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Yieldcos With Organic Growth Prospects – Part 1

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Mar. 31 2015, Updated 5:05 p.m. ET

Right of first offer assets

As discussed in Part 8 of this series, ROFO (right of first offer) assets represent growth opportunities. Yieldcos need to keep adding new assets to their portfolios to stay tax efficient and competitive. A large pipeline of ROFO assets means greater certainty about growth prospects. Yet, note that sponsors aren’t obligated to sell the projects in the pipeline.

In this part, we’ll look at the ROFO asset pipelines of the yieldcos discussed so far.

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NRG Yield (NYLD)

As mentioned in Part 9, as of December 31, 2014, NRG Yield (NYLD) operated a portfolio of 2,985 MW spread across conventional generation, utility scale solar, distributed solar, and wind. The company had a ROFO asset pipeline of 469 MW as of December 31, 2014. All its ROFO assets are currently owned by NRG Energy (NRG), either fully or partially.

NRG Energy (NRG) makes up 1.57% of the SPDR Select Sector Utilities ETF (XLU).

Pattern Energy Group (PEGI)

As of December 31, 2014, Pattern Energy Group (PEGI), operated 1,974 MW of wind power plants. The company had ROFO wind assets of 1,719 MW in its pipeline on that day. All its ROFO assets are owned by Pattern Development, the sponsor.

NextEra Energy Partners (NEP)

As of December 31, 2014, the company operated 1,240 MW solar and wind projects. The company has a ROFO agreement with NextEra (NEE) for another 1,549 MW of solar and wind projects. The wind portfolio was added to the company’s portfolio in January 2015 following the acquisition of First Wind.

In the next part of this series, we’ll continue our look at yieldco ROFO assets.

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