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Solar Blockbuster: SunEdison Buys Vivint

July 24, 2015
SunEdison, Inc., based in Maryland Heights, Mo., along with its “yieldco” TerraForm Power, made a huge move this week to expand its residential market presence with a $2.2 billion deal to acquire the #2 player in residential rooftop solar, Vivint Holdings Inc., Provo, Utah.

Already a giant in the solar market with involvement in manufacturing, development, financing, installation and operation of solar power systems as well as an array of other renewable energy development interests, SunEdison, Inc., based in Maryland Heights, Mo., along with its “yieldco” TerraForm Power, made a huge move this week to expand its residential market presence with a $2.2 billion deal to acquire the #2 player in residential rooftop solar, Vivint Holdings Inc., Provo, Utah.

SunEdison has built its business primarily on utility-scale and large industrial renewable energy projects — not just solar but wind and microgrid installations as well. The acquisition of Vivint gives it a strong position in the residential solar market, which is growing rapidly due to declining equipment prices and widespread use of incentives such as net metering to integrate distributed power into the electric grid. The leader in that space is SolarCity Corp., Elon Musk’s residential solar business.

Publicly traded Vivint Solar is controlled by 313 Acquisitions LLC, an affiliate of Blackstone Group LP, which has agreed to vote its shares accounting for 77% of the company in SunEdison’s favor. The deal is a combination of cash, SunEdison stock and convertible notes.

As part of the deal, TerraForm Power will acquire a 523 MW portfolio of Vivint’s existing rooftop solar assets for $922 million in cash. TerraForm Power is a yieldco, which means it exists to own and operate solar power production assets developed by SunEdison and others. Selling its operating renewable assets to the yieldco provides SunEdison with funds to pursue additional development projects, while TerraForm uses revenue from selling power generated by the plants to buy more plants and pay dividends to investors. TerraForm Power was launched publicly in a July 2014 public offering.

Vivint Solar’s management team will join SunEdison, and the business will be merged with SunEdison’s existing residential and small commercial (RSC) business unit.

“SunEdison’s acquisition of Vivint Solar is a logical next step in the transformation of our platform after the successful execution of our First Wind acquisition in January 2015,” said Ahmad Chatila, SunEdison CEO and chairman of Terra Form Power.

The deal doesn’t include Vivint Inc., which provides automation and security systems to help homeowners manage energy usage. That business was kept by Blackstone Group.

SunEdison has been active in other markets as well, of late, with recent announcements that Hewlett-Packard (HP) signed a 12-year power purchase agreement for 112 MW of wind power to run HP’s 1.5 million square feet of data center operations in Texas. The agreement puts HP five years ahead of its 2020 target to cut its greenhouse gas emissions by 20% of the company’s 2010 levels. The deal allows SunEdison to begin construction on the South Plains II wind farm in Texas, which when completed will generate 300 MW of power. Once operational, South Plains II will be acquired by TerraForm Power.

SunEdison also this week bought a British energy solutions provider, Mark Group, based in Leicester, UK, which has been a SunEdison solar sales and integration partner. The acquisition establishes a direct sales channel to residential and commercial markets in the UK.

Last week, SunEdison announced a partnership with Advanced Microgrid Solutions to deploy 50 MW of onsite energy storage for Southern California Edison. Once those systems are operational in 2016, they’re expected to be the first storage assets acquired by TerraForm Power.