American Electric Power (AEP), one of the largest power producers in the United States, has completed the sale of its unregulated renewable energy contract portfolio to a consortium led by Invenergy. The transaction, which has an enterprise value of $1.5 billion, was confirmed by IRG Acquisition Holdings (IRGAH) on Aug. 16. IRGAH is a partnership between Invenergy, CDPQ and funds managed by Blackstone Infrastructure Partners.
The portfolio consists of 14 projects spread over 11 states with a total capacity of 1,365 MW. Includes 1,200 MW wind energy and 165 MW solar projects. This acquisition represents a significant milestone for Invenergy, a leading developer, owner and operator of renewable energy, gas, transmission and storage assets.
All projects in the AEP portfolio have long-term power purchase agreements with utility companies, corporations and municipalities. AEP Renewables, the division hosting the contracted renewable energy portfolio, actively works with stakeholders to provide clean and sustainable renewable energy solutions.
AEP plans to simplify its operations and focus on its regulated businesses. The sale of its unregulated contracted renewable energy portfolio is part of that strategy. Proceeds from the transaction will be used to modernize the power grid, transition to a more balanced generation portfolio and improve customer service while strengthening the company’s financial position.
In addition to its renewable energy portfolio, AEP has initiated the sale of other assets including its AEP Energy retail business and AEP OnSite Partners distributed resources business, its 50% interest in the New Mexico renewable energy joint venture and interests in two Company non-principal transmission joint ventures.
AEP’s decision follows a similar decision by Duke Energy to sell its unregulated wind and solar power giant in June. Duke Energy also wanted to focus on its regulated businesses and used the proceeds from the sale to fuel growth in those areas.
Invenergy and IRGAH have secured a $580 million production tax credit transfer commitment with Bank of America Securities. This transaction underscores the potential to increase renewable energy growth and support the energy transition.
With the completion of this sale, AEP is taking an important step towards its goal to focus on its core regulated businesses and improve its financial position to better serve its customers.