First Solar and SunPower have issued a brief statement saying that they are in advanced negotiations to form a joint financial yield-co vehicle to contribute PV power plants projects from their existing portfolio of assets.
Both companies have come under increased pressure form the financial analyst community to separately announce yield-co plans in response to the like of SunEdison that has pioneered the system to obtain low cost finance for building PV power plants.
Subject to a final agreement the companies intend to file a registration statement with the Securities and Exchange Commission (SEC) for an initial public offering. Further details on the potential IPO were not disclosed.
Both companies are holding separate fourth quarter and full-year financial earnings calls this Tuesday, while SunEdison plans its ‘Markets Day’ analyst event on the same day.
SunEdison recently reported fourth quarter and full-year results for 2014, reaching its 1GW project completion target in the year and increased its near-term pipeline by 51% to 5.1GW, excluding the First Wind acquisition, strongly indicating its ability to leverage its Terraform YieldCo vehicle to support agressive PV project installations globally.
Another key driver for First Solar and SunPower to team-up is to maximise execution on US PV projects in the commercial and utility markets before the possible reduction in the ITC tax reduction, seen by many analyst as a growth stopper for the US PV market.
Both companies have been heavily dependent on the US PV market in recent years and their track record of project completions has exceeded the likes of SunEdison.
However, SolarCity the largest residential PV installer in the US recently announced nearly a doubling of installations in 2014 and guided installations doubling again in 2015.
A near rival to SolarCity in US residential installations is SunPower.
The response from Mahesh Sanganeria from RBC Capital was: "We believe the yield-co decision is positive for both First Solar and SunPower as it helps to create more value for sponsors."