The US renewable energy group SunEdison is expected to use its latest acquisition – the $US2.2 billion purchase of US-based solar specialist Vivint Solar – to boost its presence in Australia, and to challenge the local and global energy incumbents.
The purchase of the fast-growing Vivint, along with the recent $US2.1 billion acquisition of First Wind and the creation and listing of its Terraform venture, SunEdison is emerging as the biggest renewable energy developer in the world, and the biggest presence in distributed generation (behind the meter solar and storage).
It is also growing to a size where it can think of challenging the global energy utilities that have dominated the industry in recent decades. This graph below shows that it sits at the bottom end of the biggest utilities in the world, but it has a fast-growing profile over the next 20 years, and its aim is to become the biggest.
“We are building the next generation of the biggest energy companies on earth,” Julie Blunden, SunEdison’s chief strategy officer, told Greentech Media before the company’s investor call. “We’re not waiting to find out who they’ll be — we want it to be us.”
The company says it is on track to add more than 1 gigawatt of renewable electricity projects to its portfolio every quarter, and Greentech Media noted that Vivint gives SunEdison the best door-to-door solar sales team in the country and one of the largest residential pipeline.
“Vivint Solar’s competitive advantage lies entirely in its sales capabilities, making up for SunEdison’s biggest weakness,” said Nicole Litvak, a senior solar analyst with GTM Research.
SunEdison is expected to leverage that expertise in markets such as Australia and the UK, where it already has a presence in the residential and commercial markets. In Australia, it has bought local company Energy Matters, and is seeking to establish itself as one of the biggest installers of rooftop solar in the country.
“The transaction expands SunEdison’s strong (residential and commercial solar) platform and is intended to accelerate SunEdison’s existing business in the United States , United Kingdom and Australia,” it said in a statement.
SunEdison CEO Ahmad Chatila later told the conference call that he compared SunEdison’s potential not just to country-based utilities but to global oil majors and mega-utilities (see above), noting that the market opportunity for renewables is finally catching up with conventional energy.
“We’re adding a large oil company in value each year,” he said, talking about industry-wide contracted cash flows. “A lot of people don’t realize that.”
SunEdison – with a market capitalisation of $US9 billion – is still a fraction of the size of the biggest oil companies, but its Terraform venture allows it to expand quickly. It has 53 gigawatts of projects under development or completed – around the same size as the entire Australian grid.