Cypress Creek to Cut EPC Business, Expand in Competitive Markets

Greentech Media: Headlines –

The new leaders at solar developer Cypress Creeks Renewables have finalized the strategic shift they were hired to execute.

Going forward, the company will continue to develop in the Carolinas, but will focus more effort on competitive electricity markets including Texas, PJM and New York, where the company can sell to more than just utility offtakers. Cypress Creek will also eliminate its in-house division for engineering, procurement and construction once it has completed ongoing projects, and will contract with external EPCs from now on.

The chart-topping utility-scale developer, based in North Carolina, has had a turbulent year. It laid off roughly 20 percent of its workforce in January, GTM reported. In June, the company brought in new leadership from Point Reyes Energy Partners, a solar advisory and development company. Sarah Slusser, Kim Oster and Rebecca Cranna now serve as CEO, interim chief strategy officer and interim chief operating officer, respectively.

Slusser promised in an interview after her appointment to instill “a more disciplined approach to development” focused on value creation and sustainable growth. On Thursday, she delivered that strategy.

“With you, we will take this company from its roots of rapid expansion in the Carolinas to a more dynamic national solar company focused on sustainable growth powered by innovative projects and products, including solar and storage,” Slusser wrote in a letter to staff Thursday.

The internal EPC business grew up during the company’s early days as a regional player in the Carolinas. As business activities spread into farther-flung geographies, running EPC in-house made less sense, Slusser said.

“As we go across the country, we can rely on the external EPC market, which is a robust market for providing EPC services to developers,” Slusser said in a Thursday interview. She declined to comment on how many employees will be affected by the decision.

Former CEO Matthew McGovern in January described EPC as one of the company’s “core value creation centers,” alongside development and project finance.

EPC leader Mike Belikoff will leave the company after managing the draw-down of his business unit, Slusser said. Belikoff, the former chief operating officer at Strata Solar, had joined Cypress as part of the January restructuring.

Several finance leaders will also leave the company, including Chief Structured Finance Officer Patrick McConnell, Managing Director for Project Finance David Riester and Chief Capital Markets Officer Brad Bauer.

Cassidy DeLine, formerly director of project finance, has stepped up to lead the project finance team as vice president.

The company's “Go Forward Strategy” does not call for selling off more projects, for now. Cypress Creek cashed out of 580 megawatts' worth of projects ahead of the January layoffs, but has some 2.5 gigawatts remaining in its operating portfolio, with more executed contracts coming online this year. The company has developed more than 3.7 gigawatts to date.

“We monetize when we see fit, when we see value to that,” Slusser said. “That’s always going to be in the mix.”

North Carolina will remain in the mix too, but it will form a smaller share of business as the company ramps up utility-scale efforts in deregulated markets. The freedom to make bilateral contracts with corporate offtakers, as well as municipalities and community solar subscribers, opens up new opportunities compared to the more closed environment of regulated markets.

Cypress Creek leveraged those opportunities with its 70-megawatt deal with Starbucks to power 360 stores in Texas, announced in April. That type of deal, Slusser noted, would be harder to structure in North Carolina's regulatory environment.

The company will also pursue distributed generation projects in New York and Illinois.

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