Jul 4 2014
Pattern Energy Group Inc. ("Pattern Energy"), today announced it has closed on its commitment to acquire 172 megawatts (MW) of owned interest in the 218 MW Panhandle 1 wind project from Pattern Energy Group LP ("Pattern Development") for a total cash consideration of US$124.4 million.
The balance of the project has been acquired from Pattern Development by three institutional tax equity investors.
Acquisition Highlights
- Full 218 MW has completed construction and is fully operational
- Portfolio now comprises nine operating wind facilities and two construction projects
- Second completed acquisition since the Initial Public Offering (IPO) in a series of anticipated transactions with Pattern Development
- Project utilizes General Electric 1.85 MW turbines and is secured with a long-term contract for 77% of its output
- Located in one of the strongest wind resources in the country
- Cash purchase price represents a 9-10x multiple on run-rate CAFD [1] contribution from the project
"This acquisition adds 16% to our operating capacity and marks our third project to successfully reach completion this year," said Mike Garland, President and CEO of Pattern Energy. "It is the second project we have acquired from Pattern Development that has gone into operation since our IPO – again demonstrating the value of that strategic partnership – and we anticipate their extensive pipeline will create more opportunities that will help us meet or exceed our growth plans."
Panhandle 1 is located in Carson County, Texas, and consists of 118 General Electric 1.85 MW wind turbines. The facility is utilizing Texas' new Competitive Renewable Energy Zone (CREZ) transmission infrastructure, which connects to the state's main power grid operator, Electric Reliability Council of Texas (ERCOT).
"Panhandle 1 is located on one of the best wind sites in the U.S. with a strong wind resource and excellent access to transmission," added Garland. "The strength and reliability of the wind, coupled with an unleveraged finance structure, will result in stable, steady cash flows from the project."
The Panhandle 1 project created more than 275 construction jobs and 11 permanent operations and maintenance positions. According to statistics from the U.S. Energy Information Agency, it will generate clean, renewable electricity for up to 60,000 Texas homes each year without using any of the region's limited water supplies.
Approximately 77% of the expected output of Panhandle 1 is contracted under a 13-year energy price hedge, with an A-/Baa2 credit-rated affiliate of Citibank, with the balance sold at ERCOT's spot market prices.
[1] This forward looking measure of run-rate CAFD contribution from Panhandle 1 is a non-GAAP measure that cannot be reconciled to net cash provided by operating activities as the most directly comparable GAAP financial measure without unreasonable effort. A description of the adjustments to determine CAFD can be found on page 71 of Pattern Energy's 2013 Annual Report on Form 10-K.