Withan expected bankruptcy filing looming, SunEdisonInc. and its creditors will be taking a close look at the fleet ofpower plants and projects owned by the company and its yieldcos across theglobe.
Theseplants serve as the core assets of a company that has so far has been unable toclimb out of a liquidity crisis. If valued by creditors and the marketplace,the assets could help to balance the company's huge liabilities; if not, abankruptcy could be the end of the line for many unfinished projects.
Accordingto S&P Global Market Intelligence, SunEdison is sitting on nearly 1,750 MWof operating renewable power projects and another 4,500 MW of planned andunder-construction projects, just in the U.S. and Canada. The company'sTerraForm Power Inc.yieldco holds another 1,431 MW of operating plants, though it is unclear howthose projects would factor into an insolvency proceeding.TerraForm Global owns a further 815 MW of capacity across the globe.
SunEdisonhas 1,095 MW of operating wind assets and 649 MW of solar assets. It also has827 MW of projects under construction in North America, including 319 MW ofwind projects and 508 MW of solar assets. Key to the valuation of mostrenewables projects, particularly those under development, is a contract forthe plant's output.
AmongSunEdison's planned projects that have signed power purchase agreements is the300-MW South Plains WindEnergy II facility in Texas, which has contracts with and ; the 120-MW inColorado, which has a contract with PublicService Co. of Colorado, a subsidiary of ; and the 110-MWSunflower Windfacility in North Dakota, which has a contract with .
SunEdisonhas "a lot of value … good assets, good portfolio," one industryanalyst said recently. "It doesn't deserve to be thrown out; it's not likevaporware."
Thecompany's problems broke into the open in the summer of 2015 when its expensivebuying spree collided with a downturn in the yieldco market. Saddled withenormous debt and unable to sell projects to its affiliated holding companies,investors became increasingly worried about SunEdison's rapid expansion andmurky financials. With its stock price gutted, SunEdison found itself withoutaccess to capital markets to fund its business. Bills went unpaid anddevelopment ground to a halt.
Now,counterparties are left wondering about the fate of projects they thought wouldsupply them with electricity. PacifiCorp,for example, is the counterparty to 531 MW of planned capacity from SunEdisonand its yieldco TerraForm PowerInc., according to S&P Global Market Intelligence.Underscoring the uncertainty is HawaiianElectric Co. Inc.'s decision in February to power purchase agreements withthree SunEdison solar projects totaling 111 MW because the developer missedfinancing deadlines. Hawaiian Electric is a subsidiary of
Itis unclear what affect a bankruptcy filing would have on TerraForm Power andSunEdison's other yieldco, TerraFormGlobal Inc. TerraForm Global recently a bankruptcy filing by its sponsorwould have "a material adverse effect" on its business, but that itwould have "sufficient liquidity to support its ongoing operations."
TerraFormPower could take a financial hit if there are demands for repayment ofproject-level debt or accelerated project-debt amortization, which could eatinto cash available for distribution and affect dividends, CreditSights said.The firm also noted warnings from TerraForm Power that some of its powerpurchase agreements and project-level financing arrangements allowcounterparties to terminate contracts or accelerate maturity if SunEdisonceases to own a majority of the company.