We haven’t touched anything solar or alternative energy since last Summer when the early signs of Euro weakness occurred. Since that time a new crop of domestic solar utilities have been developed that in structure are much like REIT’s and MLP’s where the majority of the positive cash flow is passed on to the shareholder.
Basically, these companies represent shares of solar farms or other reliable forms of alternative energy where the farm has a long term contract with a larger utility for the sale of the energy produced. This structure eliminates much of the risk associated with construction and development. Plus, contrary to solar cell manufacturers the investor is not exposed to the downward price pressure of solar wafers. (See Sunpower, First Solar as examples)
The benefits are cash flow from dividends that should grow periodically. In terms of a fit in a macro world of 0% and 1% yields on sovereign Treasuries these Yieldco’s could represent a viable alternative for a portion of a green portfolio.
In the meantime we are conducting our own research and developing a shopping list of names to buy once this current bear market is over.
Brad Pappas
No positions