Axios Pro: Climate Deals

June 13, 2023

Axios Pro Exclusive Content

It's Tuesday! If today's byline looks different, that's because we're delighted to welcome Katie Fehrenbacher as a Climate Deals reporter.

  • 1 fun thing: Katie started writing about climate tech before Elon Musk launched the first Tesla Roadster. For you old-school readers, you know that was about 15 years ago!

1 big thing: Duke unloads

Illustration of an electricity pylon with a dollar sign at the top.

Illustration: Gabriella Turrisi/Axios

Duke Energy yesterday announced plans to sell its portfolio of solar, wind and battery storage projects to private equity giant Brookfield Renewables for $2.8 billion including debt, Alan reports.

Why it matters: Duke is the latest utility to offload assets in so-called "unregulated" markets.

What's happening: Duke Energy, based in Charlotte, said it's selling a 3.4 GW portfolio of utility-scale renewables projects in the U.S.

  • It expects the sale to close by the end of the year. It's been looking for a buyer since last summer.

Catch up fast: The assets are in unregulated or "deregulated" markets.

  • In traditional "regulated" markets, utilities build power plants and transmission lines, then pass the cost to customers in their electric bills. The process can be slow but brings predictable returns.
  • In unregulated markets, project developers and operators compete on cost — promising potential bigger upside but possibly more risk.

The latest: New York utility Con Edison this spring sold a roughly 8 GW renewables portfolio to German energy company RWE for $6.8 billion.

  • American Electric Power, based in Columbus, Ohio, announced a $1.5 billion deal in February to sell a nearly 1.4 GW renewables fleet.

What they're saying: AEP president and CEO Julie Sloat said that the utility's planned sale of unregulated renewables is meant to "de-risk" the company's portfolio.

State of play: Solar and wind have faced mounting costs from supply-chain disruptions, trade disputes, grid-connection delays, labor shortages and inflation.

  • Project developers in the past two years have increasingly found themselves forced back to the negotiating table to revise power purchase contracts — an expensive and time-consuming process.

Be smart: Three portfolio sales may make a trend — but it doesn't mean it's being reflected uniformly across the utility sector.

  • Utilities large and small, from NextEra to Elite Energy, maintain non-regulated business lines. "There’s not going to be one-size-fits-all," Deloitte's U.S. renewables lead Marlene Motyka tells Alan.

View archive