It’s been so long since I’ve seen a truly bullish MLP trading chart that when I first glanced at the one below I did a triple take, and then just stared at it until the dizziness passed.

That’s Enviva Partners (NYSE: EVA), and as the trading action suggests this partnership is not involved in shipping crude or processing natural gas. Rather, Enviva supplies utility-grade wood pellets that can be burned in dedicated power plants or alongside coal.

The pellets aren’t competitive with coal on market price, but are growing fast as a coal substitute in Europe thanks to subsidies by European Union members trying to meet binding renewable power targets. Wood pellet plants emit only about 20% as much of greenhouse gases as those generating equivalent power from coal.   

For more on this rapidly growing industry and Enviva’s assets, please see Robert Rapier’s write-up from a February MLP Investing Insider, reprised below. Robert also covered Enviva in detail just before its initial public offering last May.

Building on his research, I’ll focus on recent developments and the broad investment case as well as key risks.

Source: Enviva Partners presentation

As the trading chart shows, the first year in the public markets has been an eventful one for Enviva, as it got swept up in last summer’s risk aversion and was still far below its IPO price just two months ago before rallying hard.

It helped a lot that the financial results have exceeded forecasts, powering rapid distribution growth that’s expected to continue next year and providing 1.28x cash flow coverage for the current 9% annualized yield.

For 2016, Enviva forecasts distribution of at least $2.10 per unit, which would represent growth of 27% since the IPO, and a prospective yield of 10%.

A lot of things have gone right to make the numbers look this good. The volume of pellets sold increased 57%, while the adjusted gross margin per ton jumped 50% as Enviva used its industry-leading scale to drive plant and supply-chain efficiencies while enjoying lower fiber and fuel costs.

Source: Enviva Partners presentation

As with any master limited partnership, the opportunity to collect a large tax-deferred yield comes with considerable risks and costs. In Enviva’s case the costs start with the $35.5 million management fee the sponsor collected last year, amounting to 30% of revenue and 153% of net income. This year the sponsor gets an additional $2.4 million in office lease payments. And if the distributions continue to increase the sponsor will start netting incentive distribution rights.

Perhaps more troubling is the partnership’s overwhelming current reliance on just two big purchasers of its pellets, though the sponsor has worked to line up contracts with additional buyers that will kick in over the next couple of years.

Also, like most renewables suppliers benefitting from targeted government mandates, Enviva runs the risk of abrupt changes in such policies.

At the moment, policy trends favor rapid adoption of wood pellets that one analyst estimates could deliver growth averaging 20% annually through 2019.

The UK plans to shut all its coal plants over the next decade and Netherlands is on the verge of following suit; wood pellet power plants are also planned in Japan and South Korea. The U.S. could become another big market, depending on the outcome of the current court battle over restrictions on burning coal between the Environmental Protection Agency and industry groups.

But subsidies for renewable power remain subject to sudden change or outright cancellation.

And while Enviva’s current supply contracts accounting for much of its production capacity still have more than seven years to run on average, its current concentration means that the loss of a single customer could prove devastating.

Mitigating that risk is Enviva’s current status as the lowest-cost supplier, and one of the few operating on sufficient scale to meet the needs of large utility purchasers.

The sponsor has additional contracted volume it could drop down, along with a new plant and port terminal under development.

And if a year from now Enviva has delivered the promised distributions and seen its yield dip to around 8% as was the case at the time of its IPO, that would imply a 28% jump in the unit price.

That’s a reasonable potential reward for the significant risks involved. We’re adding Enviva Partners to our Aggressive Portfolio. Buy EVA below $23.