In the United States (US), independent power producer (IPP) Atlantic Power Corporation has announced that it has an agreement to acquire two biomass power plants in South Carolina (SC) from EDF Renewables Inc., a subsidiary of France-headed energy utility major EDF Group.
According to a statement, the closing of the US$13 million transaction which is not subject to regulatory approval is expected to occur late in the latter half third of 2019, following a restructuring of the plants’ ownership structure by EDF Renewables after the end of relevant tax credit recapture periods.
Atlantic Power will assume operation of the South Carolina plants at closing, or potentially earlier, subject to negotiation of an agreement with EDF Renewables. The purchase will be funded from the company’s discretionary cash.
The two 20 MWe biomass power plants are identical in design and have been in commercial operation since 2013. The Allendale plant is located in Allendale and the Dorchester plant in Harleyville. Biomass fuel for the plants consists primarily of sawmill and harvesting residues.
All of the output of the two plants is sold to Santee Cooper, a state-owned utility, under Power Purchase Agreements (PPAs) that run to 2043. Under the PPA terms, the plants receive energy payments for energy produced whereas the fuel cost component of the energy revenues is based on a biomass market index. There is no project-level debt at either plant.
This acquisition represents our second external growth investment following a three-year business restructuring process. Earlier this summer, we closed the acquisition of the remaining interests in the Koma Kulshan hydro project. We own four biomass plants currently, and we have considerable operational and commercial experience in this area. If we can deliver targeted operational and financial results for both South Carolina plants, the returns should be very attractive compared to other potential uses of our discretionary cash. In addition, the long remaining term of the two PPAs provides a stable base of cash flows, said James J. Moore, Jr., President, and CEO of Atlantic Power.