 with high industry assistance
new entrants estimated to
grow in the next 3-5 years
Low supplier power—
 oversupply of panels
 high competition b/w
suppliers
 more vertical
integration in firms
 increasing
outsourcing
 low concentration of
firms
Sources: IbisWorld,
Competition—
 High, from conventional utilities
 Medium, from alternative utilities: Leader in
renewable energy space
 Medium internal competition: Low firm
concentration, but current firms have
differentiated structures & services
High buyer power—
 not as cost-efficient
as conventional
utilities
 but demand for
green energy
increasing
High threat from substitutes—
 Conventional utilities currently
cheaper, but in next 5 years coal
prices to increase 8% and natural
gas by 28%
 Alternative energy production not
yet achieved economies of scale
 High switching costs
17
Trend #1: Back-up Data – Module Price Decrease
Average Silicon Solar Module Spot Price
Average PV Module Prices
1.8
1.4
Price ($/watt)
Mid Price (USD/watt)
1.6
1.2
1
0.8
0.6
0.4
0
12/1/2010
12/1/2011
12/1/2012
12/1/2013
3/1/2010
6/1/2010
9/1/2010
12/1/2010
3/1/2011
6/1/2011
9/1/2011
12/1/2011
3/1/2012
6/1/2012
9/1/2012
12/1/2012
3/1/2013
6/1/2013
9/1/2013
12/1/2013
3/1/2014
6/1/2014
9/1/2014
0.2
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
12/1/2014
US PV Module Prices (1989-2011)
1.5
1.4
1.3
1.2
1.1
1
0.9
0.8
0.7
0.6
0.5
7
6
Price ($/peak watt)
Price ($/watt)
Solar Panel / Solar Module 120 W+ Weekly Retailer Price Average
5
4
3
2
1
0
Sources: Bloomberg New Energy Finance, GTM Research, IREC, PV Insights, US Department of Energy
18
Trend #1: Back-up Data – Module Price Decrease & Increase in Installations
Number of PV Solar System Installations
Global PV Module Production
14000
40500
40000
29936
30000
25000
18406
20000
15000
10106
10000
5000
1399
1761
8000
6000
4000
2000
6725
1067
10000
0
2687
2004
2005
0
2006
2007
2008
2009
2010
2011
2012
2013
Years
Crystalline Silicon Module Overall Average Spot Price
Price ($/watt)
PV Capacity (MW)
35000
Capacity (MWDC)
12000
32701
2.2
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
11/30/2010
11/30/2011
Multi-crystalline Silicon Module
% Change:
-42.18%
11/30/2012
11/30/2013
Mono-crystalline Silicon Module
-48.92%
Sources: Bloomberg New Energy Finance, GTM Research, IREC, PV Insights, US Department of Energy
19
Long-term Value of Solar: Disruptive Potential
Solar accounts for small share of overall energy supply, but since a increasingly higher
proportion of new annual capacity is taken by solar, it has disruptive potential.
• Wal-Mart stated that it will switch to
100% renewable power by 2020, up
from around 20% today.
• Mining and defense companies are
looking to solar in remote and
demanding environments.
• In the hospitality sector, Starwood
Hotels and Resorts has partnered
with NRG Solar to begin installing
solar at its hotels.
• Verizon is spending $100 million on
solar and fuel-cell technology to
power its facilities and cell-network
infrastructure.
Why are companies doing such things?
To diversify their energy supply, save money, and appeal to consumers.
Sources: McKinsey Quarterly: The disruptive potential of solar power,
20
Trend #2 Backup Material – US well-positioned for new PV capacity additions
New Installed PV Capacity (Global & USA)
45000
13.92%
40000
35000
7.20%
12.64%
30000
MW
25000
6.32%
20000
15000
10000
4.59%
5000
0
0.68% 0.93%
2000
2001
6.61%
2002
8.48% 5.61%
2003
2004
US
Sources: EPIA, CleanTechnica
5.90% 7.11%
2005
2006
Overall
6.81%
6.58%
2007
2008
2009
2010
2011
2012
2013
% of Overall
21
Trend #3 Backup Material – Potential future legislation against Carbon-intensive fossil fuels
 1972- Clean Water Act- Established the basic structure for regulating discharges of pollutants into the waters of the United
States
 1977&1990- The Clean Air Act- Regulates air emissions from stationary and mobile sources.
 1990- The Pollution Prevention Act- Focused on industry, government and public attention on reducing the amount of pollution
through cost effective changes in production, operation, and raw materials use.
 1990- Oil Pollution Act- Streamlined and strengthened EPA’s ability to prevent and respond to catastrophic oil spills1992- The
Energy Policy Act of 1992-establishes a range of new subsidies and tax breaks for conservation and alternative energy
sources.
 2000- President Clinton’s Partnership for a New Generation of Vehicles hands out $1.2 billion over eight years to automakers
for development of hybrid cars.
 2005- The Energy Policy Act provides loan guarantees for entities that develop or use innovative technologies that avoid the
by-production of greenhouse gases.
 2007- Energy Independence and Security Act- increase production of clean renewable fuels, promote research on and deploy
greenhouse gas capture and storage options
22
Trend #3 Backup Material – Future predictions of oil prices (US EIA)
Future Estimated Price of Crude Oil (WTI)
140
120
PRICE IN DOLLARS
100
80
60
40
20
0
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Historical spot price (dollars per barrel)
STEO price forecast (dollars per barrel)
NYMEX futures price (dollars per barrel)
95% NYMEX futures lower confidence interval (dollars per barrel)
95% NYMEX futures upper confidence interval (dollars per barrel)
23
Trend #3 Backup Material – Future prediction of natural gas prices (US EIA)
Future Estimated Price of Natural Gas (Henry Hub)
8
7
6
5
4
3
2
1
0
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Historical spot price (dollars per million Btu)
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
STEO forecast price (dollars per million Btu)
NYMEX futures price (dollars per million Btu)
95% NYMEX futures upper confidence interval (dollars per million Btu)
95% NYMEX futures lower confidence interval (dollars per million Btu)
24
Residential price (dollars per thousand cubic feet)
Nov-15
Sep-15
Jul-15
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
Mar-10
Jan-10
Trend #3 Backup Material –
US Natural Gas Prices
20
18
16
14
12
10
8
6
4
2
0
Henry Hub spot price (dollars per thousand cubic feet)
25
What is a Yieldco?
Definition
A company that owns primarily clean energy assets for the purpose of generating income which is mostly
returned to investors through distribution of dividends out of the cash flow generated by the long-term
contracts to sell power to utility companies.
Properties
i.
ii.
iii.
iv.
v.
An investment yield vehicle, structured like a REIT but without double taxation
Traded on stock exchanges
Bundle existing power plants and projects with fixed, long-term Power Purchase Agreements
(PPAs) with utilities
Create a buyer for completed projects
Spinoffs of alternative energy companies or subsidiaries of established utility companies. (Usually,
the parent company retains at least a 70 percent ownership stake in the spinoff.)
26
YieldCos Supporting Industry Growth
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
Aggregate income-producing assets, which transform non-liquid assets into
tradable commodities
Allows investors to tap into alternative energy sector without the risk of
turbulent commodity prices
•
Reduce exposure to financial risk
Provide source of financing with lower transactional cost, which can be
obtained through traditional bank loans or debt/equity financing
Due a lower cost of capital, make solar cheaper and more accessible to the
public
Allows developers to “recycle” capital i.e. build one plant and sell existing
one into yieldco to raise equity
Yieldcos have right of first refusal to purchase projects
Yieldcos may acquire completed assets from independent companies
Provides potential for growing dividend payments
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YieldCos Supporting Industry Growth
i.
ii.
iii.
Major energy companies have spun-off yieldcos:
•
NRG Energy
•
Nextera Energy
Approximate dividend yield > 4%
More than 900 actively managed and passive funds now own at least one
yieldco
i.
BlackRock Equity Dividend Fund ($29.3 B)
ii. T. Rowe Price Small-Cap Stock fund ($9.2 B)
NRG Yield’s Competitive Advantage
•
NRG Yield owns a diversified portfolio of renewable and conventional energy assets in the US.
•
It’s stock price appreciated 87% in the last one year since its IPO.
•
It is structured as a yield co, which reduces exposure to financial risk that is faced by other companies
in the industry.
•
It’s cost of capital is in the 5-7% range, while the industry average range is 8-15%.
•
Since its IPO in 2013, insider actions show only an increasing trend of purchases.
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