BLOOMBERG - Yieldcos, a clean-energy financing model that didn’t exist three years ago, are on track to become a $100 billion market. That’s almost quadruple the $27 billion in market value now, according to Jeff McDermott, a managing partner at Greentech Capital Advisors LLC, a New York-based investment bank that invests in yieldcos.
Wind and solar developers continue to form the publicly traded ventures to reduce funding costs as investors snap up the shares, which provide one of the few opportunities to buy into the steady revenue delivered by renewable power plants, he said.
“It really does lower the costs of renewables,” McDermott said during a panel discussion Wednesday at Bloomberg New Energy Finance’s annual conference in New York. “It’s got a lot of room to run.”
There are at least a dozen yieldcos now and more are in the works. First Solar Inc. and SunPower Corp., the biggest U.S. solar manufacturers, said in February they plan to jointly form one.
Under the yieldco format, an energy developer creates a separate company that buys and operates completed power plants. Long-term deals to sell electricity make the ventures low-risk borrowers, while project sales give developers capital to build more wind and solar farms.