US utility American Electric Power (AEP) has signed an agreement to sell its 625MW of solar PV assets in the state of New Mexico to investment firm Exus Asset Holdings.
The solar capacity is spread across 15 projects throughout the state and will be sold for approximately US$230 million. The portfolio is under the ownership of New Mexico Renewable Development LLC (NMRD), a 50-50 joint venture between AEP and New Mexico-based electricity holding company PNM Resources.
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The majority of NMRD’s solar capacity is under development. Of the projects being sold, nine are operational and represent 185MW of capacity, whilst six projects are being sold in the development stage with a projected capacity of around 440MW.
The sale is expected to close in February 2024, with the proceeds expected to be split evenly between AEP and PNM.
AEP is divesting itself of these assets as part of its ongoing plan to simplify its operations, “focus on investing in our core regulated operations” and “de-risk” the business, according to a statement from the chair, president and chief executive officer Julie Sloat.
In August 2023, AEP sold a 1.3GW solar and wind portfolio for US$1.5 billion to a JV between renewables developer Invenergy and Blackstone Infrastructure Partners. As with this most recent offloading of assets, the company said that it would be refocusing its operations on its regulated businesses, particularly in grids and transmission. These regulated businesses include utilities in Kentucky, Arkansas, Indiana, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia.
In its five-year investment plan, which it announced in November last year, AEP committed over half of the total US$43 billion funding to its transmission and distribution businesses.
In a press release at the time, Sloat said that the company had a “significant pipeline of opportunities to invest in our wires infrastructure.”
Under US rate base legislation, utilities can receive a rate of return based on the value of their held assets, including transmission lines. This return can be reflected in consumer energy costs.
AEP is not the only utility apparently shifting its focus to transmission assets. Fellow US utility Duke Energy committed US$75 billion to transmission upgrades in its 10-year plan released last year, and has also been divesting much of its generation business.
