American Electric Power on Wednesday sold its 1,365-MW unregulated renewable energy portfolio to IRG Acquisition Holdings, a partnership owned by Invenergy, pension fund Caisse de dépôt et placement du Québec, and funds managed by Blackstone Infrastructure.
The $1.5 billion transaction is one of the largest, fully-operational renewables portfolio to come to market in years, according to Norton Rose Fulbright, which advised IRG on the deal.
The deal included a $580 million first-of-its-kind federal production tax credit transfer with Bank of America Securities, the law firm said.
“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,” Karen Fang, global head of sustainable finance at Bank of America, said in a press release.
The deal is part of a trend in utility companies selling their renewable energy assets. It also reflects AEP’s efforts to sell non-core businesses.
“This sale is part of our strategy to streamline and de-risk the business and focus on our regulated operations,” Julie Sloat, AEP president and CEO, said in a press release. “Over the next five years, we plan to invest nearly $40 billion primarily in our regulated wires and generation businesses.”
The renewable portfolio comprised 14 projects, including 1,200 MW of wind and 165 MW of solar in 11 states, AEP said. The power from the projects is sold under long-term contracts to utilities, corporations and municipalities.
In the deal, AEP netted $1.2 billion in cash after taxes, transaction fees and other adjustments.
J.P. Morgan served as lead financial advisor and Citigroup Global Markets served as financial advisor to AEP for the transaction. Hunton Andrews Kurth served as legal counsel to AEP.
Lenders for the deal included Banco Santander, New York Branch, Coöperatieve Rabobank UA, New York Branch, Natixis CIB and Export Development Canada, according to Norton Rose Fulbright. Sheppard Mullin served as legal counsel to Invenergy.
