Enel is reportedly now just weeks away from unveiling its anticipated US renewable energy assets yieldco.
The company is reportedly not planning on listing the yieldco publicly, though — as such publicly traded entities are monsters “that you have to feed,” as CEO Francesco Starace stated recently in an interview with Bloomberg.
What that means of course, is that companies are put under pressure to continuously add new assets to meet the market’s idea of “growth” — rather than follow a perhaps slower but more intelligent course of development.
As it stands, Enel Green Power SpA owns and operates or is developing renewable energy projects in 21 different US states. These projects encompass various generating modalities, including: solar energy, wind energy, hydroelectric, and geothermal. The anticipated yieldco will reportedly also incorporate a Canadian wind farm.
Yieldcos have been becoming somewhat more common in the renewable energy sector in the past year or so, and appear to be mostly successful — SunEdison’s TerraForm Power, for example, has gained more than 26% since formation last year.
As noted in a October 17 report from Moody’s Investors Service: “Yieldcos are especially attractive to renewable energy producers because they offer these usually small and fast growing companies an accessible source of cheap capital to accelerating development while potentially replacing tax equity as tax incentives expire.”
According to Starace, Enel has already garnered significant interest in its yieldco from institutional investors.
“Now is the time to do this,” he stated during the recent interview, referencing the fact that they appear to be “in fashion” currently.
Bloomberg commented in its coverage that, as the “global economy recovers, inflation will rise and the returns from yieldcos will become less attractive in relation to other investments.”
It’s an open question, though, how long it will take for the global economy to “recover” to it’s pre-recession state. While official figures may have largely recovered in many instances, many other markers of economic health and demand are still substantially down. Perhaps these sorts of yieldcos will remain a good choice for some time.
Image Credit: Enel
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