North American energy infrastructure company Sempra Energy has entered an agreement with the US electric utility American Electric Power (AEP) for the divestment of its wholly-owned subsidiary Sempra Renewables, which owns 724 MW of operating wind power generation and battery assets. The total amount of the transaction nears US$1bn, of which US$551m in cash, an initial assumption of US$343m in existing project debt and US$162m in tax equity obligation. The agreement is subject to customary closing conditions and approvals, of which in particular from the Federal Energy Regulatory Commission (FERC).
The transaction entails seven wind parks, two of which are owned entirely by Sempra Renewables: the Black Oak Getty wind park in Minnesota and the Apple Blossom wind project in Michigan. Sempra Renewables co-owns the remaining five assets with BP Wind Energy: Auwahi Wind in Hawaii, Flat Ridge-2 Wind in Kansas, Mehoopany Wind in Pennsylvania, Cedar Creek-2 Wind in Colorado, and Fowler Ridge-2 Wind in Indiana. BP will retain its ownership share of those projects.
Besides, AEP Renewables also recently signed a separate agreement to purchase a 75% stake (corresponding to 227 MW) in the Santa Rita East wind park currently under construction in San Angelo (Texas) and slated for completion by mid-2019. AEP’s current renewable power generation portfolio currently stands at 351 MW, including wind and solar projects in four states: Texas (261 MW wind), California (20 MW solar), Nevada (50 MW solar) and Utah (20 MW solar). After the completion of the transaction with Sempra Energy and the commissioning of the Santa Rita project, AEP's electricity generation capacity will grow to a total of 1,302 MW across 11 states. This will enable the company to join the top 10 largest owners of competitive wind generation in the country.
AEP aims at decreasing its CO2 emissions by 60% from 2000 emission levels by 2030 and 80% from 2000 emission levels by 2050. The plan is moving forward and the company's coal-fired plants only accounts for 47% of the total power generation capacity, compared with 70% in 2005. Meanwhile, its gas-fired capacity increased from 19% to 28% over the same period and its renewable capacity rose from 4% to the current 14%. AEP reported that upon completion of the aforementioned agreement with Sempra Energy, the share of renewables in its generation portfolio will hike to 16% at the expense of coal and gas, whose shares will then stand at 46% and 27%, respectively.