A report issued by Deutsche Bank last month noted that solar power yieldcos will play a major role in driving revenue and profit growth for project developers around the world.
The Deutsche Bank investment note stated that solar power stocks have already outperformed the S&P Index by 20-25% this year and are expected to maintain the positive momentum for the rest of the year, with Yieldcos playing an important role in this regard.
Yieldcos, especially in emerging markets like India and China, will play a crucial role in driving the financial growth of solar power companies, the investment note read. Yieldcos have become common in developed markets like the US and Europe but emerging markets like India, China, South Africa, and Chile are yet to adopt this business practice of floating separate yieldcos.
Yieldcos help project developers negotiate power purchase agreements at lower rates as parent companies can unlock additional value of yieldcos by getting them listed on stock exchanges. Such prospects can help distressed companies, like several Chinese solar modules manufacturing companies. These companies have set large-scale solar power projects which can be packed off into a yieldco and listed on stock exchange to earn additional revenue and de-stress their balance sheets.
Image Credit: Abengoa Solar
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