Grid Alternatives, a nonprofit solar installer serving underprivileged communities, has filed a lawsuit against the SunEdison Foundation seeking nearly $2.3 million in unpaid donations.
The organization submitted the claim late Friday, a day after SunEdison filed for bankruptcy. Erica Mackie, Grid Alternatives co-founder and CEO, said she launched the suit to help ensure the nonprofit’s work can continue.
“We want to do everything we can to make sure the low-income families we serve and job trainees we train continue to have access to solar and solar jobs,” she said. “This [lawsuit] is one part of making sure we’re good stewards of our mission.”
Mackie said the intent is not to condemn SunEdison or its employees, but to use official channels to uphold SunEdison’s philanthropic commitments as the company goes through the Chapter 11 reorganization process.
“There are so many people within the company who are committed personally and professionally to diversity and equity and inclusion in the solar industry, and to training and making sure low-income families have access to solar jobs and to solar on their rooftops,” Mackie said. “We really just want that work to continue.”
While SunEdison's fate remains uncertain, spokesperson Ben Harborne said the company hopes to do more charitable work with Grid Alternatives.
"SunEdison and Grid Alternatives have collaborated to train more than 2,800 people, primarily women and people from underserved communities, for a well-paying career in solar," he wrote in an email. "SunEdison deeply values our collaboration with Grid Alternatives, and we look forward to continuing to work with them in the future."
A growing list of lawsuits
Grid Alternatives’s lawsuit adds to a growing number of legal claims against SunEdison, which saw its stock plunge after announcing plans to acquire Vivint Solar last July. By the end of 2015, the company had lost nearly 80 percent of its market cap, and it continued to lose value in the new year.
In December, shareholders filed a class-action lawsuit against the company, alleging that SunEdison and its senior executives misled investors by making it seem as though the company had the financial wherewithal to sustain continued growth.
In January, David Tepper’s hedge fund Appaloosa Management sued the company to prevent one of SunEdison's YieldCos, TerraForm Power, from purchasing some of Vivint Solar’s assets following the SunEdison’s pending acquisition. Then in March, Vivint Solar launched a lawsuit against SunEdison for damages after the $1.9 billion acquisition fell through.
SunEdison’s second YieldCo, TerraForm Global, has also filed a lawsuit, claiming its cash-strapped parent company diverted $231 million from the YieldCo to "prop up its flagging liquidity position.” The suit reveals that SunEdison requested funding from TerraForm Global around the same time it claimed to have a strong financial position in filings with the Securities and Exchange Commission.
The Street reports that SunEdison’s board held impromptu meetings with the boards of TerraForm Global and TerraForm Power last November that resulted in major structural changes, referred to as the “Friday Night Massacre.” Shortly after, TerraForm Global approved a $150 million prepayment for renewable energy projects in India, with an additional $81 million to follow.
The suit alleges that the YieldCo received misleading explanations for why the funds were needed. It also claims SunEdison used those funds to repay a $100 million margin loan instead of financing the India solar projects. SunEdison is now looking to sell off roughly 1 gigawatt worth of its India assets.
The renewable energy developer’s troubles don’t end there. The Securities and Exchange Commission is investigating SunEdison’s disclosures to investors about how much cash it had on hand as its share prices plummeted last fall. In addition, SunEdison has received a subpoena from the U.S. Department of Justice seeking information related to the Vivint Solar acquisition, financing of the company’s Uruguay projects, and inter-company transactions involving SunEdison and its two YieldCos, among other requests.
Facing $11 billion in debt and a slew of angry creditors, SunEdison’s bankruptcy filing last Thursday is hardly the end of the company’s woes.
Outstanding balance: $2.3 million
Amid all of the turmoil, the Grid Alternatives lawsuit is arguably the most upsetting. It very clearly points to the good work SunEdison was attempting to do -- and to the squandered opportunity.
Last year, Mackie and SunEdison CEO Ahmad Chatila co-wrote an article on why diversity is important for the health of the solar industry, referencing improved company returns, a happier solar workforce and stronger local economies. Through a national initiative, Realizing an Inclusive Solar Economy (RISE), the two institutions committed to providing hands-on solar installation training to 4,000 underemployed individuals from diverse communities over two years.
The two companies also partnered to bring the benefits of solar technology to dozens of low-income families. Going solar can help some homeowners reduce their electricity bills by up to 90 percent, freeing up money to meet other needs.
SunEdison carried out much of this work through the SunEdison Foundation, the company’s charitable arm dedicated to “empowering people and improving lives.” The organization is a leading supporter of Grid Alternatives, as well as SunFarmer, a nonprofit that provides the capital and technical expertise necessary to bring solar electricity to hospitals, schools and other important institutions in remote and rural areas.
Grid Alternatives is now seeking to ensure SunEdison makes good on its commitments. Specifically, SunEdison pledged $5 million to support Grid Alternatives’ work over two years -- $1 million to be delivered in four cash payments in six-month increments, and the remainder in in-kind donations of solar modules. The commitment was laid out in a memorandum of understanding signed by SunEdison, the SunEdison Foundation and Grid Alternatives in February 2015.
The $5 million agreement was intended to fund the RISE workforce diversity program, an online resume bank for job seekers and Grid Alternatives’ SolarCorps program, among other initiatives. The agreement would also support Grid Alternatives' efforts to provide access to solar power in low-income communities throughout the U.S. and in Nicaragua.
SunEdison and the SunEdison Foundation followed through on the first year of agreement terms, delivering two cash payments worth $250,000 and solar equipment valued at more than $2 million, for a total contribution to date of $2,711,070.
However, as SunEdison’s business collapsed, the company missed its March and mid-April deadlines for cash and equipment donations. With the news of SunEdison’s bankruptcy filing, Grid Alternatives received legal advice that it should file a claim to ensure SunEdison’s philanthropic commitments are considered as part of the Chapter 11 process. Grid Alternatives seeks to claim an outstanding balance totaling $2,288,929.
A thriving industry moves forward
Regardless of the outcome, Mackie said that Grid Alternatives is committed to pressing forward in its mission to expand access to solar and solar workforce training. While SunEdison is currently Grid Alternatives’ largest funder, it is not the only funder -- the nonprofit has several other committed financial backers from both the government and philanthropic sectors. At the same time, Mackie believes it’s important for SunEdison to uphold its agreement.
“This has been an incredible partnership, for which we are really grateful. We have done amazing things together that we should be really proud of,” she said. “And as the leader of Grid Alternatives, I promise those things will continue -- both by making sure that we formally say, ‘Please hold up your part of the partnership,’ and that we go to the rest of the industry and other funders and say, 'Please join us this in this really important work.'”
Mackie added that SunEdison’s business troubles have dealt a blow to morale in the solar industry, to both SunEdison’s partners and competitors. However, one bankruptcy does not mean that the broader solar industry is failing.
“The industry is still thriving in the face of this,” she said. “Because one company has business troubles doesn’t mean that the sun is running out, or the industry is dying, or that there’s something wrong with solar power. It’s one company having problems.”