Canadian energy company Veresen has signed three separate deals to divest its power generation business for $1.18bn.

The firm, which owns energy infrastructure assets in Canada and the US, intends to use the proceeds from the sale to fund other growth projects.

Veresen signed a deal with Capital Power whereby the later firm will acquire two gas-fired generation facilities and two waste heat plants for $500m.

As per the deal, Capital Power will acquire 284MW of generation from two natural gas-fired power plants in Canada which include the 84MW East Windsor Cogeneration Centre and a 50% stake in the 400MW York Energy Centre.

Capital Power will operate both the natural gas-fired power plants, which have long-term power purchase agreements (PPAs) with the Ontario Independent Electricity System Operator.

The deal also includes acquisition of 10MW of waste heat generation from two facilities, each with 5MW capacity, located at Westcoast Energy’s BC Gas Pipeline compressor stations in Savona.

The waste heat facilities are under 20-year electricity purchase agreements (EPAs) with BC Hydro while Spectra Energy provides operations and maintenance services to these  assets.

Capital Power president and CEO Brian Vaasjo said: “The long-term contracts associated with these assets have a weighted average remaining PPA life of 14 years that will enhance our contracted cash flows out to the end of the next decade.

“This transaction helps reduce our overall risk, enhance our ability to pay dividends and build shareholder value.”

Veresen expects the sale to strengthen its balance sheet while allowing it to focus on its pipeline and midstream businesses.

Veresen president and CEO Don Althoff said: "The $1.4bn of contracted capital projects in our core natural gas and NGL infrastructure business is now fully funded with no need to access the capital markets, ensuring that top line growth translates into per share metrics.”

Scheduled to be completed in the second quarter of 2017, the transactions are subject to regulatory approvals and satisfaction of closing conditions.

Image: Veresen intends to divest its power generation business to focus on pipeline and midstream businesses. Photo: courtesy of supakitmod/