NextEra Energy sells 396 MW wind, solar portfolio in Canada

Wind farm in Ontario. Author: John Vetterli. License: Creative Commons, Attribution-ShareAlike 2.0 Generic

April 2 (Renewables Now) - US clean energy company NextEra Energy Partners LP (NYSE:NEP) today announced the sale of six fully contracted wind and solar power assets with an overall capacity of 396 MW, all located in Ontario, Canada.

NextEra Energy Partners has signed a definitive agreement with Canada Pension Plan Investment Board (CPPIB) for a total consideration of approximately USD 582.3 million (EUR 472.4m) оr CAD 741 million (USD 575.1m/ EUR 466.6m ), as announced by CPPIB.

Subject to customary working capital and other adjustments, the sum includes the net present value of the operation and maintenance (O&M) origination fee, plus the assumption by the purchaser of approximately USD 689 million in existing debt, the seller said in a news release today.

This transaction is valued at approximately 10x EBITDA and a 10% cash yield, based on 2019 estimates, CPPIB noted in a separate release.

Subject to receipt of regulatory approvals and satisfaction of customary closing conditions, the sale is expected to close during the second quarter of 2018.

The portfolio includes four wind and two solar power projects, namely:

Bluewater, a 59.9-MW wind farm;
Conestogo, a 22.9-MW wind farm;
Jericho, a 149-MW wind farm;
Summerhaven, a 124.4-MW wind farm
Moore, a 20-MW solar power system; and
Sombra, a 20-MW solar energy generating facility.

The assets have an average contract life of approximately 16 years and according to NextEra Energy Partners estimates -- a 10-year average cash available for distribution (CAFD) of USD 38.4 million.

An affiliate of NextEra Energy Resources will continue to operate all of the facilities included in the transaction under a 10-year services agreement with CPPIB.

"We expect to accretively redeploy the proceeds from this transaction to acquire higher-yielding U.S. assets from either third parties or NextEra Energy Resources,"  said Jim Robo, chairman and chief executive officer of NextEra Energy Partners.

The acquisition represents CPPIB’s third significant investment in the global renewables sector. “Since December 2017, CPPIB has committed to wind and solar investments in Brazil, India and now Canada. As power demand grows worldwide and with a focus on accelerating the energy transition, we will continue to seek opportunities to expand our power and renewables portfolio globally,” said Bruce Hogg, Managing Director, Head of Power and Renewables, CPPIB.

Citi and CIBC Capital Markets are serving as financial advisors to NextEra Energy, and McCarthy Tétrault LLP and Gowling WLG (Canada) LLP are legal counsel.

Despite the asset offload, NextEra Energy Partners continues to expect a run rate for adjusted EBITDA of YUSD 1.00 billion to USD 1.15 billion and CAFD of  USD 360 million to USD 400 million at December 31, 2018, reflecting calendar year 2019 expectations for the forecasted portfolio at year-end 2018.

(USD 1 = EUR 0.811)

(CAD 1 = USD 0.78/ EUR 0.63)

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Mariyana is a founding member of the Renewables Now team. With nine years of professional experience in renewables she has built strong expertise in the wind industry and French-speaking markets.

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