US energy company AEP is to buy wind and energy storage projects totalling 724MW from Sempra Renewables in a deal worth over $1bn.
The transaction covers seven wind farms and one battery storage facility located in Colorado, Hawaii, Indiana, Kansas, Michigan, Minnesota and Pennsylvania.
Five of the projects – Auwahi (including battery storage), Flat Ridge 2, Cedar Creek 2, Mehoopany and Fowler Ridge 2 – are jointly owned by BP Wind Energy, which will retain its ownership share in the plants, AEP said.
The other two projects are Black Oak Getty in Minnesota and Apple Blossom in Michigan.
All the wind farms have long-term power purchase agreements for all the electricity they produce, and have an average remaining life of 16 years.
Two of the projects have PPAs with AEP subsidiaries, AEP Ohio, Indiana Michigan Power and Southwestern Electric Power Company.
Finance for the deal will come through a combination of debt, equity and/or equity-linked securities.
The transaction is expected to close in the second quarter of 2019, subject to approvals from the Federal Energy Regulatory Commission and Hart-Scott-Rodino clearance, AEP said.
Once completed AEP’s renewables portfolio will grow to 1302MW across 11 US states.
AEP chairman, president and chief executive Nicholas Akins said: “Our long-term strategy is focused on diversifying our generation portfolio including expanding our ownership of renewable generation.
“We targeted $2.2bn of capital investment in competitive, contracted renewables by 2023. Adding these high-quality renewable assets to our portfolio will achieve a significant portion of that goal this year.
“The long-term contracts and attractive returns associated with these existing assets will be immediately accretive to earnings and solidify our projected 5% to 7% earnings growth rate.
“The business also includes a pipeline of development projects that could provide additional value.”
Sempra Energy chief operating officer Joseph Householder said: “The agreement to sell our US wind assets along with the previously announced sales of our US solar and natural gas storage assets are expected to generate approximately $2.5bn in cash proceeds to support our growth plan as we strive to become North America’s premier energy infrastructure company.
“The timing of these asset sales is important as we look to redeploy new capital into important growth at our US utilities where we are improving the safety and reliability of electric and gas service.”