NRG Yield shows modest progress in Q3

When solar yieldcos arrived on the scene five years ago, they were the hottest thing, and quarterly results calls were marked by massive acquisitions, growing dividends, and breathless promises of future growth.

But after SunEdison nearly took down its two yieldcos with it in its messy bankruptcy, the space has experienced a degree of crisis, with market valuations falling and a number of developers either selling off or considering selling their yieldcos.

Since that time, the surviving yeildcos are no longer marked by dramatic growth, as evidenced in NRG Yield’s Q3 results. In addition to $295 million in capital deployed since the third quarter, the yieldco’s big announcement was the closure of a drop-down of 38 MW of mid-sized solar assets on November 1.

Additionally, NRG Yield has formed a partnership with NRG to invest up to $50 million in a portfolio of distributed solar assets, which the company says is primarily comprised of community solar.

If solar acquisitions by the company were not terribly ambitious, financials were sluggish but not disastrous. During Q3 the company brought in net income of $41 million, but also $203 million in cash and $143 million in Cash Available for Distribution (CAFD), with net income and CAFD down from a year ago.

Regardless, the company is increasing its dividend to $0.288 per share in Q4, a 15% year-over-year growth. Additionally the company has received an offer from NRG to acquire its 154 MW Buckthorn Solar project under its Right of First Offer agreement, which is expected to come online in mid-2018.

The closing of the drop-down of the 38 MW of solar assets has allowed NRG to increase its CAFD guidance for 2017 from $255 to $260 million. In 2018 the company expects this to grow again modestly to $280 million.

The news brought a slight increase in the value of NRG Yield’s stock, which closed at about $18.50 on Wednesday evening to rise above $19.00 by early Friday.