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NRG Energy and NRG Yield have formed a yieldco that will invest in and hold operating portfolios of residential solar assets developed by NRG Home Solar. This partnership will hold interests in an unlevered and tax equity financed residential solar portfolio. Also, NRG Yield will invest up to $150 million in the partnership.
Initially, the yieldco invested in two portfolios, totaling 65MW, of leases: over 2,200 leases across 9 states representing approximately 17 MW with a weighted average remaining term of approximately 17 years; and an “in-development,” tax equity financed portfolio of between 6,000-7,000 leases across at least 10 states representing approximately 48 MW with a lease term of 20 years.
As part of the agreement, NRG will periodically monetize its residential leases through NRG Yield’s upfront equity investment and still retain a residual economic interest in the portfolio, while also providing NRG Yield with additional cash available for distribution (CAFD).
The partnership is expected to be fully invested within 12 months of this announcement date and, when fully utilized, is expected to include over 15,000 leases representing approximately 65 MW. NRG Yield expects its investment in the partnership to generate an average unlevered CAFD yield of approximately 7.5% over the contracted life of these investments.
David Crane, Chief Executive Officer of NRG and NRG Yield’s Chairman and Chief Executive Officer, commented, “This strategic financial partnership, coupled with the growing strength of NRG Home’s residential solar platform, provides us even more confidence in our strategy and growth targets both for the residential solar business and for the NRG Yield portfolio at large.”
(Photo Credit: NRG Energy)
