The Diverging Experience of the UK & US YieldCos and why it is Important. By James Armstrong Managing Partner, Bluefield Partners LLP

Transcription

1 The Diverging Experience of the UK & US YieldCos and why it is Important By James Armstrong Managing Partner, Bluefield Partners LLP

2 July 2013, Public listing of the Bluefield Solar Income Fund Of the 201m long term debt in the company ( 187va and 14m BLB) 1m is fixed price. As such the direct linkage of our revenues to RPI benefits from a multiplier effect on the debt giving rise to the potential of an above RPI increase in distributable earnings. The Company does have 65m of RPI linked debt which only partially offsets this benefit but meanwhile provides a hedge in a lower inflation or deflationary nvironment.bluefield Partners LLP - Key Facts No. of Plants 70 Locations England, Wales Energy Capacity 400 MW No. of Panels 1,600,000 panels CO 2 Emissions Saved 172,00 tonnes per year Name Homes Powered West 121,200 Raynham per year Location Norfolk (ex-military airfield) Energy Capacity 50 MW No. of Panels 200,000 panels CO 2 Emissions Saved 21,500 tonnes per year Homes Powered 15,150 per year

3 Bluefield Funds- Key Facts Gross Assets c. 600 million Yield 7% (target yield on Bluefield Solar Income Fund) No. of Plants 70 Locations UK (England, Wales) Energy Capacity 400 MW No. of Panels 1,600,000 panels CO 2 Emissions Saved 172,00 tonnes per year Homes Powered 121,200 per year

4 High Stakes

5 The Paris Agreement: Less than 20% of known fossil fuels can now be used 2, C budget 20% Carbon budget: Potsdam Institute Carbon reserves: BP SRWE

6 Renewable Energy is getting cheaper! $101 Price of a solar panel per W Global solar installed >64 GW 2 MW $ F o r t y y e a r s

7 GW per year electricity generation additions The fall of fossil fuels and the rise of renewables Bloomberg NEF projections

8 2013: Solar in the USA Solar Plant Construction Solar Energy and Stable Yields 8

9 2013: Solar in the UK

10 Stock Performance YieldCos Trends YieldCos Market Performance (4) Foresight TRIG NRG Yield 80 JLEN NextEnergy NextEra TerraForm Power TerraForm Global 8Point3 Foresight Bluefield TRIG NRG Yield JLEN NextEnergy NextEra TerraForm Power TerraForm Global 8Point3 Total $9bn NextEnergy Bluefield Foresight TRIG JLEN 60 TerraForm Power aug.-15 szept.-15 nov.-15 dec.-15 febr.-16 ápr.-16 máj.-16 (1) Company Press releases and RNS Announcements (3) Company 10-Q SEC filings, Annual reports and RNS Announcements (2) Financial Times (Market Cap as at 20 June 2016) (4) Yahoo Finance NRG Yield, Inc.; The Renewable Infrastructure Group Limited (TRIG); Bluefield Solar Income Fund Limited; Foresight Solar Income Fund Limited; TerraForm Power, Inc.; NextEra Energy Partners, LP; NextEnergy Solar Fund Limited; John Lain Environmental Asset Limited (JLEN); 8Point3 Energy Partners LP; TerraForm Global, Inc. U.S. YieldCo U.K. YieldCo 10

11 1. Design a financial product that suits the asset you are investing in? Solar Plant Construction Solar Energy and Stable Yields 11

12 Jam Tomorrow, Yield Tomorrow? Solar Plant Construction Solar Energy and Stable Yields 12

13 2. Get the Right type of Investor Long-term Short-term Solar Energy and Stable Yields Solar Plant Construction 13

14 3. Transparency & Reporting Solar Solar Plant Energy Construction and Stable Yields 14

15 Production (GWh) Monthly Production (GWh) Cumulative Generation (GWh) Operational Performance Power Generation Profile júl.-15 aug.-15 szept.-15 okt.-15 nov.-15 dec.-15 jan.-16 febr.-16 márc.-16 ápr.-16 máj.-16 jún.-16 Actual Forecast Cumulative Actual Cumulative Forecast Portfolio Generation Bridge Chart ,5 ([VALUE]) ([VALUE]) 317,1 309,2 Irradiation for the year was 3.7% below expectations, driven materially by unusually low levels in July 2015 and June Availability was 0.6% below assumed 99% level. However, operational performance was 1.8% ahead of forecast. 2015/16 Forecast generation Irradiation Plant Outages Portfolio Outperformance 2015/16 actual generation Overall portfolio generation was 309GWh, 2.5% below P50 base case. 1. BSIF Annual Report and Consolidated Financial Statements for the Financial Year Ended 30 June

16 Financial Highlights Dividend Backed by Underlying Earnings Consolidated Portfolio Earnings FY 15/16 ( m) Commentary Revenue k per MW revenue, as per slide 10 1 Other Revenue 0.9 Insurance proceeds and liquidated damages Portfolio Income 36.5 Portfolio Costs (7.1) c. 20% of Revenue Portfolio EBITDA 29.4 c. 80% margin Project Level Debt Service (1.4) Repayment and Interest in Project Durrants Total Investment Income Earned 28.0 c. 77% margin Group Admin & Finance Costs 7.0 Ongoing Charge Ratio of c. 1.1% of NAV 2 Total Underlying Earnings pence per Ordinary Share 1. BSIF Annual Report and Consolidated Financial Statements for the Financial Year Ended 30 June 2016; Weighted average portfolio capacity of MWp across FY 2015/ Net asset value. 16

17 4. The Use of Leverage Solar Solar Plant Energy Construction and Stable Yields 17

18 The YieldCo model should enable investors to sleep at night Solar Plant Construction Solar Energy and Stable Yields 18

19 Can we do it?