Solar Star California XIII LLC and 8point3 Energy Partners LP applied on Apri 24 at the Federal Energy Regulatory Commission for approval of transactions that would take certain solar assets public under a “yieldco” structure.
The companies are requesting authorization for:
- The contribution to 8point3 Operating Co. LLC (OPCo) by SunPower Corp. of SunPower’s indirect ownership interest in Solar Star XIII and the contribution to OpCo by SunPower and First Solar of other indirect ownership interests in certain other solar generation companies (such interests collectively with SunPower’s interest in Solar Star XIII referred to as the “contributed interests”);
- Related transactions by which OpCo will become a partially-owned subsidiary of 8point3 Partners, and 8point3 Partners and OpCo will indirectly be jointly controlled by First Solar and SunPower; and
- The initial public offering (IPO) and sale of Class A limited partnership interests in 8point3 Partners, through which purchasers of the Class A Shares will acquire indirect economic interests in the contributed interests.
“The purpose of the proposed Transaction is to monetize the value of certain of SunPower’s and First Solar’s contracted, solar generation resources through a public offering,” the application said. “The primary objective of 8point3 Partners is to generate predictable cash distributions that grow at a sustainable rate. 8point3 Partners is best characterized as a ‘yieldco,’ and the proposed Transaction is similar to other recent yieldco transactions.”
Incidentally, the name “8point3” refers to the number of minutes that sunlight takes to reach the Earth.
The involved SunPower companies are:
- Solar Star XIII was formed for the purpose of developing, constructing, owning, and operating the Quinto Project, an approximately 135 MW photovoltaic facility in Merced County, California. The project will interconnect to the Pacific Gas and Electric (PG&E) transmission system within the California Independent System Operator (CAISO) balancing authority area (BAA). The Quinto Project is currently expected to begin generating test power in June 2015 and to commence commercial operation in January 2016. The entire output is committed to Southern California Edison under a long-term power purchase agreement. Solar Star XIII is an indirect, wholly-owned subsidiary of SunPower. However, prior to closing of the transaction SunPower expects to sell indirect, non-controlling interests in Solar Star XIII to unaffiliated tax equity investors while retaining a controlling, membership interest in Solar Star XIII. SunPower’s retained controlling interest in Solar Star XIII will be a contributed interest in the IPO-related transaction.
- Solar Star California XXX LLC is developing and owns photovoltaic facilities located at seven Macy’s stores in northern California having a combined net power production capacity of approximately 4.8 MW. The facilities are expected to begin commercial operation in October 2015 and are located within the geographic footprint of the CAISO BAA. The entire output of each of the facilities will be sold at retail to Macy’s. Solar Star XXX is an indirect, wholly-owned subsidiary of SunPower.
- Solar Star California XXXI LLC is developing and owns a 7.5 MW photovoltaic facility at the Tequesquite Landfill in Riverside, California. The facility is expected to begin commercial operation in September 2015 and is located within the geographic footprint of the CAISO BAA. The entire output of the facility will be sold at wholesale to the City of Riverside, California, under a long-term agreement. Solar Star XXXI is an indirect, wholly-owned subsidiary of SunPower.
- Solar Star California XXXII LLC is developing and owns a 13 MW solar facility at the University of California Davis South Campus in Solano County, California. The facility is expected to begin commercial operation in September 2015 and is located within the geographic footprint of the CAISO BAA. The entire output of the facilities will be sold at retail to the University of California pursuant to a long term contract. Solar Star XXXII is an indirect, wholly-owned subsidiary of SunPower.
Prior to close of the IPO-related transaction, SunPower will sell indirect passive tax equity interests in Solar Star XXX, Solar Star XXXI, and Solar Star XXXII to an unaffiliated third party and will retain an indirect, controlling ownership interest in Solar Star XXX, Solar Star XXXI, and Solar Star XXXII. SunPower’s retained interests in Solar Star XXX, Solar Star XXXI, and Solar Star XXXII will be contributed interests in the transaction.
SunPower Solar Program I LLC , SunPower Solar Program II LLC and SunPower Residential I LLC collectively own a portfolio of approximately 5,900 residential solar facilities having a combined capacity of approximately 48 MW. The facilities began commercial operation during the period 2012–2014 and are located in Arizona, California, Colorado, Hawaii, Massachusetts, New Jersey, New York, Pennsylvania and Vermont. Prior to closing of the transaction, the passive interest in Program II will be unwound and Program I, Program II and Residential I will all be merged into SunPower Residential Holdings I LLC, an indirect, wholly-owned subsidiary of SunPower. Residential I will be the surviving entity in the merger. SunPower’s ownership interests in Residential I will be a contributed interest in the transaction.
First Solar to contribute a number of assets to the ‘yieldco’
The contributed interests to be contributed by First Solar to OpCo will consist of ownership interests in:
- Blackwell Solar LLC owns a 12 MW photovoltaic facility located in Kern County, California, and sells electricity exclusively at wholesale from the Blackwell Facility. Lost Hills Solar LLC owns a 20 MW photovoltaic facility in Kern County, California, and sells electricity exclusively at wholesale from the Lost Hills Facility. Both facilities began commercial operation in April 2015. The Blackwell Facility is interconnected to the distribution system of PG&E, and Lost Hills is interconnected with the transmission system of PG&E, both within the CAISO BAA. The entire output of each facility is committed for about 29 years through successive long-term power purchase agreements with the City of Roseville, California and PG&E.
- North Star Solar LLC is currently constructing a 60 MW photovoltaic facility (the “North Star Facility”). It is expected to begin commercial operation later in the second quarter of 2015 and will interconnect to the PG&E transmission system within the CAISO BAA. The entire output of the North Star Facility is contractually committed to PG&E for a period of 20 years pursuant to a power purchase agreement.
- SG2 Imperial Valley LLC owns an approximately 150 MW photovoltaic facility located in Imperial County, California. It is interconnected to transmission facilities owned by the Imperial Irrigation District (IID) within the IID BAA. The entire output of the SG2 Facility is committed to San Diego Gas and Electric pursuant to a 25-year power purchase agreement. First Solar indirectly owns a passive membership interest in SG2.
- Maryland Solar LLC owns and operates a 20 MW photovoltaic facility (“Maryland Solar Project”) near Hagerstown, Maryland, within the PJM Interconnection BAA. The entire output is committed to FirstEnergy Solutions Corp. under a long-term contract. Maryland Solar is an indirect, wholly-owned subsidiary of First Solar, and First Solar’s ownership interest in Maryland Solar will be a contributed interest in the transaction.
First Solar (NASDAQ: FSLR) and SunPower (NASDAQ: SPWR) had announced March 10 that 8point3 Energy Partners had filed a Registration Statement on Form S-1 with the Securities and Exchange Commission for this initial public offering. 8point3 Energy Partners plans to list its shares on the NASDAQ Global Market.