As a result of a comprehensive strategic review of its businesses and asset portfolio over the past year, Sempra Energy has decided to sell its entire portfolio of U.S. wind and solar power assets, as well as certain U.S. midstream assets.
The board of directors approved the sales on June 25. The planned asset dispositions represent the first phase of a multi-phase portfolio optimization initiative designed to sharpen the company’s strategic focus and create value for all shareholders, according to the San Diego-based Fortune 500 company.
Part of the planned sales are all of Sempra Renewables’ solar and wind assets and investments, including joint venture and tax equity investments, with a total generating capacity of approximately 2.6 GW, as well as projects in development.
Sempra Renewables has ownership interests and investments in solar projects in Nevada, Arizona and California and wind projects in eight states, stretching from Hawaii to Pennsylvania.
“Renewable energy is a vital part of the energy landscape, and we have developed a great platform, but we have determined that our U.S. solar and wind generation businesses would be more valuable to another owner,” says Jeffrey W. Martin, CEO of Sempra Energy. “We will continue to be a leader in sourcing renewable energy for our utility customers, which is critical to the future of an expanding clean energy grid.
Midstream assets included in the planned sales are Mississippi Hub LLC, an underground salt dome with natural gas storage capacity, along with related compression and pipeline facilities, and the company’s 90.9% ownership interest in Bay Gas Storage Company Ltd., a natural gas storage facility in Alabama.
“Natural gas storage plays an important role in energy markets, but these Gulf Coast storage assets are no longer core to our business strategy,” Martin explains. “Monetizing these assets will support growth opportunities in our other U.S. businesses and strengthen our balance sheet.”
According to Martin, the company’s review of its asset portfolio was “guided by several important considerations and factors, including deployment of additional capital to improve critical utility infrastructure, changes in the U.S. tax code, California regulatory developments and strategic growth opportunities.”
“This is just the first phase of our portfolio optimization, which we expect to continue in the coming months,” Martin continues. “We intend to continue evaluating our portfolio, looking for additional opportunities to create long-term value for all shareholders. We will pursue additional initiatives using a disciplined, phased approach, taking into consideration timing and market conditions.”