First Solar, SunPower Joint Venture Will Own Rooftop Systems

(Bloomberg) — First Solar Inc. and SunPower Corp., the two

largest U.S. solar-panel manufacturers, said their joint venture

will own a stake in residential rooftop systems in addition to

large-scale projects in California and Maryland.

8point3 Energy Partners LP will hold 432 megawatts in total

capacity, according to a filing with the U.S. Securities and

Exchange Commission Tuesday. The joint venture’s name “is

derived from the average amount of time it takes light from the

sun to reach the earth, which is 8.3 minutes,” the companies

said.

While other alternative energy companies have sold shares

in ventures with large solar projects, this partnership would

also give investors access to payments from the power generated

by rooftop systems. It’s a novel way for investors to make money

from the boom in residential solar. Installations on U.S. homes

have increased by at least 50 percent in each of the last three

years, the Solar Energy Industries Association and GTM Research

said in a report.

“It makes absolutely no difference whether these solar

panels sit on the ground in the middle of a desert or on a

warehouse or on a homeowner’s rooftop,” Pavel Molchanov, an

analyst at Raymond James & Associates Inc. in Houston, said in a

phone interview. “Ultimately, all that matters is how many

megawatts there are.”

Pooling Projects

First Solar and SunPower announced last month that they

were planning to sell shares in the partnership, the first time

competing panel makers have joined forces to create a so-called

yieldco. Several renewable-energy companies, including Abengoa

SA and NRG Energy Inc., have formed yieldcos as part of a

growing trend to pool projects into entities that return steady

dividends to shareholders. Selling projects to the partnerships

also gives developers more capital for future projects.

SolarCity Corp. has offered bonds that are funded by

revenue from residential systems.

The new partnership will own stakes in six solar farms,

four of which are operational and two of which are in late-stage

development. In addition, it will include about 39 megawatts

from rooftop solar arrays on 5,900 customer homes.

The 8point3 filing didn’t specify how many shares would be

sold or at what price they would be offered. The partnership is

applying to list on the Nasdaq, the companies said in a

statement.

“The 2014 financials won’t really give us a lot of

insight, and even 2015 guidance won’t give us much insight” on

how much cash the projects will generate, Molchanov said. “The

first steady-state year for this initial portfolio is going to

be 2016. Ultimately, it’s going to be that cash available for

distribution that drives the yieldco.”

Goldman Sachs Group Inc. and Citigroup Inc. are arranging

the offering.

First Solar dropped 2 percent to $59.86 at the close in New

York and SunPower declined 2.7 percent to $32.29.

To contact the reporter on this story:

Justin Doom in New York at

jdoom1@bloomberg.net

To contact the editors responsible for this story:

Reed Landberg at

landberg@bloomberg.net

Tina Davis, Steven Frank

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