Two Solar Developer IPOs Coming

Two of the world’s biggest solar developers will go public this year on Nasdaq, giving people another way to invest and gain long-term benefits from the delivery of clean electricity.

Spain’s Abengoa, which recently began trading on Nasdaq (ABGB), is spinning off Abengoa Yield and SunEdison (SUNE) is spinning off Terraform Power, probably during this quarter.

They join about six other "yieldcos" – a new, popular model for financing renewable energy projects. They draw a line between the side of a company that develops projects and the Yield Co, which owns and operates them long-term. Investors benefit from long-term, stable dividends that come from selling electricity to utilities under 20-25-year power purchase agreements. For income investors, they offer one of the few ways to make reliable dividends from high quality, very low risk projects. Any cash that’s not paid out in dividends is reinvested in new projects.  

SunEdison actually invented the solar leasing model that’s used so widely today. Among its many customers are Staples, New York City, and it built India’s largest solar project to date.

Abengoa, which built the world’s first concentrating solar plant (parabolic trough) that has energy storage (Solana), is spinning off Abengoa Yield, under the ticker ABY. The company hopes to raise about $620 million in the IPO. Last year’s sales were $211 million with a loss of $1.8 million.

Solar Solana1

Abengoa Yield will own, operate and acquire renewable energy plants and transmission lines, focused on low carbon projects. It will start with projects in North and South America, and in Spain, with a longer term goal of branching out to certain countries in Africa and the Middle East. 

30% of Abengoa’s revenues are in the US and 18% are in Spain. It has projects in the US, Mexico, Peru, Chile, Uruguay, Brazil and Spain. They expect to pay out 90% of cash in dividends, raising them over time through organic growth as they acquire more assets.

Abengoa has 11 assets:

  • 710 megawatts (MW) of renewable energy generation: two US concentrating solar plants, Solana and Mojave (280 MW each) and two in Spain, Solaben 2 and Solaben 3 (50 MW each); and a 50 MW wind farm in Uruguay (50 MW)
  • 300 MW cogeneration plant in Mexico
  • 1,018 miles of electric transmission lines in Peru and Chile

Solana, which is about 70 miles south of Phoenix, is the world’s largest parabolic solar plant, producing energy since late last year. Abengoa is also building the Mojave Solar Project (250 MW), another parabolic trough plant, in California.

They won a $1 billion contract to build the first concentrating solar plant in Latin America, a 110 MW solar tower plant in Chile’s desert. And they are building the biggest solar complex in Africa – two, 100 MW concentrating plants. 

Read our article, Clean Energy IPO Boom For Investors Seeking Predictable Dividends and another since then, Pattern Energy Group for wind energy.

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