MAKE Consulting recently released one of the company’s “Flash Notes” examining the impact of the growth of yieldcos in the U.S. over the past couple of years. Yieldcos open wind ownership to a new class of public investor, which is driving a lower cost of capital and favoring further growth.
The short analysis provides insight into developments in the renewable energy industry.
According to MAKE, the U.S. wind industry is undergoing an evolution in asset ownership with the rapid rise of the yieldco as an ownership vehicle and capital recycling tool. A number of asset owners, both experienced wind players and newcomers to wind power ownership, have launched yieldcos with wind capacity in their quickly expanding portfolios.
The Flash Note is titled “Yieldco expansion in the U.S.: benefits and limits to growth,” and analyzes yieldco preferences in the context of the U.S. market outlook and the existing U.S. wind power fleet to identify yieldco growth opportunities and barriers. Asset portfolios, average costs of capital, and dividend yields of five major yieldcos in the U.S. are outlined. MAKE analyzes the drivers and benefits of yieldco expansion as well as potential limiting factors.
Key points in the report include:
- Yieldcos have accumulated 5.5 GW of US wind power assets since 2013 and are still climbing
- Projects with PPAs, long-term service agreements, and Section 1603 grants or many years of PTCs remaining are prime acquisition targets
- MAKE identifies more than 20 GW of operational US wind assets viable for yieldco acquisition
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