Power Technology

Daily Newsletter

17 August 2023

Daily Newsletter

IRGAH acquires AEP’s 1.36GW US renewables portfolio for $1.5bn

The portfolio is spread across 11 US states, with the energy sold to utilities, corporations and municipalities.

IRG Acquisition Holdings (IRGAH) has concluded a $1.5bn deal to buy a 1.36GW unregulated renewables portfolio from American Electric Power (AEP).

IRGAH is a partnership between American power generation company Invenergy, CDPQ and funds managed by Blackstone Infrastructure Partners.

This deal was announced in February 2023. It includes 14 projects with 1.2GW of wind and 165MW of solar capacity, located across 11 US states.

The clean electricity generated from the portfolio is sold to utilities, corporations and municipalities under long-term agreements.

The sale was completed after securing approvals from the Federal Energy Regulatory Commission and Committee on Foreign Investment in the US, along with approvals under applicable competition laws.

IRGAH secured a production tax credit transfer commitment for $580m from Bank of America Securities. The US bank also served as transferability underwriter, placement agent and financial advisor for the transaction.

Invenergy executive vice-president and chief financial officer Meghan Schultz stated: “This transaction was the result of our innovative financing approach, the strength of our investor consortium, and our exceptional team who will integrate the projects into our portfolio in collaboration with our partners and service providers.

“Invenergy has industry-leading operations and asset management capabilities, and we look forward to applying our unmatched expertise to this portfolio of projects.”

The IRGAH partnership also secured committed financing from Banco Santander, Coöperatieve Rabobank, Natixis CIB and Export Development Canada.

Other lenders included Banco Bilbao Vizcaya Argentaria, Banco de Sabadell, Bayerische Landesbank, CaixaBank MetLife, ICBC, National Westminster Bank, Norddeutsche Landesbank Girozentrale and Société Générale.

AEP president and CEO Julie Sloat stated: “This sale is part of our strategy to streamline and de-risk the business and focus on our regulated operations. Over the next five years, we plan to invest nearly $40bn primarily in our regulated wires and generation businesses.

“The proceeds from this sale will be used to continue to modernise the energy grid, shift to a more balanced generation portfolio and enhance service for our customers while strengthening our balance sheet.”

AEP secured $1.2bn in cash after taxes, transaction fees and other customary adjustments from the acquisition.

Renewable technologies continue to account for a significant share of the global energy mix

The push for a transition to cleaner energy, driven by strong policies and financial support, will heavily impact the future of renewables, allowing them to take almost 50% of the power mix by 2035. From a regional perspective, Europe and North America will continue to have an accelerated shift into clean technologies, whereas progress is slower in Asia-Pacific and specially Middle East where thermal technologies will still be their main power source. The development of new technologies such as hydrogen, energy storage, carbon capture and smart grids, are also driving change in the power sector.