Clean Focus Yield owns and operates clean, renewable-energy projects for commercial, industrial, government, utility and community solar clients. Its projects produce steady, predictable cash flows that translate into reliable dividends for investors. As the company acquires additional high-quality projects, it steadily grows dividends.
Steadily Increasing Dividends
Clean Focus Yield is a “yield growth company” or “YieldCo.” Similar in structure to a Real Estate Investment Trust (REIT), YieldCos securitize renewable-energy assets in a structure that delivers steadily increasing dividends. Publicly traded, YieldCos own and operate projects that produce stable, reliable cash flows over a long time horizon and distribute the income as cash dividends to investors.
The YieldCo market has seen robust activity in the past two years with seven recent IPOs each achieving over $1 Billion market capitalization. YieldCos recently listed in the U.S. by large-scale developers have received very strong demand from investors, gaining as much as 30% on the first day. Despite the difficult macro downturn in the energy market, especially in oil and gas, YieldCos have continued to consistently increase dividends per share, proving the business model works.
YieldCos offer steadily increasing dividends over a three to five year time frame as new project acquisitions add accretively to cash available for distribution. Clean Focus Yield buys privately held projects with high yields, targeting 10-12% leveraged equity returns, and pays a dividend to its shareholders at 7% or lower. This arbitrage between the public and private markets generates accretion.
Clean Focus Yield Portfolio Development
Clean Focus Yield continues to add projects from its sister development companies — Greenskies Renewable Energy, Clean Focus Renewables, and Clean Focus China — and through acquisitions from third-party developers. Clean Focus Yield has raised over $800 million of tax equity, long-term debt, and sponsor equity. It already owns or has secured 280 MW in the United States, and it expects to reach 400 MW by the end of 2018.
Targeting Growth Markets
Renewable energy continues to experience rapid growth with over two-thirds of new installed power generation in the United States coming from renewables. Falling equipment costs, favorable policies, and ongoing coal plant decommissioning have helped the U.S. solar market grow 30X from 481 MW in 2009 to 14.6 GW in 2016.
Commercial & Industrial solar development taps high credit-quality companies, often in the Fortune 1000. These corporate offtakers benefit from solar by significantly reducing energy costs. Clean Focus Yield already owns and operates over 300 installations on commercial and industrial rooftops and carports across the United States. Premier customers include Target, Walmart, and Sam’s Club.
Utility-scale projects provide larger scale and sell electricity to high credit-quality electric utilities. These ground-mount projects enable municipalities, electric utilities, and co-ops to offer clean power to their retail customers. Clean Focus Yield operates the largest landfill solar project (22.1 MW) in New England and numerous small-utility projects across the United States.
Community Solar represents the next big step forward. These projects allow high credit-quality subscribers (often from commercial, industrial, government, schools, and hospitals) to benefit from low-cost solar power without installing anything on their property. Clean Focus Yield already operates the largest community solar garden in Colorado, and it has contracted additional community solar projects in multiple states.
Municipal & Government solar projects generate substantial electricity savings for government entities, including town halls, civic centers, libraries, landfills, water treatment plants, and more. Clean Focus Yield owns and operates rooftop and ground-mount systems that service local governments with strong credit ratings.
Schools & Hospitals consume large amounts of electricity. Solar on their rooftops or carports can reduce costs significantly, often saving millions of dollars over the lifetime of the system. Clean Focus Yield owns and operates numerous systems for highly-rated schools and hospitals, including two large carport systems (3.8 MW) for Dignity Health.
These growth markets offer strong cash returns with high credit quality. While large-scale utility projects can put a lot of money to work, they provide very weak returns. By contrast, distributed-generation projects offer similar safety with much higher returns. The challenge is achieving sufficient scale to manage a diversified portfolio cost effectively. Clean Focus Yield already owns the largest C&I portfolio in the United States, so it has achieved economies of scale to reach the lowest cost structure.
Strict Project Screening Criteria Ensures Reliable Yields
Each solar project must pass a comprehensive set of screening tests before it is eligible to be acquired as part of the Clean Focus Yield portfolio. A reliable electricity buyer (offtaker) with investment-grade credit rating must be secured under a Power Purchase Agreement (PPA) contract. The solar project itself must use proven technology including modules, inverters, and racking, to ensure consistent performance. The expected electricity production must be validated by a qualified independent engineer, and the system must be constructed by an experienced and reliable engineering, procurement, and construction (EPC) contractor.
In the U.S. and other high credit-quality countries, projects must have reasonable certainty of achieving at least 10-12% IRR over total project life (PPA duration and an additional 5-10 years of estimated, uncontracted cash flow). Projects are only located in areas with sufficient electricity demand, and are tailor-made to our technical requirements, with all land and interconnection permits. Clean Focus Yield closely monitors design, construction, and maintenance quality.
Unique Combination of Safety and Growth
Clean Focus Yield provides investors a unique and desirable combination of safety and growth. Clean Focus Yield brings strict U.S. corporate governance practices to the management of solar projects. Furthermore, the Clean Focus Yield portfolio contains a unique blend of strong-credit projects in the U.S. with small opportunistic exposure to other high credit-quality countries with strong returns. This combination offers a unique blend of safety and growth.
A Disciplined YieldCo
There are numerous YieldCos already in the market, and more intending to be listed. What makes Clean Focus Yield different is our focus.
Project acquisition and operations demand deep local expertise and an extensive network of local relationships. Rather than spread resources thinly across multiple regions, Clean Focus Yield strategically hones in on a few geographies in which the team has a proven track record. With over 90% of its asset base centered in the United States, Clean Focus Yield delivers safe, stable, long-term returns.
Lastly, Clean Focus Yield is a pure play asset management company. Other solar companies tend to be heavily involved in equipment manufacturing or driven by other motivations. Such activities are very capital intensive and risky, which can hinder the abilities of such YieldCos to make regular dividend payments. With a singular mandate, Clean Focus Yield is dedicated to delivering stable and predictable returns for our shareholders.