Most people know very little about the true economics in the solar and wind industry. Even less understand the cryptic disclosures in an SEC filing of reports from FERC. Yet the financial inventors are brilliant in concealing the simple business model that is supposed to generate earning from real economic activity. Let's be generous and report on the public relations announcement, 5 Slides That Show Why SunEdison Bought First Wind. Reading such glowing projections might attract investors into the SunEdison, TerraForm Power Up Solar ETFs.
"SunEdison is among the largest holdings in both the Guggenheim Solar ETFs (TAN) and the Market Vectors Solar ETF (KWT), which climbed 5.1% and 3.8% respectively.
These two solar ETFs are alone in giving meaningful weight to TerraForm, SunEdison's partner "yieldco" that went public in July, according to research firm XTF."
Are you ready for some government and private sector newspeak? Note the following appears on the website of NREL - a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. - A Deeper Look into Yieldco Structuring.
"A yieldco is a dividend growth-oriented public company, created by a parent company (e.g., SunEdison), that bundles renewable and/or conventional long-term contracted operating assets in order to generate predictable cash flows. Yieldcos allocate cash available for distribution (CAFD) each year or quarter to shareholders in the form of dividends. This investment can be attractive to shareholders because they can expect low-risk returns (or yields) that are projected to increase over time."
Surely you got that these "yieldco" are even better than derivatives, RIGHT???
Before you call your broker, review a recent edition of the BATR RealPolitik Newsletter on the topic - Another Green Energy Fraud. When Bloomberg announces that SunEdison, TerraForm to Acquire First Wind for $2.4 Billion, they are not disclosing the entire story.
"Expected to close in the first quarter, the purchase will consist of a $1.9 billion upfront payment and $510 million dependent on First Wind completing backlog projects.
TerraForm will add 521 megawatts of First Wind projects to its portfolio under the deal, with 1.6 gigawatts of projects expected to be developed by SunEdison and dropped down into TerraForm in 2016 and 2017, the companies said in the statement."
The sordid history of First Wind strikes a record of questionable financial dealing, concealed debt obligations, flipping LLC ownership and holding company discrepancies. It came as no surprise that First Winds bizarre attempt to sell off their self proclaimed core projects fell flat. A local Bangor Maine newspaper has taken the lead on real investigative reporting. First Wind sale means end of $333 million partnership with Emera is but one in a series of damaging evidence on the shady business practices of First Wind.
"Ending a partnership challenged twice before state regulators and in court, Nova Scotia-based Emera has sold its interest in a $333 million joint venture with First Wind, which was purchased Monday by a Missouri-based renewable power developer.
Emera announced Monday that it has agreed to sell its interest in Northeast Wind Partners back to First Wind for $223 million.
The deal would end a legal challenge to that partnership, which Houlton Water Co. and a group representing industrial power users argued violated the intent of New England's deregulation of its electricity market. But that money may be directed at other power generation resources in the region after the completion of the larger deal between First Wind and SunEdison subsidiary TerraForm Power."
Ask yourself, why would a newly capitalized company want to acquire a debt ridden albatross like First Wind? When SunEdison Spin-Off TerraForm Power Scores Hot IPO came to market, a smell of a Wall Street bailout using another shell public company reeks. Since First Wind failed in their own IPO offering, just maybe a careful examination into the filings of these companies is warranted.
"TerraForm Power Inc. (NASDAQ: TERP), another spin-off from SunEdison Inc. (NYSE: SUNE), offered 20.1 million shares and raised about $500 million in its IPO, valuing the company at around $2.4 billion. SunEdison will retain nearly 95% of the voting power in the company. The IPO's underwriters have a 30-day option on another 3 million shares."
Selling shares of public companies to pension funds for eventual shorting from the house accounts of underwriting firms is a favorite strategy that if caught, only gets a slap on the wrist.
The lack of disclosure of ALL the debt for projects that cannot even satisfy minimum interest payments must less retiring the actual obligations, is indicative of an industry that is based upon fraud and uncompetitive costs.
Wind proponents want you to believe that Wind Power Forecasting in U.S. Electricity Markets are based upon true figures of literal production that goes into the grid for actual consumer use. Nothing could be further from the truth. Sun Edison is no virgin to the mega corporation ownership game. Having started in 1959 as the Monsanto Electronic Materials Company, a business unit of Monsanto Company, their SEC filing is a wealth of information on connections to the usual suspects behind the renewable energy Wall Street schemes.
Renewal Energy World explains, SunEdison Launches Yieldco to Unearth, Leverage Solar Asset Values, and sure sounds like a lot of financial trickery.
"Here's why SunEdison and the rest of the industry is so keen to pursue new finance options. Back in its 3Q13 financial results SunEdison calculated its current business model of building and selling solar projects yields about $0.74/Watt -- but those assets' true value could jump as high as $1.97/W if the company can find ways to enumerate and apply various methods: lower the cost of capital, apply various underwriting assumptions, and factor in residual value in power purchase agreements. That's a startling 2.6× increase in potential value creation that SunEdison thinks it can unlock, and creating a yieldco structure to attract interest from the broader investor community is a big part of the answer."
Birds of a feather flock together and care nothing about all the fowl kill is a bad deal for investors and electric rate payers.