AIG Continues Sell Off of Clean Energy Assets as part of Restructuring
On Monday, an investment unit of the embattled American International Group (AIG) sold its 42.5 percent stake in a 120 megawatt Texas wind farm to industrial conglomerate Sumitomo, marking the Japanese company’s first foray into the U.S. clean energy market.
Japanese news service Nikkei reports that Sumitomo paid about $100 million for its stake in the Stanton wind farm. General Electric holds another 42.5 percent in the project and Invenergy, the U.S. independent developer, the remaining 15 percent.
Back in March, at the peak of the bonus scandal (for more on that see here) AIG sold three Spanish solar power plants with a combined output of 35 megawatts and an enterprise value of €300 million ($427 million) to HG Capital, a listed private equity fund.
Motivating the Texas purchase for Sumitomo is the growth prospect of the U.S. market, which could generate as much as 20 percent of its electricity from wind by 2020.
Other Japanese companies with U.S. projects include Eurus Energy Holdings, which is developing a 63 megawatt facility in northern Oregon expected to begin operating at the end of the year. The company, a unit of Tokyo Electric Power and Toyota Tsusho, already operates eight wind farms in the U.S.
HG Capital
11:01 AM EDT
No Comments
This week in green energy
Underscoring this reversal of fortune was Friday’s report that OptiSolar was shutting down its two plants, one in Sacramento and the other in Hayward, Calif. Just a year ago the company said it would build the massive 550 megawatts Topaz solar farm in California’s Central Coast. Pacific Gas and Electric had agreed to buy the plant’s electricity output. But even with this marquee backing, OptiSolar was unable to secure funding.
Earlier this month OptiSolar sold its pipeline of unfinished projects, including the Topaz farm, to First Solar in a $400 million all stock transaction. At the time, the company was counting on a $300 million federal loanguarantee to stay in business as a manufacturer of thin-film solar cells.
Earth2Tech draws an interesting parallel between the end of the clean energy boom and the dot com bust a decade earlier. It writes:
The fallen dotcom firms of the past made a variety of mistakes like building services no one was ready for yet (Pets.com and Webvan), or making margins so slim that the business wasn’t sustainable (kozmo.com: free delivery of discounted goods in an hour and no tips!). But the faults of the struggling cleantech firms have been largely both underestimating how expensive it is to manufacture “stuff” and not being able to reach a large manufacturing scale quick enough before the credit crunch hit. It seemed as if OptiSolar had announced it was building one of the largest solar photovoltaic projects ever built at 550 MW, before it had even disclosed its funders or explained how its technology was superior to any competitors.
Other clean energy companies announcing scale backs: Biofuel maker Imperium Renewables laid off 24 employees; Spanish developer Acciona Windpower cut 65 jobs in the U.S.
Oil companies are doing the same. Royal Dutch Shell said this week that it would drop all wind and solar investments, arguing returns were too small. BP, over the past year, has shut down a solar panel manufacturing plant in Australia and said it would only invest in wind projects in the U.S. and Europe.
Shut downs, lay offs…. consolidation. First Solar started the process a few weeks ago with its acquisition of the OptiSolar project pipeline. That same week Spanish developer Fotowatio bought projects from MMA Renewable Ventures. It continued this week with Recurrent Energy’s acquisition of a 350-megawatt project portfolio from Chicago-based UPC Solar. In Europe private equity fund HG Capital acquired controlling interests in three Spanish solar plants from AIG Financial Products, the embattled unit of insurer American International Group.
But, there are small rays of light. This week, the Department of Energy, acting on its pledge to speed up processing of renewable energy loan guarantees, distributed the first of these to Solyndra, a California solar panel maker. It plans to use the $535 million guarantee to grow production at its facilities in Fremont, Calif.
On the regulatory front, the Department of Interior and the Federal Energy Regulatory Commission (FERC) signed a Memorandum Of Understanding to work on rules to regulate the development of offshore wind and solar projects.
The Wall Street Journal also reported on Tuesday that the cap-and-trade system proposed by the Obama administration, could actually raise two-to-three times the White House’s $646 billion revenue estimate, generating roughly $1.3 trillion and $1.9 trillion for the 2012 -2019 period. As is, about $120 billion of the trading platform’s revenues would fund clean energy projects.