October 12, 2018 Read More →

New assets, old assets, U.S. wind market is flourishing

S&P Global Market Intelligence ($):

The market to acquire wind generation remains robust, whether for development assets or legacy projects, with contracts or without, according to deal-makers at the American Wind Energy Association’s annual Wind Energy Finance & Investment conference in New York City on Oct. 1-2.

“There is a lot of liquidity and strong demand, both on the development side and the operating side,” said Frank Nicklaus, principal at Greentech Capital Advisors, citing the recently agreed sale of Noble Environmental Power LLC’s 612-MW operating wind portfolio in New York state as an example.

Carlyle Group LP announced it would acquire the wind assets in September, marking the first wind investment for the Washington, D.C.-based private equity firm. Carlyle owns upward of 6,000 MW of generation assets, including gas-fired plants and hydro facilities.

“A lot of the folks that looked at that portfolio were looking at it as a potential repowering,” said Nicklaus, whose firm ran the sale process for Noble, adding that he was “pleasantly surprised” by the great interest shown in the platform. “Those assets were about 10 years old, had rolled off the [production tax credits] and were actually merchant.”

Nicklaus said big strategic investors are expected to be among those looking to acquire projects ripe for repowering as the passage of time produces more “legacy” wind projects, though Christopher Pih, managing director at Bank of America Merrill Lynch, said private equity firms may be more equipped to tackle the risk associated with a repowering.

“If you have higher risk, whether it’s repowering, or re-contracting, or a bit of hair, then you start to tap into more of the private equity-like kind of infrastructure players who are interested in those types of assets,” Pih said.

However, panelists at the conference left little doubt that the wind M&A market is active across the board.

Live sales include utility-owned portfolios from sellers trying to drum-up low-cost cash, recycle capital or otherwise find ways to up their balance sheet as well as assets from developers who see the frothy M&A market as the perfect opportunity to put projects on the block, Pih said.

More ($): Seller’s market for wind assets persists

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