by Eric Wesoff
The dust has settled from Solar Power International, and as that show's hype bubble is deflating, solar companies and their staffs are returning to their jobs and keeping the big promises they made in Los Angeles. We're starting to see the maturation of an industry -- with an emphasis on immense bankable projects, a new flow of debt financing and the entry of acquisitive global players. The big news from a single day this week should provide some indication of the scale of what's happening:
1. The world's largest solar project gets a green light: Solar Millennium's (OTC:SMLNF) Blythe concentrating solar project secured a Final "Record of Decision" from the Bureau of Land Management (BLM) approving the plant's Right-of-Way Grant. It will be the largest solar plant in the world at 1,000 megawatts (four plants, each 250 megawatts). The facility will be located in Riverside County, California on a 9,400-acre plot of land, with an estimated cost of more than $5 billion. It is expected to create 1,000 construction jobs as it is built and 220 permanent jobs over the plant's 40-year life. The first 250 megawatts are scheduled to come on-line in the second quarter of 2013.
See Brett Prior's article for more details.
Why it's important: Although Blythe still needs a DOE loan guarantee to be financeable, this one-gigawatt project and others like it are testament to the Obama Administration's commitment to clean energy and green jobs creation.
2. SunPower (SPWRA) looks on target to meet its $2 billion guidance: Moody's issued a press release stating that Andromeda PV, a subsidiary of SunPower, received a $279 million loan from two French banks to build two solar PV plants at Montalto di Castro, Italy, with a combined capacity of 51 megawatts (a 45.3-megawatt project and a 6.1-megawatt project). SunPower expects construction and financing to be completed by the end of this year. The note has two equal tranches with two favorable investment grade ratings. According to Vishal Shah of Barclays Capital, SunPower still needs to close debt financing and sell the equity piece in order to recognize revenues.
Why it's important: Despite the many SunPower negativists, the closure of this deal would allow SunPower to achieve its 2010 revenue guidance of $2 billion to $2.25 billion. Owning the project and downstream integration are keeping SunPower in the game despite high product costs. Additionally, this is the first investment-grade solar debt deal of meaningful size, and it signals that SunPower could continue to secure large-project financing in 2011.
3. The world's largest photovoltaic plant: Good Energies, a greentech investor, and NIBC Infrastructure Partners (NEIF), a $490 million fund investing in EU member states, reached an agreement with German solar producer Q-Cells to form the world's largest operational solar photovoltaic plant.
Good Energies and NEIF are acquiring Finsterwalde II and Finsterwalde III in Brandenburg, Germany, and when combined with the adjacent Q-Cells (OTCPK:QCLSF)-built Finsterwalde I, the plants have created the largest operational solar PV plant in the world at 81 megawatts. Note that this output exceeds the 80-megawatt Sarnia PV power plant in Ontario, Canada by one megawatt, a slim distinction not lost on either party, I'm sure. The purchase price was not disclosed.
The projects have been developed and constructed by Q-Cells, are fully operational and benefit from a sweet 20-year feed-in tariff as per the provisions of the German EEG.
Why it's important: The purchase of a 40-megawatt operational solar field by an institutional investor sends a signal to other developers that if you front the cash to build a PV plant, there will be investors to whom to sell it once it is completed. This cycle allows cash-poor developers to sell their stake in a finished plant and use the proceeds to begin work on the next project. It demonstrates that the downstream integration model is real, and illustrates Q-Cells' commitment to the cause. What's more, it shows that there is apparently still money to be made off of large ground-mounted systems in Germany.
4. As promised, BYD (OTCPK:BYDDF) is going to move into solar PV in a big way: BYD, the China-based industrial behemoth that is 10-percent-owned by Warren Buffett's Berkshire Hathaway (NYSE:BRK.A), announced a two-year polysilicon sales agreement valued at approximately $300 million with LDK Solar (NYSE: LDK). LDK will supply polysilicon with monthly shipments expected to start in January 2011 that will extend through the end of 2012. A deposit for the two-year contract has already been received. LDK is one of the world's largest producer of multicrystalline wafers.
Why it's important: BYD is another in a long line of global industrial giants waking up to the promise of the solar industry. BYD joins firms like Corning (NYSE:GLW), Samsung (OTC:SSNLF), Siemens (SI), Toshiba (OTCPK:TOSBF), Mitsubishi (MHVYF.PK), LG, Hyundai (OTC:HYMLF), Honeywell (NYSE:HON), and GE (NYSE:GE) in the rush into this industry.