8point3 Energy Partners LP (NASDAQ:CAFD), the joint venture formed by SunPower (NASDAQ:SPWR) and First Solar (NASDAQ: FSLR), has entered into agreements to acquire an interest in the 50-MW Hooper Project from SunPower and the 40 MW Kingbird Project from First Solar.
These drop-down acquisitions are expected to generate approximately $9m in combined annual pre-tax cash flow and have a 20 year average contract life, the parties said in an April 1 news release.
The 50-MW Hooper project is located in Colorado’s San Luis Valley and commenced operations in December 2015. Xcel Energy (NYSE:XEL) is buying the power generated by the Hooper Project under a 20 year power purchase agreement. All conditions have been satisfied and the transaction was expected to close April 1.
The venture sought Federal Energy Regulatory Commission (FERC) authorization for the Hooper dropdown in February.
The 40-MW Kingbird has been acquired and is located in Kern County, California. Construction of the plant is expected to be completed next month.
Following commercial operation, power generated by Kingbird will be sold to member cities of the Southern California Public Power Authority and the City of Pasadena under separate 20-year agreements.
With the increased opportunity to potentially acquire solar power plant projects beyond 2016 due to the recent extension of the federal Investment Tax Credit and with the desire to finance acquisitions on favorable terms while simultaneously maintaining a conservative capital structure, the partnership has agreed to make certain adjustments to the right of first offer (ROFO) portfolio.
These adjustments include waiving the partnership’s right of first offer on a portion of First Solar’s interest in the 300 MW Stateline Project and adding First Solar’s 179 MW Switch Station Project in Nevada to the ROFO portfolio, which has an expected commercial operation date in 2017.
8point3 Energy Partners now expects to be offered First Solar’s remaining ownership stake in the Stateline Project, approximately 35% in the aggregate, at the end of 2016 or the first half of 2017.
The partnership believes that these adjustments better align the ROFO portfolio with its targeted long-term growth plan while maintaining its stated targeted annual distribution growth.