The world's leading developer of solar energy, SunEdison Inc.SUNE recently announced the acquisition of Solar Grid Storage LLC - a leader in deploying combined energy storage and solar PV systems - for an undisclosed amount. The acquisition will help SunEdison to combine its renewable energy projects with battery technology.
Philadelphia, PA-based Solar Grid Storage, founded in 2011, specializes in developing projects that combine solar energy with lithium-ion battery systems. Per Bloomberg, the company's system can support projects as large as 10 megawatts (MW). Currently, the company's four projects are operating successfully and three other projects are being developed.
With this acquisition, SunEdison has now become the world's first renewable energy company to offer solar and wind energy as well as energy storage facilities.
We believe that the demand for clean energy will increase manifold over the next few years due to environmental concerns and depleting natural resources. According to Bloomberg, global solar and wind energy project installations in 2015 are likely to increase to 52,000 MW and 60,000 MW, respectively. SunEdison, being the world's leading developer of solar energy, is well positioned to capitalize on this opportunity.
Furthermore, we are encouraged by the company's sustained focus on expanding clean energy capabilities through acquisitions and strategic alliances which should drive long-term growth.
The most recent notable buyout prior to Solar Grid Storage was the acquisition of First Wind. The buyout will help SunEdison in expanding its foothold in the U.S. wind energy market.
Apart from this, SunEdison recently entered into a strategic alliance with Indian conglomerate, Adani Enterprises, to grow its base in India. Per the agreement, the companies will invest approximately $4 billion to develop solar photovoltaic projects in Gujarat, India. We believe that SunEdison's strategic decision to produce solar panels from low-cost production regions like India gives it an added cost advantage over its peers.
Despite the positives, we recognize that solar projects require considerable time and investment and any delay or inability in selling these projects at desired prices could affect the company's liquidity.
The pricing environment and a highly leveraged balance sheet are other concerns plaguing SunEdison. Apart from this, the company is up against competition from SunPower Corp. SPWR and First Solar Inc. FSLR .
Currently, SunEdison has a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector is Cirrus Logic Inc. CRUS , sporting a Zacks Rank #1 (Strong Buy).