Alt-Energy Watch: Solar Mergers Begin, Saudi Solar, Solar Lawsuits (WFR, SPWRA, TOT, FSLR, TAN)

Today’s alternative energy news is solar, solar, solar…. We have an acquisition in the solar PV project development business. A lawsuit has been filed in California to halt the construction of a 250-megawatt solar PV plant, and the Saudis want to get into the solar generation business.

SunEdison, a solar PV project development company owned by MEMC Electronic Materials, Inc. (NYSE: WFR), agreed to acquire another project development firm, Axio Power, for an undisclosed sum. Axio claims a project pipeline of more than 500 megawatts of utility-scale solar PV projects in Ontario and the western US.

Last April Axio received approval from Ontario power regulators to build 90 megawatts worth of projects and another 50 megawatts if certain interconnection tests were passed. Ontario offers a generous feed-in tariff program for developers that manufacture in the province. Under the law, renewable energy plants are guaranteed a profit for 20 years, and ground-mounted solar PV projects smaller than 10 megawatts are paid a contract price of $0.443/kWh.

Canadian consumers pay about $0.1454/kWh, already higher than the US average of $0.1174/kWh, and the price for electricity in Ontario rises by about 50%/kWh during peak periods. The Axio acquisition gets MEMC/SunEdison into one of the most lucrative solar programs around.

SunPower Corp. (NASDAQ: SPWRA), soon to be controlled by Total SA (NYSE: TOT), is running into a lawsuit related to its proposed California Valley Solar Ranch project. The project aims to build a 250-megawatt solar PV plant on about 2,000 acres of land in San Luis Obispo county. An adjacent 2,400 acres has been permanently reserved to accommodate wildlife habitat and migration.

That’s not enough, apparently, for two community groups and a local resident who have filed suit to stop the project claiming that it would harm wildlife, air quality, and natural beauty. The suit seeks to rescind approval for the project and to have it declared unlawful.

First Solar Inc. (NASDAQ: FSLR) recently received approval to build the 550-megawatt Topaz Solar Farm on 3,500 acres in the same area. Community groups and local residents have filed appeals with the county planning commission to stop First Solar’s project as well.

SunPower has already received a conditional commitment of a loan guarantee for $1.2 billion from the US Department of Energy to build the plant.

The threats to these solar PV plants appear to be a classic case of NIMBY-ism. Everyone supports clean energy until it comes time to build the solar or wind plants that generate that clean electricity. Still, two solar projects, virtually side-by-side on more than 8.5 square miles of land, could cause any community to re-think its commitment to clean energy.

While it is easy to be encouraged by the solar sector, we need to look at Guggenheim Solar (NYSE: TAN) for a sector-wide reality check.  This had a monster gap-up this week based in part on the Germans deciding that nuclear power will be phased out over the next decade.  Last Friday the ETF closed at $7.08 and the Tuesday close was at $7.49 after a $7.55 high.  Now shares are down around $7.15.

Paul Ausick