Pattern Energy Group Inc. (NASDAQ: PEGI) (TSX: PEG) said March that its 2014 highlights included that it acquired Panhandle 2 and Logan’s Gap from sponsor Pattern Energy Group LP (known as Pattern Development), expanding its portfolio to 1,636 MW in owned capacity and 12 wind projects.
The company also initiated commercial operations at two projects; Panhandle 2, with an owned capacity of 147 MW, and Grand Renewable, with an owned capacity of 67 MW. It added three new projects to the identified Right of First Offer (ROFO) list for a total of 977 MW owned capacity; Henvey Inlet and, subsequent to the end of the period, Amazon Web Services Wind Farm (Fowler Ridge) and Mont Sainte-Marguerite.
Pattern Development acquired a majority stake in Tokyo-based Green Power Investment Corp. (GPI), subsequent to the end of 2014, which has more than 1,000 MW in near and longer term wind and solar projects in development and Pattern Development’s interest in GPI’s projects is subject to Pattern Energy’s ROFO.
Pattern Development signed a joint venture agreement with CEMEX Energia, a subsidiary of CEMEX S.A.B. (NYSE: CX), subsequent to the end of 2014, to develop renewable energy projects throughout Mexico and Pattern Development’s interest in the joint venture’s projects is subject to Pattern Energy’s ROFO.
“The $62.1 million in cash available for distribution we reported for 2014 exceeds the target we outlined during the IPO. This positive momentum reflects the continuous growth we have demonstrated in our portfolio, which now stands at 1,636 MW in owned capacity – up 57% since the IPO – as well as in our identified ROFO list, which has grown by 781 MW in owned capacity – an increase of 105% since the IPO,” said Mike Garland, President and CEO of Pattern Energy. “At the same time, Pattern Development is also expanding our reach by entering new markets, like Japan and Mexico through its relationships with GPI and CEMEX, and contracting with new power buyers, like Walmart and Amazon. Our high-quality operating portfolio and the clear path for growth from our ROFO list underpin our stable and growing cash flow.”
Pattern Energy sold 888,577 MWh of electricity on a proportional basis in the fourth quarter of 2014 compared to 440,623 MWh sold in the same period in 2013. Pattern Energy sold 2,914,810 MWh of electricity on a proportional basis for the full year 2014 compared to 1,771,772 MWh sold in 2013. The increases were primarily attributable to the commencement of commercial operations at South Kent, El Arrayan, Panhandle 1 and Panhandle 2 at various times during the year and the twelve-month figure also reflects an increase in production from an additional 42 MW at Ocotillo for the full year of 2014.
Two projects completed construction and reached their commercial operation date on schedule during the fourth quarter of 2014. Pattern Energy acquired 147 MW of the 182 MW Panhandle 2 project at the time of commercial operation in November as agreed upon with Pattern Development. Pattern Energy also owns a 67 MW interest in the 149 MW Grand Renewable project which reached commercial operation in December.
Pattern Energy currently has one project in construction, the Logan’s Gap facility in Texas, where it owns 164 MW of capacity. The project is due for commercial operation in the fourth quarter of this year.
Pattern Energy has the Right of First Offer (ROFO) on a pipeline of acquisition opportunities from Pattern Development. In addition, Pattern Energy may seek to acquire assets from third parties.
Pattern Energy adds to right of first offer list
Since the beginning of the fourth quarter, Pattern Energy announced the addition of three new projects to its list of identified ROFO projects from Pattern Development, consisting of: 150 MW of the 300 MW Henvey Inlet Wind project in November; 116 MW of the 150 MW Amazon Web Services Wind project (Fowler Ridge) in January; and the 147 MW Mont Sainte Marguerite Wind project in February. With these new additions, the identified ROFO list now consists of nine projects with a rated capacity of 1,719 MW and a total owned capacity of 977 MW.
- The Henvey Inlet Wind project, to be built in Parry Sound County, Ontario, is a 50/50 joint venture partnership between Pattern Development and Nigig Power Corp., which is wholly owned by Henvey Inlet First Nation. The project has a 20-year power purchase agreement (PPA) with the Independent Electricity System Operator (IESO), formerly known as Ontario Power Authority, for 100% of its expected production. Pattern Development expects to arrange both construction and long-term debt financing for Henvey Inlet in 2016. Upon completion, it will be the largest First Nation wind project in Ontario.
- The Amazon Web Services Wind Farm (Fowler Ridge), which is located in Benton County, Indiana, has a 13-year PPA to supply Amazon Web Services, an Amazon.com company, with electricity. Pattern Development currently owns 100% of the 150 MW project and it is anticipated that Pattern Energy will acquire 116 MW of owned interest, with tax equity investors acquiring the balance. Pattern Development expects to begin construction of this project in April and anticipates reaching commercial operation in late 2015 or early 2016.
- The Mont Sainte-Marguerite Wind project, located about 50 kilometers south of Quebec City in the Chaudiere-Appalaches region, has entered into a 25-year power PPA with Hydro-Quebec. Pattern Development currently owns 100% of the 147 MW project and it is anticipated that Pattern Energy will acquire the full owned interest in the project. Pattern Development expects to begin construction of the project in the third quarter of 2016 and anticipates reaching commercial operation in December 2017.
The list of identified ROFO projects represents a portion of Pattern Development’s 4,500 MW pipeline of development projects, all of which are subject to Pattern Energy’s ROFO. The 4,500 MW figure includes Pattern Development’s interests in both its recently acquired majority stake in Tokyo-based GPI and its recently announced joint venture with CEMEX Energia in Mexico. GPI has up to 1,000 MW of near and longer term wind and solar projects in development. The joint venture between Pattern Development and CEMEX Energia has a goal of developing 1,000 MW of wind and solar generation in Mexico over the next five years where recent reforms set a mandate of 35% of generation to come from clean resources by 2024.
Here is the current list of identified ROFO projects:
- Gulf Wind, Texas, 76 MW owned, operational;
- K2, Ontario, 90 MW owned, in construction, commercial operation in 2015;
- Armow, Ontario, 90 MW owned, in construction, commercial operation in 2015;
- Meikle, British Columbia, 185 MW owned, commercial in 2016;
- Conejo Solar, Chile, 73 MW, ready for financing, commercial in 2016;
- Belle River, Ontario, 50 MW, securing permits, commercial in in 2017;
- Henvey Inlet, Ontario, 150 MW, late-stage development, commercial in 2017;
- Amazon/Fowler Ridge, Indiana, 116 MW, ready for financing, commercial in 2015-2016; and
- Mont Sainte-Marguerite, Quebec, 147 MW, late-stage development, commercial in 2017-2018.
Pattern Energy has a portfolio of 12 wind power projects, with a total owned interest of 1,636 MW, in the United States, Canada and Chile that use proven, best-in-class technology. Pattern Energy’s wind power projects generate stable long-term cash flows in attractive markets and provide a solid foundation for the continued growth of the business.