New York-based solar and wind power company TerraForm Power announced today that it has entered into an agreement with AltaGas Ltd and its subsidiary companies. Through the deal, TerraForm will come into the possession of AltaGas’ distributed power generation portfolio, adding 320MW of assets and almost doubling its capacity.
TerraForm will reportedly pay a total consideration of $720mn for AltaGas’ assets. Following the completion of the transaction, TerraForm’s portfolio of distributed assets will total 750MW, making is one of the largest distributed generation businesses in the United States.
“Following the close of this transaction, TerraForm Power is expected to own one of the largest portfolios of distributed generation in the United States. The acquisition will increase TerraForm Power’s average contract duration to 14 years and enhance its resource diversity.” said John Stinebaugh, CEO of TerraForm Power. “Furthermore, this demonstrates our strategy of recycling capital from stabilized assets with limited opportunities for further value creation into newly acquired assets that meet our return targets and have commercial and operational upside that we can extract through our integrated operating platform.”
The portfolio represents one of the largest distributed generation platforms in the United States, comprised of 291 megawatts of commercial and industrial solar assets, ~21 megawatts of residential solar assets and ~10 megawatts of fuel cells. Diversified across 20 states and in the District of Columbia and with over 100 commercial and industrial customers, the portfolio is comprised of assets with an average age of 3.5 years that have power purchase agreements with an average investment grade credit rating of A+/A2 and an average remaining term of over 17 years.
TerraForm Power expects to generate returns on equity on this investment within its targeted range of 9% to 11%.