Brookfield Renewable offices reside in Gatineau, Que., Sept. 1, 2020.Adrian Wyld/The Canadian Press
Brookfield Renewable Partners LP is selling wind power assets in two separate deals totalling US$1.41-billion, taking advantage of the premium prices that buyers are increasingly willing to pay.
NextEra Energy Partners LP of Juno Beach, Fla., said Monday that it has agreed to pay US$733-million to Brookfield Renewable to acquire three wind farms in California and one in New Hampshire. NextEra expects to close the deal in the third quarter for the combined 391 megawatts of renewable power.
The announcement comes after Friday’s move by Orsted, the multinational power company based in Denmark, to pay US$677-million for Brookfield Renewable’s onshore wind businesses in Ireland and the United Kingdom. Orsted expects the purchase to close by the end of the second quarter.
For Brookfield Renewable, “the sale fits the company’s long-term strategy that takes advantage of market dynamics to prune the portfolio and recycle capital into better perceived opportunities,” Wells Fargo Securities LLC said in a research note on the sale to Orsted.
Toronto-based investment giant Brookfield Asset Management Inc. owns 48 per cent of Brookfield Renewable, which has partnership units and related shares that trade on the Toronto and New York stock exchanges.
Brookfield Renewable, which didn’t immediately comment on the sales pointed on Monday to a statement that it issued last year on its general strategy. “We also continued to execute our capital recycling strategy of selling mature, de-risked or non-core assets to lower cost of capital buyers and redeploying the proceeds into higher yielding opportunities,” Brookfield Renewable told unitholders in August.
Mark Carney, the former governor at the Bank of Canada and Bank of England, has served as a vice-chairman at Brookfield Renewable since October and helped attract increased attention to the company.
The company recently had almost 20,000 megawatts of power capacity, with 5,300 generating plants in North America, South America, Europe and Asia. Last year, hydro accounted for 41 per cent of total megawatts, followed by wind at 24 per cent, storage and solar at almost 14 per cent each and other sources at 7 per cent.
While Brookfield Renewable is divesting some of its wind assets in its portfolio, Orsted and NextEra said they view their acquisitions as fitting well into their long-range plans.
“The European market for onshore wind power is expected to grow significantly in the coming years,” Orsted chief executive officer Mads Nipper said in a statement. Orsted will be taking over 389 megawatts from the onshore wind properties in Ireland and Britain in operation and under construction, adding to its large portfolio that includes U.S. onshore renewables.
NextEra will be picking up U.S. wind generation with a remaining contract life averaging 13 years. “The assets are well-situated in strong markets with long-term renewables demand, supporting potential recontracting or repowering opportunities after the initial contract terms,” NextEra CEO Jim Robo said.
The acquisitions by NextEra and Orsted are subject to regulatory approvals.
NextEra, Orsted and Brookfield Renewable have grown rapidly in the past three years, concentrating on green investment opportunities as an array of countries strive to decarbonize their economies.
“Based on existing country/state goals, we think installed global offshore wind capacity could grow tenfold over the next 10-15 years,” Wells Fargo said.
Brookfield Renewable’s other assets in Europe include a minority stake in Polenergia, an energy company based in Poland that has both onshore and offshore wind developments.
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Brent Jang