'On track'| AEP sees Q2 close for gigascale solar and wind sale to US-Canadian investor group
Utility reports federal regulatory approvals for $1.5bn transaction involving 14 projects across US to group that includes Invenergy, Blackstone, and Canada's CDPQ
The sale is among the largest announced this decade in the US for contracted clean generation assets, as AEP along with several other prominent utilities move to focus on lower risk regulated investments that can produce higher and more predictable financial returns.
The AEP portfolio includes wind projects totaling some 1.2GW of nameplate, located in Colorado, Kansas, Indiana, Michigan, Minnesota, Pennsylvania, and Texas, while the solar plants, around 170MW of capacity, are in California, Nevada, and Utah.
The buyer, IRG Acquisition Holdings – is made up of Invenergy with a 20% stake, Canadian institutional investor CDPQ (Caisse de dépôt et placement du Québec), and funds managed by Blackstone, each with 40% shares.
The deal expands Invenergy's stable of solar and wind plant by about one-third, from just over 3GW in 2022 toward close to 4.5GW and is expected to enable it to better leverage economies of scale and compete in certain regional markets.
CDPQ is a majority investor in Invenergy and Blackstone is the largest minority investor, not a shareholder.
Invenergy Renewables, the largest private renewable energy company in North America, is majority owned by CDPQ and Invenergy management with Invenergy the managing member. In January 2022, funds managed by Blackstone Infrastructure Partners made a $3bn equity investment in the company
AEP – among the largest US utility holding companies, with power generation and is operator of the nation’s largest transmission system in the Midwest, Texas, and neighbouring states – said it expects to clear $1.2bn in cash proceeds after tax and transaction costs and will use the funds to support regulated businesses.
On a Friday conference Call, CEO Julie Sloat said AEP plans to invest $8.6bn this year through 2027 in regulated renewables, or 22% of capital outlays across the company.
“We're focused on our core regulated utility operations and continue to evaluate all value additive potential activities to enhance their performance and look for opportunities to recycle capital,” she said.
Separately, AEP announced it had reached agreement with 50-50 joint venture partner PNM Resources to sell its stake in a 715MW unregulated solar project portfolio in New Mexico.
The partnership known as New Mexico Renewable Development includes eight operating projects totaling 135MW, a 150MW facility under construction, and six in development comprising 440MW.
“Last week, an adviser was selected to move forward with the sale process. We anticipate making a sale announcement early in the fourth quarter of this year, and we'll target closing by the end of 2023, subject to timing of regulatory approvals,” said Sloat.