Sempra Renewables has completed the sale of 724MW portfolio of wind and battery assets to American Electric Power (AEP), for $1.05bn.
Image: AEP buys renewable portfolio from Sempra. Photo: Courtesy of Myriams-Fotos/Pixabay.
The transaction between Sempra and AEP is part of a $2.5bn deal that included the sale of renewable business and non-utility natural gas storage assets.
For the renewables transaction, AEP will pay $584m in cash, including $33m in working capital and will assume $470m in existing project debt and tax equity obligations.
The transaction includes seven wind farms and one battery installation in seven states. Out of the seven, five of the wind farms are owned jointly with BP Wind Energy. BP Wind Energy will retain its share in the projects.
AEP chairman, president and CEO Nicholas K. 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.”
The seven wind farms are located in the states of Colorado, Hawaii, Indiana, Kansas, Michigan, Minnesota and Pennsylvania and they have an average capacity factor of 37%. All the wind farms are supported by long-term power purchase agreements with investment-grade investor-owned utilities, municipal utilities and electric cooperatives, to supply 100% of the energy generated.
The PPAs have an average remaining life of 16 years. Out of all the PPAs, AEP’s AEP Ohio, Indiana Michigan Power and Southwestern Electric Power Company have PPAs with two of the wind farms.
Recently, AEP had signed a separate agreement to acquire 75% of stake in the 277MW Santa Rita East Wind Project, which is currently built in San Angelo, Texas.
The portfolio acquisition will bring AEP’s renewable generation portfolio to 1.075GW across 11 states in the US. The Santa Rita project will further increase its portfolio to 1.3GW.
The acquisition is part of AEP’s plans to cut down its carbon dioxide emissions by 80% of its emission levels in 2000 by 2050.