Sunedison Inc. (fka SUNEQ)

[FEED_THE_FOXES]

Your opinion on yieldcos the other day is fundamentally flawed. Project developers seek the maximum sale price of completed projects to achieve the highest profit margin while yieldcos want to pay the lowest price possible to maximize their ROI. In addition, the vast majority of energy projects involve passive tax equity investors who get most of the free operating cash flow after debt service for the first 7-10 years. So in effect, yieldcos controlled by a developer can/will be a dumping ground for projects a developer cannot sell in the open market at a profitable margin.

When SUNE purchased First Wind they acquired a company that had never shown positive annual operating cash flow (see their S-1’s) or a net profit and had an Accumulated Deficit of $647 million as of April 2014. Many projects from that purchase are in the Northeast, have no PPA’s which mean they get paid market energy rates which are now the lowest level in over a decade, were dumped into TERP. There is an inherent conflict of interest between a developer and its yieldcos which is why TERP’s current third party controlling stockholders are seeking total independence from SUNE.