8point3 Energy Partners LP, a new ‘yieldco’ to be formed around solar projects initially contributed by sponsors SunPower and First Solar, has a right of first offer (ROFO) deal to acquire several large solar projects, mostly in California, that SunPower and First Solar are currently developing.
On June 4, 8point3 filed with the Securities and Exchange Commission a third amendment to its Form S-1, which is a prospectus for its upcoming IPO. The June 4 filing doesn’t say how many limited partnership units will be offered to the public and at what price. That will come later on.
“Our primary objective is to generate predictable cash distributions that grow at a sustainable rate,” said the June 4 filing. “Our Sponsors have granted us rights of first offer on certain of their solar energy projects that are currently contracted or are expected to be contracted prior to being sold, should our Sponsors decide to sell such projects during the term of such agreements. Our ROFO Projects include assets similar to the projects in our Initial Portfolio and represent interests in 1,143 MW capacity, or more than 2.6 times our Initial Portfolio.”
The ROFO projects with power sales contract in place include:
- Kingbird, located in California, commercial in December 2015, 40 MW (ac), currently a First Solar project, power customer is Southern California Public Power Authority;
- Hooper, Colorado, commercial in April 2016, 52 MW (ac), a SunPower project, customer is Public Service Co. of Colorado;
- Moapa, Nevada, commercial in June 2016, 250 MW (ac), a First Solar project, customer is Los Angeles Department of Water and Power;
- Cuyama, California, commercial in June 2016, 40 MW (ac), a First Solar project, customer is Pacific Gas & Electric;
- Henrietta, California, commercial in July 2016, 102 MW (ac), a SunPower project, customer is Pacific Gas & Electric;
- Stateline, California, commercial in September 2016, 300 MW (ac), a First Solar project, customer is Southern California Edison;
- Stanford, California, commercial in October 2016, 54 MW (ac), a SunPower project, customer is Leland Stanford Junior University.
The June 4 Form S-1/A filing added: “We are a growth-oriented limited partnership formed by First Solar and SunPower to own, operate and acquire solar energy generation projects. Upon completion of this offering, our Initial Portfolio, which we will acquire from our Sponsors, will have interests in 432 MW of solar energy projects. Our primary objective is to generate predictable cash distributions that grow at a sustainable rate. We intend to achieve this objective by acquiring high-quality solar assets primarily developed by our Sponsors that generate long-term contracted cash flows and serve utility, C&I and residential customers in the United States and other select markets, primarily within the countries that comprise the Organization for Economic Co-operation and Development, or the OECD.
“We believe our relationship with our Sponsors provides us with a significant competitive advantage. Our Sponsors have demonstrated track records of developing solar energy projects in our target markets. For example, between 2005 and 2014, our Sponsors developed, built or supplied solar modules to approximately 39% of the 18.1 GW of solar power capacity installed in the United States and approximately 11% of the solar power capacity installed in the OECD. As of March 31, 2015, on a combined basis, our Sponsors had identified a development pipeline (as defined in the ‘Certain Terms Used in this Prospectus’) of approximately 13.7 GW of potential solar energy project opportunities, ranging from early-stage to advanced-stage development. We will have a right of first offer, or ROFO, on interests in 1,143 MW of the advanced development stage projects included in this pipeline, all of which are located in our target markets. Our Sponsors’ development track records are enhanced by their vertically integrated business models across the solar value chain, from solar module and select balance of systems manufacturing to providing engineering, procurement and construction, or EPC, and operations and maintenance, or O&M, services, which enables them to more efficiently develop solar energy projects.
“Upon the completion of this offering, we will own interests in six utility-scale solar energy projects, three of which are operational and three of which are in late-stage construction. These assets will represent 87% of the generating capacity of our Initial Portfolio upon all projects attaining [commercial operation date] COD. We will also own interests in a portfolio of C&I and residential DG Solar assets, which will represent 13% of the generating capacity of our Initial Portfolio. Our Initial Portfolio is located entirely in the United States and consists of utility-scale and C&I assets that sell substantially all of their output under long-term, fixed-price offtake agreements with investment grade offtake counterparties and residential DG Solar assets that are leased under long-term fixed-price offtake agreements with high credit quality residential customers with FICO scores averaging 765 at the time of initial contract. As of March 31, 2015, the weighted average remaining life of offtake agreements across our Initial Portfolio was 22.0 years. In addition, we will have a right of first offer on certain of our Sponsors’ solar energy projects that are currently contracted or expected to be contracted prior to the closing of this offering, should our Sponsors decide to sell such projects during the term of our ROFO Agreements.”
The Federal Energy Regulatory Commission on June 5 approved the transactions related to the “Initial Portfolio” of assets that are coming from SunPower and First Solar. They include from the Sunpower side the 135-MW Quinto Project in California, which is due for commercial operation in October. The initial facilities coming from First Solar include the companion Blackwell Solar 12-MW photovoltaic facility in California and the Lost Hills Solar 20-MW photovoltaic facility in California (both of which went commercial in April of this year), and also the North Star Solar 60-MW photovoltaic facility in California. North Star is due for commercial operation this month.