Like peanut butter and jelly, wind+solar in a 1.2 GW deal

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NextEra Energy and Kohlberg Kravis Roberts (KKR) have announced a deal involving 1,192 MW of wind and solar power assets in the United States spread across ten sites. The deal gives NextEra access to cash continue developing projects, while bridging any cash shortfalls associated with ongoing PG&E bankruptcy, in exchange for the collateral and cash flow of already developed projects.

KKR noted that their investment will be in the form of an equity interest in a partnership with NextEra, and that NextEra has certain rights to acquire KKR’s interest over time at pre-determined return levels between 3.5 and 7.0 years after the formation of the partnership. NextEra expects to periodically exercise its right to buy out KKR’s equity interest for a fixed pre-tax annual return of approximately 8.3%.

The first half of the deal involved NextEra creating a new subsidiary, and selling the below projects – including 382 MW of solar – to this new group for $1.02 billion. Then, KKR joining the fund and buying the percentages noted for $900 million in a  convertible equity financing deal.

  • 100% interest in Ashtabula II Wind Energy Center (120 MW plant in Griggs and Steele counties, North Dakota)
  • 100% interest in Story County II Wind Energy Center (150 MW plant in Hardin and Story counties, Iowa)
  • 100% interest in White Oak Wind Energy Center (150 MW plant in McLean County, Illinois)
  • 49.99% interest in Silver State South Solar Energy Center (250 MW plant in Clark County, Nevada)
  • 49.99% interest in Marshall Solar Energy Center (62.25 MW plant in Lyon County, Minnesota)
  • 49.99% interest in Roswell Solar Energy Center (70 MW plant in Chaves County, New Mexico)

The second half of the transaction involves a recapitzalition of $220 in non-resource project debt that is outstanding on the four below wind projects totaling 581 MW.

  • Perrin Ranch Wind Energy Center, a 99-MW wind generation plant in Coconino County, Arizona;
  • Tuscola Bay Wind Energy Center, a 120-MW wind generation plant in BaySaginaw and Tuscola counties, Michigan;
  • Ashtabula III Wind Energy Center, a 62-MW wind generation plant in Barnes County, North Dakota; and
  • Stateline Holdings Wind Energy Center, a 300-MW wind generation plant in Umatilla County, Oregon and Walla Walla County, Washington.

NextEra notes that the average credit rating of the original 611 MW portfolio is A/A2.