Clearway Energy Inc. (Clearway Energy) has entered into a binding agreement to acquire a portfolio of operating wind projects from Capistrano Wind Partners LLC for, subject to closing adjustments, cash consideration of $255 million, plus the assumption of approximately $160 million of non-recourse debt.
The Capistrano portfolio consists of five utility-scale wind projects representing 413 MW of capacity located in Texas, Nebraska and Wyoming that achieved commercial operations between 2008 to 2012. The assets within the portfolio sell power under power purchase agreements with investment-grade counterparties that have a weighted average remaining contract duration of approximately 10 years. The operations, maintenance and asset management of these projects have been and will continue to be provided by subsidiaries of the Clearway Energy’s sponsor, Clearway Energy Group (Clearway Group).
The Capistrano portfolio will also provide additional growth potential as Clearway Energy will have the option to invest in future wind repowering opportunities that will be evaluated in partnership with Clearway Group. Concurrent with the acquisition of the Capistrano portfolio, Clearway Energy has also entered into a development agreement with Clearway Group, whereby Clearway Group will pay $10 million to Clearway Energy to partially fund the acquisition of the Capistrano portfolio for an exclusive right fee to develop, construct and repower the projects in the Capistrano Portfolio.
After factoring in estimated closing adjustments, proceeds from the rights fee and new non-recourse debt, Clearway Energy expects its total long-term corporate capital commitment to acquire the Capistrano portfolio to be approximately $110-130 million, which the company expects to fund with cash on hand. Based on current expected terms and conditions of the new non-recourse financing, the acquisition is expected to provide incremental annual levered asset CAFD on a five-year average basis of approximately $12-14 million beginning January 1, 2023. Clearway Energy expects the transaction to close in the second half of 2022.
“With this acquisition, Clearway continues its successful track record of executing on third-party transactions at attractive economics while further diversifying the Clearway platform on a regional basis,” states Christopher Sotos, Clearway Energy Inc.’s president and CEO. “Furthermore, the development agreement with Clearway Group further demonstrates the strength of our sponsor by its willingness to invest alongside the company for potential future growth.”
“The company has now committed to or has line of sight to the future deployment of over 55 percent of the $750 million of excess proceeds from the Thermal sale which solidifies Clearway’s ability to achieve the upper range of our 5 to 8 percent annual dividend growth objective through at least 2026,” Sotos adds.