SunEdison to Acquire Vivint Solar’s 523-MW Rooftop Solar Portfolio
Renewables giant SunEdison will acquire emerging distributed energy firm Vivint Solar's 523-MW rooftop solar portfolio in a $2.2 billion acquisition deal that signals momentum for the business model that has challenged the bottom lines of traditional utilities.
SunEdison and Vivint Solar signed a definitive merger agreement on July 20. It will involve the acquisition of Vivint Solar's 523-MW rooftop solar portfolio, which is expected to be installed by year-end 2015, for $922 million in cash by SunEdison subsidiary TerraForm Power.
Vivint Solar offers distributed solar energy to residential customers based on 20-year contracts at prices that it says are "below their current utility rates."
"Our customers pay little to no money upfront, and typically save 20% to 40% on solar-generated electricity rates relative to utility-generated electricity rates following system interconnection to the power grid and continue to benefit from locked-in energy prices over the term of their contracts, insulating them against unpredictable increases in utility rates," the company says in its 2014 annual report.
In 2014, Vivint Solar's workforce of nearly 3,000 had installed 155 MW for more than 22,000 customers. Overall it has installed 228 MW for nearly 36,000 customers across seven states.
"Our estimated nominal contracted payments remaining at the end of the year was [$1.03 billion], growing 161% from the year ago period and our estimated cumulative retained value was $481 million at the end of year, growing 153% from the year ago period," wrote CEO Greg Butterfield.
"We finished the year with a Q4 cost per watt of $2.96, dropping approximately 30% from Q1's cost per watt of $4.25."
Vivint Solar has said that its "primary competitors" are the traditional utilities. At a lesser level, it competes with companies not regulated like traditional utilities that have access to traditional utility electricity transmission and distribution infrastructure and solar companies in downstream value chains.
"We compete with these traditional utilities primarily based on price (cents per kilowatt hour), predictability of future prices (by providing pre-determined annual price escalations) and the ease by which customers can switch to electricity generated by our solar energy systems," it says in its annual report. "We believe that we compete favorably with traditional utilities based on these factors in the states where we offer our solar power purchase and solar energy leasing services."
-Sonal Patel, associate editor(@POWERmagazine, @sonalcpatel)
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