You Could Soon Have the Opportunity to Fund Your Retirement and Save the Environment

NextEra Energy filed to take its clean energy income vehicle public. It’s a move that might work well at a company like Exelon.

May 25, 2014 at 3:40PM

Solar Panels

About a month ago NextEra Energy (NYSE:NEE) announced that it submitted a confidential draft registration statement for a yieldco vehicle. Basically, it wanted to see if it could file an initial public offering for an MLP-type investment that would own clean-energy assets. Just this week NextEra Energy announced that it now plans to go ahead with an initial public offering of units of NextEra Energy Partners. With that offering investors would have a pure-play, clean-energy income vehicle to fund their retirements, while at the same time owning assets that are saving the environment.

The plan
Under the plan filed with the SEC, NextEra Energy plans to raise up to $50 million by selling common units of NextEra Energy Partners. The company, which was formed this year, operates 10 wind and solar energy projects. Over the past 12 months those assets generated $169 million in revenue.

The idea behind a yieldco vehicle like this is to use the issuance of common units to fund growth as a bulk of the cash flow will pass through to unit holders. It's a concept that has been well received by oil and gas investors as MLPs have become a popular income vehicle for investors seeking income security for retirement. What's different this time is that investors don't have to choose their retirement or the environment as NextEra Energy Partners will only own clean energy assets.

The new vehicle will enable NextEra Energy to build solar plants and wind farms and then sell these assets down to NextEra Energy Partners once the projects are fully contracted for the long term. This arrangement will provide NextEra Energy a new source of growth capital to fund additional clean-energy projects.

Wind Farm Gate

First, but not the last
NextEra Energy Partners could actually open up the floodgates of additional yieldco type vehicles. With interest rates still low, and so many Americans heading toward retirement there is a huge market for high yielding stocks. Because of this we're likely to see other utilities with growing renewable portfolios like Exelon (NYSE:EXC) follow suit.

The company's generation business currently plans to invest over $2 billion per year through 2016 just to maintain and grow its generation business. Less than 10% of that capital will be used to grow its clean energy portfolio because the company needs to spend so much on base capex and nuclear fuel just to keep its business going. But that's not stopping the company from looking for growth from the outside as it recently announced it was paying $6.8 billion to buy Pepco Holdings (NYSE:POM).


Photo credit: Exelon 

There problem with acquisition-fueled growth is it is adding a lot of debt to Exelon's balance sheet. While Exelon is selling off about a billion dollars' worth of fossil-fuel power plants to help pay for the Pepco Holdings deal, it certainly could benefit from selling some of its wind or solar assets into a yieldco vehicle. The value uplift that comes from the higher valuation investors assign MLPs could provide a nice boost, while the cash influx could help reduce debt levels or fund high-returning growth projects. It's certainly an option that Exelon, and many of its peers, could consider in the future if NextEra Energy Partners finds success in the marketplace. 

Investor takeaway
NextEra Energy's new clean energy income vehicle is likely just the first of many for the sector. We could see growth-strapped companies like Exelon following suite as the move could make a lot of sense for it. That's good news for investors as it means they'll have more options to fund their retirement without worrying about funding projects that aren't always environmentally friendly.

1 retirement strategy you simply must learn
There are a handful of companies using a small IRS "loophole" to help line their investors' pockets with money. There's a real simple strategy to finding and investing in these companies, which could make you a lot of money. To learn more check out our special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Exelon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers