Pattern Energy Group pursues wind project acquisitions

Pattern Energy Group Inc. (NASDAQ: PEGI) (TSX: PEG), in a Feb. 4 prospectus filed at the SEC in relation to a planned public offering of 12 million additional shares of its stock, said it has a number of power projects in development.

Pattern is an independent power company focused on owning and operating power projects with stable long-term cash flows in attractive markets. It holds interests in 12 wind power projects in the United States, Canada and Chile that have a total owned capacity of 1,636 MW. These projects consist of 11 operating projects and one project under construction. The in-construction facility is the Logan’s Gap project, which it acquired from sponsor Pattern Energy Group LP (commonly known as Pattern Development) in December 2014 and is scheduled to commence commercial operations prior to the end of 2015.

The company’s growth strategy is focused on the acquisition of operational and construction-ready power projects from Pattern Development and other third parties that it believes will contribute to the growth of its business and enable it to increase its dividend per share over time.

“We expect our continuing relationship with Pattern Development, a leading developer of renewable energy and transmission projects, will be an important source of growth for our business,” the company wrote. “In addition, opportunities in new geographic markets, such as Japan and Mexico, could form part of our growth strategy. Currently, Pattern Development has a 3,500 MW pipeline of development projects, all of which are subject to our right of first offer.”

Under recent developments, the company said:

  • On Jan. 28, it announced that Pattern Development acquired a majority stake in Green Power Investment Corp. (GPI), based in Tokyo, Japan. GPI has 1,000 MW in various stages of development, spread across a number of existing near- and longer-term development projects. Pattern Development’s expected indirect interest in the GPI projects is included in its 3,500 MW pipeline of development projects, all of which are subject to the right of first offer.
  • On Dec. 19, 2014, Pattern Energy Group completed its acquisition of Pattern Development’s interest in the approximately 200-MW Logan’s Gap project located in Comanche County, Texas, for a total cash funding commitment of about $113m, a portion of which, together with cash funding to be provided by certain tax equity investors, will be used to pay down construction debt upon the completion of construction. The completion of the project, which consists of 87 2.3-MW Siemens turbines, is expected in late 2015. Upon completion of construction, Pattern Energy Group expects to have an owned capacity in this project of 164 MW.
  • On Dec. 9, 2014, the 149-MW Grand Renewable Wind project in Haldimand County, Ontario, completed construction and reached commercial operations.
  • On Nov. 10, 2014, Pattern Energy Group completed its acquisition of Pattern Development’s interest in the Panhandle 2 project for consideration of $123.8m, as it reached commercial operations.

Pattern Energy Group said it has added two new Right of First Offer Projects (ROFO Projects) to its list of identified projects that it expects to acquire from Pattern Development:

  • On Nov. 5, 2014, it announced the addition of 150 MW of the 300-MW Henvey Inlet wind project to the ROFO list. The project has a 20-year power purchase agreement with the Ontario Power Authority and is expected to begin construction in 2016.
  • On Jan. 20, Pattern Development announced that it had entered into a 13-year power purchase agreement with a subsidiary of Amazon.com in connection with a 150-MW wind project in Indiana. Pattern Development expects to retain an owned capacity in the project of approximately 116 MW. The project is expected to begin commercial operation in late 2015 or early 2016.

Here is a summary of the 830 MW of ROFO Projects that Pattern Energy Group expects to acquire from Pattern Development in the coming three to twenty-one months:

  • Gulf Wind, Texas, 76 MW owned, operational;
  • K2, Ontario, 90 MW owned, in construction;
  • Armow, Ontario, 90 MW owned, in construction;
  • Meikle, British Columbia, 185 MW owned, ready for financing;
  • Conejo, Chile, 73 MW owned, ready for financing;
  • Belle River, Ontario, 50 MW owned, securing final permits;
  • Henvey Inlet, Ontario, 150 MW owned, signed PPA/late stage development; and
  • Amazon Wind Farm (Fowler Ridge), Indiana, 116 MW owned, ready for financing.

In August 2014, NV Energy delivered notice that it was exercising its option to acquire up to 50% of the equity membership interests in Pattern Energy Group’s Spring Valley project. Following a 120-day period under the option to negotiate terms and conditions that are acceptable to Pattern Energy Group, the option lapsed. NV Energy no longer holds an option to acquire an interest in the Spring Valley project, the prospectus noted. Spring Valley is a 152-MW project located in White Pine County, Nevada. The project consists of 66 2.3-MW Siemens turbines that commenced commercial operation in August 2012. All of the project’s output, including electricity generation and environmental attributes, is sold to NV Energy under a long-term power purchase agreement. 

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.