China’s Yingli Green Energy has taken the yieldco approach for renewable energy project development to a new level. The company has launched bonds for specific projects to attract public funding.
Yingli Green Energy recently announced bonds for a 4 MW solar photovoltaic (PV) power plant operational in China’a Hebei province. The bond issue is open for public subscription through an online portal.
Project bonds are an alternative to debt financing from banks and other institutions. The approach also directly involves common and small investors in the development of renewable energy infrastructure.
The launch of project bonds by Yingli comes at a time when the Chinese stock markets are undergoing an uncertain phase. The Shanghai Stock Exchange Composite Index is down over 20% from the all-time high of 5,166 made earlier this year. Domestic and small investors have seen their investments wash out completely. Bonds, considered a safer investment option to equities, would certainly be attractive to investors in this environment.
Bonds for project development may be a necessity for Yingli as well since it sits on a debt of $1.6 billion. Banks would certainly think twice before increasing exposure to a company with such high debt on books.
A number of project developers are looking to set up yieldcos to maximise their revenue and profit from the renewable energy assets.
SunEdison, the world’s leading renewable energy projects developer, earlier this year announced plans to issue bonds worth $900 million. The funds raised from the bond issues would be used for setting up new projects as well as acquiring existing projects from other companies. The latter could be done through the company’s yieldco TerraForm.