Dominion and SunEdison set up JV for 24 solar projects, and will jointly develop 210 MW Three Cedars project in Utah
Written By: Tracy Dawson Roses
September 8, 2015
On September 8, Dominion announced that it has agreed to enter into a partnership with SunEdison, Inc. in which it would sell 33 percent of its ownership in 425 megawatts of solar generating capacity for approximately $300 million, subject to working capital and certain other adjustments. Under the terms of the agreement, SunEdison has a future option to buy all or a portion of Dominion’s remaining 67 percent ownership.
Included in the agreement are 24 projects in California, Connecticut, Georgia, Indiana, Tennessee and Utah. Fifteen of the projects entered service in 2013 and 2014. The remaining projects either have been completed or have expected in-service dates in 2015. All have long-term power purchase agreements with local electricity providers.
Dominion expects to pay down debt with the cash proceeds. The transaction will require approval by the Federal Energy Regulatory Commission.
Dominion also announced that it has agreed to enter into a joint venture with SunEdison to develop the 210-megawatt Three Cedars Solar project in Utah. Dominion and SunEdison each will have a 50 percent interest in Three Cedars. The Three Cedars solar project, a 265 megawatt (MW) DC, or 210 MW AC, solar project in Utah, was developed by SunEdison. The announcement marks the expansion of a joint venture recently announced regarding Dominion’s investment in the 420 MW DC Four Brothers solar project in Utah.
Similar to Four Brothers, the Three Cedars project is contracted under long-term power purchase agreements for 20 years with PacifiCorp (A-/A3), a subsidiary of Berkshire Hathaway Energy. The project is now under construction and fully financed with an expected commercial operation date of mid-2016.
Under the terms of the expanded JV, Dominion will invest approximately $320 million to acquire 50 percent of the cash equity and 99 percent of the tax equity in Three Cedars, including funding of construction. SunEdison expects to fully finance the $80 million balance of the capital for Three Cedars through a loan from Deutsche Bank through construction and long-term ownership. Dominion’s aggregate investment in the joint venture is approximately $830 million to acquire 50 percent of the cash equity and 99 percent of the tax equity in Four Brothers and Three Cedars, including funding of construction.
SunEdison will oversee construction of the projects and day-to-day operation of the facility once it has come online, which is expected in 2016. Three Cedars is expected to qualify for the federal Investment Tax Credit. Dominion will receive the majority of the federal tax benefits from the projects for the first several years, including the investment tax credit.
Three Cedars consists of three sites located in Iron County, Utah. The project has secured 20-year power purchase agreements, interconnection agreements and engineering, procurement and construction contracts.
SunEdison’s 50 percent interest in both the Four Brothers and Three Cedars projects are on the Call Right Projects List for TerraForm Power, Inc. (Nasdaq: TERP), a global owner and operator of clean energy power plants.