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Financial turmoil at SunEdison imperils solar projects worldwide

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LOS ANGELES In November, solar energy giant SunEdison Inc reported that its project pipeline had grown by 75 percent in just a year, the result of an aggressive growth strategy.

Now, five months later, many of those projects are imperiled as SunEdison reportedly prepares to declare bankruptcy.

SunEdison’s rapid growth in planned capacity – from 4.5 gigawatts to 7.9 GW in 12 months, according to a company press release – was propelled by an acquisition spree and aggressive underbidding of rivals on projects. Put in perspective, a typical nuclear power plant has a capacity of 1 GW.

Among the deals now in question is a solar plant under construction for the central Texas community of Georgetown. SunEdison initially told officials there it would self-finance the project, but now wants to make alternative funding arrangements.

At SunEdison’s request, the city last month authorized financing through Morgan Stanley, but the financial services firm has yet to agree to the arrangement.

In February, Hawaiian Electric Company cited project delays in cancelling a contract with SunEdison to purchase power from three solar facilities the company was building on the island of Oahu.

And last month, TerraForm Global – a related company set up to own and operate clean energy assets developed overseas by SunEdison – warned of delays in construction on two projects in Uruguay and a wind venture in India. Another of SunEdison’s Indian ventures, a 500 megawatt solar plant that is one of the country’s biggest forays into renewable energy, has not yet broken ground. Industry sources said it will likely be re-bid unless another company steps in to buy it.

SunEdison declined to comment on the number and status of its unfinished deals. Company releases and news reports suggest the company has dozens of projects in development, ranging from massive power plants to small rooftop arrays.

The company has already sold off some large ventures, including its portion of the massive Beacon Solar project going up in California’s Mojave desert, which Swiss investment firm Capital Dynamics bought last month.

SunEdison and First Reserve – which jointly own the huge 156 MW Comanche Solar plant underway in Colorado – asked the Federal Energy Regulatory Commission in March for expedited approval to sell that project. The FERC filing said the parties had identified three potential buyers.

First Reserve, which financed the plant but never intended to be a long-term owner, declined to comment.

FAST GROWTH, FAST DECLINE

SunEdison was until recently the nation’s fastest growing renewable energy developer, but the company now faces a cash crunch and $12 billion in debt, according to regulatory filings. Its shares have fallen about 98 percent over the past 12 months.

In March, SunEdison warned that it could not yet file its annual financial results for 2015 because it was investigating former executives’ allegations that the company’s disclosures of liquidity were incorrect. The company also said in filings that it faces scrutiny from regulators at the U.S. Department of Justice and the U.S. Securities and Exchange Commission over a failed deal and other issues.

A SunEdison bankruptcy would rank among the largest by asset value involving a non-financial company in a decade, according to bankruptcydata.com.

A GREENER FUTURE

When the city of Georgetown signed on with SunEdison last year, city leaders announced they had taken the final step toward a power supply entirely independent of fossil fuels.

If negotiations drag on – or Morgan Stanley balks at financing the deal – Georgetown may have to look elsewhere for power. Keeping its commitment to all-renewable power by 2017 might require piecing together power contracts from other projects while it seeks a new long-term solution. Morgan Stanley declined to comment.

“I literally have a book at the office with Plan A, Plan B, Plan C,” said Chris Foster, a manager at Georgetown’s municipal utility. “We’ll just flip the page if that happens.”

In the suburban Los Angeles community of Duarte, the school district’s Chief Facilities Officer Brad Patterson said he is wary but hopeful that the solar parking canopies planned for four schools will go up as planned.

He said SunEdison officials told him they have lined up an investor willing to buy the unfinished Duarte project along with others underway in California school systems.

Still, Patterson is consulting lawyers on the district’s options.

HAWAIIAN TURMOIL

After the Hawaiian Electric Company canceled its contract with SunEdison, it said it would consider offers from other companies to complete the three planned projects.

The solar company objected, saying it had already spent $42 million on construction. SunEdison proposed to sell the projects back to D.E. Shaw Group – the same investors that had sold them to SunEdison just a year earlier. Projects in Utah and California are also tied up in that transaction.

The Hawaiian utility has objected to such a sale over concerns that it could get bogged down in a SunEdison bankruptcy – especially because D.E. Shaw would be a creditor in those proceedings. D.E. Shaw had no comment on the situation.

“Those projects could be tied up for a long time,” said Hawaiian Electric spokesman Darren Pai. “It was important to us to keep jurisdiction of these projects in Hawaii and not have the projects involved in a bankruptcy.”

(Editing by Sue Horton and Brian Thevenot)


Source: R-Business

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Britain urges China to speed up steps to cut steel capacity

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LONDON Britain asked China to tackle over-capacity in its steel industry on Saturday, hoping to stem the flood of cheap imports into Europe which India’s Tata Steel (TISC.NS) said caused it to pull out of the United Kingdom, putting 15,000 jobs at risk.

Tata put its entire UK business up for sale last month, including steel works at Port Talbot in south Wales, saying it could no longer endure mounting losses caused by increased imports to Europe from countries like China, high manufacturing costs and domestic market weakness.

“I urged China to accelerate its efforts to reduce levels of steel production,” Britain’s Foreign Secretary Philip Hammond said in a statement after in talks with his Chinese counterpart Wang Yi in Beijing.

“The UK’s focus is on finding a long-term sustainable future for steel making at Port Talbot and across the UK, and I welcomed the potential interest of Chinese companies in investment in UK steel-making.”

The global steel industry is suffering from over-capacity as a slowdown in growth in the Chinese economy has dampened demand.

China, which produces half of the world’s steel, and Russia have responded by diverting more of their steel output to markets like Europe.

The European Union opened three anti-dumping investigations into Chinese steel products in February and imposed new duties on imports after the European steel industry said thousands of jobs were at stake.

China said earlier on Saturday that plans to shut steel mills over the next five years would cut capacity to an estimated 1.13 billion tonnes by 2020, which is still far in excess of the country’s needs.

(Reporting by Paul Sandle; Editing by Toby Chopra)


Source: R-Business

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Iran exporting 350,000 bpd oil to India, hopes for more – Shana

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DUBAI Iran is exporting around 350,000 barrels of crude oil a day to India and hopes to increase this number, Oil Minister Bijan Zanganeh was quoted as saying on Saturday after meeting Indian counterpart Dharmendra Pradhan.

The Shana news agency, linked to Iran’s oil ministry, quoted Zanganeh as saying Indian oil purchases from Iran were at 350,000 barrels a day, and that “we hope this number will increase now that sanctions have been lifted”.

The two ministers signed a cooperation agreement covering oil exports, the petrochemical sector and the development of a gas field, though there were no reports of any final deals being signed.

Pradhan said India was ready to invest $20 billion in the port of Chabahar port in southeastern Iran, according to Shana, adding that “Iran and India’s energy ties are no longer limited to crude oil imports”.

Zanganeh said Indian companies were looking to invest in oil, gas and petrochemical projects in the Islamic Republic, but that reaching deals was “a difficult task and needs time”.

Industry sources last week said Indian refiners are looking to ramp up purchases of Iranian crude after sanctions on Tehran were lifted in January, bringing India’s imports to at least 400,000 bpd in the coming year.

(Reporting by Sam Wilkin; Editing by Mark Heinrich)


Source: R-Business

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