After agreeing to sell its utility-scale renewables business to Brookfield, Duke has now found a buyer for its distributed generation business. ArcLight Capital Partners, a middle market infrastructure investor, will purchase the DG business for $364 million, inclusive of non-controlling tax equity interests. Duke Energy expects approximately $259 million of proceeds from this transaction, which is subject to certain customary adjustments and will be received upon closing.
“The sale of our commercial renewables businesses streamlines our portfolio and provides the resources to support the long-term needs of our customers in our growing regulated territories,” said Lynn Good, Duke Energy Chair, President and CEO. “Over the next decade, we plan to invest significant amounts of capital to fund the critical energy infrastructure necessary to serve our customers and support our clean energy transition.”
The distributed generation business being sold includes REC Solar/Duke Energy Sustainable Solutions operating assets, development pipeline and O&M portfolio, as well as distributed fuel cell projects managed by Bloom Energy. Employees of the distributed generation business will transition to ArcLight to maintain business continuity for its operations and customers.
“Our investment in Duke Energy’s commercial distributed generation business supports ArcLight’s long-standing strategy of acquiring operating assets from leading strategics and creating strong stand-alone renewable platforms. We believe this is an attractive opportunity to acquire a first-rate commercial distributed generation portfolio, partner with a talented team and build upon longstanding, high quality customer relationships,” said Marco Gatti, Managing Director at ArcLight.
News item from Duke Energy
“Duke Energy expects approximately $259 million of proceeds from this transaction, which is subject to certain customary adjustments and will be received upon closing.”
The “tell” here is (customary adjustments). Duke has been buying up alternative energy assets and forming JDA to construct alternative energy assets. It seems many of these projects fall under non-regulated assets. I believe what is happening now is large electric utilities have harvested the ITC and any other government subsidies, depending on the scope and type of “regulation” these projects don’t seem part of the legacy “regulated monopoly” of the fueled generation industry. They sell these assets to others and effectively increase their cash holdings for “other” projects these utilities need for better and more robust transmission interconnections.
The down side is companies like Arclight have their own agenda and business model, depending on how these often “wholesale” generation projects are, at some level it will affect the retail electricity end user with bundled costs moving forward. Moving forward, Arclight could run these assets say 5 years longer, replace a large solar PV farm one string at a time with the latest/greatest solar PV technology available, add bifacial modules, get rid of fixed mounts, replace with east to west tracking and add on site utility scale ESS and use the assets as grid services and after hours dispatch to the grid. Duke and ‘others’ seem to be moving towards a “wires only” EaaS entity all the while bundling transmission costs to make the retail electric rate three, four, five times the wholesale electricity rate at any given time of the day. Just sayin’, there is no free lunch.
Great piece of information Kelly