Japan's Sharp Buys a Spot in the North American Solar Industry
Sharp will buy independent solar power developer Recurrent Energy in a $305 million all-cash deal clearly meant to give the Japanese LCD TV and panel maker a ticket to the North American market.
The acquisition firmly places Sharp, one of the world's largest makers of solar panels, in the middle of the action -- utility-scale action, that is. Recurrent Energy, one of the last independent utility-scale solar power project developers has 2 gigawatts of solar power generation projects currently in the pipeline. Projects under development include 60 megawatts with the Sacramento Municipal Utility District and 170 MW with the Ontario Power Authority.
For Sharp the purchase isn't about carving out more market share in the U.S. to sell solar panels. In fact, under the terms of the deal Recurrent Energy, which will operate as a subsidiary, isn't obligated to buy Sharp solar modules. Instead, it's about Sharp's interest in becoming a one-stop shop of sorts. Sharps wants to develop solar energy projects and then sell that electricity to utilities and large-scale commercial customers.
Why? Because Sharp expects demand to expand in the North American photovoltaic market as power companies increase the number of solar projects. Bloomberg New Energy Finance has estimated that global sales this year may more than double to as much as 18 gigawatts and then flatten as countries like Germany, Italy and France cut guaranteed above-market rates for solar energy.
This approach isn't exactly unique. But it's effective. First Solar (FSLR) bought OptiSolar -- and the projects it had under development -- in 2009. The $400 million acquisition, Earth2Tech also noted, made First Solar a major player in the project development business.
The move to become a one-stop shop, or "total solutions company" as Sharp describes it, is essential if the company wants to grow. Or even remain competitive. Solar module makers like Sharp are facing increasing competition from low-cost Chinese manufacturers. So more companies, like First Solar, have diversified and become project developers too.
Why it's good for Recurrent Energy
There's the two obvious ones: financing and brand recognition. And Recurrent, now with Sharp's solar panel-making capability, is on more equal footing to big name competitors First Solar and Chinese solar module maker Suntech Power, which also happens to be one of Recurrent's suppliers. Suntech, by the way, also has added the commercial development project title in recent years. Two years ago, the Chinese company bought California-based El Solutions, a commercial solar developer;and established Gemini Solar Development Co., a joint venture with MMA Renewable Ventures, both in an effort to expand its share of the U.S. market.
Photo from Sharp