Trina Solar’s Growthco

Yieldcos by solar companies have been a big success, despite the recent stock market setback. They have allowed solar players like SunEdison and First Solar to lower their cost of capital for funding large solar power projects. They also allow increased access to capital for developing solar projects, as they unlock capital. Developed solar projects are dropped to yieldcos, which allow the cash to keep flowing for solar developers. Yieldcos have a different less risk taking investor audience, which require high stable yields. They also are happy with lower returns as compared to solar companies, which are highly volatile in their earnings and project development. It is a win-win situation for both.

Also read on GWI Yieldcos in Solar Industry – The Story so Far

However, Chinese solar companies have not managed to list a yieldco despite all major players such as Canadian Solar, Jinko and Trina Solar wanting to list one. The main issue is that most of these projects are located in China, where cash flows are not stable and returns are quite low. China faces issues of transmission links to the projects, besides untimely payments of subsidy.

Trina Solar is looking at alternatives and it recently floated the idea of a growthco which will focus more on growth than yield. This security will have its USP as growth rather than returns. The Chinese solar market is the largest in the world and will keep growing, as China moves towards renewable energy in order to meet its climate change and pollution goals. Trina Solar does not have much of an option, given that it does not have too many developed market assets nor a strong pipeline. I am not sure of how much success Trina Solar will get with its growthco plans.