Wind and solar projects pump investment grade portfolio returns

Ullico has purchased part of a 1.3 GW wind+solar portfolio, originally developed and sold by sPower. The transaction, and other optimizations surrounding the portfolio, have increased the return on investment to 13% for one of the investment groups involved.

November 12, 2018 John Fitzgerald Weaver

sPower

Big money, hungry for long term, consistent, cash flow, keeps flowing into renewable energy.

Ullico Inc. has agreed to purchase 24% of a portfolio of 1.3 GW of solar and wind projects developed by sPower, which contains 70 projects that have long term power purchase agreements with investment grade off takers. The portfolio was fully owned by the Alberta Investment Management Corporation and The AES Corporation, and they will retain majority ownership, with each selling 24% of their respective portions to Ullico. The two companies bought the portfolio from sPower about a year ago.

The reason the group decided to invest in these resources was noted clearly by Jeff Murphy, portfolio manager for Ullico’s infrastructure business:

The composition of the portfolio naturally hedges geographic and resource-related risk, offering long-term stable cash flows that fit with Ullico’s infrastructure fund objectives.

UtilityDive noted that the transaction, “including two previously completed refinancings and reduced operating costs,” would increase AES’ return on sPower’s operating portfolio to 13% per their third quarter earnings call on November 6.

The portfolio is Ullico’s fifth investment in renewable energy assets. In 2013, Ullico invested in the 69 MWac Kawailoa Wind Farm in Hawaii. In 2017, Ullico invested in a 921 MWac portfolio of wind and solar generation projects spread across the United States followed by a similar investment earlier this year in a 642 MWac portfolio of U.S. wind and solar generation projects. Recently, August 2018, Ullico acquired a portfolio of four solar generation projects totaling 38.5 MWac located in Ontario, Canada.

An affiliate of sPower will serve as the asset manager for all the projects along with conducting operations and maintenance for the solar projects. The projects’ wind turbines will be maintained under long-term agreements with original equipment manufacturer General Electric.

The continued growth of investment in solar power is part of a required jumped into investment grade status that must occur if we’re to scale to one terawatt of installed capacity annually. pv magazine has seen many sales with investment grade offerings as a driver of their completion in the prior months, and it’s not expected to slow anytime soon.

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