The fallout from SunEdison's bankruptcy will take months, even years to realize. Here's how to keep your project moving.
Now that SunEdison is in bankruptcy, the expectation is that the creditors will keep the company operating in order to complete on-going projects. The impact this will have depends on the current stage of your project: 1) pre-contract, 2) contracted but not yet in construction, 3) contracted and in active construction, 4) or a project that’s operational and maintained by SunEdison.
While you may see a slowdown in decision-making and implementation, projects under construction will likely be completed. Key deadlines could slip, with negative consequences for other projects and programs.
Q: I have a signed contract with SunEdison, but construction has not started on my project. Should I terminate the contract?
A: This depends on whether the project is sold to a new buyer in a timely fashion. If SunEdison is able to sell the development rights to the project - you may have the right to review and approve that transfer - then the project may proceed. This could entail significant delays while the projects in SunEdison’s portfolio are auctioned off to buyers.
Note that solar project costs have also been rising lately due to a general increase in cost of funding across the industry. Therefore, a cost/benefit analysis is required to determine the relative value of continuing with SunEdison versus rebidding the project. Given the recent extension of the Investment Tax Credit (ITC), there is still sufficient time to rebid a project and start over. Running a competitive bid process is the way to ensure that you are maximizing the net benefit.
Q: Are my project costs going to increase?
A: This depends on several factors including how the project is financed, when the contract was signed, if SunEdison is behind on payments to subcontractors and whether the contract can be sold to another developer with existing terms. An independent energy advisor can help evaluate the potential risks to cost increases, and develop a plan to mitigate any cost changes.
Q: I have a Power Purchase Agreement (PPA) with SunEdison and my project is completed. What happens now?
A: If your project has completed interconnection, the ownership of the assets has likely been transferred to a third party. The rate structure will not change, and any performance guarantees should remain in place. If SunEdison still owns your project, they will likely attempt to sell it to a third party, which should have little to no impact on your project.
Q: I purchased my system from SunEdison and they are providing ongoing operations and maintenance support. What happens now?
A: This depends on the terms of your support contract. If you signed a support contract with SunEdison, they have likely subcontracted the work to a third party. The subcontractor will continue to provide service as long as they are paid by SunEdison. If SunEdison does not pay the subcontractor, they will discontinue supporting your system, and SunEdison will default on the contract. This is particularly problematic if you have a multi-year support contract which has been prepaid.
Q: I want to move forward with my solar project. What are the steps I can take to keep momentum?
A: Consider hiring an independent solar energy advisor to evaluate where you are in the process, what the potential risks are to the budget, accurately value and schedule the project, and specify steps that can be taken to mitigate the impact of SunEdison’s bankruptcy on your solar project.