Solar and wind are clean energy’s indisputable go-to resources. So it was just a matter of time before one company decided to deal in both.
That company is solar (and now wind) provider SunEdison, which has, along with its renewable energy power plant operator TerraForm, announced the acquisition of U.S. standout First Wind for $2.4 billion. The benchmark acquisition reportedly makes SunEdison the “world’s largest renewable energy development company,” according to its press release, as well as an immediate player in a solar sector dominated by American champs like SunPower, SolarCity and First Solar.
Perhaps more importantly, at least for SunEdison, the acquisition significantly increases its asset balance sheet, providing even more incentive for institutional investors and renewables consumers to support to its yieldco. That will allow SunEdison, a subsidiary of the multinational Monsanto, to raise even more money on the backs of its quickly expanding assets, which will in turn lead to more acquisitions and consolidations in the cleantech market.
It doesn’t take more than a cursory look at the thick corporate jargon and financial figures disclosed in SunEdison’s press release to see that boardroom synergy is the prime directive of this nevertheless impressive buyout.
“The acquisition of First Wind transforms both SunEdison and TerraForm Power into diversified renewable energy companies and will make SunEdison the leading renewable power plant developer in the world,” explained SunEdison president and CEO Ahmad Chatila in the press release. “By bringing together First Wind’s proven development and operational capabilities and SunEdison’s global corporate infrastructure and renewable energy development and finance experience, we will be well-positioned to capitalize on the significant growth opportunities in the global wind power markets and drive returns to shareholders of both SunEdison and TerraForm Power.”
On the ground, things may move a bit slower. In the solar sector, SunEdison is still playing catch-up to the aforementioned market leaders, as well as their international counterparts like Yingli, Trina, Canadian Solar and others looking to solarize the world, posthaste, including Vivint, whose IPO arrived last month. As its press release stated, the First Wind purchase allows both SunEdison and TerraForm to raise their project installation guidance and unlevered cash. But it doesn’t really bring in any more material solar business.
But adding First Wind’s project pipeline and $1.9 billion in “upfront consideration” to SunEdison’s yieldco will attract investments from both citizens and banks — doubtlessly including Goldman Sachs, Bank of America, Citi and other capital gangs that helped seal SunEdison, TerraForm and First Wind’s deal, Meanwhile, solar heavyweights like SunPower can spend the next few quarters mulling whether they will form a yieldco, which is quickly becoming a Wall Street concern that can knock a stock price down or raise it up.
The wind, however, is where this deal truly changes things. Flooding the wind sector with Monsanto and SunEdison’s significant influence and power will only accelerate development of the renewable energy infrastructure the world desperately needs. And consolidating solar and wind, and hopefully tidal and geothermal, into one-stop renewable energy shops is an industry inevitability. This deal paves the way for a future where everyone from homeowners and small businesses to corporations and governments can hopefully establish a clean energy portfolio and infrastructure without hordes of middlemen gumming up the works. Hopefully.
Which means that SunEdison’s acquisition of First Wind is just the first of many to come. Let’s just hope that consumers, who need serious alternatives to coal, oil and gas, don’t get lost in the fine print.