SunEdison Inc. Expanding Solar Power Plant Business

SunEdison  (NYSE: SUNE  ) continues to expand its asset base in the solar industry, today announcing the acquisition of a 50% stake in Silver Ridge Power. The $178.6 million cash purchase from AES gives SunEdison a 50% stake in 336 megawatts of operational solar power plants.  

This broadens SunEdison's solar portfolio ahead of the launch of a yieldco named TerraForm Power, which will be a publicly traded company that holds solar power plants. SunEdison could then push assets down to the yieldco, much like midstream energy companies do with MLPs.

SunEdison did not explicitly state that it would push the new plants to TerraForm, but the company is increasingly becoming a project developer and needs capital to keep building those projects. The yieldco model offers a way to monetize projects while keeping them in a subsidiary.

The market has had little reaction to the Silver Ridge Power stake today, but that's not surprising because it's really just business as usual. It'll be more important that SunEdison executes on its own pipeline and gets attractive terms in the TerraForm IPO, because that's where shareholders are going to see more value generation.

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  • Report this Comment On July 03, 2014, at 12:22 PM, AdamGalas wrote:

    Thanks for the heads up on TerrForm Power. Yieldcos like that and NEP are an exciting, high yielding way to play alternative energy with lower risk than the usual solar stocks.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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8/28/2015 4:00 PM
SUNE $10.30 Up +0.20 +1.98%
SunEdison CAPS Rating: **
AES $12.10 Up +0.23 +1.94%
The AES Corp CAPS Rating: ***