First Solar Looks To Shed 8point3 Energy Yieldco
First Solar Inc., a U.S.-based vertically integrated solar company, has announced it is exploring options to sell its interests in 8point3 Energy Partners, a yieldco joint venture with SunPower Corp.
The announcement comes after First Solar revealed a restructuring initiative in November, including plans to fast-forward to producing its Series 6 platform and cut over 25% of its workforce, in an effort to remain competitive among global market challenges.
Raj Prabhu, CEO and co-founder of research firm Mercom Capital Group, explains First Solar’s strategic shuffle: “The company is moving back to being primarily a component supplier and is betting it all on the next-generation Series 6 panels. This is a bold move considering the module price crash over the last year, but it remains to be seen how things will play out, as this shift is still in the preliminary stages.”
As a continuation of its restructuring, First Solar says in a press release, the company is exploring options for the sale of its interests in 8point3 in order to refocus resources on Series 6 objectives and allow for faster recycling of its systems business capital.
“We remain committed to developing, constructing and selling utility-scale solar power plants,” states Mark Widmar, CEO of First Solar, in the release. “Series 6 has the potential to be a transformational product and provide attractive returns to our shareholders. As we accelerate the cash conversion cycle from our systems business, we will further enable this important transition in our business.”
In light of First Solar’s announcement, SunPower, which is another U.S.-based vertically integrated company, says it is evaluating strategic options for 8point3. In a company release, SunPower says it and First Solar will coordinate a review, which will include, but is not limited to, a potential replacement partner for First Solar.
“After approximately two years of successful operational performance, we have proven that a diversified portfolio of high-quality renewable assets is an ideal vehicle to drive stable cashflow growth for investors,” says Tom Werner, SunPower president and CEO, in the release. “We will work with our financial advisors to evaluate all alternatives for our investment in 8point3, including a potential replacement partner for First Solar, as we believe 8point3 can continue to benefit from owning long-term, high-quality renewable assets.”
Given that bankrupt firm SunEdison’s TerraForm yieldcos recently found a buyer in Canada-based Brookfield Asset Management, Mercom’s Prabhu thinks SunPower would likely be able to replace First Solar with a new co-sponsor if necessary. “There is a good chance they will find a solid partner,” he says. “A strong financial company with deep pockets would be ideal, but large energy conglomerates could also be interested.”
As of press time, First Solar and SunPower both say they don’t intend to disclose further developments with respect to this process except to the extent a specific course of action is approved, the process is concluded, or it is required by law or otherwise deemed appropriate. Meanwhile, the companies add, the sponsor-appointed leaders of 8point3 remain committed to managing the partnership.
In concert with its sponsors’ announcements, 8point3 has released its financial results for the first quarter of fiscal year 2017, during which the yieldco reported revenue of $9.9 million, net loss of $5.3 million, adjusted EBITDA of $13.1 million, and cash available for distribution of $22.1 million. As of the end of February, the yieldco’s portfolio totaled interests in 945 MW.
“Our high-quality solar portfolio performed well, as we exceeded our key financial metrics for the quarter while once again raising our quarterly distribution,” says Chuck Boynton, 8point3 CEO, in the announcement. “Despite the sponsors’ review of alternatives with respect to their interests in the partnership, I want to assure our investors that we do not expect this process to have an impact on our financial results for the year. Given our cashflow profile, we are well positioned to achieve our guidance for the year, as well as reach our 12 percent distribution growth rate for 2017.”
Prabhu suggests First Solar’s potential sale of its 8point3 interests is not necessarily indicative of an issue with the viability of the yieldco model, itself.
“8point3 Energy was the only pure-play solar yieldco, and all of the other renewable yieldcos are different in their portfolio makeup and business model,” he explains. “Most of them have recovered somewhat after the SunEdison collapse. This decision by First Solar is more about where they as a company are going than a referendum on yieldcos in general.”
A Closer Look At 2016’s Historic Jobs Growth
The Solar Foundation has launched an interactive Solar Jobs Map, which provides data on the number of solar jobs in every U.S. state, metropolitan area, county and congressional district in 2016. The new map builds on the nonprofit’s recently released National Solar Jobs Census 2016 report and reveals the impact of the nation’s historic solar jobs boom down to the local level. In addition to the map, The Solar Foundation has produced 50 state-level fact sheets and released an analysis of the economic impact of the solar labor market nationwide and in five states: California, Florida, New York, Ohio and Texas.
As previously reported, the National Solar Jobs Census 2016 found that solar industry employment increased by a historic 25% nationwide from 2015 to 2016, for a total of 260,077 solar workers. This growth occurred across all regions of the country – the number of solar jobs increased in 44 of the 50 states from 2015 to 2016. In 21 of the 50 states, solar jobs grew by 50% or more.
Metropolitan areas across the nation also saw historic solar jobs growth from 2015 to 2016, as the data in the Solar Jobs Map shows. For example, solar jobs in the Cleveland metropolitan area doubled, for a total of 1,632 solar workers in 2016, and the number of solar jobs in the San Antonio metro area increased by 146% to 1,767 workers. Solar jobs increased 78% to 1,771 workers in the Albuquerque, N.M., metro area; 40% to 1,215 workers in Tampa-St. Petersburg-Clearwater, Fla.; 15% to 2,406 workers in the Atlanta metro area; and 20% to 1,033 workers in the Milwaukee metro area.
“The solar industry is generating well-paying jobs everywhere from Detroit to Miami to Salt Lake City, and in states from Ohio to Texas to South Carolina,” says Andrea Luecke, president and executive director of The Solar Foundation. “America’s solar energy boom adds tens of billions of dollars to our economy each year, all while providing an affordable, reliable and local energy source.”
In 2016, The Solar Foundation found that with 260,077 solar workers nationwide, the solar industry produced $62.5 billion in direct sales. The solar industry’s broader labor impact that includes direct, indirect and induced jobs amounted to nearly 789,000 U.S. jobs. The nonprofit says these jobs paid more than $50 billion in salaries, wages, and benefits and produced $154 billion in total economic activity for the U.S. in 2016.
“Solar power not only enhances environmental protection and health – it helps accelerate economic growth,” comments Colorado Gov. John Hickenlooper. “We are pleased that the solar industry continues to find Colorado a good state for business. For years, Colorado has been on the leading edge of clean energy and solar deployment. Thanks to Coloradans’ vision, initiative and leadership, we’ve grown our solar workforce by 20 percent in 2016 – and are among the top states in solar deployment, setting a great example for the entire nation.”
The Solar Foundation says its new Solar Jobs Map provides complete data on solar jobs in all 50 states, along with details on jobs by solar employment sector, percentages of women and veterans in the solar workforce, and more. Users can toggle between 2015 and 2016 data to compare the number of solar jobs year-over-year. The Solar Jobs Map, as well as state-based fact sheets, can be found at SolarStates.org.
NYC Surpasses 100 MW Solar Milestone
The Big Apple has hit a big milestone! New York City residents and businesses have installed more than 100 MW of solar and are using the power of the sun to generate clean, renewable power, according to utility Con Edison. Specifically, the company says its customers in the city have completed 9,700 projects totaling 101.2 MW, enough to power more than 15,000 homes.
Just a decade ago, solar panels were rare in New York City, but Con Edison says the utility, Sustainable CUNY (at the City University of New York), government agencies, and other parties have encouraged residents and businesses to consider solar as a way to reduce their energy bills and protect the environment.
For example, Utley’s Inc., which makes prototype containers for the cosmetics and liquor industries, installed a 24 kW solar project on its manufacturing building in Queens in 2015 and estimates the company’s annual electricity savings at about $5,000.
“Solar panels have been a great investment for our business,” says John Utley, who owns the company with his brother George Utley. “We expect to recoup our investment in less than five years. It was a great business and environmental decision.”
Con Edison says it tries to make the interconnection process as easy and quick as possible for customers who choose solar, and the company does not require an engineering review for systems under 25 kW. The utility, itself, has even installed 200 solar panels on a roof at its headquarters building in Manhattan.
Con Edison notes it is also a member of the Solar Progress Partnership, a group of six New York utilities and four leading solar companies, and Con Edison recently proposed a new program to place solar panels on its rooftops and properties and make that power available to low-income customers, a group that now has limited access to solar.
“One of the most striking trends within the transformation of the energy industry is the move of customers to renewables,” says Matthew Ketschke, Con Edison’s vice president of distributed resource integration. “We want clean energy, including solar, to be available for customers of all income levels and regardless of whether they live in a house or an apartment. We also advocate policies that ensure funding for the kind of robust grid that makes solar energy possible.”
Suniva Announces ‘Significant’ Layoffs
Citing “continued downward market pricing pressures,” Suniva Inc., a Georgia-based manufacturer of solar cells and modules, has announced a “significant reduction” in its workforce.
When reached for comment, a Suniva spokesperson said she was unable to offer additional details, including the timing of the layoffs and the number of workers involved. In a press release, Suniva says the layoffs affect “employees in all areas of company operations” at both its Saginaw, Mich., and Norcross, Ga., plants.
However, according to the Georgia Department of Economic Development, Suniva submitted a WARN Act disclosure on March 29 that the company had laid off 131 employees at its Norcross facility. This comes only a few months after Suniva celebrated an expansion at the location, which also serves as the company’s headquarters. As of press time, it is unclear how many workers might remain at the Norcross facility and whether operations are ongoing there.
In a WARN Act disclosure to the Michigan Workforce Development Agency, Suniva explains it laid off 59 employees at its Saginaw plant on March 29. A local ABC12 report notes the new layoffs follow a previous round of job cuts at the facility in February. Citing a plant manager and a former Suniva employee, the local report says Suniva is closing the Saginaw facility; however, the Suniva document says the plant “will remain open with a reduced staff.”
“Although it is possible that additional terminations might occur in the near future at the Saginaw facility, no additional terminations have been scheduled at this time,” the document adds.
In the press release announcing its company-wide layoffs, Suniva provides only the following explanation, which makes several fiery claims about market hurdles:
The reductions come as U.S. solar manufacturers face attack from the continued growth of global manufacturing overcapacity, particularly in Asia, and the ongoing influx of foreign imports, which continue to drive down domestic prices. Since 2013, when the U.S. government instituted anti-dumping and countervailing duties against manufacturers in certain countries, additional new global overcapacity has continued to drive U.S. market prices to levels that challenge responsible economic operations for U.S. manufacturers. The resulting faltering economics have led to similar actions at multiple companies in the manufacturing, construction, and development segments of the U.S. industry over the last 12 months.
Suniva remains committed to U.S. manufacturing and continuing forward as America’s leading manufacturer of high-efficiency and high-quality solar products. The company is actively investigating all economically responsible operational structures and will aggressively pursue all avenues that create a fair and rational market for U.S. manufacturers in this important industry.
Although Suniva is a U.S.-based company, Hong Kong-based Shunfeng International Clean Energy has owned a 63.13% equity interest in the manufacturer since October 2015. In its full-year 2016 financial report, Shunfeng revealed – unsurprisingly now – that Suniva “has been operating at a loss.” – Joseph Bebon
America’s Electric Co-ops Are Going Big On Solar
By the end of 2017, the total solar energy capacity of America’s electric cooperatives will be five times what it was two years ago, according to data released by the National Rural Electric Cooperative Association (NRECA). This year, co-ops are on pace to add 480 MW of solar, which would bring their total capacity to 873 MW. This more than quadruples the 180 MW reached in 2015 and represents a twenty-fold increase over the 37 MW capacity in 2010.
In addition, NRECA says that over the last two years, cooperatives have expanded their solar footprint from 34 states to 44 states. Among states where co-ops have been actively developing solar, Georgia ranks first, with a total of 122 MW – followed by New Mexico, Hawaii, Colorado, Arizona, Maryland and North Carolina.
“Electric cooperatives continue to aggressively pursue solar as an energy source and are the leaders in community solar,” says NRECA CEO Jim Matheson. “Co-ops across the nation are laboratories of innovation and are responsive to member needs as they work to power and empower millions of American families and businesses.”
NRECA, a national service organization that represents the U.S.’ more than 900 private, not-for-profit, consumer-owned electric cooperatives, also provides some insight into what is driving the growth in co-op solar. In a nationwide survey conducted between December 2016 and January 2017, co-ops were asked to identify the factors driving their decision to offer or support solar programs, including community solar, utility-owned solar and rooftop installations. According to NRECA, 68% of respondents said they were motivated by a desire to increase consumer satisfaction, 59% cited consumer demand for solar offerings, and 43% pointed to the decline in the cost of solar development.
NRECA adds that much of the growth in both deployed and planned solar can be attributed to collaboration among co-ops. Forty-two percent of co-op solar projects are joint efforts involving either the generation and transmission co-ops (also called power supply co-ops) or fellow distribution co-ops, according to the survey.
“Cooperation among cooperatives is one of our core principles. The fact that more than 40 percent of co-op solar capacity comes from collaboration among co-ops demonstrates that this principle is truly transformative,” states Matheson. “Just in the last year, nine generation and transmission cooperatives announced they will be pursuing solar development with their distribution co-op members. We fully expect that number to increase this year.”
