SunEdison Inc’s (NYSE:SUNE) stock has a lot of potential and is speculated to rise in the coming days; here are the reasons why that could be a possibility:
SunEdison is sometimes underrated due to its small size, and with only $2 billion dollars in revenue compared to $2.5 billion of SunPower Corporation (NASDAQ: SPWR) and $3.3 billion of First Solar (NASDAQ:FSLR), this may create difficulty for its solar stock to sell. But SunEdison has made a clever move, the firm split off its subsidiary TerraForm Power (NASDAQ:TERP) which now came to be known as the Yield Co.
Now TerraForm’s free status imitates a Master Limited Partnership aka MLP for the Thermal Power Corporations which would now benefit the investors and SunEdison with an inflow of cash from the solar assets it already possess. SunEdison has a lot going on recently. Last month it signed a MoU with the government of India to produce 5000 megawatts of electricity in the state of Rajasthan and it also made deals of a 26 and 18 MW projects in California. Plus it has also started a project with a Chinese company to produce up to 1000 MW in China over a span of three years.
When companies like Berkshire Hathaway’s (NYSE: BRK-B) or Google Inc (NASDAQ:GOOGL) come along and invest in firms like SunEdison, they bring along their trust in the firm. This would make many stock buyers to consider SunEdison as an investment. Google had agreed to lend $145 million to SunEdison for a solar farm which would generate 82 MW of power in California and it has also recently funded around 17 green energy projects worth $1.5 billion around the world.
Nick Coons, the green energy head at Google, said that the world needs clean energy and this solar farm project with SunEdison brought an ideal opportunity to convert a thermal energy field into a green energy generating place, and it would have been foolish not to invest in such a project. This investment of $145 million only makes about 6% of SunEdison’s assets but is a crucial part of their strategy.
Diversification of assets:
The solar market may seem to be the backbone of SunEdison but it is not just limited to that, the company is distributing its assets and capital to various countries and scales to minimize its risk. A 3400 MW project was started by SunEdison of which only half was located in the US and Canada, around one third in the Middle East and a fifth of it in new developing markets.
This also goes for the size of other projects. Even though the utility- scale solar project has proven to be quite successful but still SunEdison is playing smart and is not going to place all its capital in a single project. Around 17% of its projects are of the small category and produce no more than 10 MW of electricity, while only about 24% are of 100 MW. This tactic may leave SunEdison to embrace new solar technologies within a short period of time.