SunEdison’s troubles mount; creditors seek funds from TerraForm
Embattled US-based firm SunEdison faced further pressure this week after two of its creditors filed a lawsuit against its yieldco unit, TerraForm Power, seeking $231m. DE Shaw & Co and Madison Dearborn Capital Partners filed the claim, which related to an acquisition that took place last year. They maintain that outstanding funds are owed as deferred payment after SunEdison purchased First Wind Holdings in January 2015 for $1.9bn.
“During the fall of 2015, SunEdison failed to make timely earn-out project payments and indicated that it would not comply with its obligations,” according to the suit. DE Shaw and Madison Dearborn Capital notified SunEdison and TerraForm Power on 18 November that this would lead to an “acceleration event” that would make TerraForm Power responsible for the entire amount.
SunEdison’s troubles began after it embarked on a debt-backed aggressive expansion strategy, leaving it on the brink of bankruptcy. The solar developer racked up a huge bill after a string of purchases and the failed acquisition of Vivint Solar. By September last year, SunEdison had amassed $11.7bn in debt.
In other news from the US, Tesla Motors launched its much-awaited low-cost Model 3 sedan last week, with interest in the vehicle far exceeding expectations. The company received over 250,000 pre-orders – more than four times the number anticipated – according to a tweet by chief executive officer Elon Musk. The California-based firm unveiled its five-seat vehicle with a 215-mile (346-kilometre) range and offered 800 guests a test drive. The model will be Tesla’s cheapest electric vehicle and is priced at $35,000. Potential owners can pre-order with a refundable deposit of $1,000.
“Electric vehicles are the best thing since sliced bread,” Southern company chief executive officer Thomas Fanning said at the Bloomberg New Energy Finance summit in New York, where John Kerry also spoke. The two-day summit ends later today. Keep up to date with the latest news from the event on the BNEF website and twitter feed at #BNEFSummit. Real time updates from the event are also released in the live Bloomberg Brief on the BNEF Summit 2016.
Over in Europe, French Environment Minister Segolene Royal has set up a taskforce to work on a proposal to boost carbon prices in the European Union emissions trading scheme. Royal asked the group of industry experts to assess key price components in Europe’s carbon trading. A final report is due in July this year.
In emerging market news, Mexico’s first-ever electricity auction garnered investment commitments estimated at $2.6bn. The government was forced to rerun the auction after a flawed bid from Gestamp Wind was found to be too low, and impacted results. The auction is the country’s first private auction since policy makers decided in 2013 to allow private companies to compete for power contracts. Acciona, Enel Green Power, SunPower Systems and Recurrent Energy were among the 11 companies that won rights to generate and sell 2,085MW of clean power to the state-owned Comision Federal de Electricidad. As many as 18 projects were ultimately awarded, with solar making up 1,691 of the megawatts contracted. The remaining 394MW will come from wind resources, according to Energy Minister Pedro Joaquin Coldwell.
In Africa, the Overseas Private Investment of the US reported that renewable energy projects and small off-grid plants will drive the growth of its African investment portfolio. Africa is an attractive market for investment in renewables and has seen a number of off-grid and utility-scale projects come through. According to Bloomberg New Energy Finance, sub-Saharan nations raised over $5.4bn in new clean energy investment in 2015. “We are seeing a lot of investors working with communities to develop off-grid, mini-grid to provide hydropower, solar, wind directly to consumers”, said Peter Ballinger, the company’s managing director for Africa.
Also in Africa, the outlook for utility-scale PV development in East Africa is said to be limited, according to research by Bloomberg New Energy Finance. Despite the continent being a hotspot for investors keen to tap its renewable energy market, development in East Africa has been slow due to low feed-in tariffs, murky land titles, risky off-takers and governments loathe to offer financial guarantees. However, the scenario could change as a result of projects which may be financed this year such as NextGen’s 5MW project in Tanzania and up to five 40MW projects in Kenya.
