American Electric Power (AEP) has completed its acquisition of Sempra Renewables, including 724MW of operating wind generation and battery assets, for an undisclosed amount, said to be over $1 billion.
The acquisition is part of AEP’s $2.2bn investment in contracted renewables by 2023.
AEP will pay $584 million in cash, including $33 million in working capital, and take over the $470 million in current project debt and tax obligations.
The purchase, which includes assets across seven US states, comprises all or part of seven wind farms, and one energy storage site.
Five of the wind famrs are co-owned by BP Wind Energy, whose ownership will go unchanged and AEP Clean Energy Resources will absorb the twenty employees currently employed by Sempra Renewables.
AEP chief executive Nicholas Akins said: “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 $2.2bn in capital investment in competitive, contracted renewables by 2023.”
Akins added: “The long-term contracts and attractive returns associated with these existing assets will be immediately accretive to earnings and solidify our projected 5-7% earnings growth rate.”
The seven wind farms are located in Colorado, Hawaii, Indiana, Kansas, Michigan, Minnesota and Pennsylvania, and all have long-term power purchase agreements for 100% of the energy generated with utilities in place. Each agreement has an average of 16 years remaining.
AEP’s divisions AEP Ohio, Indiana Michigan Power and Southwestern Electric Power Company have PPA’s in place with two of the wind farms that form part of the purchase.
AEP Renewables also recently finalise the purchase of a 75% (227MW) stake in the Santa Rita East Wind under construction in Texas, and will acquire its share of the project on completion, expected in June 2019. This brings AEP’s Renewable’s stake in renewable power generation to 1302MW.