Although the rate of growth has slowed, developing and operating renewable energy facilities remains on a growth trajectory. A more moderate pace will allow the industry to better sustain growth over an extended number of years. Developers of renewable energy projects use high-yield business structures as the final owners of the projects. The pass-through renewable energy companies provide the capital for development and investors receive attractive dividend streams.
The chart below recently published by the U.S. Energy Information Agency (EIA) shows the agencies short-term forecast for renewable energy supplies through 2019. You can see that new solar and wind energy sources will continue to be develop and go online at a steady pace. Longer term, there are forecasts for continue growth in renewable energy sources through 2050.
After a renewable energy project is up and running, the generated power is typically sold through long term contracts. This ensures the project will generate a return on the capital invested. There are a handful of public companies that focus on owning renewable energy assets and paying attractive dividends to investors. Here are three to consider.
NRG Yield Inc. (NYSE: NYLD) owns a nationally diverse portfolio of conventional, solar, thermal, wind, and natural gas electricity production assets. The company was spun out in 2012 by NRG Energy (NYSE: NRG), a regulated electric utility company. Renewable energy assets developed by NRG were sold to NYLD to support the growth of NYLD.
Currently, the controlling sponsor interest in NYLD is being acquired by Global Infrastructure Partners. Along with control of NYLD, Global will purchase NRG Renewables 6.4 GW project backlog. This means the NYLD double digit per year dividend growth story will continue.