First Solar, SunPower Yieldco Drives Losses at Top Panel Makers

(Bloomberg) — The biggest U.S. solar-panel makers reported
their first losses in years as they prepare to form a joint
venture that will own and operate power plants.

SunPower Corp. and First Solar Inc. are planning to create
a so-called yieldco, a move that dragged down revenue in the
first quarter.

Yieldcos are becoming increasingly popular in the renewable
energy industry because they let companies retain their
completed power plants, and the steady, long-term revenue
streams that go with them. The transition is cutting into sales
because it means they delay selling the power plants. First
Solar’s revenue in the quarter slipped 51 percent from a year
earlier, and SunPower’s declined 36 percent.

“The lower net sales was due to constructing more projects
on balance sheet following our decision to pursue a yieldco,”
First Solar Chief Financial Officer Mark Widmar said on a
conference call Thursday.

First Solar, the biggest U.S. panel maker, and SunPower,
the second-biggest, in February said they are jointly forming a
yieldco. They plan to sell shares in the venture through an
initial public offering and haven’t provided details on when
that will occur. The yieldco will be called 8point3 Energy
Partners LP, referring to the 8.3 minutes it takes for light to
travel from the sun to the Earth.

The yieldco will own 432 megawatts of projects, according
to a Mar. 10 filing, holding stakes in eight solar farms. In
addition, it will include about 39 megawatts of rooftop solar
arrays on 5,900 customer homes. 8point3 has a right of first
offer to buy an additional 1,131 megawatts from its parents,
including projects in Japan and Chile.

Lower Sales

First Solar’s sales slipped to $469 million from $950
million a year earlier, the Tempe, Arizona-based company said in
a statement Thursday.

That led to its first unprofitable quarter in three years.
The loss was $62.3 million, or 62 cents a share, more than
double the 28-cent loss analysts were expecting, the average of
10 estimates compiled by Bloomberg. The company reported net
income of $112 million, or $1.10 a share, for the same quarter a
year earlier.

First Solar’s sales were also affected by a delay in
selling a share in its Los Hills-Blackwell project to Southern
Co. that was expected in the first quarter and now will be
recorded in the second quarter, Widmar said. Permitting delays
on several projects and a port strike on the West Coast also ate
into revenue.

SunPower, based in San Jose, reported revenue of $441
million, down from $692 million a year earlier, and its first
unprofitable quarter in two years.

The net loss was $9.6 million, or 7 cents a share, compared
with profit of $65 million, or 42 cents, a year earlier.
Excluding one-time items, per-share profit of 13 cents exceeded
the 8-cent average of eight analysts’ estimates compiled by
Bloomberg.

Tom Werner, SunPower’s chief executive officer, said he’s
starting to work more closely with First Solar executives.

“Everything is on track” for the yieldco, he said in an
interview.

To contact the reporters on this story:
Christopher Martin in New York at
cmartin11@bloomberg.net;
Ehren Goossens in New York at
egoossens1@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Will Wade, Carlos Caminada

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