NextEra Energy Partners (NEP) has agreed to buy a 50% stake in a 2.5GW renewables portfolio and enter into a US$824 million convertible equity portfolio financing that includes the acquired assets.
The move also sees NEP, a publicly traded subsidiary of US energy giant NextEra Energy, expand into three new US states and make substantial strides into the battery storage market, with assets now totalling nearly 90MW.
NEP is buying the portfolio interest from a subsidiary of NextEra Energy Resources, the renewable arm of NextEra Energy, for US$849 million in addition to its share of the portfolio’s total tax equity financings, which was roughly US$866 million at the time of closing.
“The convertible equity portfolio financing we are announcing today is the lowest cost in the partnership’s history, with a more than 250 basis points lower implied return to the investor in the buyout price than the first iterations of the structure in 2018 and early 2019,” said NextEra Energy chairman and CEO Jim Robo.
This significant “access to low-cost capital” and NextEra Energy Resources’ renewables portfolio enables NextEra Energy to be “uniquely positioned to take advantage of the clean energy transformation and meet its long-term growth objectives,” he added.
Consisting of solar, wind and solar-plus-storage assets, the purchased portfolio totals 2,520MW and is broken down as follows:
|Cool Springs Solar||213MW||40MW||Georgia|
|Dodge Flat Solar||200MW||50MW||Nevada|
|Quitman II Solar||150MW||0||Georgia|
|Fish Springs Ranch Solar||100MW||25MW||Nevada|
|Borderland Wind||99MW||0||New Mexico|
|Ensign Wind Energy||99Mw||0||Kansas|
|Minco Wind Energy III||107MW||0||Oklahoma|
|Little Blue Wind||251MW||0||Nebraska|
|Irish Creek Wind||301MW||0||Kansas|
|White Mesa Wind||501MW||0||Texas|
In total, NextEra Energy, which is the world’s largest producer of renewable energy, acquired 712MW of solar and 115MW of battery storage. The company also added more than 5.7GW to its renewables and storage backlog in the first nine months of the year.
The acquisition is expected to add to adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) by between US$184 million and US$194 million, and on cash available for distribution (CAFD) by US$58 million to US$67 million. Each are on a five-year average annual run-rate basis, as of 31 December 2022.
Subject to regulatory approval, the acquisition is expected to close later in 2021 or early next year.
NEP said that the money will enable it to routinely buy out the investor’s equity interest in the portfolio between the five- and 10-year anniversaries of the deal at a fixed pre-tax annual return of about 5.6%.
Furthermore, “NEP continues to expect to be in the upper end of its previously disclosed year-end 2021 run-rate adjusted EBITDA and CAFD expectations ranges of US$1.44 billion to US$1.62 billion and US$600 million to US$680 million, respectively,” the company said in a media release.
The company posted adjusted earnings of US$1.48 billion for Q3, however, compared with US$1.31 billion a year earlier.
NextEra Energy Resources reported a fiscal loss of US$315 million in its Q2 results this year, although it added 1.84GW of renewables and energy storage projects to its backlog, which at the time stood at 16.7GW.