AEP purchases Sempra Renewables along with all wind, battery assets

Under a recently signed purchase agreement, American Electric Power (AEP) will acquire Sempra Renewables LLC and the 724 megawatts (MW) of wind generation and battery assets under its portfolio.

The purchase is part of a plan by AP to invest $2.2 billion into renewables by 2023. In this case, the agreement will cost them around $1.056 billion, after factoring in the purchase price, the assumption of project debt and tax equity obligations. The result will be the acquisition of all or part of seven wind farms and one battery installation spread across seven states: Colorado, Hawaii, Indiana, Kansas, Michigan, Minnesota, and Pennsylvania.

“Our long-term strategy is focused on diversifying our generation portfolio including expanding our ownership of renewable generation,” Nicholas K. Akins, AEP chairman, president and CEO, said. “We targeted $2.2 billion of capital investment in competitive, contracted renewables by 2023. Adding these high-quality renewable assets to our portfolio will achieve a significant portion of that goal this year. 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. The business also includes a pipeline of development projects that could provide additional value.”

Each of the purchased wind farms has long-term power purchase agreements already in place for 100 percent of the energy they produce. These go to a variety of investment-grade investor-owned utilities, municipal utilities, and electric cooperatives, and on average will last as many as 16 years.

The transaction is currently expected to close in the second quarter of this year, following approval from the Federal Energy Regulatory Commission and Hart-Scott-Rodino clearance. Once cleared, AEP will see its 351 MW of renewable projects grow to 1,302 MW if this deal, and a separate deal, go through, and put AEP squarely among the top ten largest utility owners of wind generation in the nation.