Duke, Sumitomo arrange financing for Kansas wind units

Duke Energy’s (NYSE: DUK) commercial renewable business and the U.S. branch of a Japanese company have finalized their 50-50 ownership arrangement for two Kansas wind power units and secured about $353m in financing for construction and operating costs.

Duke and Sumitomo Corp. of America (the U.S. subsidiary of Sumitomo Corp.) announced the deal April 26 in a news release.

Duke Energy Renewables had said in March that it plans to sell a 50% stake in the 131-MW Cimarron II Windpower project in Gray County and the 168-MW Ironwood project in Ford County to Sumitomo. The companies will complete construction of both wind farms later this year.

Both the Cimarron II and Ironwood projects have long-term contracts in place to sell the electricity they generate.

Kansas City Power & Light will purchase all of the electricity and associated renewable energy credits (RECs) produced by Cimarron II under the terms of a 20-year agreement. Westar Energy (NYSE: WR) will buy all the power and RECs produced by the Ironwood wind farm through a 20-year agreement.

KCP&L is part of Great Plains Energy (NYSE: GXP).

The financing, which closed April 18, consists of a construction and term loan facility of roughly $330m and a letter of credit facility totaling roughly $23m.

The lenders involved in the deal were Sumitomo Mitsui Banking Corp., Mizuho Corporate Bank Ltd., and Bank of Tokyo-Mitsubishi UFJ Ltd. Vinson & Elkins and Kirkland & Ellis provided legal counsel to Duke Energy Renewables and Sumitomo, respectively, during the formation of the joint venture.

Chadbourne & Parke represented the joint venture partners in the financing effort. Milbank, Tweed acted as legal counsel to the lenders.

Duke’s renewable business has a portfolio that includes 10 wind projects and 11 solar units operating in eight states. The fleet represents more than 1,000 MW in generating capacity.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.