A couple of years ago First Solar and SunPower partnered to create 8point3 Energy Partners, A YieldCo aimed at owning solar projects that others can invest in and expect long-term returns from. The YieldCo reported its first quarter 2017 earnings today but now First Solar has announced that it may seek to exit the joint venture to focus on other strategies.
Both First Solar and SunPower are relatively unique in the US, if not the world. They’re both leading US PV companies that manufacturer their own solar panels—albeit with very different technologies, each has developed some of the largest solar projects in the world and each has developed their own products to make it easier and quicker to install large projects with modular approaches.
Their partnership to create 8point3 Energy was also unique in that it brought two competitors together and created the first YieldCo to focus specifically on creating lower-cost financing for giant solar projects. "Our high-quality solar portfolio performed well as we exceeded our key financial metrics for the quarter while once again raising our quarterly distribution," said Chuck Boynton, 8point3 Energy Partners CEO.
"As of the end of February, our portfolio consisted of interests in 945-megawatts (MWs) of US solar generating assets including the recent acquisition of First Solar's 34 percent minority interest in its 300 MW Stateline project. The Stateline project is expected to generate approximately $32 million in annual cash distributions and has a 20-year contract life. With this acquisition, our portfolio is now expected to generate annual CAFD [i.e., cash available for distribution] of approximately $100 million in 2017,” Boynton said.
However, First Solar is in the process of launching its Series 6 solar panels, which resizes its solar panels, requiring manufacturing changes at multiple facilities. The company said it is seeking to align its resources and capital in support of the transition, including selling projects earlier in the construction phase. For instance, it’s offered two of its earlier stage projects, California Flats and Cuyama to 8point3 and if the YieldCo can’t purchase them First Solar will have to look for other purchasers.
"We remain committed to developing, constructing and selling utility-scale solar power plants," said Mark Widmar, CEO of First Solar. "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. We want to thank SunPower for their partnership in forming 8point3, which has a portfolio of high quality solar assets and proven operating performance. We look forward to working cooperatively with them through this process."
This is still just a potential sale of interest in the YieldCo. Both First Solar and SunPower observed that they will review their interests in the YieldCo, which could include finding a replacement partner for First Solar. SunPower, which in addition to large-scale solar projects, also does smaller commercial and even residential installations, said it thinks the partnership still offers significant, long-term strategic value.
"We want to thank First Solar for their strong partnership in creating the industry's first, solar-only YieldCo. 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 cash flow growth for investors," said Tom Werner, SunPower president and CEO. "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."Tweet