Exus swoops for 625MW solar portfolio as sellers AEP and PNM exit US renewables free-for-all
Investor-owned utilities are under pressure to focus on less risky, more profitable regulated businesses
US utilities American Electric Power (AEP) and PNM Resources have agreed to sell their respective 50% ownership stakes in a renewable energy joint venture with a 625MW solar project portfolio to Exus North America Holdings for $230 million.
The joint venture, New Mexico Renewable Development, has a portfolio comprising nine operating solar arrays totaling 185MW and six development projects with estimated 440MW nameplate capacity.
The sale is expected to close in February and is subject to regulatory approval by the Federal Energy Regulatory Commission and New Mexico authorities for one of the joint venture projects.
AEP is based in Columbus, Ohio, and PNM has its headquarters in Albuquerque, New Mexico. They launched the sales process in June.
Each utility’s share of the sale proceeds is $115m. AEP expects to receive about $104m in cash after tax, transaction fees, and other customary adjustments.
“This sale is another step forward on our path to simplify our business and focus on investing in our core regulated operations, and we continue to execute our strategy to de-risk the company,” said AEP CEO Julie Sloat. PNM will do the same.
Traditional investor-owned utilities have been under pressure from shareholders and Wall Street to focus on their regulated businesses which often generate higher profit margins and are less risky for large investments that energy infrastructure requires.
AEP and PNM were among a host of vertically integrated utilities that created joint ventures or subsidiaries that were independent power producers (IPPs) in markets that allow competition, as opposed to their own service territories where they alone generate and distribute electricity.
Those IPPs faced aggressive competition from larger players such as Avangrid and NextEra Energy Resources, while profitability of projects sometimes suffered from high inflation, labour shortages, and logistics and supply chain bottlenecks.
Renewable energy development also remains heavily reliant on federal subsidies and, in the case of solar, continued access to cheap imported cells and modules from Southeast Asia.
Both of those are in doubt should opposition Republicans regain control of Congress and the White House in November 2024 national elections.
Exus North America Holdings, based in Pittsburgh, is part of a global infrastructure asset development and management firm focused on the renewable energy sector. It had no immediate comment on the transaction.
The company has at least two US operating assets: a 485MW solar array and a 240MW wind farm.
Exus’ partners in Pittsburgh include Dhaval Bhalodia, a GE Renewable Energy alumnus, where he was a wind turbine performance and diagnostics engineer.
Another, Mike Speerschneider, whose focus is project development public policy, worked previously at American Clean Power Association, a prominent national trade group.
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