Yieldco slowdown hits SunEdison-Gamesa deal

It has been a tough six months for US renewables giant SunEdison.

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A Word About Wind
January 28, 2016
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Yieldco slowdown hits SunEdison-Gamesa deal

It has been a tough six months for US renewables giant SunEdison.

The company started 2015 by making a big push into wind by completing a $2.4bn buyout of US developer First Wind. It followed up by announcing a series of acquisitions across the world so it could grow in wind in emerging markets. But it has since pulled out of most of these deals after investors expressed concerns about its plans, and shareholder interest in US yieldcos has fallen.

And now another deal is in doubt.

Last July, SunEdison announced it had signed a memorandum of understanding with Spanish firm Gamesa to work together on wind farms totalling 1GW by 2019, with a contracts due to be signed by the end of last year. The idea was that SunEdison would finance the projects and then one of its yieldcos would buy the finished wind farms, with Gamesa providing turbines and building expertise.

But that deadline has passed with no deal, and now a Gamesa spokeswoman has confirmed that “negotiations with SunEdison have not advanced”. Given that SunEdison is seeing major pressure on its finances and its yieldcos are not on the acquisition trail, this is of no surprise. It would be no great shock to us if this plan was allowed to wither and die. But with what effect on the companies?

From SunEdison’s perspective it would make sense if this deal didn’t happen. The business is retrenching from wind in emerging market to focus on wind and solar in established markets. A major tie-up with Gamesa for projects in Mexico and India does not fit neatly into its new plans.

And this could be the best result for Gamesa too. The spokeswoman has said that the company has not included the planned joint venture in its 2015-2017 strategic plan and, while questions remain about SunEdison’s strategy, we do not expect Gamesa to push for anything to complete. This is a deal that could well look like more trouble than it is worth for the Spanish business.

After all, there is no sense building projects for a yieldco that might not be able to buy them.
_

For more on SunEdison’s plans for wind, check out our special report Finance 2015

It has been a tough six months for US renewables giant SunEdison.

The company started 2015 by making a big push into wind by completing a $2.4bn buyout of US developer First Wind. It followed up by announcing a series of acquisitions across the world so it could grow in wind in emerging markets. But it has since pulled out of most of these deals after investors expressed concerns about its plans, and shareholder interest in US yieldcos has fallen.

And now another deal is in doubt.

Last July, SunEdison announced it had signed a memorandum of understanding with Spanish firm Gamesa to work together on wind farms totalling 1GW by 2019, with a contracts due to be signed by the end of last year. The idea was that SunEdison would finance the projects and then one of its yieldcos would buy the finished wind farms, with Gamesa providing turbines and building expertise.

But that deadline has passed with no deal, and now a Gamesa spokeswoman has confirmed that “negotiations with SunEdison have not advanced”. Given that SunEdison is seeing major pressure on its finances and its yieldcos are not on the acquisition trail, this is of no surprise. It would be no great shock to us if this plan was allowed to wither and die. But with what effect on the companies?

From SunEdison’s perspective it would make sense if this deal didn’t happen. The business is retrenching from wind in emerging market to focus on wind and solar in established markets. A major tie-up with Gamesa for projects in Mexico and India does not fit neatly into its new plans.

And this could be the best result for Gamesa too. The spokeswoman has said that the company has not included the planned joint venture in its 2015-2017 strategic plan and, while questions remain about SunEdison’s strategy, we do not expect Gamesa to push for anything to complete. This is a deal that could well look like more trouble than it is worth for the Spanish business.

After all, there is no sense building projects for a yieldco that might not be able to buy them.
_

For more on SunEdison’s plans for wind, check out our special report Finance 2015

It has been a tough six months for US renewables giant SunEdison.

The company started 2015 by making a big push into wind by completing a $2.4bn buyout of US developer First Wind. It followed up by announcing a series of acquisitions across the world so it could grow in wind in emerging markets. But it has since pulled out of most of these deals after investors expressed concerns about its plans, and shareholder interest in US yieldcos has fallen.

And now another deal is in doubt.

Last July, SunEdison announced it had signed a memorandum of understanding with Spanish firm Gamesa to work together on wind farms totalling 1GW by 2019, with a contracts due to be signed by the end of last year. The idea was that SunEdison would finance the projects and then one of its yieldcos would buy the finished wind farms, with Gamesa providing turbines and building expertise.

But that deadline has passed with no deal, and now a Gamesa spokeswoman has confirmed that “negotiations with SunEdison have not advanced”. Given that SunEdison is seeing major pressure on its finances and its yieldcos are not on the acquisition trail, this is of no surprise. It would be no great shock to us if this plan was allowed to wither and die. But with what effect on the companies?

From SunEdison’s perspective it would make sense if this deal didn’t happen. The business is retrenching from wind in emerging market to focus on wind and solar in established markets. A major tie-up with Gamesa for projects in Mexico and India does not fit neatly into its new plans.

And this could be the best result for Gamesa too. The spokeswoman has said that the company has not included the planned joint venture in its 2015-2017 strategic plan and, while questions remain about SunEdison’s strategy, we do not expect Gamesa to push for anything to complete. This is a deal that could well look like more trouble than it is worth for the Spanish business.

After all, there is no sense building projects for a yieldco that might not be able to buy them.
_

For more on SunEdison’s plans for wind, check out our special report Finance 2015

It has been a tough six months for US renewables giant SunEdison.

The company started 2015 by making a big push into wind by completing a $2.4bn buyout of US developer First Wind. It followed up by announcing a series of acquisitions across the world so it could grow in wind in emerging markets. But it has since pulled out of most of these deals after investors expressed concerns about its plans, and shareholder interest in US yieldcos has fallen.

And now another deal is in doubt.

Last July, SunEdison announced it had signed a memorandum of understanding with Spanish firm Gamesa to work together on wind farms totalling 1GW by 2019, with a contracts due to be signed by the end of last year. The idea was that SunEdison would finance the projects and then one of its yieldcos would buy the finished wind farms, with Gamesa providing turbines and building expertise.

But that deadline has passed with no deal, and now a Gamesa spokeswoman has confirmed that “negotiations with SunEdison have not advanced”. Given that SunEdison is seeing major pressure on its finances and its yieldcos are not on the acquisition trail, this is of no surprise. It would be no great shock to us if this plan was allowed to wither and die. But with what effect on the companies?

From SunEdison’s perspective it would make sense if this deal didn’t happen. The business is retrenching from wind in emerging market to focus on wind and solar in established markets. A major tie-up with Gamesa for projects in Mexico and India does not fit neatly into its new plans.

And this could be the best result for Gamesa too. The spokeswoman has said that the company has not included the planned joint venture in its 2015-2017 strategic plan and, while questions remain about SunEdison’s strategy, we do not expect Gamesa to push for anything to complete. This is a deal that could well look like more trouble than it is worth for the Spanish business.

After all, there is no sense building projects for a yieldco that might not be able to buy them.
_

For more on SunEdison’s plans for wind, check out our special report Finance 2015

It has been a tough six months for US renewables giant SunEdison.

The company started 2015 by making a big push into wind by completing a $2.4bn buyout of US developer First Wind. It followed up by announcing a series of acquisitions across the world so it could grow in wind in emerging markets. But it has since pulled out of most of these deals after investors expressed concerns about its plans, and shareholder interest in US yieldcos has fallen.

And now another deal is in doubt.

Last July, SunEdison announced it had signed a memorandum of understanding with Spanish firm Gamesa to work together on wind farms totalling 1GW by 2019, with a contracts due to be signed by the end of last year. The idea was that SunEdison would finance the projects and then one of its yieldcos would buy the finished wind farms, with Gamesa providing turbines and building expertise.

But that deadline has passed with no deal, and now a Gamesa spokeswoman has confirmed that “negotiations with SunEdison have not advanced”. Given that SunEdison is seeing major pressure on its finances and its yieldcos are not on the acquisition trail, this is of no surprise. It would be no great shock to us if this plan was allowed to wither and die. But with what effect on the companies?

From SunEdison’s perspective it would make sense if this deal didn’t happen. The business is retrenching from wind in emerging market to focus on wind and solar in established markets. A major tie-up with Gamesa for projects in Mexico and India does not fit neatly into its new plans.

And this could be the best result for Gamesa too. The spokeswoman has said that the company has not included the planned joint venture in its 2015-2017 strategic plan and, while questions remain about SunEdison’s strategy, we do not expect Gamesa to push for anything to complete. This is a deal that could well look like more trouble than it is worth for the Spanish business.

After all, there is no sense building projects for a yieldco that might not be able to buy them.
_

For more on SunEdison’s plans for wind, check out our special report Finance 2015

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