Atlantic Power has executed an agreement to acquire ownership stakes in two contracted biomass plants in North Carolina and Michigan for $20m.
Atlantic Power is acquiring the assets held by AltaGas Power and the purchase is expected to be funded from the discretionary cash of the company.
The assets Atlantic Power is acquiring include Craven County Wood Energy, a 48MW biomass plant located in North Carolina that has been in service since October 1990. The plant uses wood waste, including wood chips, poultry litter, forestry residues, mill waste, bark and sawdust for generation.
The company will acquire a 50% interest in the plant from AltaGas and the remaining 50% interest is held by CMS Energy. Craven County facility is supported by a Power Purchase Agreement (PPA) with Duke Energy Carolinas that is valid through December 2027.
Grayling Generating Station is a 37MW biomass plant located in Michigan and has been in service since June 1992. The plant makes use of wood waste from local mills, forestry residues, mill waste and bark for power generation.
Atlantic Power will acquire 30% interest in the plant from AltaGas. The remaining interests are held by Fortistar (20%) and CMS Energy (50%). The facility is supported by a PPA with Consumers Energy, the utility subsidiary of CMS Energy, which runs through December 2027.
Subject to the approval of the Federal Energy Regulatory Commission and customary third-party consents, the transaction is anticipated to be closed by mid-2019.
Atlantic Power CEO and Jr. President James J. Moore said: “Since last summer, we have announced the acquisitions of five plants – Craven County and Grayling; the remaining ownership interests in the Koma Kulshan hydro facility, which we acquired in July; and the Allendale and Dorchester biomass plants in South Carolina, on which we expect to close later this year.”
“The PPAs for these acquired plants run through December 2027, March 2037 and October 2043, respectively. The acquisitions represent a meaningful addition to the level and length of our existing contracted cash flows, and we estimate they will contribute Project Adjusted EBITDA of $8 million to $10 million annually on average through the date of the first PPA expiration.”