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SunEdison to halt transfer of assets to yieldcos
Oct 7, 2015 | PV Magazine
By Christian Roselund
SunEdison has been in the news a lot lately. After taking a beating in the stock market, over the weekend it was revealed that the company is laying off a significant portion of its workforce. SEC filings later revealed this to be 15% of the global total. -
REC to offer bid in Dubai's 800 MW solar park tender
Oct 7, 2015 | PV Magazine
By Edgar Meza
REC is set to bid in Dubai's third tender for 800 MW at the Mohammed Bin Rashid Al Maktoum Solar Park in Dubai. -
Photographer: Luke Sharett/Bloomberg Solar and Wind Just Passed Another Big Turning Point
Oct 6, 2015 | Bloomberg
By Tom Randell
Wind power is now the cheapest electricity to produce in both Germany and the U.K., even without government subsidies, according to a new analysis by Bloomberg New Energy Finance (BNEF). It's the first time that threshold has been crossed by a G7 economy.
Industry News
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SunEdison to halt transfer of assets to yieldcos
Oct 7, 2015 | PV Magazine
By Christian Roselund
SunEdison has been in the news a lot lately. After taking a beating in the stock market, over the weekend it was revealed that the company is laying off a significant portion of its workforce. SEC filings later revealed this to be 15% of the global total.
On Wednesday morning, SunEdison held a call to explain the short-term restructuring of its operations which it says is due to a “market dislocation” - namely the deep and sustained fall in its stock price and the stock prices of its two yieldcos.
In a rapid shift of strategy, SunEdison is not planning to drop any of the projects which it completes in 2016 into either of its two yieldco vehicles. Instead, the company plans to keep most of the projects which it completes in warehouse facilities, supported by investment banking and private equity firms including Goldman Sachs and First Reserve.
This will not affect those projects which are in the process of being transferred to TerraForm Power and TerraForm Global, only new projects starting in 2016.
The warehouses will allow SunEdison the option of moving these projects into its yieldcos when market conditions improve. Additionally, SunEdison plans to sell 800-1,000 MW of projects in 2016 to third parties, in order to supply a steady flow of cash.
“We continue to believe in the value of TerraForm Power and Global as the best options to derive value for SunEdison”, explains SunEdison CFO and Executive VP Brian Wuebbels. “As the market conditions evolve, we will further refine the mix between third party and megawatts retained.”
SunEdison is clear that it is still excited about yieldcos, but Wuebbels states that the company is “acknowledging reality” that the lack of market confidence in yieldco vehicles is affecting their performance. “People need to build confidence in the asset classes,” explains Wuebbels. “They are going to come back in four weeks and see how they deliver.”
Additionally, SunEdison says that it is going to continue to focus on markets in the United States, Latin America, China and India. The company singled out the UK as one of the markets which it will be exiting, citing the slashing of the nation's feed-in tariff.
However, SunEdison did not complete a $700 million purchase of Latin American Power, which was set to close on September 30. Both parties have alleged that the other did not deliver, with Wall Street Journal citing un-named sources in saying that SunEdison failed to make a $400 million up-front cash payment.
SunEdison has indicated that it will continue with its purchase of Vivint Solar, but says that positions will be cut. “We are going to go line by line, and totally rationalize (Vivint) and our residential business,” explained SunEdison CEO Ahmad Chatila.
Despite these problems, SunEdison is clear that the fundamentals of its business remain healthy, including strong demand for the projects that it is building. "Whether or not public market sentiment improves, these projects will be built and financed,” declared Chatila during the Wednesday call.
The company estimates that before it pulled back, yieldcos were planning on buying only 2% of 3% of the renewable assets in the world, and notes that purchase prices and the cost of capital for traditional project buyers have remained unchanged.
The company also addressed concerns about its debt and cash positions. SunEdison has US$727 million in debt due over the next three years, but no further debt due until 2020.
The company expects to complete 875 MW of wind and solar plants quarterly through its development company in 2016, which it says will translate to $156 million in EBITDA per quarter. Between third parties, a joint venture and the warehouses, SunEdison expects to have over $6 billion in incoming capital in 2016.
“We are going to be patient here,” stated Wuebbels. “We still believe in the long-term plan that we have laid out.”
http://www.pv-magazine.com/news/details/beitrag/sunedison-to-halt-transfer-of-assets-to-yieldcos_100021441/#ixzz3ntIZ6A4W -
REC to offer bid in Dubai's 800 MW solar park tender
Oct 7, 2015 | PV Magazine
By Edgar Meza
REC is set to bid in Dubai's third tender for 800 MW at the Mohammed Bin Rashid Al Maktoum Solar Park in Dubai.
The Norway-based, Chinese-owned company with operational headquarters in Singapore has partnered with asset management and investment company Viridis Holding in submitting an “expression of interest” to the Dubai Electricity and Water Authority (DEWA), which last month invited developers to bid on the third phase of the Mohammed bin Rashid Al Maktoum Solar Park.
REC and Viridis said they intended to submit "a competitive bid" for a part of the remaining 800 MW at the solar park. The move, REC, added, further supports its commitment to the Middle East and specifically to the Dubai solar market after opening its regional office in the emirate in 2013.
The Mohammed bin Rashid Al Maktoum Solar Park will have a total capacity of 3 GW when completed and is expected to dramatically alter the solar landscape of the region.
As the power authority of Dubai, DEWA has increased its renewable energy target, pledging to source 7% of its energy needs from clean resources by 2020 and 15% by 2030.
"Dubai benefits from high irradiation levels, making solar quite competitive,” said Luc Graré, REC’s senior VP for Europe, the Middle East and Africa. “However, the best profitability analysis is useless if the solar panels are not performing as they should for at least 25 years due to the region’s harsh climate conditions.”
Graré stressed that REC’s high-quality products, long-term experience and German engineering expertise equipped it with the necessary “know-how to implement efficient, long-running and reliable solar installations that can withstand the heat and sandstorms that exist in Dubai. He added that the company’s offer would be “on a competitive level backed by sustainable financial stability.”
REC’s recent installations and projects include one of the world’s largest and most advanced solar test facilities in Dubai as well as the first privately financed large commercial rooftop installation in the emirate’s free zone. The Dubai International Airport has also utilized REC solar panels in a rooftop installation on one of its terminals.
http://www.pv-magazine.com/news/details/beitrag/rec-to-offer-bid-in-dubais-800-mw-solar-park-tender_100021442/#ixzz3ntIpvOoJ
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Photographer: Luke Sharett/Bloomberg Solar and Wind Just Passed Another Big Turning Point
Oct 6, 2015 | Bloomberg
By Tom Randell
Wind power is now the cheapest electricity to produce in both Germany and the U.K., even without government subsidies, according to a new analysis by Bloomberg New Energy Finance (BNEF). It's the first time that threshold has been crossed by a G7 economy.
But that's less interesting than what just happened in the U.S.
To appreciate what's going on there, you need to understand the capacity factor. That's the percentage of a power plant's maximum potential that's actually achieved over time.
Consider a solar project. The sun doesn't shine at night and, even during the day, varies in brightness with the weather and the seasons. So a project that can crank out 100 megawatt hours of electricity during the sunniest part of the day might produce just 20 percent of that when averaged out over a year. That gives it a 20 percent capacity factor.
One of the major strengths of fossil fuel power plants is that they can command very high and predictable capacity factors. The average U.S. natural gas plant, for example, might produce about 70 percent of its potential (falling short of 100 percent because of seasonal demand and maintenance). But that's what's changing, and it's a big deal.
For the first time, widespread adoption of renewables is effectively lowering the capacity factor for fossil fuels. That's because once a solar or wind project is built, the marginal cost of the electricity it produces is pretty much zero—free electricity—while coal and gas plants require more fuel for every new watt produced. If you're a power company with a choice, you choose the free stuff every time.
It’s a self-reinforcing cycle. As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed. The virtuous cycle has begun.Source: Bloomberg
Wind and solar have long made up a small fraction of U.S. electricity—about 5 percentin 2014. But production has been rising at an exponential rate, and those two energy sources are now big enough to influence when coal and natural gas plants are kept running, according to BNEF.2
There are two reasons this shift in capacity factors is important. First, it's yet another sign of the rising disruptive force of renewable energy in power markets. It's impossible to brush aside renewables in the U.S. in the same way it might have been just a few years ago. "Renewables are really becoming cost-competitive, and they're competing more directly with fossil fuels," said BNEF analyst Luke Mills. "We're seeing the utilization rate of fossil fuels wear away."
Second, the shift illustrates a serious new risk for power companies planning to invest in coal or natural-gas plants. Historically, a high capacity factor has been a fixed input in the cost calculation. But now anyone contemplating a billion-dollar power plant with an anticipated lifespan of decades must consider the possibility that as time goes on, the plant will be used less than when its doors first open.
Most of the decline in capacity factors is due to expensive "base-load plants that are being turned on less because of renewables," according to BNEF analyst Jacqueline Lilinshtein. Plants designed to come online only during the highest demand of the year, known as peaker plants, play a smaller role. In either case, the end result is that coal-fired and gas-fired electricity is becoming more expensive and the profits less predictable.
The opposite is true of wind and solar, as well as new battery systems that can be paired with renewables to replace some peaker plants. Wind power, including U.S. subsidies, became the cheapest electricity in the U.S. for the first time last year4, according to BNEF. Solar power is a bit further behind, but the costs are dropping rapidly, especially those associated with financing a new project. Latest Solar Costs by StateSource: BNEF, Annotated by Bloomberg
The economic advantages of wind and solar over fossil fuels go beyond price.5 Still, it's remarkable that in every major region of the world, the lifetime cost of new coal and gas projects6 are rising considerably in the second half of 2015, according to BNEF. And in every major region the cost of renewables continues to fall.
http://www.bloomberg.com/news/articles/2015-10-06/solar-wind-reach-a-big-renewables-turning-point-bnef
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