The Carlyle Group (NASDAQ: CG), a global asset manager, said Sept. 7 that its infrastructure fund has agreed to acquire from Goldman Sachs Group Inc. (NYSE: GS) the North American power generation assets held by Cogentrix Energy LLC.
That includes five coal and solar power projects in Florida, Virginia, Colorado and California, as well as a development pipeline of gas and renewable power projects. The transaction includes the Charlotte, N.C.-based Cogentrix team, which is developing new power generation projects and acquisitions, and will bring their power asset management and operating expertise to Carlyle’s future investment activity in the power sector.
Equity for this investment comes from Carlyle Infrastructure Partners, a $1.14bn fund. Terms of the transaction, which is subject to customary regulatory approvals and is expected to close during the fourth quarter of 2012, were not disclosed.
“Carlyle has long been committed to investing in energy and expanding its dedicated capabilities in this important segment of the global economy,” said Carlyle Chairman and Co-founder Daniel D’Aniello. “We are delighted to have the Cogentrix development team as a key resource in the build-out of our long-term energy and power investment strategy,” he added.
Robert Dove, Carlyle Managing Director, said: “This is an attractive portfolio of power assets that we look forward to managing and growing. Access to the world-class development team at Cogentrix will deepen our existing infrastructure investment capabilities, enabling us to pursue an active program of acquiring and developing conventional and renewable power projects across the U.S.”
Involved power plants are scattered across the country
The transaction includes significant ownership stakes in coal-fired power plants in Jacksonville, Fla. (the Cedar Bay plant) and Hopewell and Portsmouth, Va.; solar power facilities in Daggett, Calif. (Sunray), and Alamosa, Colo. Goldman Sachs will retain a minority stake in Cedar Bay.
Cogentrix was founded in 1983 and has been directly responsible for the development, engineering, construction, operation and management of fossil and renewable power facilities with a combined generating capability in excess of 5,000 MW. Through additional acquisitions, Cogentrix has been directly involved in the operation and management of power assets delivering in excess of 7,000 net MW.
On May 10, Cogentrix announced that the largest concentrating photovoltaic electric power generating facility in the world has successfully begun commercial operation. The Alamosa Solar Generating plant, located in the San Luis Valley of Colorado, produces 30 MW of solar power for use by Public Service Co. of Colorado.
Carlyle is a longstanding investor in energy, with investments emanating from a variety of fund groups, including the U.S. and European buyout funds, Carlyle Infrastructure Partners, Carlyle Equity Opportunity Partners and Carlyle Energy Mezzanine Partners. Recent investments include:
- Agreement with Sunoco Inc. (NYSE: SUN) to form Philadelphia Energy Solutions, a joint venture that will enable an historic Philadelphia refinery to continue operating;
- Plainfield Renewable Energy, a biomass gasification power plant in Connecticut;
- TexOak Energy, an upstream oil and gas company with assets in Texas and Oklahoma;
- Black Raven Energy, an exploration and production company based in Denver, Colo.; and
- Core Minerals Operating Co., an exploration and production company based in Evansville, Ind.
Cogentrix coal presence had been whittled down to three plants
The Cogentrix website shows that Cogentrix has in the past been involved in several coal plants, including Southport and Rocky Mount in North Carolina and Indiantown in Florida. But only three coal plants, the ones named in the Carlyle announcement, are in the company’s current holdings under the conventional coal category.
- Cedar Bay is a 258-MW coal-fired cogeneration plant located very near the Northside and St. Johns River Power Park of JEA. Cogentrix owns 100% of Cedar Bay and is responsible for the operations and commercial management of the facility. It provides electricity to Florida Power and Light and up to 215,000 pounds of steam per hour to Smurfit-Stone Container‘s adjacent recycled linerboard paper mill. The plant operates three reheat circulating fluidized-bed (CFB) boilers fueled by low-sulfur coal.
- The Portsmouth Genco LLC facility is an upgraded version of the plant originally developed and constructed by Cogentrix in 1988. The plant is a nominal 110-MW under-feed stoker coal-fired cogeneration facility located in Portsmouth, Va., along the banks of the Elizabeth River. Portsmouth no longer has customers for its cogenerated steam, the website said. All of the plant output is now dedicated to generating electricity, which is delivered to Northern Virginia Electric Cooperative. In 2007, Cogentrix replaced the original stoker feeders with “underthrow” feeder technology, allowing the plant to burn cheaper steam coal instead of the original stoker coal. In 2008, Cogentrix completed the installation of SO2 scrubbers, new cooling towers, and a new distributed control system.
- The James River Genco LLC facility in Hopewell, Va., is an upgraded version of the plant originally constructed by Cogentrix. The plant is a nominal 110-MW coal-fired cogeneration facility placed into commercial service in 1987. Hopewell continues to provide steam to Honeywell International Inc. under a long-term purchase contract. Electricity is delivered to Northern Virginia Electric Cooperative. In 2008,Cogentrix completed the installation of SO2 scrubbers, new cooling towers, as well as upgrades to the plant’s waste water treatment system.
Notable is that the website shows a fourth coal plant, under a different category called “waste coal,” in the company’s current holdings. That is Northampton, a 112-MW anthracite-fired facility in Northampton County, Pa. The website said Cogentrix indirectly owns a 22.5% interest in Northampton. The facility uses CFB technology, achieved commercial operations in September 1995 and operates under a long-term power supply deal with Metropolitan Edison.
The only other current power plant holdings shown on the Cogentrix website are the 30-MW Alamosa solar plant in Colorado and the 43-MW Sunray solar plant in California.