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dydo

NextEra Energy Partners, LP (NEP)

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3 hours ago, odyd said:

NRG Energy is bidding on 2.1GW dc operating assets of SunEdison, today, for $144M. Check the thread on NYLD. This is an equity payment for SUNEQ companies interest. 1.6GW ac assets cost $0.10 per watt. In turn, they will sell those assets to NYLD say for $288M (my joking estimate), making 100% return, moving intact debt from SUNEQ to NRG  to NYLD. 

How much more they have to pay, is not that relevant to NYLD. However looking at the price of NEP purchase this is massive benefit to NYLD

Ok. So the debt part is excluded in those numbers? The price becomes quite irrelevant if there's assumed debt unaccounted for in it. They bid $0.10 per watt for it, but if for example the SUNE projects have negative value (more debt than value) it's still a high price. How do we know if $0.10 per watt is a good price without knowledge about debt and value? Value being estimate of discounted future cash flow from the projects..

We can assume though that NRG won't bid high for a massive asset base on fire sale but we can't really know how low the bid is relative to net value..

Edited by explo

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We can assume plenty, look at the price of the solar/wind watt from perspective of overall cost. The 10 cents is for equity part and debt is assumed. Those are operating assets with known dates of delivery and ppas. I don't know exact details, but looking at the nep purchase is already giving a lot of ideas.

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I'm not sure we can assume that SUNE used the same project debt ratio as NEP's sponsor.

Anyway, a winning stalking horse bid can probably be assumed to have made a good deal.

 

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Well, I dug deeper in the purchases, they may be still projects at various of stages of construction including completion within those packages, but indeed, not all being completed utility producing plants, as I thought.

There were over 112 parties in the review process, NRG got the leading role, they are also earnout payments worth $43M in addition to $144M price. In relative terms, like those in any relating to projects in solar or/wind, 2014-2016 versus 2011, is cheaper, so the comparison to NEP is skewed. However buying projects in what may have been auction is by the nature of arrangements cheaper than buying from a seller. Projects are managed at that level as individual companies, with interest, non-recourse debt, etc. Those are not corporate debts, and they have to follow a structure defined for each, which has never dropped in project financing below 20% and most of the time was at 30% or would be allowed to move lower. Not knowing as you point out I imagine, NRG has made decisions to benefit and not to damage itself by making those, and I consider this a financial benefit transferable to own yieldco.  

NEP is putting $218M to get 132MW plus $258M in debt, ilustrates pricing mechanisms of legacy projects built by FSLR some years ago. They were sold with PPAs also reflective of times. Stil while $218M for 132MW is not disputable, I can permit myself to think that $144M plus $43M, or $188M for 2.1GW of interest has to offer rather incredible opportunities for the buyer, transferable to its yieldco when done.

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1 hour ago, odyd said:

Great outlook for NEP, 12 to 15% growth in dividend till 2022, change in IDRs, reduction to benefit further unit holders.

http://www.investor.nexteraenergypartners.com/phoenix.zhtml?c=253465&p=EarningsRelease

Nice. Now I can regret not picking up the dip to $23 even more.

Edited by explo

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Reading further in NEP, change in IDR, is expected to eliminate the need for equity sale in 2017 or 2018.

Wow, that is new for a yieldco structure. I like this very much. 

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From Recharge:

NextEra Energy, the world’s largest generator of wind and solar power, safe-harboured enough wind components in late 2016 to build 10GW of future capacity eligible for the full PTC, and is confident the Trump administration will do little to dent the US renewables market.

On a conference call Friday, chief executive James Robo acknowledged investor concern about the impact of Trump’s approach to energy and climate policy on a company like NextEra.

In addition to its rate-regulated utility, Florida Power and Light, NextEra Energy owns an immense fleet of wind and solar projects across North America through its Energy Resources unit, and is among the continent’s most prolific developers. It also controls a renewables-focused yieldco, NextEra Energy Partners.

Robo noted that 9 November, the day after the US presidential election, was the worst day for NextEra’s stock relative to the S&P 500 Index in eight years. But he expressed confidence that key renewables tax incentives will be allowed to phase out as scheduled under Trump, and said he expects another near-term “step change” in wind turbine technology will make renewables competitive by 2020 without federal support.

“With regard to concerns over renewables tax incentives, I believe it’s unlikely that either the [wind production tax credit] or the [solar investment tax credit], each extended under a five-year phase down by the Republican congress at the end of 2015, will be retroactively changed,” Robo says. 

As evidence, Robo pointed to recent remarks by Steven Mnuchin, Trump’s pick to become the next US treasury secretary, confirming his support for allowing the wind PTC to phase out as planned.

“Given how rare it is for our government to retroactively change laws, particularly when parties have relied on them to make long-term investment decisions, I believe our safe-harboured projects will receive the 100% PTC through 2020,” Robo says.

“The major driver behind bipartisan support for the five-year phase down is jobs,” he added.  

Robo says NextEra does not expect any changes to the current “start of construction” guidance for wind farms, which gives developers four years to build wind projects they qualified for the full $23/MWh PTC in 2016.

He expects NextEra to continue having “robust access” to tax equity for its projects, although he believes smaller developers may suffer.

Armando Pimentel, chief executive of power-generation unit NextEra Energy Resources, says the company has not noticed much change in the US renewables market since the election. Since NextEra’s last financial earnings were released, on 31 October 2016, it has signed contracts for another 640MW of renewables capacity, including 540MW of wind for delivery in 2017/18.

“We haven’t seen anything come off the table [since the election],” Pimentel says. “We’re still having a lot of discussions with customers, and they’re not really focused on it, honestly.”

“There’s a little bit of talk about, hey, let’s try to get something done in the earlier years,” Pimentel says. “But I fully expect 2017 and 18 to be really good years for origination for renewables.”

NextEra built 4GW of new wind and solar capacity over the last two years, a record for the company, and expects to develop 2.8GW-5.4GW during 2017/18. It is also undertaking a major repowering programme, adding new turbines at many of its older wind farms.

Even if the PTC and ITC extensions are preserved, they are still set to phase down over the next few years—to nothing in the case of wind projects that enter construction after 2019. But Robo says technology and efficiency improvements will allow the renewables market to continue buzzing into the 2020s.

“We expect yet another major step-change in wind turbine technology through a combination of even taller towers and wider rotor diameters, which would further increase net capacity factors,” he says.

“So even if I’m wrong about continued federal incentives for renewables, as we near the end of this decade, I’d expect that in 2020 even without the PTC wind will be be a 2¢-3¢/kWh product, and solar without the ITC will be a 3¢-4¢/kWh product.”

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It was confusing to see a drop on Friday, NEP looks great, one of best yieldcos.

Sent from my HTC One_M8 using Tapatalk

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