NextEra Energy Partners LP has entered into an agreement with a subsidiary of NextEra Energy Resources LLC to acquire a 50% interest in an approximately 2,520 MW renewables portfolio. In conjunction with the acquisition, NextEra Energy Partners has also entered into an approximately $824 million convertible equity portfolio financing with Apollo Global Management.
“The transactions support NextEra Energy Partners’ continued ability to execute on its long-term growth plan and access attractive low-cost sources of capital,” says Jim Robo, chairman and CEO. “The acquisition of the high-quality, long-term contracted renewable energy assets extends the partnership’s geographic footprint into three new states and expands its ownership of battery storage assets, which would total nearly 90 MW at close.”
“Additionally, the convertible equity portfolio financing we are announcing 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,” Robo continues. “This significant access to low-cost capital and access to NextEra Energy Resources’ industry-leading renewables portfolio enables NextEra Energy Partners to be uniquely positioned to take advantage of the clean energy transformation and meet its long-term growth objectives.”
The contracted renewables portfolio of wind, solar and solar-plus-storage assets has a mix of investment-grade counterparties and cash available for distribution (CAFD)-weighted remaining contract life of approximately 19 years. The portfolio to be acquired by NextEra Energy Partners consists of 50% of the indirect membership interests in the following wind generation facilities: White Mesa Wind in Texas (501 MW), Irish Creek Wind in Kansas (301 MW), Little Blue Wind in Nebraska (251 MW), Minco Wind Energy III in Oklahoma (107 MW), Ensign Wind Energy in Kansas (99 MW), Borderlands Wind in New Mexico (99 MW) and Hubbard Wind in Texas (300 MW).
The solar assets include Cool Springs Solar in Georgia (213 MW solar generation and 40 MW solar storage facility), Dodge Flat Solar in Nevada (200 MW solar generation and 50 MW solar storage facility), Elora Solar in Tennessee (150 MW solar generation facility), Quitman II Solar in Georgia (150 MW solar generation facility), Quinebaug Solar in Connecticut (49 MW solar generation facility) and Fish Springs Ranch Solar in Nevada (100 MW solar generation and 25 MW solar storage facility).
NextEra Energy Partners expects to acquire the interests in the assets for a total consideration of approximately $849 million, subject to working capital and other adjustments, plus NextEra Energy Partners’ share of the portfolio’s total tax equity financings, which is estimated to be approximately $866 million at the time of closing. The acquisition is expected to contribute adjusted EBITDA of approximately $184 million to $194 million and CAFD of approximately $58 million to $67 million, each on a five-year average annual run-rate basis, as of Dec. 31, 2022.
NextEra Energy Partners expects to close the acquisition later this year or in early 2022, subject to customary closing conditions and receipt of certain regulatory approvals.
Read more about the financial details here.