Stonepeak upbeat on US renewables after $340m Repsol deal

Spanish oil major Repsol will sell a 46.3% stake in a 777MW solar and battery storage portfolio in New Mexico and Texas for $340m to US private equity firm Stonepeak, the first deal in what they expect will become a broader renewable energy partnership.

It also indicates continued investor demand for quality contracted US grid-scale battery storage, solar, and wind assets in operation, under construction, or in late-stage development despite an adverse federal policy environment with President Donald Trump in office.

This reflects a belief that renewables will continue to play a key role in providing electrons to help meet strong forecast power demand the balance of this decade, as alternatives such as natural gas and nuclear face equipment supply, permitting, and other development challenges.

The transaction, set for third quarter close, includes 632MW Frye solar array in northern Texas, among the state’s largest in operation, and 125MW Jicarilla solar farm in northern New Mexico. This facility also has 20MW/80MWh battery storage capacity.

Both arrays have long-term electric power off-take arrangements. Together with $60m in tax equity raised through federal investment tax credits, today’s announced transaction values the project portfolio at $795m, according to Repsol.

“We are very proud to start a partnership with Stonepeak in our first renewable asset rotation in the US market,” said João Costeira, executive managing director of Repsol's low-carbon generation business.

The company’s strategy is to “optimise” the financial structure of its renewable energy business by bringing in investment partners that enhance value of contracted assets.

For its part, Stonepeak sees the $340m investment as another important step in delivering “much-needed cost effective and sustainable electricity to our domestic power grid at a time when communities need it most,” according to Anthony Borreca, a senior managing director.

“We look forward to deepening our partnership with them in the coming years,” he added.

These could potentially include three large solar projects in Texas: Outpost, 629MW, entering commercial operation; and Pinnington, 825MW, and Pecan Prairie, 595MW, both under construction.

Repsol this decade has been aggressive investing to become a meaningful player in the US renewables market. In 2021, it acquired a 40% stake in Chicago-based solar and storage developer Hecate for an undisclosed amount.