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GTM Research analysts weigh in on what SunEdison’s bankruptcy means for the utility-scale and non-residential segments.
It is increasingly likely that SunEdison will not re-emerge after last month’s Chapter 11 bankruptcy filing. According to recent reporting, the developer is now selling off its assets by geographic region in what could be an outright liquidation of the company.
Below, we speculate on which developers in the U.S. utility and non-residential solar markets are most likely to benefit from SunEdison's sell-off.
Tapping into our U.S. Utility PV Market Tracker data, SunEdison currently has 2.4 gigawatts of utility PV projects in development across 10 states. Approximately 1 gigawatt of those projects are under construction and on schedule to come on-line in 2016.
Although many utility PV developers are delaying projects that are not required to deliver power until 2017 in light of the ITC extension, SunEdison’s remaining 1.4-gigawatt pipeline is at even greater risk of spilling over into 2017 -- or being canceled -- if the projects do not meet intermediate milestones.
The companies best positioned to buy SunEdison’s U.S. utility solar assets are large, experienced developers like SunPower, NextEra, First Solar, Recurrent Energy and 8minutenergy. These developers will have the bandwidth and resources to rapidly conduct due diligence and the capital to bid on large projects. Despite this, it is likely some projects will be canceled because they are either not attractive enough or have contractual timelines that are too tight to attract buyers.
These larger developers will also benefit from having one fewer company to contend with for future contracts. However, as utility PV grows in new states, smaller companies have begun to gain dominance in niche markets. These regional developers, such as Pacific Northwest Solar in the Oregon and Montana Public Utility Regulatory Policies Act (PURPA) markets, and Southern Current in South Carolina, have the potential to become major players in the U.S. utility PV landscape.
According to GTM Research's U.S. PV Leaderboard, SunEdison has been a consistent top-five player in the non-residential market, which includes both private- and public-sector projects. SunEdison has been active in originating portfolio deals with Fortune 500 customers, as well as acquiring projects from local developers to provide PPA financing -- eventually flipping the projects into its YieldCo, TerraForm.
Developers most likely to benefit from SunEdison’s abandoned deals or absence in future RFPs include SolarCity, SunPower, NRG Energy, SoCore Energy, and Greenskies Renewable Energy, which have all developed retail portfolios. Meanwhile, in addition to SolarCity and SunPower, Borrego Solar Systems, Ameresco, and PFMG Solar have experience developing projects for schools -- another sector in which SunEdison had been particularly active.
The project acquisition marketplace is no longer as active as it was several years ago, when SunEdison and TerraForm -- as well as other players like NRG Solar -- were more consistently buying individual projects or smaller portfolios from local developers. Although a number of financiers are still specifically targeting these projects, there is an opportunity for additional project buyers.
The deadline for submitting bids on SunEdison’s assets is June 20. That will bring further clarity on the future of both SunEdison and its competitors.