The facility is contracted under a long-term power purchase agreement and steam sale agreement for approximately six years
Canadian electricity utility TransAlta has acquired a 29MW cogeneration facility in Michigan from two private companies for nearly $27m.
The deal marks the company’s first cogeneration project in the US.
The contracted cogeneration asset includes a single GE LM2500 gas turbine and an ABB steam turbine.
The facility, which has been operational since 1991, is contracted under a long-term power purchase agreement and steam sale agreement for approximately six years.
The cogeneration facility’s electricity and steam output are fully contracted providing consistent, predictable revenues through 2026.
The deal, which will be funded with cash on hand, is expected to enhance geographic, technology and counterparty diversification of TransAlta.
The acquisition is expected to close in the second quarter of 2020
The deal is expected to be completed in the second quarter of this year, subject to customary regulatory approvals.
TransAlta president and CEO Dawn Farrell said: “The acquisition marks our first U.S. cogeneration project and aligns with our strategy of growing our on-site generation business, diversifying our cogeneration portfolio, and increasing the pipeline of assets for potential future drop-downs into TransAlta Renewables.
“The expansion into new geographic markets further enhances our position as a leader in behind the fence generation and provides potential for future opportunities in the U.S. cogeneration space.”
In November, TransAlta signed an agreement with Kineticor Holdings Limited Partnership #2 to indirectly acquire two gas turbines and related equipment.
The deal include acquisition of two 230MW Siemens F class gas turbines and related equipment for $84m.
TransAlta owns, operates and develops electrical power generation assets in Canada, the US and Australia.
The company provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power.