NextEra Energy Partners LP is growing its renewable energy portfolio with the acquisition of wind assets in California and New Hampshire with Brookfield Renewable announced April 19.
Headquartered in Juno Beach, Fla., NextEra Energy Partners owns interests in wind and solar projects throughout the U.S. plus natural gas infrastructure assets in Texas and Pennsylvania. NextEra Energy Inc., its parent company and the world’s largest producer of wind and solar energy, has said it would invest more in renewable power generation, according to a Reuters report.
In a company release on April 19, NextEra Energy Partners said it had entered into a definitive agreement to acquire the portfolio comprised of four operating wind assets facilities in the U.S., totaling 391 megawatt (MW), from Brookfield for $733 million.
Almost all of the acquired portfolio’s capacity is contracted with investment-grade counterparties and a cash available for distribution (CAFD)-weighted remaining contract life of approximately 13 years at the time of closing. Additionally, the assets are located, according to NextEra CEO Jim Robo, to strong markets with long-term renewables demand.
The acquired wind generation facilities include:
- Alta Wind VIII, 150-MW wind generating facility in California;
- Windstar,120-MW wind generating facility in California;
- Coram, 22-MW wind generating facility in California; and
- Granite, 99-MW wind generating facility in New Hampshire.
“The transaction also provides an accretive investment opportunity to deploy the proceeds from the second draw of our 2020 convertible equity portfolio financing,” Robo said in a statement on April 19, “illustrating NextEra Energy Partners’ ability to leverage its value-enhancing financing structures to support long-term growth.”
Robo continued in his statement that the company remains on a trajectory to grow LP distributions per unit by 12% to 15% through 2024.
“In our view, the partnership has never been better positioned to deliver unitholder value going forward,” he added.
NextEra Energy Partners plans to fund the transaction with a combination of undrawn funds remaining from the 2020 convertible equity portfolio financing and existing debt capacity. The acquired assets are expected to contribute adjusted EBITDA and CAFD of approximately $63 to $70 million, each on a five-year average run-rate basis, beginning Dec. 31, 2021.
Analysts with Tudor, Pickering, Holt & Co. (TPH) believe the acquisition provides potential for additional growth avenue alongside dropdowns to its affiliate NextEra Energy Resources LLC.
“No change to our view of NEP [NextEra Energy Partners] as a core holding in the renewables space, as third-party acquisitions offer an additional avenue to pursue growth alongside a steady flow of expected dropdowns from NEER’s [NextEra Energy Resources] best-in-class portfolio of operating and development assets,” the TPH analysts wrote in a April 20 research note.
On April 19, NextEra Energy Partners said it expects now expects an EBITDA by year-end 2021 at the upper end of its earlier forecast of $1.44 billion to $1.62 billion and CAFD also at the upper end of its previous range of $600 million to $680 million.
NextEra Energy Partners expects to complete the acquisition with Brookfield in third-quarter 2021. Citi is sole financial adviser to NextEra Energy Partners for the transaction, and Pillsbury Winthrop Shaw Pittman LLP is providing the company legal counsel.
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