Denham Capital in $277m solar exit

SunRay Renewable Energy, a Maltese solar power plant developer, is to be bought by Nasdaq-listed SunPower in a deal expected to close in the first half of this year.

Denham Capital, the energy- and commodities-focused private equity firm, has agreed to sell portfolio company SunRay Renewable Energy, a Malta-based European solar power plant developer, to Nasdaq-listed solar technology firm SunPower Corp in a $277 million deal.

Through the deal, SunPower acquires a pipeline of solar photovoltaic (PV) projects totalling more than 1,200 megawatts (MW) in Italy, France, Israel, Spain, the UK and Greece. SunRay’s most recent project, the 24-MW Montalto power plant in Italy, was the largest solar PV power plant financed last year.  The capacity of the Montalto site is expected to reach 100MW by the end of 2010.    

A press release issued by SunPower said total consideration for the deal was approximately $277 million, including $235 million in cash and $42 million in a letter of credit and promissory notes. The transaction is expected to close in the first half of 2010.    
Solar plant developers such as SunRay are able to take advantage of European Union incentives to produce clean electricity from solar power with zero emission of greenhouse gases. So-called feed-in tariffs guarantee grid access, long-term contracts for electricity produced and purchase prices based on the cost of generation.

Together with a reduction in solar module costs, this means the climate for solar investment has become increasingly favourable. According to figures from Bloomberg New Energy Finance, global financial investment in solar totalled more than $23 billion in 2009, compared with investment of nearly $112 billion in renewable energy as a whole.

Earlier this month, Denham invested $108 million in Vulcan Power Company, a US-based developer of geothermal energy projects, bringing its total investment in the firm to $166 million.

Denham has over $4.3 billion of invested and committed capital, and operates out of offices in Boston, Houston, Short Hills (New Jersey), London and Sao Paolo.