TerraForm Power expects to break even in 2017


As TerraForm extricates itself from the mess that is SunEdison, it is also putting its financial house in order, starting with overdue quarterly metrics. Last week the yieldco finally got around to releasing its financials for the first quarter of 2016, and followed up on this yesterday with a conference call and slide deck providing more details about the troubled company and its future prospects.

TerraForm Power has been bleeding red ink for some time, but according to these financials the losses were already slowing as of the 1st quarter of 2016. The company reported $154 million in revenues and $34 million in losses, both of which were superior to the first quarter of 2015 when the company’s losses exceeded its revenue.

Additionally TerraForm brought up its capacity factor for its fleet of nearly 3 GW of wind and solar assets to nearly 31% during Q1, along with producing $61 million in cash available for distribution (CAFD). Despite this CAFD number, TerraForm did not pay a dividend in Q1.

TerraForm says that this is due in part to higher-performing and more profitable wind plants in the U.S. Midwest, Texas and Canada that the yieldco acquired from Invenergy during 2015.

In addition to providing these overdue Q1 figures, the yieldco provided an estimate for the full year 2016, over which it expects $700-$710 million in revenue but a loss of $105-$145 million, which if not great is still an improvement over its 2015 performance. During 2016 the company expects to generate $165-185 million in cash available for distribution (CAFD), however the company notes that this will be dependent upon resolving certain financial issues.

“The 2016 CAFD forecast assumes that all project level defaults are resolved in time to reclassify the cash now held at the project level from restricted to unrestricted and be included in our full year 2016 CAFD,” stated TerraForm Chief Financial Officer Rebecca Cranna.

Looking farther to the future, TerraForm is predicting that it will roughly break even in 2017, with $570-$670 million in revenues and an income range of -$50 to 50 million. The company is also predicting $120-$160 million in CAFD during 2017.

Part of the company’s plan for better financial performance in 2017 involves the sale of its 376 MW of solar assets in the UK. TerraForm CEO Peter Blackmore states that this sale “has gone through a detailed competitive process which is now at an advanced stage”, and notes that sale of these projects should eliminate $390 million in debt.

It is unclear if TerraForm will sell all of these projects, but its 2017 estimate is to hold around 2.7 GW of projects, bringing up its capacity factor and allowing it to generate a similar amount of electricity.