The Federal Energy Regulatory Commission on June 5 approved a complicated series of transactions between parties including SunPower and First Solar that involve in-development and operating solar projects that will be packaged into a ‘yieldco’ company that will be taken public.
On April 24, Solar Star California XIII LLC and 8point3 Energy Partners LP filed an application requesting authorization for: the contribution to 8point3 Operating Co. LLC (OpCo) by SunPower 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 other solar generation companies (called the Contributed Interests); related transactions by which OpCo will become a partially-owned subsidiary of 8point3 Partners, and by which 8point3 Partners and OpCo will indirectly be jointly controlled by First Solar and SunPower; and an IPO of Class A limited partnership interests in 8point3 Partners.
SunPower is a vertically-integrated solar products and services company that designs, manufactures and delivers solar photovoltaic panels and electricity generating systems to residential, business, government and utility customers. The stock of SunPower is publicly traded on the NASDAQ exchange. Total Energies Nouvelles Activités USA, which is a wholly-owned subsidiary of Total S.A., owns approximately 60% of the issued and outstanding shares of SunPower’s common stock. Total is a multinational energy company with operations in more than 130 countries.
In this now-approved transaction, the Contributed Interests to be contributed by SunPower to OpCo will consist of SunPower’s ownership interests in:
- Solar Star XIII, which was formed for the purpose of developing, constructing, owning, and operating the Quinto Project, a 135-MW photovoltaic facility located in Merced County, California. The Quinto Project will be interconnected to the Pacific Gas and Electric (PG&E) transmission system within the California Independent System Operator (CAISO) market. The entire output of the Quinto Project is committed to Southern California Edison under a long-term power purchase agreement.
- Solar Star California XXX LLC, which is developing and owns photovoltaic facilities located at seven Macy’s stores in northern California with a combined net power production capacity of 4.8 MW. They are located in the geographic footprint of the CAISO market and that the entire output of each of the facilities will be sold at retail to Macy’s Customer Services pursuant to a long term contract.
- Solar Star California XXXI LLC, which is developing and owns a 7.5-MW photovoltaic facility at the Tequesquite Landfill in Riverside, California. The facility is located within the geographic footprint of the CAISO market and its entire output will be sold at wholesale to the City of Riverside, California, pursuant to a long-term agreement.
- Solar Star California XXXII LLC, which is developing and owns a 13-MW solar facility at the University of California Davis South Campus in Solano County, California. The facility is located within the geographic footprint of the CAISO market and the entire output will be sold at retail to the University of California pursuant to a long-term contract.
- SunPower Solar Program I LLC (Program I), SunPower Solar Program II LLC (Program II) and SunPower Residential I LLC (Residential I), which collectively own a portfolio of approximately 5,900 residential solar facilities with a combined capacity of 48 MW. The facilities are located in Arizona, California, Colorado, Hawaii, Massachusetts, New Jersey, New York, Pennsylvania and Vermont. All of the equity interests in Program I, Program II, and Residential I are indirectly owned by SunPower with exception of a passive, noncontrolling interest owned by an unaffiliated third party in Program II.
First Solar is engaged in the business of manufacturing thin film solar photovoltaic modules for sale, and developing solar power generating facilities through special purpose project companies. First Solar’s stock is publicly traded on the NASDAQ exchange.
OpCo will consist of these First Solar ownership interests:
- Blackwell Solar LLC, which 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, which owns a 20-MW photovoltaic facility located in Kern County, California, and sells electricity exclusively at wholesale from the Lost Hills Facility.
Both of these facilities are interconnected with the transmission system of PG&E within the CAISO market, and the entire output of each facility is contractually committed for a period of 29 years through successive long-term power purchase agreements with the City of Roseville, California, and PG&E.
OpCo will also consist of these First Solar ownership interests:
- North Star Solar LLC, which is indirect wholly-owned subsidiary of First Solar that is currently constructing a 60-MW photovoltaic facility. The North Star Facility will interconnect to the PG&E transmission system within the CAISO market via a limited and discrete two mile generator tie line. 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, which owns a 150-MW photovoltaic facility located in Imperial County, California. The SG2 Facility is interconnected to the transmission facilities owned by the Imperial Irrigation District (IID) within the IID balancing authority area (BAA). The entire output of the SG2 Facility is committed to San Diego Gas & Electric pursuant to a 25-year power purchase agreement.
- Maryland Solar LLC, which owns and operates a 20-MW photovoltaic facility near Hagerstown, Maryland, within the PJM Interconnection market. The Maryland Solar Project is a QF whose output is committed to FirstEnergy Solutions Corp. under a long term contract.
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. It has filed three amended versions since then, including the latest one on June 4. 8point3 Energy Partners plans to list its shares on the NASDAQ Global Market.
Said the June 4 version of that statement: “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.”