As if we needed any more evidence that solar energy has arrived as a mainstream resource, the announcement that French oil and gas giant Total (TOTF.PA) was acquiring a majority interest in solar giant SunPower (SPWRA) left little doubt.
“The world future energy balance will be the result of a long-term transition in which renewable energies will take their place alongside conventional resources,” Phillippe Boisseau, Total Gas and Power Division President.
Total will pay up to US$1.37 billion for a take a 60% share of SunPower paying a 44% premium for Class A shares and 47% premium for Class B shares assuming the deal meets all the needed regulatory approvals. SunPower’s management team will continue to operate the company and Total will use it as a platform to scale its position in the clean energy space focusing on leveraging Total’s broad access to markets with SunPower’s strong solar project management expertise.
Both sides get something they need to scale their business.
For Total, this deal boosts a modest position in renewable energy into a global leadership position while giving it broad access to the US market—THE place to be for solar energy today—as well as the ability to bring SunPower’s expertise to fill gaps in the European market and leverage it into the Middle East, Africa and elsewhere Total has interests. While the French has always had a strong belief in nuclear energy, the rest of Europe is more skeptical. If the EU is to meet its greenhouse gas emissions targets and reduce its dependence upon imported natural gas it must scale its renewable energy market share in both wind—likely offshore wind, and large scale solar energy projects. This acquisition positions Total to be a major player in that energy strategy transformation.
SunPower gets something every start-up craves in its exit strategy—a deep pockets parent and liquidity to refocus its business on the more profitable large scale project development and escape the falling sword of ever lower prices for PV panels from China. The deal will provide up to US$1 billion of credit capacity over the next five to accelerate new technology development to drive up solar efficiency, ramp-up manufacturing capacity and scale new project development around the world raising the bar on China and its competitors.
Impact on Those Left Behind
Consolidation is accelerating in both wind and solar energy and this deal will likely quicken that pace. Small start-ups even successful ones are no match for the duel threats of expanding China exports of low-priced commodity PV panels and the looming presence of large, global players among oil and gas leaders like Total or Fortune 500 players like GE, ABB, Siemens and others.
Get Big, Get Liquid, Get Better or Get Gone!
For First Solar and other large solar market participants this acquisition squeezes good companies to get bigger, go faster, get better—much better or risk falling behind. A lot of lipstick is going to be put on many solar pigs in the near future as deal making accelerates. This is good for the solar industry and good, good for customers, and good for power markets.
- Total to Buy 60% of SunPower for $1.38 Billion in Solar Bet (businessweek.com)
- Sunshot! (insightadvisor.wordpress.com)
- Reading the VC Tea Leaves: Solar Sizzles, Wind Wilts (insightadvisor.wordpress.com)
- Alternative Energy Watch: Solar PV Sales Predicted to Rise; Maine Wind Farms Not Universally Welcome; Bureau of Land Management Rules Change (LDK, WFR, WFC, FSLR, SPWRA) (247wallst.com)
- SunPower Brightens On Nuclear Concerns, Headed To $16 (blogs.forbes.com)
- Swan Solar Becomes SunPower ‘Premier Dealer’ (your-story.org)
- SunShot Taking Its Best Shot at $1 Solar Power (fool.com)
- California Makes a Splash in Solar (fool.com)