Solar PV makers have been moving downstream for a while now, trying to take advantage of the expected growth in new projects as countries work to reduce their carbon emissions. In that spirit, Japanese electronics giant Sharp (OTC: SHCAY) has acquired privately-held, utility-scale U.S. project developer Recurrent Energy, LLC for about $305 million.
This deal tops an acquisition by First Solar (NASDAQ: FSLR), which paid $285 million for NextLight Renewable Power earlier this year. MEMC Electronic Materials (NYSE: WFR) paid $200 million for solar project developer SunEdison in October 2009 and $76 million for Solaicx, a manufacturer of crystalline wafers, in July 2010. As prices come down for solar PV cells and modules, whether made with thin-film or crystalline technology, companies at the upstream end of the solar industry are hunting for profits at the project design and construction end of the solar pipeline.
STMicroelectronics NV (NYSE: STM), another solar PV wafer maker, created a joint venture called 3Sun with Italy’s Enel and Sharp to manufacture thin-film products and, ultimately, to build solar power plants. SunPower (NASDAQ: SPWRA) spent $277 million to acquire SunRay Renewable Energy, giving the company a pipeline of some 1,200 megawatts of downstream solar projects.
Sharp apparently outbid other, unnamed companies in its acquisition of Recurrent, which has about 2,000 megawatts of solar projects in its pipeline. Among competitors thought to be bidding for Recurrent were SunPower, MEMC and Suntech Power Holdings (NYSE: STP).
But the acquisition game could be about over. The largest remaining privately-held, utility-scale project developer is Axio Power, with about 500 megawatts of projects in its pipeline. That’s about as much as NextLight had when it was purchased by First Solar, so that puts a price on Axio of around $250 million.
Dramatic cost reductions in producing both thin-film and wafer-based solar cells are bringing the cost of solar-generated electricity nearly equal with electricity generated from coal and gas burners. Fears earlier this year that cuts to Germany’s feed-in tariffs would lead to a depressed outlook in the solar industry have not materialized.
If anything, solar stocks are heading upward again. In the past month, every stock mentioned here has gained at least 5%, and both SunPower and First Solar are up more than 15%. The Claymore/MAC Global Solar Energy ETF (NYSE: TAN) is up nearly 10%.
As of this writing, Paul Ausick did not own a position in any of the stocks named here.
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