Recurrent Energy has bought a portfolio of solar power projects from UPC Solar, a deal will allow Recurrent to complete developing up to 350 megawatts worth of power plants in North America.
San Francisco-based Recurrent has paid an undisclosed amount of money to Chicago-based UPC Solar for the pipeline of unfinished projects, and it plans to develop, own and operate these projects and sell electricity to utilities through long-term power purchase agreements.
Recurrent began pursuing the deal with UPC solar near the end of last year -- it had been shopping for solar power projects of 2-megawatt to 10-megawatt each to boost its own portfolio, said Recurrent's CEO Arno Harris. UPC Solar is part of UPC Energy Group, a renewable energy developer and investor with a focus on wind power.
The acquisition exemplifies an emerging trend at a time when some developers are having a tough time lining up lenders to raise millions of dollars for their solar power projects, Harris said. The UPC Solar deal involves only projects that will use solar panels for generating electricity.
"It reflects the general environment we see right now -- well capitalized companies are in the position to buy project pipelines from developers who are having a harder time raising money to continue the business," Harris said. He added that he has seen "a fair amount" of projects" for sale, and has been looking to buy not only in North American but also in Europe.
Other companies have been scooping up unfinished solar power projects, which could save the buyers the time and money it would otherwise take to develop power plants from scratch.
Solar panel maker First Solar in Tempe, Ariz., is spending $400 million to buy about 1.85 gigawatts worth of projects from Hayward, Calif.-based OptiSolar, which plans to focus on making solar panels instead (see First Solar Buys OptiSolar's Power Projects). eSolar, based in Pasadena, Calif., recently sold the development rights of 500 megawatts worth of projects in the United States to NRG Energy.
UPC Solar currently owns and operates several solar power projects, including 550-kilowatt worth of systems at four schools in San Diego.
Before the acquisition, Recurrent already had been developing projects to sell electricity to businesses, governments and utilities that couldn't afford -- or didn't want to -- own solar energy systems. One of the company's highly touted projects is a 5-megawatt deal to place solar panels at the Sunset Reservoir in San Francisco.
The majority of the unfinished projects from UPC Solar are set to be located in Ontario, Canada, which has a history of offering generous renewable energy subsidies to developers, Harris said. The Ontario government introduced North America's first feed-in tariff program in 2006, and recently proposed a new set of subsidies.
The feed-in tariff program requires the Ontario Power Authority to buy solar and other renewable sources of electricity through long-term contracts at government-set prices. In order to support renewable power generation, the prices for solar, wind and other green power are much higher than the prices for power from conventional means. Similar programs in Germany and Spain have made the two countries the world's largest markets for solar energy generation (see Report: Global Solar Industry Raked In $37.1B in 2008).
The newly proposed solar electricity rates would be more lucrative than what the government approved back in 2006, when it set the price at CAD 42 cents per kilowatt hour. That price applied to solar projects of all sizes. The proposal under consideration now includes rates for different sizes of the projects, as well as their locations (rooftop v. ground), and the rates range from CAD 44.3 cents per kilowatt hour for a ground-mounted system to CAD 80.2 cents per kilowatt hour for a rooftop system with 10-kilowatt or less in generation capacity.
Harris declined to disclose the number and sizes of projects his company plans to complete in Ontario. He has set a goal of bringing more than 100 megawatts of solar power projects online by 2012. Some of the projects from UPC Solar are in the United States.
Recurrent is working with banks in the United States and Canada to finance the projects. The company said last July it had raised $75 million from private equity firm Hudson Clean Energy Partners, money that was set aside for corporate expenses.