SunEdison Cuts Back on Development, Work Force to Drive Profits

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Researched by Industrial Info Resources (Sugar Land, Texas)--Solar and wind power company SunEdison (NYSE:SUNE) (Maryland Heights, Missouri) has cut back its project development guidance for 2016 by 20% as part of its cost-cutting moves. The company said it now expects to develop 3.2 to 3.7 gigawatts (GW) next year, compared with its earlier guidance of 4.2 to 5.6 GW. Industrial Info is tracking 39 SunEdison projects worth $6.21 billion.

On Monday, the company, which has 7,200 employees, said it would cut its global work force by 15% as part of its restructuring efforts.

SunEdison Chief Executive Officer Ahmad Chatila said Wednesday the company will exit the U.K. market because the country's new feed-in tariff policy makes doing business there "uneconomical." For related information, see July 29, 2015, article - U.K. Cuts Renewables Support, Backs Nuclear.

The company reported a net loss of $263 million in the second quarter ended June 30, 2015, and its stock prices dropped from $31.66 per share on July 20 to $7.18 per share on September 30.

Chatila said during a business update conference call Wednesday that the company's yields "have been impacted by the turbulent energy market," adding: "While we believe the underperformance is driven by technical factors rather than a change in [SunEdison's] fundamental structure, we need to adjust our tactics."

He said the company will adopt a more flexible portfolio, with a focus on its markets in the U.S., China, Latin America, and India.

"We remain optimistic about the long term outlook for renewable energy," he added, saying that in 2015, 110 GW of solar and wind-power projects industrywide will be constructed and financed globally, which amounts to about $200 billion in investments.

Chief Financial Officer Brian Wuebbels said the company will need $5.8 billion to achieve the midpoint of its 3.2 to 3.7 GW development goal for 2016.

Wuebbels said the company has a strong project backlog and pipeline. The company reported that for second-quarter 2015, it had 1.9 GW of projects under construction, an 8.1-GW project pipeline and a 5.6-GW backlog.

SunEdison also will also put more emphasis on third-party sales, company executives said, with nearly 45% of its total volume sold through third parties in 2016.

Industrial Info is tracking 23 SunEdison projects, valued at $3.87 billion, which are in the engineering and construction phases. There are also 16 projects, valued at $2.34 billion, which are still in the planning phases, where plenty of factors could alter their outcome.

The U.S. has 22 of the projects, with a total investment value of $4.79 billion. Brazil has five projects, valued at $810 million, followed by India, with seven projects valued at $253 million.

With a total investment value of $620 million, a 300-megawatt (MW) expansion of a windfarm near Lockney, Texas, has the biggest price tag. Mortenson Construction (Minneapolis, Minnesota) is providing engineering, procurement and construction services for the project, which includes the installation of 150 Vestas V100-2 wind turbine generators, each with a 2-MW capacity. Construction began in April 2015, with completion expected in second-quarter 2016.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.