Atlantic Power has executed an agreement to acquire two biomass plants in Allendale and Dorchester in Harleyville, both in South Carolina, from EDF Renewables for $13m.

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Image: The entire output of the two plants is sold to Santee Cooper, a state-owned utility. Photo courtesy of PinkBlue/FreeDigitalPhotos.net.

The transaction, which is not subject to regulatory approval, is expected to close in the third quarter or in the fourth quarter of 2019 after a restructuring of the plants’ ownership structure by EDF Renewables.

Atlantic Power will take over operation of the plants at closing, or earlier, subject to negotiation of an agreement with EDF Renewables.

The transaction will be funded from the company’s discretionary cash.

Each plant has a capacity of 20MW. Identical in design, both plants commenced commercial operation in 2013. Mill and harvesting residues are the primary constituents of the biomass fuel for the plants.

The entire output of the two plants is sold to Santee Cooper, a state-owned utility, under Power Purchase Agreements (PPAs) that run to 2043.

Under the terms of the PPAs, the two plants will receive energy payments for energy produced. The fuel cost is based on a biomass market index. Both plants do not have project-level debt.

Atlantic Power president and CEO James Moore said: “This acquisition represents our second external growth investment following a three-year business restructuring process. Earlier this summer, we closed the acquisition of the remaining interests in the Koma Kulshan hydro project.

“We own four biomass plants currently, and we have considerable operational and commercial experience in this area. If we can deliver targeted operational and financial results for both South Carolina plants, the returns should be very attractive compared to other potential uses of our discretionary cash.

“In addition, the long remaining term of the two PPAs provides a stable base of cash flows.”

Atlantic Power, an independent power producer, owns power generation assets in nine states in the US and two provinces in Canada. These projects sell electricity and steam to utilities and large customers predominantly under long-term PPAs that have expiration dates ranging from 2019 to 2037.