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Safe and reliable Wind and Solar Energy Investments

piggy-ban-renewablesInvestment firms buying renewable energy developments Sandiego Source, By JUSTIN DOOM , Bloomberg NewsWednesday, February 19, 2014 NEW YORK– Hedge funds and private equity firms from D.E. Shaw & Co. to KKR & Co. are ramping up their investments in renewable energy projects.

D.E. Shaw, the $30 billion hedge fund manager, bought stakes in five California solar plants in July and is co-developing a wind farm off Rhode Island Wind farms and industrial-scale solar plants typically have decades-long deals, known as power purchase agreements, to sell electricity to utilities.

D.E. Shaw is betting those contracts make renewable energy as safe and reliable as, say, conventional utility bonds have always been regarded, said Bryan Martin, a managing director at the New York-based firm.

Only a minority of investors understand that such contracts with investment grade utilities or cities “are capable of providing a steady income stream comparable to high-quality corporate bonds,” Martin said………

Developers are forecast to install as much as 42 gigawatts of solar power in 2013, up 39 percent from the prior year.

In the U.S., they were expected to add 4.3 gigawatts last year alone, according to the Solar Energy Industries Association, up 27 percent, including a record amount of residential rooftop systems.

A gigawatt of solar supplies about 165,000 U.S. homes……..

Young industry

Clean power is a young industry. It ramped up in a serious way only from 2004, after Germany rolled out a national subsidy program.

There’s little doubt the program has worked. The country has more solar capacity than anywhere else, about 35.5 gigawatts, almost triple that of the United States.

KKR (NYSE: KKR) has completed five clean energy deals in three years, and Altus Power America Management LLC announced a joint venture Feb. 4 to develop $150 million of commercial solar projects.

What’s driving this are projections of stable yields of 8 percent to 10 percent in the next few years — better than most corporate bonds………

%-10% returns

For some investment firms with experience in solar and wind, the returns are more than sufficient compared with the risk.

Altus, based in Old Greenwich, Conn., was founded in 2009 by veterans from Cohen & Co. andAmerican International Group Inc. (NYSE: AIG) to develop and own rooftop solar systems on schools, warehouses and other commercial structures including ESPN’s Bristol, Conn., headquarters. Altus projects that its rooftop projects will beat the average corporate bonds…….

Raj Prabhu, chief executive officer of Mercom Capital Group LLC says“The market’s still trying to digest how to evaluate the risk of investing in clean energy,” he said. “For mainstream investors, it’s still a little new. But the market understands the potential of this, and we’re going to see more deals.”

February 21, 2014 - Posted by | Uncategorized

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