Duke Energy reached an agreement to sell its commercial distributed generation business to an affiliate of ArcLight Capital Partners, a middle-market infrastructure investor, for an enterprise value of $364 million, inclusive of non-controlling tax equity interests. Duke Energy expects approximately $259 million of proceeds from this transaction, which is subject to certain customary adjustments and will be received upon closing.
In early June, Duke Energy reached a sale agreement for its utility-scale renewables business platform. The company expects to finalize the sales for its utility-scale and distributed generation businesses by the end of 2023 and will utilize the proceeds to strengthen its balance sheet and avoid additional holding company debt issuances associated with these assets. These transactions will support Duke Energy’s focus on the growth of its regulated businesses, including investments to enhance grid reliability and help incorporate more than 30,000 megawatts of regulated renewable energy onto its system by 2035.
“The sale of our commercial renewables businesses streamlines our portfolio and provides the resources to support the long-term needs of our customers in our growing regulated territories,” Lynn Good, chair, president and CEO of Duke Energy, said. “Over the next decade, we plan to invest significant amounts of capital to fund the critical energy infrastructure necessary to serve our customers and support our clean energy transition.”
The distributed generation business being sold includes REC Solar operating assets, development pipeline and O&M portfolio, as well as distributed fuel cell projects managed by Bloom Energy. Employees of the distributed generation business will transition to ArcLight to maintain business continuity for its operations and customers.
“Our investment in Duke Energy’s commercial distributed generation business supports ArcLight’s long-standing strategy of acquiring operating assets from leading strategics and creating strong stand-alone renewable platforms. We believe this is an attractive opportunity to acquire a first-rate commercial distributed generation portfolio, partner with a talented team and build upon longstanding, high quality customer relationships,” Marco Gatti, managing director at ArcLight, said.
“This transaction leverages ArcLight’s deep experience in investing across the renewables infrastructure sector and utilizing our value-added approach to help drive asset optimization, which allow us to further build upon the portfolio and advance brownfield development opportunities,” Dan Revers, managing partner of ArcLight, said.
The sale is subject to satisfaction of customary closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Act. Regulatory approval by the Federal Energy Regulatory Commission will also be required for the sale of the Bloom Energy distributed fuel cell assets.
BofA Securities is serving as the financial advisor and Mayer Brown is serving as the legal counsel to Duke Energy for this transaction. Scotia is serving as the financial advisor and Kirkland & Ellis is serving as the legal counsel to ArcLight.
