The CEO of US solar and energy storage developer Borrego has said the company’s project development business will be less capital constrained under the new ownership of investment firm ECP, following a deal announced earlier this week to spin off and sell the unit.
Borrego is offloading the development business, including its project pipeline of more than 8.4GW of solar and 6.4GW / 25GWh of energy storage, to focus on growing its EPC and O&M businesses.
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The last two years have seen the development unit more than double the number of US states it is working in as it made a push into utility-scale solar and large-scale standalone storage, Borrego CEO Mike Hall said.
“With that growth and that expansion comes large capital needs. And so we wanted to find a partner that could bring that capital and that investment expertise so that the business would be less capital constrained,” he told PV Tech.
Alongside the EPC and O&M units, Borrego is formally launching a new business in the coming months called Anza, a supply chain solution to help project developers navigate the solar module landscape.
With each of the businesses at different parts of their lifecycle, Hall said “it became difficult for us to give all of them what they need to really capitalise on each of their opportunities.
“We actually thought that the development business would be better as an independent company without some of the constraints that come with being part of what effectively becomes more a conglomerate.”
While there are no partnership agreements in place between the development unit that’s being sold and Borrego’s other business, management is hopeful that its EPC and O&M teams will be hired to work on the developer’s upcoming projects. “There should be lots of opportunities for us to collaborate in the future,” Hall said.
The sale comes as solar project construction slows in the US as the Department of Commerce continues its investigation into alleged circumvention of anti-dumping tariffs
Borrego’s EPC unit has had customers suspend or delay projects as a result of the investigation, but the development business has been less affected as it generally sells projects that are due to begin construction in 2023 or after.
“I do think that the investment community is very optimistic that this Commerce investigation is more of a short-term problem than a long-term structural problem. And so we’ve continued to be able to do deals with our IPP customers on the development side,” Hall said.
With the tariff probe coming at a time when the sector was already dealing with higher commodity prices, labour shortages and long lead times on the supply chain, Hall is forecasting a down year for US solar, but is bullish about medium-term growth.
He said: “I expect that the market will resume growth in 2023, but 2022 is going to be a tough year.”
