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SunEdison's acquisition of Vivint Solar hits delay

Vivint Solar, the US rooftop PV installer in the process of being acquired by SunEdison, grew its revenue and shrank its net loss in the third quarter, but failed to reduce the amount it spends installing solar systems – a potentially ominous sign for its future owner.

Vivint Solar’s cost per installed Watt of capacity was $3.12 in the third quarter – flat on the same period last year, and an increase on the $3.00/W it reported in the second quarter of 2015.

By comparison, larger rival SolarCity continues to hammer down its cost per Watt, reaching a record low $2.84/W in the third quarter.

Slashing installation costs is critical for companies like SolarCity, Vivint and Sunrun, as they prepare for a planned drop in the solar Investment Tax Credit from 30% to 10% at the end of 2016, and steel themselves for further challenges to the state net-metering policies which form the bedrock of their current value proposition to customers.

Vivint’s bookings and deployments increased modestly year-on-year but they both decreased sequentially, meaning the company’s growth engine has stalled since SunEdison announced its $2.2bn acquisition of Utah-based Vivint in July.

That announcement marked a major turning point in SunEdison’s own story, with its shares falling more than 85% since, erasing billions of dollars of value for shareholders in the self-titled largest renewables developer in the world.

Vivint Solar remains the second largest installer of rooftop PV in the US, though it trails SolarCity by a considerable distance. Vivint installed 61MW in the third quarter, compared to SolarCity's 256MW.

Vivint narrowed its quarterly net loss to $50.3m, compared to $51.7m in the same period in 2014. Its revenue surged to $22.5m, from $8.3m a year ago.

When SunEdison announced its intention to acquire Vivint Solar this summer, it said the deal was expected to close in the fourth quarter of 2015. That timeline, however, looks increasingly unlikely, with SunEdison now suggesting it may not happen until the first quarter of 2016.

Speaking to analysts last week, SunEdison chief executive Ahmad Chatila blamed his company’s myriad challenges for the delay.

“Why is it taking so long? Because there are just so many things going on in the company,” Chatila said, mentioning the company’s “dislocation” that began in late July, its IPO of yieldco TerraForm Global, and its ongoing attempt to close a number of announced deals in places like Latin America and India.

“We recognize [the Vivint acquisition] is taking a little bit longer than it should,” Chatila said. “But don’t read too much into it.”

Chief financial officer Brian Wuebbels added: “We have signed a purchase and sale agreement and we’re going through the customary closing procedures on that.”

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