“The yieldco market got very heated,” Barry Gold, the New York-based head of Orix Infrastructure & Renewable Energy, said in an interview. “But we all know how things work in the financial markets: if a door closes, someone opens a window somewhere.”

Several yieldco owners see the writing on the wall. SunEdison, Abengoa SA and  First Solar Inc. are trying to distance themselves from the units they created. Mark Widmar, First Solar’s chief executive officer, described the company’s 8Point3 Energy Partners LP yieldco as “a dormant vehicle basically.”

Pattern, meanwhile, is continuing as an owner of clean-energy projects -- the original intent of yieldcos -- but is now pushing into development. It recently bought a stake in an affiliated private company that feeds it projects, and it recruited Canada-based Public Sector Pension Investment Board to buy almost 10 percent of its stock. PSP Investments will also co-invest in projects bought by Pattern.

“We’re short renewables in the U.S. -- and we want more,” Patrick Samson, a Montreal-based managing director at PSP Investments, said in an interview. “My pensions need long-term cash flows.”

Institutional investors are indeed emerging as a heavy of renewables M&A:

• Alberta Investment Management Corp. in February agreed to buy one of the largest U.S. private solar companies, sPower, alongside AES Corp.

• John Hancock Life Insurance Co. in March said it will buy a 49-percent stake in a clean-energy portfolio owned by Exelon Corp.

• Activist investor Paul Singer may pressure NRG to sell its yieldco, potentially to capture institutional interest in wind and solar farms.
“Why not just sell to a pension fund?” said Jigar Shah, chief executive officer of clean-energy investor Generate Capital Inc. and a former SunEdison CEO. 

“There are literally hundreds of them that want these assets.”

Wind and solar farms typically have utility contracts that ensure consistent revenue streams, which neatly dovetail with the long-dated liabilities that insurers and pension fund managers accrue. For endowments, solar and wind investments help satisfy their heightened sustainable targets.