Why MLP introduction won't stop yieldco use

Author: Zoe Thomas | Published: 3 Jul 2015

Yieldcos will remain a popular vehicle for renewable energy companies even if they are allowed to form master limited partnerships (MLP), according to market participants.

Proposals to change which asset classes are eligible to be placed in an MLP are unlikely to halt the use of yieldcos. But the US yieldco market is also unlikely to see significant numbers of new entrants because existing players are moving ahead with many of the available growth opportunities.

The choice of either an MLP or a yieldco comes down to a benefits versus cost analysis of the corporate structures.

"I see MLPs, Reits [real estate investment trust] and yieldcos as a ways to operate without significant corporate tax," said Keith Martin, partner at Chadbourne & Parke. "If you worry that congress will scale back MLPs, yieldcos...