SunEdison Inc’s (NYSE:SUNE) path to “re-engineering” its business model moved forward Tuesday. The solar energy firm announced it had signed two 20-year power purchase agreements (PPAs) with public utility Southern California Edison (SCE). The deal has been described as a way to curb air pollution and improve the power grid.
SunEdison’s Push in California
SunEdison continues to make its plays in the state of California. The firm has already established several deals this year in The Golden State, and there are no signs of it slowing down whatsoever.
The SunEdison-SCE deal will be for 2.7 megawatts DC of solar. SunEdison will build the solar systems using a mix of parking canopies and rooftop spaces. At the same time, parked cars will receive shade while creating solar energy.
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As part of the PPA, SCE will not pay any up-front costs and will receive low-cost solar energy. SunEdison will install, operate and own each system it creates. The firm will operate and maintain the services and offer 24/7 management, monitoring and reporting.
SunEdison plans to finish the solar systems pending approval of the agreements by the state’s Public Utility Commission (PUC).
The solar systems are projected to produce enough energy to power more than 600 homes each year. It will also help the state avoid emitting around 50 million pounds of carbon dioxide over 20 years, which is the same as taking roughly 5,000 cars off the road. Moreover, these kinds of solar systems will aid the utility in meeting the state’s goal of creating half of its power from renewables by 2030.
Sam Youneszadeh, SunEdison’s regional GM of its Western U.S. solar business, noted in a news release that air quality and renewable energy are major concerns for residents.
SCE has been looking at an array of clean energy sources that could end the construction of a new gas power plant in Orange County. Recent closures of power plants have affected the region’s energy supply so the public utility wants to install clean and cost-effective alternative forms of energy.
SunEdison’s Financial Outlook
SunEdison stock has been falling with each passing trading day. Year-to-date, the firm has lost nearly three-quarters of its value to just over $1 a share. It’s very different than what the stock looked like last summer when it was trading around $30.
The firm sparked headlines when it confirmed it was cutting down plants, slashing 220 jobs and selling assets. This is part of restructuring efforts to keep the firm afloat and help tackle its large debts.
On Tuesday, its target price was cut by stock analysts at UBS AG from $2.00 to $0.75 in a research note. This helped the stock fall six percent during the mid-day trading session.
On the bright side, a handful of groups have increased their positions in the firm. Some of the entities include California Public Employees Retirement System, Manufacturers Life Insurance Company and Retirement Systems of Alabama.
Will investors stay the course hoping for a miracle? The firm’s leadership is hoping.