First Solar seeking sale of its share in yieldco 8point3 Energy


First Solar, the Arizona-headquartered thin-film producer and solar developer, is seeking alternatives for the sale of its interest in 8point3 Energy, a yieldco it created in March 2015 in collaboration with fellow U.S. solar firm, SunPower.

In a statement issued by First Solar, the company revealed that it is working with financial and legal advisors to assess the potential sale of its stake, revealing that its future focus will be steered towards developing and promoting its new Series 6 module.

In response to First Solar’s statement, SunPower confirmed that it will coordinate with First Solar on this review of the yieldco, with SunPower CEO and president Tom Werner stressing: “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.”

8point3 Energy was formed by First Solar and SunPower to own, operate and acquire solar generation projects around the world. The publicly traded entity came into being during a time when the yieldco vehicle was growing in popularity in the U.S. clean energy sector due to their lower risk avenues towards investment.

However, in the years since, SunEdison’s bankruptcy – the firm had two yieldcos (TerraForm Power and TerraForm Global) under its belt – has served to cool investor interest in the model. At the same time, the global gut of solar modules has brought down prices and cut into the margins of large solar firms such as SunPower and First Solar.

The latter is now seeking to strategically align its resources and capital to support its transition towards the Series 6 module expansion – a decision that sees First Solar take a step back from its downstream development objectives and stride once more into the realm of technology and production.

“This capital [from the sale of its stake in 8point3],” the statement from First Solar read, “would support the planned transition to Series 6 production and provide additional funding for the expected deployment of multiple gigawatts of Series 6 capacity over the next several years.

“First Solar intends to accelerate the return of capital from its systems business by selling projects earlier in the construction phase.” This, the company said, will include its California Flats and Cuyama projects, which have been offered to 8point3. Should the yieldco be unable to complete the purchase, then First Solar would look to sell the projects to third parties.

First Solar CEO Mark Widmar said that the company remains committed to developing, constructing and selling utility-scale solar plants, but added that the Series 6 has the “potential to be a transformational product”.

“As we accelerate the cash conversion cycle from our systems business,” Widmar added, “we will further enable this important transition in our business.” The CEO thanked SunPower for its partnership in forming 8point3, and remarked that the consideration of sale is in the preliminary stages and may not result in any transaction being proposed or even consummated.

SunPower’s Werner echoed these sentiments, adding: “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.”

In a recent financial filing, 8point3 Energy beat its Q4 guidance and continued to make steady progress on a number of fronts, not least the completion of a 49% stake of SunPower’s 102 MW Henrietta solar project and a 34% stake in First Solar’s 300 MW Stateline solar project.

Prior to First Solar announcing its intention to sell, 8point3 Energy was forecasting 2017 revenue of between $63-67 million, although CEO Chuck Boynton warned at the time that as the industry’s sole solar-only yieldco, 8point3 was uniquely exposed to the winds of change that regular buffeted the solar industry. “The overall dynamics remain somewhat challenging as investors evaluate the effect of rising interest rates and the potential impact of the current [U.S.] administration,” Boynton said in January.

This week, the company reported Q1 profit of $861,000, with revenue of $9.9 million beating Wall Street expectations. However, while 8point3 Energy’s shares were 2% up since the beginning of the year, in the final minutes of trading on Wednesday they fell 12% following First Solar’s announcement.

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