First Solar is a well established player in Australia's fledgling utility solar sector. It has provided EPC services for two of the largest assets in the country; supplied panels to three large scale operations; and has a further two projects in the pipeline (see this article for details on their dominant EPC position). It also owns an off-grid facility at Rio Tinto's Weipa bauxite mine.
But soon, First Solar will take full ownership of a large scale Australian solar farm for the first time.
The asset is Manildra in New South Wales, a 42.5 MWac project currently wholly owned by Infigen Energy. The ownership change has been triggered by ARENA's recent grant award for Manildra in the large scale solar funding round that concluded in September. In 2015, Infigen and First Solar entered into a letter of intent for the potential sale of the asset, conditional on success in the ARENA process.
Infigen expect the deal to complete in the next 6 weeks. The purchase price was determined by the final size of the project (in MW), and the transaction will realise the company approximately A$4 million in EBITDA. Since the deal was struck in 2015, Infigen has significantly de-risked the development of the asset. We therefore expect this to be a positive purchase for First Solar: our base case valuation is A$16 million (using a 5% real discount rate).
This base case is of course subject to considerable uncertainties - our analysis of Manildra highlights the capacity factor and final capital intensity as the biggest risks on both the upside and downside.
Where does this deal place First Solar in the ranks of Australian solar asset owners?
We have used data from our SERA Tracker to create an interactive visual to show the majority owners of operations and projects, and their portfolios.
The sale will make First Solar the 13th largest owner by capacity (MWac). This places it just outside the top half. At the same time it will move Infigen down to joint 10th, from 6th.
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