California-based energy infrastructure firm Sempra Energy has wrapped up the sale of its US renewables business and non-utility natural gas storage assets, for a total of nearly $2.5bn, through multiple transactions.
Image: Sempra Energy headquarters in San Diego, California. Photo: courtesy of Sempra Energy.
One of the divestitures made by Sempra Energy included sale of Sempra Renewables and its 724MW operating wind farms and battery assets to Ohio-based electric utility American Electric Power for about $1.05bn.
As per the deal announced in February 2019, AEP will pay $584m in cash to the Californian firm. The transaction amount includes $33m in working capital, and assumption of $470m in existing project debt and tax equity obligations.
Sempra Renewables jointly owns all or part of seven wind farms and a battery installation, located across Colorado, Kansas, Hawaii, Indiana, Michigan, Minnesota and Pennsylvania. Through the same transaction, AEP purchased all of Sempra Energy’s wind projects that are in development stage.
Five of the operating wind farms are jointly owned with BP Wind Energy, which will retain its ownership stake in the facilities. Sempra Renewables holds 100% of the 78MW Black Oak Getty Wind project in Minnesota and the 100MW Apple Blossom Wind project located in Michigan.
AEP chairman, president and CEO Nicholas Akins said: “The addition of these high-quality renewable assets and the experience of our new employees will support our long-term strategy to diversify our generation fleet. We’ve targeted a total of $2.2 billion in capital investment in competitive, contracted renewables by 2023.
“The long-term contracts and attractive returns associated with these existing assets will be immediately accretive to earnings and solidify our projected 5 to 7 percent earnings growth rate.”
Prior to the sale of the US renewables business, Sempra Energy, in February, closed a $328m deal to offload its non-utility natural gas storage facilities in the US to an affiliate of ArcLight Capital Partners.
Towards the end of last year, the company closed a deal worth around $1.6bn to divest its solar assets and battery storage development projects along with ownership stake in a wind facility, all located in the US, to Consolidated Edison.
Sempra Energy president and chief operating officer Joseph Householder said: “We have a long and successful track record of actively managing our portfolio, including exiting businesses that are no longer consistent with our strategy.
“The proceeds from the asset sales will be used to pay down debt and redeploy capital to support the strategic growth of Sempra Energy in North America.”
Sempra Energy is also in the process of selling its stakes in its South American operations, which includes its 83.6% stake in Luz del Sur in Peru and 100% stake in Chilquinta Energía in Chile, along with its interests in two energy services companies -Tecnored and Tecsur.