Dive Brief:
- SunEdison this week said it had closed on the second phase of a deal with Dominion, acquiring a 33% stake in the Virginia power company's 231 MW solar portfolio for $117 million, and then dropping it into a yieldco investment structure managed by the SunEdison and investors at J.P. Morgan Asset Management.
- In an earlier deal in December, SunEdison acquired a third of a separate 336 MW Dominion solar portfolio, before also immediately selling it to Terra Nova Renewable Partners, according to Bloomberg.
- The so-called "warehouse" investment structure allows SunEdison to leverage the solar generation's predictable cashflows to free up its own capital for further expansions while gauranteeing a return for investors.
Dive Insight:
SunEdison, the largest renewables developer in the world, has completed a complicated deal where it purchased a third of Dominion's solar generation before passing the assets into a yieldco which will allow the company to earn a return while freeing up its own capital.
"We are pleased that the Terra Nova partnership has invested in Dominion's diverse, domestic portfolio of solar assets," Brian Wuebbels, SunEdison's chief financial officer, said in a statement. "With Terra Nova acquiring the assets, we retain an option to acquire high quality contracted cash flows in the future."
Through an indirect subsidiary, Terra Nova will retain the option to buy the remaining 67% of this solar portfolio and the one acquired in December, should certain undisclosed events occur.
SunEdison said it has the option to repurchase the projects from the partnership for a period of five years and may assign TerraForm Power Inc., a global owner and operator of clean energy power plants, call rights to the projects should they be repurchased. Any projects not repurchased by SunEdison would continue to be owned by the partnership.
The combined 567 MW of the two Dominion portfolios consist of 24 projects located in Indiana, Georgia, Connecticut, California, Tennessee, and Utah. The second phase of the transaction is for nine of those projects. SunEdison said portfolio's total power output has been contracted "and has a weighted remaining contract term of 19.8 years."