CBD Energy and Westinghouse Solar will form a joint venture (JV) to design, engineer, procure, and construct solar projects in Italy.
Under the terms of the JV, Westinghouse can invest $1.5m in the JV and gain 25% in the profits earned by CBD in its Italian solar projects pipeline and can increase its share by up to 50% by investing another $1.5m.
Westinghouse Solar CEO Margaret Randazzo said the agreement is another step towards the merger of the companies.
"We believe our investment in this venture further diversifies our business, and will provide incremental earnings," Randazzo said.
CBD managing director Gerry McGowan said the company is committed to improve the financial performance of Westinghouse Solar.
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By GlobalData"By partnering with Westinghouse Solar, we are able to diversify their business and provide them an attractive earnings source through their investment and participation in our Italy project pipeline," McGowan said.
"Following merger closing, we intend to pursue additional EPC opportunities in Europe and the U.S."
Westinghouse will receive its share of about $5m, based on a 50% interest in the JV, for developing a total of 30MW.
The JV partners have calculated that earnings from the project sales will start in the third quarter of 2012.
Westinghouse is looking for capital financing for the investment.
CBD has sold the first of the pipelined solar projects of 5MW capacity and will deliver another five projects each with a 5MW capacity in October to the same buyer.
