First Solar, SunPower to form joint yieldco

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In a major case of solar "kissing cousins," U.S. thin film giant First Solar and high efficiency c-Si manufacturer SunPower are set to team up to create a joint yieldco.

Existing projects from each of the companies’ project pipelines and existing PV power plants will be contributed towards the yieldco, which will presumably free up cash for both firms to pursue new projects globally.

The new JV solar yieldco will mean that the firms will now rival compatriot company SunEdison, which has been a pioneer in the PV yieldco with TerraForm that was launched in June 2014. SunEdison itself is looking to continue to innovate in the space with a second yieldco for projects in developing solar markets in Africa and Asia planned, for execution in mid 2015.

A yieldco is a publicly traded company that is formed to own operating assets that produce a predictable cash flow. As PV power plants, excepting technology failure, produce reliable revenue streams, they are well suited to inclusions into yieldco companies. GreenTech Media’s Tom Konrad notes that yieldcos may appeal to investors not interested in the initiator company’s stock – such as SunEdison, or in this latest case First Solar and SunPower.

First Solar has been under some pressure from financial analysts to form a yieldco for some of its projects and there was some expectation it would announce one in its Q3 2014 reporting

The joint statement from First Solar and SunPower, issued yesterday, is light on details and it does note: “There is no assurance that the yieldco will be formed or that the IPO will be consummated or that any other transaction will occur.”

To progress further, the proposed yieldco will file registration with the U.S. Securities and Exchange Commission.

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