First Solar will pass 10 gigawatts of in-development projects to wind developer Leeward Renewable Energy, the companies announced Monday, as the solar manufacturer continues to overhaul its business.
The sale accounts for a majority of First Solar’s project assets, in an anticipated move underscoring the company’s plans to concentrate primarily on manufacturing. First Solar is the largest solar panel maker in the U.S. and also produces panels in Vietnam and Malaysia. It has discussed streamlining its business for some time, announcing a “strategic review” last year.
“At our core, we are a technology and manufacturing company,” CEO Mark Widmar said during the company's Q4 earnings call in February of last year. “Over time, we have added to this core competency in order to address unmet needs within the market, optimizing around and enabling delivery of our products and capturing an incremental profit pool.”
Now that the development landscape is more competitive, growing that business comes at the expense of innovating in manufacturing, compelling First Solar to refocus. In service of that goal, First Solar has been shedding business operations outside of its manufacturing arm for some time. The company offloaded its operations and maintenance arm in August, selling the business to NovaSource. In 2019 it also got rid of its in-house engineering, procurement and construction business in favor of pursuing a third-party model.
The coronavirus pandemic delayed the company’s timeline on deciding the fate of its development business, but First Solar began investigating the next steps in June when it made a “determination that the market is now in a better position to evaluate potential partnerships, sales, or other transactions,” Widmar said during the company’s Q2 2020 earnings call. The deal with Leeward is expected to close in Q1 2021.
In an announcement on the sale, Widmar said the deal is “part of a transition that allows [First Solar] to focus” on deploying its thin-film module technology. First Solar will hang onto only 1.1 gigawatts of projects in development in Virginia, California and Arizona, which it also plans to eventually sell.
Texas-based Leeward, a subsidiary of Canadian pension fund OMERS, now owns more than 20 wind farms in nine U.S. states, amounting to about 2 gigawatts, according to the company. The sale will mark its first significant foray into solar, boosting its development pipeline to 14 gigawatts.
The First Solar projects Leeward is adding to its portfolio are located in California, the Southwest and the Southeast. Leeward’s existing wind projects are spread across the West, Midwest and Northeast. Buying the significant chunk of projects from First Solar will help buttress the developer’s “aggressive growth strategy,” according to Leeward CEO Jason Allen.
“Key members” of First Solar’s development team will also be moving over to Leeward after the deal closes.
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