Abengoa’s 280 MW Solana plant in Arizona

Projects with the highest net capacity factor will be the most sought after by yieldco managers, Roger Conrad, Energy and Income Advisor at Conrad's Utility Investor, said.

“Projects with higher capacity factors typically means secure long-term investments, which is critical to yieldcos,” according to Kevin Smith, CEO of SolarReserve, developer of the 110 MW Crescent Dunes tower CSP project in Nevada.

“CSP projects with storage can cost competitively provide the highest capacity factors in the renewable energy industry,” Smith said.

The growing popularity of renewable energy yieldcos shows that investors are beginning to understand the value of renewable energy assets with long term contracts and steady revenue that is immune to volatile commodity prices.

Yieldcos offer developers access to lower-cost capital as they compete against other renewables firms to reduce the cost of energy output.

Yieldcos in the renewable space include Pattern Renewable Energy Partners, NRG Yield, NextEra Energy Partners, Abengoa Yield, TerraForm Power and TransAlta Renewables.

Suitable profile

Measured as availability during the hours required by the offtaker, the capacity factor in CSP with storage can be as high as 90%, according to Kevin Smith, CEO of SolarReserve. The company’s 110 MW Crescent Dunes plant has 1,100 MWh of storage.

Power availability during specific peak demand periods is more useful to some off-takers than round-the-clock generation.

While the capacity factor of CSP with storage plants can be extremely high, Solareserve prioritizes the demand requirements of the utility.

“NV Energy doesn't want us to run 24 hours a day," Smith said.

Crescent Dunes provides 10 hours of storage and its contract requires evening generation late into the night to meet the power demands of Las Vegas.

"Our Nevada facility is at about a 52% capacity factor and the only reason why it is not more is that the utility doesn't need it. We could deliver higher capacity factor with more storage but with a PV facility, you don't have any control over that time-of-day delivery,” Smith added.

Gaining yieldco share

Although there is far more installed utility-scale PV than CSP, a much higher percentage of CSP is held by yieldcos.

All of the big CSP projects brought online in the US with the recent Investment Tax Credit (ITC) and Loan Guarantee Program (LPO) are held in one of the three yieldcos NRG Yield (NYLD), Abengoa (ABY) and NextEra Energy Partners (NEP).

Nextera Energy Partners (NEP) holds the 250 MW Genesis (parabolic trough) CSP project, but has only 40 MW of PV. Most of its assets (700 MW) are wind.

Abengoa's Abengoa Yield (ABY) is dominated by CSP, at 891 MW, followed by 100 MW of wind and no PV. It has a full economic stake in Abengoa Solar's 280 MW Solana project in Arizona and the 280 MW Mojave project in California and in the 31 MW (tower) project PS10/20 in Spain.

It has smaller stakes in its remaining trough CSP projects in Spain; 74% of Solacor 1/2 (100 MW), 70% of Solaben 1/2 (100 MW) and 30% of Helioenergy 1/2 (100 MW).

NRG Yield (NYLD) holds a 49% stake in the 392 MW Ivanpah project, making up almost a third of its 1,324 MW portfolio of natural gas, PV, CSP and wind assets.

All of these assets have begun their 20 to 30 year contracts. Yieldcos look for safe investments: energy projects that have proven themselves in at least one year of operation, when typical initial ramping-up issues associated with power blocks and those particular to large heliostat arrays are likely to have been resolved.

“As an increasing number of solar thermal energy projects are awarded, risks related to these kinds of projects become lower, which opens more access to funding for companies operating in this sector,” said a spokesman for Abengoa.

Long term support

As the oldest CSP in the world, the 354 MW SEGS project in Southern California recently began its second round of PPAs with Southern California Edison (SCE).

In 1986, SEGS I and II began operations with 44 MW, in 1988, SEGS III and VII brought 150 MW on line and SEGS VIII and IX added 160 MW in 1990.

"As the plants have aged, the cost of operations shifts from recouping the initial capital investment to maintaining and replacing aging equipment. As we replace older materials in the solar field, we are able to take advantage of newer, advanced components,” said Brad Bergman, General Manager at Cogentrix.

This kind of residual value after the end of the first contract seen in SEGS would be attractive to yieldcos, assuming that there are lease and permit terms that would allow for a subsequent PPA and there is a market need for the generation, according to John Marciano, lawyer and author of “How to Ready your Project for Sale to a Yieldco.”

The SEGS plant testifies to the long term reliability of traditional trough-based CSP. Even with downtime for maintenance and upgrades, it generates 662 GWh annually for 25-30 years.

PV remains the more competitive solar technology, based on CAPEX, but increasing data on CSP reliability is underlining the technology’s higher capacity factor and longevity.

By Susan Kraemer