Norges Bank discloses 5% stake in US renewable energy ‘yieldco’

Holding revealed in New York-listed NRG Yield

Norges Bank Investment Management (NBIM), the manager of Norway’s NOK7.12trn (€785bn) Government Pension Fund Global, has disclosed a significant stake in yet another US-based renewables firm – in this case New Jersey-based NRG Yield Inc.

According to a filing with the SEC, the US regulator, NBIM now owns 34.5m ‘Class A’ shares in NRG Yield, giving it a 5.09% stake in the New York Stock Exchange-listed vehicle.

As its name would suggest, NRG Yield is a so-called ‘yieldco’ – a listed company set up to acquire and bundle renewable energy assets. One benefit of yieldcos is that they are tax-efficient; only their dividends – instead of profits and dividends – are typically taxed.

NRG Yield is run by its majority stockholder, Princeton and Houston-based energy firm NRG Energy.

NRG Yield’s latest financial results reflect that NBIM will be satisfied with its payout. In the second quarter of 2015, NRG Yield’s dividend per Class A share totalled $0.20, or $0.80 on an annualised basis. By the fourth quarter of 2016, the company aims to raise it quarterly dividend to $0.25.Including NRG Yield, NBIM owns significant stakes in at least four listed US firms active in the energy efficiency and renewable energy sectors. The other three are smart grid software firm EnerNOC (above 6%); Itron, an IT firm specialising in efficient energy and water use (above 6%); and Ameresco, a Massachusetts-based energy efficiency and renewables company (above 5%). Contacted by Responsible Investor, a spokeswoman for NBIM said her firm did not comment on shareholdings.

The investments in the US come as the manager of the GPFG phases out its exposure to the coal industry. Last year, NBIM divested from 53 coal companies worldwide, whittling its holdings in the sector to $9.7bn (€8.7bn).

The divestment is set to continue, as the Norwegian Parliament voted in late May to forbid the GPFG to own companies where coal exceeds 30% of revenue. The restriction is to take effect from 2016, and news reports say NBIM could sell 122 companies, including such names as E.ON and RWE of Germany, Denmark’s DONG Energy, Vattenfall of Sweden and Italy’s Enel.