June 13, 2023
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
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.