Duke Energy has reached an agreement to sell its commercial distributed generation business to an affiliate of ArcLight Capital Partners LLC, 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.
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. It 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 over 30,000 MW 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,” says Lynn Good, Duke Energy CEO, chair and president. “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.
Adds Marco Gatti, managing director at ArcLight, about its investment in Duke Energy: “We believe this is an attractive opportunity to acquire a first-rate commercial distributed generation portfolio, partner with a talented team and build upon long-standing, high-quality customer relationships.”
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, Inc. is serving as the financial advisor and Mayer Brown LLP 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.