North Carolina-based energy holding company, Duke Energy has reached an agreement to sell its unregulated utility-scale commercial renewables business to Brookfield Renewable, owners and operators of renewable power and climate transition assets, at an enterprise value of approximately $2.8 billion, including non-controlling tax equity interests and the assumption of debt.
Duke Energy’s expected net proceeds from this transaction are approximately $1.1 billion, subject to certain customary adjustments. Duke Energy will use the proceeds to strengthen its balance sheet and avoid additional holding company debt issuances. The company will then focus on growth of its regulated businesses, including investments to enhance grid reliability and help incorporate over 30,000 MW of regulated renewable energy into its system by 2035.
“This sale is an important step in our transition into a purely regulated company with significant grid and clean energy investment plans that will deliver benefits to our customers and stakeholders,” says Lynn Good, Duke Energy chair, president and CEO.
The sale agreement includes more than 3,400 MWAC of utility-scale solar, wind and battery storage across the U.S., net of joint venture partners ownership, in addition to operations, new project development and current projects under construction. The primary operations of the commercial renewables business will remain in Charlotte, N.C. and the Duke Energy employees that support the business will transition to Brookfield to maintain business continuity for its operations and customers.
“With this acquisition, we are adding a scale operating renewable platform with a full suite of in-house capabilities and a proven management team,” says Connor Teskey, CEO of Brookfield Renewable. “We are also adding to our pipeline of renewable development projects, solidifying our position as one of the largest renewable energy businesses in the U.S. with almost 90,000 MW of operating and development assets.”
The sale is subject to satisfaction of customary closing conditions, including regulatory approval by the Federal Energy Regulatory Commission and the expiration of the waiting period under the Hart-Scott-Rodino Act. It is expected to close by the end of this year.
Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are serving as financial advisors to Duke Energy for this transaction. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Duke Energy.