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SunPower is offloading 233 megawatts of commercial solar project leases to a subsidiary of Goldman Sachs Renewable Power for $86.9 million, a filing this week with the U.S. Securities and Exchange Commission shows. The portfolio encompasses about 200 projects in nine states.

When the deal closes, Goldman will own the leases and collect electricity payments from the customers. SunPower and Goldman also agreed on a deal for SunPower to service customers with maintenance and upgrades going forward.

“The important point for SunPower is this a) generates cash now [and] b) starts simplifying our [profit and loss statement],” SunPower CEO Tom Werner told Greentech Media. “It’s part of our simplification. We’ve talked for several years now of selling non-core assets to generate cash so we can invest it in the business and to simplify our P&L, and this is a step to do that, much like we did with residential last year.”

In the future, Werner said SunPower will work on solidifying a structure that allows the company to sell a lease “almost coincident” with a notice to proceed on a project, which will allow it to show as a cash sale. 

In addition to bringing in cash, Werner said the sale fits with SunPower’s efforts to streamline financials for its three core business areas: technology, North American residential and North American commercial.

“Sunpower is really three franchises, and we want to make our three different businesses…more transparent and [easier] to model,” said Werner. “So that means we’ll report financials for all three, and that also means we’re simplifying the P&L.” 

Michelle Davis, a senior solar analyst at energy and consulting firm Wood Mackenzie Power & Renewables, said the move makes sense based on SunPower’s financial position.

“SunPower has been underperforming on their financials and is currently cash-constrained,” said Davis. “Offloading their leases for these projects is in line with SunPower attempting to improve their financial situation.”

As for the benefits for Goldman, which did not provide comment before publication, Davis said the sale is “a good example” of the market trend of institutional investors showing increasing interest in commercial solar assets. 

“Historically, commercial solar projects were small enough that they didn’t meet minimum transaction sizes to be attractive for institutional investors or other financial players like infrastructure funds and pension funds,” said Davis. “But as competition for financing these projects has tightened, more players are finding ways to aggregate portfolios of commercial solar assets in order to make up larger deal sizes.”

“233 megawatts is a large enough transaction that it would be appealing for Goldman Sachs to acquire,” she added.

Werner said the move indicates SunPower is working to adapt to the more “intensely competitive” capital joining the market.  

“What we see is competitive capital moving into C&I,” said Werner. “This is the beginning, I think, of an offensive move by SunPower, so that we have a more competitive cost of capital for commercial and industrial projects. More to come.”

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