China’s ET Solar has become the latest PV group to suggest it may spin off its project-development arm in an initial public offering (IPO).
ET is looking to raise $250m in a US flotation sometime by early next year, according to press reports, in another sign of capital markets' growing appreciation of solar assets.
The so-called YieldCo model has taken off in North America over the past year or so, with companies ranging from major utilities (NRG) to wind developers (Pattern Energy Group) to solar developers (SunEdison) having floated YieldCos on the public markets or announced plans to do so.
YieldCos typically own completed power-generation assets and are therefore able to offer investors steady and relatively generous dividends – while raising money for their parent company (which usually stay on as majority shareholder) to pour into project development.
Behind the phenomenon is the notion that wind and solar assets are often given a higher valuation by investors when they are part of a pure-play YieldCo than they are as part of a more diversified company with a broader set of risks.
Earlier this year JinkoSolar, a tier-one Chinese module supplier and burgeoning developer, announced that it was evaluating the possibility of spinning off its projects business via an IPO.
Despite being a major Chinese PV company – with 1GW of module capacity in Zhejiang province, a roster of repeat customers in the West, and a long-established development arm – ET is perhaps less well known than some of its rivals as a result of its private ownership.
ET was one of the first Chinese PV players to wade into the development and system-integration game, and it intends to bring 300MW of capacity on line this year – most of it outside China, and nearly one-third of it in the UK.
Nearly 40% of its revenues last year came from from its projects arm – more than any other major Chinese PV manufacturer, Canadian Solar included – and that figure will rise above 50% this year, the company told Bloomberg.
Nearly all of China’s major solar manufacturers are seeking to become significant project developers, and in many cases operators.
Hanwha SolarOne yesterday announced an arrangement that will see it develop, build and operator 100MW of distributed PV capacity in and around Wuxi, Jiangsu province.