8point3 Energy initial public offering
8point3 Energy (CAFD), the yieldco that’s jointly sponsored by SunPower (SPWR) and FirstSolar (FSLR), raised $420 million in an IPO (initial public offering) completed on June 18 on the NASDAQ. CAFD sold 20 million shares at $21 each during the IPO. As we discussed earlier in this series, FSLR received proceeds of $284 million from the IPO.
Asset drop-down to the yieldco
In 2Q15, FSLR’s 20 MW Maryland Solar Project was sold to and leased back from 8point3 Energy. Moreover, a 49% stake in three more projects in California—Solar Gen 2, Lost Hills, and North Star—transferred to 8point3 Energy. These projects have a total capacity of 242 MW. The output from these projects sold to utilities (XLU) including San Diego Gas and Electric (SRE) and PG&E (PCG) under long-term power purchase agreements (or PPAs).
Aside from the initial portfolio, FSLR has a ROFO (right of first offer) agreement with CAFD. According to the agreement, FSLR will have to offer selected projects for sale to CAFD first before approaching third parties. The ROFO agreement includes FSLR’s 250 MW Moapa project in Nevada, 300 MW Stateline project in California, 40 MW Kingbird project in California, and 40 MW Cuyama project in California. These projects too are under long-term PPAs with investment-grade utilities.