SunEdison’s yield co spin off, TerraForm Power, has acquired its first projects from a third party.
Both TerraForm and SunEdison will acquire Hudson Energy Solar, a subsidiary of Just Energy Group. TerraForm will absorb 101 operating projects totalling 25.5MW while its 4.5MW development pipeline passes to SunEdison.
TerraForm will also gain a right-of-first-offer agreement to buy completed projects built for Just Energy’s commercial and industrial customers in New Jersey, New York, Massachusetts and Pennsylvania.
"This acquisition demonstrates TerraForm Power's ability to execute our growth strategy and acquire third-party commercial and industrial projects in the US," said Carlos Domenech, chief executive officer and president, TerraForm Power. "We believe this market will provide considerable value to us for the foreseeable future and the attractive economics of this transaction – an expected first-year cash-on-cash return of 14% – bear out that point of view,” added Domenech.
TerraForm Power will pay around US$35 million upfront to acquire the assets, including cash consideration to Just Energy Group. Approximately US$21 million of project level debt will be assumed with the portfolio.
The deal is expected to close in the fourth quarter of 2014.
Last month SunEdison said it was looking to establish a second yield co focussing exclusively on emerging markets.