Brookfield To Take Over SunEdison’s TerraForm Yieldcos
It appears TerraForm Global and TerraForm Power, yieldcos of bankrupt renewables firm SunEdison, will finally be able to come out from underneath the shadow of their troubled parent company. Canada-based Brookfield Asset Management has agreed to fully acquire TerraForm Global, as well as acquire a controlling stake and assume sponsorship of TerraForm Power.
Although neither yieldco was part of SunEdison’s Chapter 11 bankruptcy filing in April 2016, SunEdison’s financial woes weighed heavily on the subsidiaries’ operations. Under the yieldco model, SunEdison, as the sponsor, would sell its operating projects to the TerraForm companies – a relationship that provided the yieldcos with a steady project pipeline to own and operate and SunEdison with more capital for future projects.
After SunEdison’s bankruptcy, however, the yieldcos started searching for buyers or new sponsors in an effort to break away from their parent and remain viable companies. They recently signed exclusivity agreements with Brookfield regarding a possible buyout, and now they have inked definitive deals.
According to a press release, TerraForm Global owns and operates, or has contracts to acquire, a fleet of 31 wind and solar power plants totaling 952 MW of capacity spread across Brazil, India, China, South Africa, Thailand, Malaysia and Uruguay. Under a definitive merger agreement, Brookfield Asset Management Inc., a global alternative asset manager, will acquire TerraForm Global for approximately $787 million in cash and will assume approximately $455 million in net debt, representing an enterprise value of approximately $1.3 billion.
“We are pleased to have reached a successful completion of TerraForm Global’s strategic alternatives process to maximize value for our shareholders,” says Peter Blackmore, chairman and interim CEO of the TerraForm yieldcos. “After a thorough review of alternatives and the significant steps taken by the board and management to best position TerraForm Global for success, we are confident a sale to Brookfield is the best possible transaction for our shareholders. We look forward to working closely with Brookfield’s experienced team to achieve a timely closing and a seamless transition.”
In addition, Brookfield has entered into a definitive agreement with TerraForm Power under which Brookfield will acquire 51%, a controlling interest, of TerraForm Power and assume the role of the yieldco’s sponsor.
According to a press release, TerraForm Power Class A shareholders will receive $11.46 per share in cash, with an option for shareholders to elect shares in order to participate in future upside potential. Brookfield will provide TerraForm Power with a 3.5 GW right-of-first-offer portfolio, representing about 1.2 GW of operating wind projects and around 2.3 GW of development-stage wind and solar projects in North America and western Europe. Brookfield will also offer a $500 million sponsor equity line to support future growth for TerraForm Power.
Blackmore says, “This agreement with Brookfield is the culmination of our efforts to separate our operations from SunEdison and to position TerraForm Power for future success. With the support of Brookfield as TerraForm Power’s sponsor, we will gain additional resources to continue to expand our portfolio and increase cashflow on a per-share basis. We look forward to working with the talented Brookfield team to achieve a smooth transition.”
Sachin Shah, senior managing partner of Brookfield, comments, “We are confident that our significant renewable power operating experience, financial resources and global institutional relationships will provide TerraForm Power with strong financial flexibility and an attractive pipeline for growth moving forward. We look forward to participating alongside all shareholders in capturing future upside and helping the business to achieve its full potential over time.”
Brookfield’s transactions with the two yieldcos, though separate, are both expected to be completed in the second half of this year, so long as they meet various closing conditions, including approval of the U.S. bankruptcy court overseeing the SunEdison Chapter 11 case.
John Dubel, SunEdison’s CEO and chief restructuring officer, says SunEdison supports both transactions. In fact, SunEdison has reached settlement agreements with TerraForm Global and TerraForm Power that contain certain terms to resolve the complex legal relationship between the yieldcos and SunEdison. That deal also requires court approval.
For its part, SunEdison has been working to emerge from bankruptcy, namely by selling off large portfolios of its project assets over the past year or so.
The company’s rapid rise and fall created fallout in the U.S. solar market in 2016, reducing investor appetite and bringing into question the viability of the yieldco model. However, Raj Prabhu, CEO and co-founder of clean energy communications and research firm Mercom Capital Group, says these new TerraForm agreements “certainly provide closure to a bad chapter in the solar industry and get SunEdison’s name out of these assets. That said, the investment community and other renewable-energy-focused yieldcos have already put this behind them. Most other yieldcos are in positive territory (in terms of stock price).”
Amazon Launches Global Rooftop Solar Initiative
The next time we order a last-minute birthday or holiday gift online, it might be shipped from a solar-powered warehouse!
E-retail giant Amazon has launched a new initiative to install solar panels on its fulfillment facilities around the world. The company initially plans to deploy large-scale solar systems on rooftops of more than 15 fulfillment and sortation centers in the U.S. this year and is planning to deploy solar systems on 50 fulfillment and sortation centers globally by 2020.
“As our fulfillment network continues to expand, we want to help generate more renewable energy at both existing and new facilities around the world in partnership with community and business leaders,” explains Dave Clark, Amazon’s senior vice president of worldwide operations. “By diversifying our energy portfolio, we can keep business costs low and pass along further savings to customers. It’s a win-win.”
According to the company, the initial solar projects planned for completion by the end of 2017 will generate up to 41 MW of power at Amazon facilities in California, New Jersey, Maryland, Nevada and Delaware. Depending on the specific project, time of year and other factors, a solar installation could generate as much as 80% of a single fulfillment facility’s annual energy needs. For example, Amazon says solar panels installed on the rooftop of the Patterson, Calif., fulfillment center cover more than three-quarters of the 1.1 million square-foot building’s rooftop and will capture California’s most generous resource to power the hundreds of Amazon Robotics utilized by associates at ground-level.
Amazon notes its recent renewable energy projects include the company’s largest wind farm to date, located in Texas. In addition, a network of wind and solar farms in Indiana, North Carolina, Ohio and Virginia are delivering energy onto the electric grid that powers AWS data centers. According to the 2017 State of Green Business report, the company was the leading corporate purchaser of renewable energy in the U.S. in 2016.
Additionally, Amazon has expanded its Career Choice program to include funding for associates to earn North American Board of Certified Energy Practitioners (NABCEP) certification. To qualify for the exam and become a certified solar PV installer for commercial and residential projects, associates in this program will participate in 40 to 80 hours of PV design principles and practices learning, OSHA training, and hands-on installations, all of which can be provided by local community colleges and other participating accredited educational organizations. Because the solar industry is growing so quickly, Amazon says many PV installers may quickly find themselves in leadership roles as managers, designers, and developers of renewable energy projects across the globe.
“The NABCEP professional accreditation is a springboard for fulfillment center associates to enter a rapidly growing and in-demand workforce outside of Amazon as PV installers,” states Kara Hurst, director of Amazon’s worldwide sustainability. “It would be great one day soon to see former associates developing solar systems on the rooftops of our fulfillment centers.”
Florida Utility FPL Doubles Down On Solar Plans
Florida Power & Light Co. (FPL) has announced it is effectively doubling its near-term commitment to build new utility-scale solar projects across the Sunshine State.
FPL recently revealed plans to install four new large-scale solar projects this year, but the company says it is now expanding that commitment to total eight new projects across Florida by early 2018. According to FPL, the eight solar plants will collectively feature more than 2.5 million new solar panels – enough to wrap around Florida’s coastline more than two times.
Each of the eight new solar plants will be 74.5 MW in capacity for a total of nearly 600 MW. Construction is slated to commence this spring, and at the height of construction, FPL expects each of the sites to employ about 200 people for a total of approximately 1,600 jobs.
“With the support of communities across the state, we are advancing smart, affordable clean energy infrastructure while keeping customer bills low,” says FPL President and CEO Eric Silagy. “On a per-megawatt basis, these eight new plants will be the lowest-cost solar ever built in Florida and some of the lowest-cost solar ever built in America. Our steadfast commitment to delivering solar cost-effectively directly benefits our customers, our environment and the economy.”
FPL says it currently operates more than 335 MW of solar generating capacity, enough to power 60,000 homes. Despite the utility’s apparent support of utility-scale solar, however, FPL and other Florida utilities came under fire last year for reportedly backing a controversial ballot measure aimed at small-scale solar in the state. Florida voters ultimately rejected the measure, known as Amendment 1, in the November general election.
What’s Ahead For The U.S. Solar Market?
Following a record-breaking 2016, total installed U.S. solar capacity is poised to nearly triple over the next five years, according to the U.S. Solar Market Insight 2016 Year-in-Review report. However, that includes a 10% slump in 2017.
After providing an encouraging preview of the report in February, the Solar Energy Industries Association (SEIA) has officially launched the new study in partnership with GTM Research. The report offers even more stats behind the U.S. industry’s historic year, as well as provides new forecasts for what lies ahead.
As SEIA previously revealed, the U.S. solar market had its biggest year yet in 2016, nearly doubling its previous installation record and adding more electric generating capacity than any other source of U.S. energy for the first time ever. Notably, though, the newest data says the U.S. added 14.8 GW of installed capacity in 2016, up from the previous tally of about 14.6 GW.
Adding to those findings, the report offers a stunning statistic – one new megawatt of solar PV capacity went online in the U.S. every 36 minutes last year. The report adds that 22 states each installed more than 100 MW in 2016, up from just two states in 2010. The report notes there was high growth in states that are not known for their solar market, including Georgia, Minnesota, South Carolina and Utah.
On average, the report continues, U.S. solar PV system pricing fell by nearly 20% in 2016. This is the greatest average year-over-year price decline since GTM Research began modeling pricing in this report series.
“It would be hard to overstate how impressive 2016 was for the solar industry,” said Abigail Ross Hopper, SEIA’s president and CEO. “Prices dropped to all-time lows, installations expanded in states across the country and job numbers soared.”
Looking ahead, the report forecasts that an impressive 13.2 GW of solar PV will be installed in the U.S. in 2017. Although that is a 10% drop from 2016, the figure still represents 75% more than what was installed in 2015, the previous record year.
According to the report, the dip will occur solely in the utility-scale market, following the unprecedented number of utility-scale projects that came online in the latter half of 2016, most originally scheduled for completion before the original expiration of the federal investment tax credit, which has since been extended. By 2019, the utility-scale segment is expected to rebound, with year-over-year growth across the board.
At 19%, U.S. residential PV saw its growth slow in 2016 from record growth in 2015 – which the report says was due to second-half slowdowns in a handful of established state markets, offset somewhat by the emergence of several new state markets. The report says the residential segment is slated to grow 9% in 2017. California, which has historically accounted for nearly half of the U.S. residential market, is expected to decline in 2017; however, 36 of the 40 tracked states will grow year-over-year, the report notes.
“Though utility PV will reset from an origination perspective starting in 2017-2018, distributed solar is largely expected to continue to grow over the next few years due to rapid system cost declines and a growing number of states reaching grid parity,” says Corey Honeyman, associate director of GTM Research. “That said, ongoing NEM and rate design battles – in conjunction with a declining incentive environment for non-residential PV – will continue to present risks to distributed solar growth.”
The non-residential market is expected to grow 11% year-over-year and install a record 1,756 MW in 2017. The report says the community solar market, which nearly quadrupled from 2015 to 2016 due to major installations in Minnesota and Massachusetts, is anticipated to represent 30% of the non-residential market in 2018.
By 2019, the report says, the U.S. solar market is expected to resume year-over-year growth across all market segments, and by 2022, more than 18 GW of solar PV capacity will be installed annually, with 24 states being home to more than 1 GW of operating solar PV, up from nine today.
According to the report, total installed U.S. solar capacity, including mostly PV and some concentrating solar power, is expected to grow from about 42.4 GW in 2016 to around 111.1 GW by the end of 2021.
“The bottom line is that more people are benefiting from solar now than at any point in the past, and while the market is changing, the broader trend over the next five years is going in one direction – and that’s up,” concludes Hopper.