By Josh Beckerman
First Solar Inc. and SunPower Corp. are in talks to form a joint
"yieldco," an entity that provides power under long-term contracts
and pays out much of its cash flow to shareholders.
The two solar-products companies have separately made statements
in the past about possible formation of yieldcos. Rival SunEdison
Inc. spun off its own yieldco, TerraForm Power Inc., which had
strong demand when it went public in July.
In late trading, First Solar shares were up 11% and SunPower
rose 13%.
First Solar Chief Executive Jim Hughes said in November that the
company was "not prepared" to "pursue a listed yield vehicle at
this time."
NRG Energy Inc. was an early player in the yieldco trend,
spinning off a mix of conventional power plants and wind and solar
farms as NRG Yield Inc.
First Solar and SunPower expect to each contribute a portfolio
of solar-generation assets from their existing holdings and
eventually file for an initial public offering for the yieldco.
Both companies are slated to report fourth-quarter results
Tuesday. First Solar's third-quarter profit fell 55% as it reported
a revenue decline that was wider than analysts' estimates, but the
company said it was on track to meet or its exceed its goal for
2014 bookings.
Earlier this month, First Solar announced that Apple Inc.
committed $848 million for power from First Solar's California
Flats project, which is expected to be completed by the end of
2016.
SunPower Corp. reported third-quarter results that beat
analysts' estimates, but its fourth-quarter forecasts were below
Wall Street expectations.
After a period of heavy competition and high-profile
bankruptcies like Solyndra LLC, the industry has seen prices
stabilize as growth in demand for panels is outpacing capacity
expansion.
Write to Josh Beckerman at josh.beckerman@wsj.com
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