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By James Armstrong
Managing Partner, Bluefield Partners LLP
The Diverging Experience of the UK & US YieldCos and why it is Important
Name West Raynham
Location Norfolk (ex-military airfield)
Energy Capacity 50 MW
No. of Panels 200,000 panels
CO2 Emissions Saved 21,500 tonnes per year
Homes Powered 15,150 per year
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
CO2 Emissions Saved 172,00 tonnes per year
Homes Powered 121,200 per year
July 2013, Public listing of the Bluefield Solar Income Fund
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
CO2 Emissions Saved 172,00 tonnes per year
Homes Powered 121,200 per year
High Stakes
Carbon budget: Potsdam Institute Carbon reserves: BP SRWE
20%
886
565
2,795
2 C budget
The Paris Agreement: Less than 20% of known fossil fuels can now be used
1975 2015 2005 1995 1985
$101
2 MW
$0.61
>64 GW
Price of a solar panel per W
Global solar installed
F o r t y y e a r s
Renewable Energy is getting cheaper!
Bloomberg NEF projections
GW per year electricity generation additions
The fall of fossil fuels and the rise of renewables
8
Solar Energy and Stable Yields Solar Plant Construction
2013: Solar in the USA
2013: Solar in the UK
YieldCos Trends
10
(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.
YieldCos Market Performance(4)
NRG Yield
TRIG
Foresight
TerraForm Power
TerraForm Global
NextEra
NextEnergy
JLEN
8Point3
NRG Yield
TRIG
Foresight
Bluefield
TerraForm Power
NextEra
NextEnergy
JLEN
8Point3
TerraForm Global
Total $9bn
U.S. YieldCo U.K. YieldCo
0
20
40
60
80
100
120
aug.-15 szept.-15 nov.-15 dec.-15 febr.-16 ápr.-16 máj.-16
Sto
ck P
erfo
rma
nce
NextEnergy
Bluefield
Foresight
TRIG
JLEN
TerraForm Power
11
Solar Energy and Stable Yields Solar Plant Construction
1. Design a financial product that suits the asset you are investing in?
12
Solar Energy and Stable Yields Solar Plant Construction
Jam Tomorrow, Yield Tomorrow?
13
Solar Energy and Stable Yields
Solar Plant Construction
2. Get the Right type of Investor
Long-term Short-term
14
Solar Energy and Stable Yields Solar Plant Construction 3. Transparency & Reporting
15
Portfolio Generation Bridge Chart
Irradiation for the year was 3.7% below expectations, driven materially by unusually low levels in July 2015 and June 2016.
Availability was 0.6% below assumed 99% level.
However, operational performance was 1.8%
ahead of forecast.
Overall portfolio generation was 309GWh, 2.5% below P50 base case.
Power Generation Profile
0
100
200
300
400
0
20
40
60
júl.-15 aug.-15 szept.-15 okt.-15 nov.-15 dec.-15 jan.-16 febr.-16 márc.-16 ápr.-16 máj.-16 jún.-16
Cum
ula
tive
Genera
tion (
GW
h)
Month
ly P
roduction
(GW
h)
Actual Forecast Cumulative Actual Cumulative Forecast
317,1 309,2
([VALUE]) ([VALUE])
8,5
50
100
150
200
250
300
350
2015/16 Forecast generation
Irradiation Plant Outages Portfolio Outperformance
2015/16 actual generation
Pro
duction (
GW
h)
1. BSIF Annual Report and Consolidated Financial Statements for the Financial Year Ended 30 June 2016.
Operational Performance
16
Consolidated Portfolio Earnings
FY 15/16 (£m) Commentary
Revenue 35.6 £110k per MW revenue, as per slide 101
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 NAV2
Total Underlying Earnings 21.0 7.10 pence per Ordinary Share
• Dividend Backed by Underlying Earnings
1. BSIF Annual Report and Consolidated Financial Statements for the Financial Year Ended 30 June 2016; Weighted average portfolio capacity of 323.3 MWp across FY 2015/16 . 2. Net asset value.
Financial Highlights
17
Solar Energy and Stable Yields Solar Plant Construction 4. The Use of Leverage
18
Solar Energy and Stable Yields Solar Plant Construction
The YieldCo model should enable investors to sleep at night
Can we do it?