Suntech Breaks Into Solar-Power Financing
10/03/08 - 11:15 AM EDT
Greentech Media
Written by Ucilia Wang
Suntech Power Holdings Co. (STP Quote - Cramer on STP - Stock Picks) said Thursday it is entering the solar-power financing and management business by buying EI Solutions, a solar integrator and installer. Suntech, which makes solar cells and panels, also said it has formed a joint venture with MMA Renewable Ventures, which finances, owns and operates commercial solar projects. The new venture, called Gemini Solar Development Co., plans to finance, develop and operate large solar power plants of 10 megawatts or more. Kristina Peterson, Suntech's director of structured finance, will become Gemini's president. MMA Renewable Ventures, based in Baltimore, Md., lines up financing, installers and customers for solar-power projects. MMA makes money by agreeing to pay for the cost of building and operating a solar power system in exchange for the tax benefits of owning the projects and long-term power-purchase agreements from its customers, which are typically businesses or schools, including Macy's (M Quote - Cramer on M - Stock Picks) and University of California at San Francisco. MMA is teaming up with Suntech to make sure it can get large volumes of solar panels at a low cost as both companies go after utilities and other larger customers, said Mark McLanahan, vice president of corporate development at MMA. "It makes sense to join forces with a supplier at the scale of Suntech's because you are talking about bigger customers, higher expectations, more capital at stake and more equipment at stake." Gemini Solar is a 50-50 joint venture based in San Francisco, McLanahan said. Lining up a partner also makes sense at a time when the financial market turmoil means fewer banks will be available to offer loans for building solar and other renewable energy projects. The credit crunch will likely increase the cost of solar electricity, but it's difficult to say by how much, McLanahan said.
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