(Adds First Solar CEO comment, background on yieldcos, share drop)
April 5 (Reuters) - U.S. solar company First Solar Inc on Wednesday said it was looking to sell its stake in a publicly traded company it formed with rival SunPower Corp less than two years ago, at the height of investor euphoria over so-called "yieldcos."
Separately, SunPower said it was exploring strategic alternatives for the venture, 8point3 Energy Partners. Shares of the company slid 12 percent in extended trade on Wednesday.
Yieldcos are publicly traded entities that house solar and wind projects with long-term contracts with utilities. The vehicles collect the stable cash flows from utility contracts and pay them out as dividends.
In its statement, First Solar said the move would allow it to allocate more capital to the production of its next-generation Series 6 panels, which Chief Executive Mark Widmar said "has the potential to be a transformational product."
A global glut of panels has pushed prices down substantially over the last year, cutting profit margins for manufacturers like SunPower and First Solar and sometimes driving prices on power plant contracts down to uneconomic levels. First Solar, which is based in Tempe, Arizona, announced late last year that it would bring forward production of Series 6 by a year in a bid to improve profitability.
Yieldcos became popular among investors earlier this decade because they were viewed as a less volatile means of investing in renewable energy. But the bankruptcy of solar industry bellwether SunEdison, which formed two yieldcos before imploding last year, soured investor interest on the business model.
8point3, which houses projects developed by both SunPower and First Solar, went public at $21 a share in June of 2015. Its stock closed at $13.21 Wednesday on the Nasdaq, and dropped to $11.65 in after-hours trade.
In its statement, SunPower said it would consider a potential replacement partner for First Solar, among other options. The partnership "still offers significant, long-term strategic value," the San Jose-based company said.
SunPower is majority owned by France's Total SA. (Reporting by Komal Khettry in Bengaluru; Editing by Anil D'Silva and Bill Rigby)