SunPower Corp (SPWR.O) said it sold two solar projects in California to a company controlled by Warren Buffett's Berkshire Hathaway Inc (BRKa.N), and would receive up to $2.5 billion in proceeds and related contracts.
Berkshire utility MidAmerican Energy Holdings Co will pay SunPower between $2.0 billion and $2.5 billion for the 579-megawatt (MW) Antelope Valley solar projects and for designing, installing and constructing them, the company said in a regulatory filing on Wednesday. (link.reuters.com/bag94t)
Construction of the projects, which the companies called the world's largest photovoltaic power development, will begin this quarter and is expected to be completed by the end of 2015.
The stamp of approval from a Buffett utility, combined with expected cashflow from the projects, will make SunPower more bankable and more creditworthy, its Chief Executive Tom Werner told Reuters.
"If you are a bank you are looking at us a lot differently today than you did last week," he said.
SunPower shares ended up 9 percent at $6.13 on Wednesday on the Nasdaq, their highest closing in about eight months.
Raymond James analyst Marshall Adkins said the monetization of the projects "does not alter the fact that SunPower retains a markedly high-cost structure and razor-thin margins in the context of a massively oversupplied market."
The projects, based in Kern and Los Angeles counties, will add to MidAmerican Energy's growing investments in clean energy.
It bought a 49 percent stake in a 290 MW solar power plant in Arizona from NRG Energy Inc (NRG.N) and acquired First Solar Inc's (FSLR.O) 550 MW Topaz Solar Farm power plant in California in late-2011.
The SunPower projects will sell power to California utility Southern California Edison under two long-term contracts.
California plans to reduce emissions of planet-warming greenhouse gases to 1990 levels by 2020, and by an additional 80 percent by 2050.
(Reporting By Garima Goel in Bangalore and Nichola Groom in Los Angeles; Editing by Sriraj Kalluvila)