Troubled renewables company SunEdison Inc. has announced it plans to close its Pasadena, Texas, polysilicon production facility; will refocus its Portland, Ore., operations into a research and development (R&D) and technology demonstration center; and is selling its Kuching, Malaysia, silicon wafer production plant.
The company says these actions build on its previously articulated strategy to refocus its solar materials operations on asset-light proprietary silicon production technologies via partnerships and joint ventures.
“We are moving forward on several fronts with our asset-light strategy for the upstream solar materials business,” states Ahmad R. Chatila, SunEdison’s CEO. “We believe our actions to re-engineer this business will maximize the value of our world-leading silicon production technologies, enabling SunEdison’s long-term downstream growth and curtailing headwinds caused by trade actions and the commoditization of certain products.”
As a result of these actions, the company expects to report a total of $266 million in non-cash impairment charges and a total of $171 million in other restructuring charges in its fiscal 2015 fourth-quarter financial results. It also expects to report approximately $10 million to $13 million in other restructuring charges in fiscal 2016.
SunEdison’s board of directors has decided to permanently close the company’s Pasadena, Texas, polysilicon manufacturing plant. The company says this action was taken, in part, as a consequence of a punitive Chinese trade action. China has imposed a 53.6% tariff on SunEdison’s polysilicon, pricing the U.S.-made polysilicon out of the market and thereby preventing SunEdison from running the plant that it has operated for more than 20 years, the company claims.
Polysilicon production has been terminated, and seed production will end by the third quarter of this year. Approximately 180 jobs are expected to be affected by the closure, subject to SunEdison’s collective bargaining obligations.
The company has also decided to refocus its activities at its Portland, Ore., facility. SunEdison says the facility has been consolidated into a cost-effective R&D, technology demonstration and training center for future licensees of the company’s continuous Czochralski (CCz) silicon crystal ingot manufacturing technology.
As a result, SunEdison is halting high-volume production of silicon crystal ingot at the facility, an action that the company expects will reduce operating expenses to optimize cash utilization. Approximately 40 jobs are affected by the changes.
In Asia, SunEdison has signed a definitive agreement to sell its silicon wafer manufacturing plant in Kuching, Malaysia, to China-based LONGi Silicon Materials Corp.
LONGi will operate the facility once it assumes ownership. The sale is expected to close in March 2016, subject to customary conditions and regulatory approvals.
As part of the transaction, SunEdison has secured a multi-year supply agreement for up to 3 GW of high-efficiency monocrystalline solar panels from a LONGi subsidiary, subject to certain conditions. SunEdison says this agreement provides the company with security of supply and cost-effective solar panels to fuel SunEdison’s global development.
SunEdison will also supply high-purity polysilicon produced by its proprietary high-pressure fluidized bed reactor (HP-FBR) process in SMP, its joint venture facility in Korea, to LONGi.
SunEdison says that polysilicon production at SMP is on track to meet its production and cost targets and is ramping up toward full operating capacity. SMP handles both silane and polysilicon production, and SunEdison seems optimistic.
“This success proves that HP-FBR technology is ready to become the new standard for high-quality polysilicon production,” says Dave Ranhoff, SunEdison’s president of solar materials. “With our HP-FBR and CCz crystal ingot technologies, we’re ideally positioned to lead in the next generation of solar panels and low-cost solar energy.”
The company says it plans to make its silicon production technologies broadly available through joint venture and licensing agreements.
SunEdison has been facing a series of problems, including financial woes, with its stock plummeting over the past year, and several lawsuits. Furthermore, the company recently lost solar power purchase agreements from Honolulu-based utility Hawaiian Electric Co., which decided to terminate the contracts after SunEdison did not reach certain project milestones in time.
According to a regulatory filing, Hawaiian Electric canceled the PPAs for three solar projects totaling over 100 MW, pointing to “SunEdison’s apparently precarious financial condition.” SunEdison is reportedly fighting the decision.