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Renewable Energy M&A: Boralex enters the US wind sector, purchasing EDF's stake in operational assets for $250mn

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Mohit Kaul's picture
Founder Enerdatics

Building Enerdatics. Leadership experience in a high growth SaaS company and secured a successful exit. A natural leader who cares about creating value for all stakeholders. Extensive experience...

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The deal is for the purchase of a 50% share in five wind farms totaling 894 MW that operate in the Electric Reliability Council of Texas (ERCOT) and Southwest Power Pool (SPP) markets. The purchase is funded by the company’s available cash reserves. The acquisition will balance Boralex's present solar and hydropower production mix in the country and take their global installed capacity to 2.95 GW. EDF, which had previously sold its 50% stake to BlackRock in Feb’ 15, will now exit the projects. Boralex will co-own and become a managing member of the projects along with Axium Infrastructure, which currently owns the remaining 50% of the projects. Boralex was advised in the transaction by J.P. Morgan (financial), Amis, Patel, and Brewers (legal),  DNV (technical), Aurora (power market), nFront (congestion risk), Aon (insurance), KPMG (tax), and Triton Advisory (accounting). 

Five wind farms included in the transaction are Hereford, Longhorn, and Spinning Spur 3 in Texas; and Milo and Roosevelt in New Mexico. All assets were developed by EDF and brought into operation between 2014-2015. They have no existing project debt, and the current tax equity investors will keep monetizing the available production tax credits. Spinning Spur 3 and Roosevelt are contracted under PPAs with Georgetown Utility Systems, Garland Power & Light, and Southwest Public Service, respectively for a remaining period of 13 years, while Longhorn has a hub-settled PPA for a remaining period of 3 years. Hereford and Milo sell power in the merchant market. Given the current state of inflation, the sale of power on the merchant market will be complementary to well-structured PPAs. The acquisition is expected to immediately contribute to Boralex’s discretionary cash flow, adding $18mn, a 19% increase over the consolidated amount generated in 2021, and an expected EBITDA contribution of $28mn in 2023.

The transaction is part of Boralex’s 2025 Strategic Plan, unveiled in Jun’ 21, which is designed around four pillars: growth, diversification, new customers, and optimization. As per the plan, the company targets to position the United States as our primary market for development and expand the customer base to directly supply electricity-consuming industries in the country. This involves expanding the US contribution to total installed capacity from 4% in 2020 to 45% by 2030, with a particular emphasis on solar and wind assets. The company will target to develop or acquire assets in the region and sell power to customers under long-term PPAs as well as to the merchant market. The company will reinvest 50 to 70% of its discretionary cash flow to fund this growth. 

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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Jim Stack's picture
Jim Stack on Dec 31, 2022

Rgu=is a very good diverse PPA portfolio.   QUOTE= The acquisition will balance Boralex's present solar and hydropower production mix in the country and take their global installed capacity to 2.95 GW. EDF, which had previously sold its 50% stake to BlackRock in Feb’ 15, will now exit the projects. Boralex will co-own and become a managing member of the projects along with Axium Infrastructure, which currently owns the remaining 50% of the projects. Boralex was advised in the transaction by J.P. Morgan (financial), Amis, Patel, and Brewers (legal),  DNV (technical), Aurora (power market), nFront (congestion risk), Aon (insurance), KPMG (tax), and Triton Advisory (accounting).

Mohit Kaul's picture
Thank Mohit for the Post!
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