AEP Sells 1.4-GW Unregulated Contracted Renewables Portfolio to Invenergy-Led Consortium
American Electric Power (AEP), one of the nation’s largest power producers, has completed the sale of its 1,365-MW unregulated contracted renewables portfolio to an Invenergy-led consortium.
IRG Acquisition Holdings (IRGAH)—a partnership between Invenergy, CDPQ, and funds managed by Blackstone Infrastructure Partners—confirmed the close of the transaction on Aug. 16 for a $1.5 billion enterprise value.
The portfolio includes 14 projects in 11 states and is comprised of 1,200 MW of wind generation and 165 MW of solar projects. It represents the “largest ever acquisition” for Invernegy, a major developer, owner, and operator of large-scale renewable, gas power, transmission, and storage facilities. “The renewable power generated by these projects is contracted under long-term agreements with various utilities, corporations, and municipalities,” Invenergy said.
AEP’s management kicked off the process to sell all or a portion of its 1.3-GW competitive contracted renewables portfolio—which is housed under the AEP Renewables division—in February 2022. AEP Renewables develops, owns, and operates utility-scale renewable projects backed with long-term contracts. “AEP Renewables works directly with stakeholders to ensure that customers have clean, sustainable renewable energy to meet their environmental goals,” the company says. AEP signed an agreement to sell the assets in February 2023 and obtained approval from the Federal Energy Regulatory Commission, clearance from the Committee on Foreign Investment in the U.S. and approvals under applicable competition laws.
AEP has also launched a sale process for its AEP Energy retail and AEP OnSite Partners distributed resources businesses, as well as its 50% share in the New Mexico Renewable Development joint venture. On July 26, the company also launched the sale of its interests in two non-core transmission joint ventures, Prairie Wind Transmission, Pioneer Transmission. It plans to complete a strategic review of another transmission joint venture, Transource Energy, by the end of the year.
The closed transaction announced on Wednesday is part of AEP’s strategy to “streamline and de-risk the business” and focus on its regulated operations, said AEP President and CEO Julie Sloat. “Over the next five years, we plan to invest nearly $40 billion primarily in our regulated wires and generation businesses,” she said. “The proceeds from this sale will be used to continue to modernize the energy grid, shift to a more balanced generation portfolio and enhance service for our customers while strengthening our balance sheet.”
The move echoes a decision by Duke Energy in June to sell its unregulated utility-scale solar and wind group—a portfolio of 3.4 GW—for an enterprise value of $2.8 billion to pure-play renewable power platform Brookfield Renewable. Duke Energy, too, said the deal’s proceeds would allow the company to focus on the growth of its regulated businesses. In March, Consolidated Edison completed the sale of its Clean Energy Businesses to RWE Renewables America in a $6.8 billion deal to enhance its focus on New York state.
Invernergy on Wednesday noted IRGAH secured a $580 million commitment for a first-of-its-kind production tax credit (PTC) tax credit transfer with Bank of America Securities, who served as Transferability Underwriter and Placement Agent and Financial Advisor.
“We are excited to support this transaction with Invenergy and their partners in IRG Acquisition Holdings. This represents the first announced large-scale transferability transaction to close since the passing of the Inflation Reduction Act (IRA) in August 2022 and creates a financeable transferability product that will be used to scale the growth of renewable energy, energy transition, and its associated supply chain development,” said Karen Fang, Global Head of Sustainable Finance at Bank of America.
—Sonal Patel is a POWER senior associate editor (@sonalcpatel, @POWERmagazine).