North Carolina-based utility Duke Energy has reached a $2.8bn (C$3.74bn) deal to offload its unregulated utility-scale commercial renewables business to Canadian renewable assets operator Brookfield Renewable.
The sum covers non-controlling tax equity interests as well as debt assumption.
Duke Energy Renewables, the commercial renewables business of Duke Energy, is a US-based developer and operator of renewable power assets.
It has 5.9GW of operating and under-construction utility-scale solar, wind and battery storage, along with 6.1GW of development pipeline.
The primary operations of the acquired business will remain in Charlotte, North Carolina. Employees will join Brookfield as part of the deal.
Duke Energy will secure net proceeds of $1.1bn from the sale.
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The company plans to utilise these to strengthen its balance sheet and prevent the requirement of further holding company debt issuances.
It will now focus on the expansion of its regulated operations and invest in improvements to grid reliability.
The company has set a 2035 target for adding 30GW of regulated renewable energy into its system.
Duke Energy chair, president and CEO Lynn Good stated: “As one of the country’s largest renewable energy operators, Brookfield has the resources to support the continued growth and success of the commercial renewables’ portfolio.
“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.”
The deal awaits regulatory clearance and is scheduled to complete by the end of 2023.
Brookfield expects the transaction to be immediately accretive [contributing to growth] to funds from operations.
It also announced a bought deal and concurrent private placement, which are expected to fetch $650m in aggregate equity proceeds.
Brookfield CEO Connor Teskey stated: “With this acquisition, we are adding a scale operating renewable platform located in highly attractive markets that we expect will immediately contribute meaningful cash flows with significant upside from potential asset repowering and synergies.
“We are also adding to our pipeline of renewable development projects, solidifying our position as one of the largest renewable energy businesses in the US with almost 90,000MW of operating and development assets.”