Solar technology company, SunEdison, Inc. SUNE recently announced that construction of the 4.5 megawatt (MW) DC solar project for the Brockton Housing Authority has begun in Dighton, a town in Bristol County, MA, United States. Construction of the project is expected to be complete in the first half of 2016. Post the announcement, shares of SunEdison went up 5.6% in the last trading session (Wednesday).
The solar photovoltaic project is being built in collaboration with local player ISM Solar. SunEdison will take care of the solar module and also contribute its best-in-class construction and maintenance services. ISM will be responsible for the operations side of things.
This venture has secured a 20-year power purchase agreement with Brockton Housing Authority, which serves around 7,000 low income residents. During this period, the solar project will shave more than $14 million of the housing authority’s energy costs. Moreover, the project will, to an extent, help the economy by creating construction jobs. It will also help the environment by lowering carbon dioxide release by roughly 80 million pounds.
The project will supply Brockton Housing Authority with electricity under a program called "virtual net metering", which allows customers to enjoy the benefits of solar power even when they can’t individually afford installations.
The rising demand for cheap and clean energy globally is benefiting this leading solar technology company. Demand is expected to increase manifold over the next few years due to environmental concerns and depleting natural resources.
We believe that partnerships like this will enable SunEdison to take advantage of the growth prospects and economic benefits in the United States while strengthening its position in the solar market of the country.
The agreement is one of the several that SunEdison has entered into in recent times to expand its presence internationally. Earlier, the company announced wins in both China and India.
Furthermore, we are encouraged by the company’s sustained focus on expanding clean energy capabilities through acquisitions and strategic alliances, which should drive long-term growth.
Despite the positives, we recognize that solar projects require considerable time and investment and any delay or inability in selling these projects at desired prices could affect the company’s liquidity.
The pricing environment and a highly leveraged balance sheet are the other concerns plaguing SunEdison. Apart from this, the company faces competition from the likes of SunPower Corp. SPWR and First Solar Inc. FSLR.
Currently, SunEdison has a Zacks Rank #3 (Hold).
A better-ranked stock is VASCO Data Security International Inc. VDSI, which sports a Zacks Rank #1 (Strong Buy).
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