BIG MONEY, NEW SUN

SunEdison venture could lead to $1.5 billion in solar energy projects
Dan Beyers, May 31, 2010 (Washington Post)

"SunEdison…develops solar energy plants around the world…[and] is teaming with one of the industry's largest private-equity companies in a joint venture that could generate up to $1.5 billion in new projects.

"The deal with First Reserve comes as the price of manufacturing photovoltaic cells has dropped sharply in the past 18 months, making new projects much more affordable. At the same time, a growing number of governments around the world are requiring utilities to generate more power from renewable sources -- helping to kick up demand for solar…Rhone Resch, president and chief executive of the Solar Energy Industries Association, said the deal could be a harbinger of what's to come in the industry…"

Prices have been coming progressively down but never more precipitously than last year. (click to enlarge)

"With 350 projects built or underway, SunEdison is already one of the world's largest developers of solar energy projects. The company has a healthy backlog of plants going through the permitting process and waiting for funding…[It] specializes in developing projects in areas near existing portions of the electrical grid in order to avoid large transmission costs. Its plants range from big, utility-scale operations to smaller rooftop systems…Any excess is typically sold back to utilities.

"… SunEdison and First Reserve have agreed to put $167 million into their new venture, which they say should be enough to attract additional debt financing to fund as much as $825 million in new projects. First Reserve may raise an additional $150 million of equity, which can be leveraged to bring the total amount of projects funded to $1.5 billion…"

SunEdison keeps making deals while the prices fall. (click to enlarge)

"Demand for solar power is projected to grow. At least [31] states have adopted rules requiring utilities to generate power from renewable sources, and federal climate legislation contemplates a [Renewable Electricity Standard (RES)]…In addition, the federal government has adopted tax credits, grants and loan guarantee programs to create incentives for new solar projects.

"The cost of manufacturing solar cells has fallen 40 percent in less than two years, which many attribute in part to a decision by several countries to curb incentives. Spain, in particular, moved to cap the size of its market, shrinking the opportunities there by roughly 75 percent, Resch said. Many manufacturers that ramped up production in anticipation of new orders suddenly found themselves with a glut of supply."