AEP Forecasts Over $2 Billion In Renewable Energy Investment Between 2019 And 2023

American Electric Power announced that its competitive renewable energy subsidiary, AEP Clean Energy Resources, has completed the previously reported purchase of Sempra Renewables LLC and its 724 megawatts (MW) of operating wind generation and battery assets for approximately $1.05 billion.

AEP will pay Sempra $584 million in cash, which includes $33 million in working capital, and assume $470 million in existing project debt and tax equity obligations, subject to adjustments.

The purchase includes all or part of seven wind farms and one battery installation in seven states. Five of the wind farms are jointly owned with BP Wind Energy. BP Wind Energy will retain its ownership share of those projects. Twenty employees will join AEP Clean Energy Resources from Sempra Renewables.

"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," said Nicholas K. Akins, AEP chairman, president and chief executive officer.

The seven operating wind farms have an average capacity factor of 37 percent. They are located in Colorado, Hawaii, Indiana, Kansas, Michigan, Minnesota and Pennsylvania. They all have long-term, power purchase agreements (PPAs) for 100 percent of the energy produced with investment-grade investor-owned utilities, municipal utilities and electric cooperatives. The project PPAs have an average remaining life of 16 years. AEP operating units AEP Ohio, Indiana Michigan Power and Southwestern Electric Power Company have PPAs with two of the wind farms.

AEP Renewables also recently signed a separate agreement to purchase a 75 percent interest (227 MW) in the Santa Rita East Wind Project currently under construction west of San Angelo, Texas. AEP Renewables will acquire its share of the project upon completion, which is expected in June.

With this acquisition, AEP's competitive renewable generation portfolio has grown to 1,075 MW of renewable generation in 11 states. It will increase to 1,302 megawatts upon completion of the Santa Rita project.

Separately, in discussing its annual meeting, AEP said "AEP’s forecasted $2.7 billion renewable energy investment between 2019 and 2023 includes the company’s recent acquisition of Sempra Renewables LLC and planned purchase of a 75% interest in the Santa Rita East Wind Project, adding 951 megawatts of wind generation and storage to AEP’s contracted renewable portfolio."

Separately, in February, Sempra Energy completed the previously reported sale of its non-utility U.S. natural gas storage facilities to an affiliate of ArcLight Capital Partners for $328 million in cash, subject to post-closing adjustments

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M&A   AEP   Sempra  

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