German FIT threat tips ambitious Solarhybrid over the edge
German developer Solarhybrid – which only last month clinched a deal to buy bankrupt Solar Millennium’s 2.25GW project pipeline in the US – has itself entered insolvency proceedings, falling victim to looming changes to Germany’s feed-in tariff (FIT).
Solarhybrid says “illiquidity” issues have forced it to file for insolvency proceedings with a local court in Arnsberg, a month after the German government said it intends to eliminate all support for PV projects larger than 10MW.
The filing leaves the whole of Solarhybrid’s project pipeline in limbo, and adds yet another grim twist to the saga of the 1GW Blythe project in California, often touted as the world’s largest solar development.
Solarhybrid chief financial officer Albert Klein did not immediately respond to requests for information regarding its project portfolio.
Despite its intense focus on the US market in recent months, it was regulatory changes in Germany that ultimately blew Solarhybrid over the cliff’s edge.
In late February Berlin stirred up a hornet’s nest by announcing it would once again change the rules governing the FIT. Among other changes, the government called for killing support altogether for projects larger than 10MW – a dagger through the heart of large-scale developers like Solarhybrid.
Shortly after the FIT proposal was made, Solarhybrid saw its credit rating suspended by one ratings agency, making its plan to issue a private bond placement to cover its Solar Millennium purchases a near impossibility.
Among other projects Solarhybrid had lined up in Germany was a 150MW PV array at a former military airport in Brandenburg, in which it has already invested €7.5m ($9.9m) and which would receive no FIT support under the new rules, due to enter force in July.
It has also invested at least €4m in expansionary phases at its Allstedt and Fürstenwalde arrays, which are now unlikely to see the light of day.
But the biggest question mark looms over the mega-project known as Blythe.
Blythe was originally to be built in several phases by Solar Trust of America, a joint venture between Germany’s Solar Millennium and Dutch engineering firm Ferrostaal, using parabolic-trough concentrating solar power (CSP) technology.
But last summer the joint venture rattled the CSP industry by revealing it would instead use PV for at least the first 500MW, reflecting the tumbling price of solar modules.
In October 2011, with its finances a shambles, Solar Millennium announced a preliminary deal to offload its US to Solarhybrid for an undisclosed amount, including Blythe and other projects like the 500MW Palen in California.
With the stroke of a pen, Solarhybrid thus became one of the largest renewables developers in the US.
Although the deal took longer than expected to go through – driving Solar Millennium into bankruptcy late last year – it was formally wrapped up in February.
Solarhybrid appeared to have every intention to build the projects, and even offered future payouts for Solar Millennium if it resold the projects in the future.
Shares of Frankfurt-listed Solarhybrid plunged more than 62% to €0.21 on the news of its insolvency, leaving the company with a market capitalisation of just €1.3m. Its share price had already been decimated in the wake of the FIT decision.