Pattern Energy (NASDAQ:PEGI) (TSX:PEG) has agreed to acquire interests in the 324-MW Broadview Wind facility along with an associated independent 35-mile 345 kV Western Interconnect transmission line from Pattern Energy Group LP, which is also known as Pattern Development.
The $269m deal will occur at commencement of commercial operations, which is expected in early 2017.
Pattern Development has closed financing and is beginning construction on Broadview, which is located 30 miles north of Clovis, New Mexico. Broadview already has a contract to benefit from the California market’s growing appetite for renewable energy.
Broadview is one of several renewable energy projects that San Francisco-based Pattern has in the development pipeline in the United States and Canada.
The Broadview power facility will consist of 141 Siemens 2.3 MW wind turbines and has the capacity to generate 324 MW of energy, the power equivalent to the annual energy usage of approximately 180,000 California homes. Broadview will be limited to 297 MW of injection capacity at the project’s transmission interconnection point.
Broadview has entered into two 20-year power purchase agreements (PPAs) with Southern California Edison (SCE). Broadview will interconnect to the new, privately-developed Western Interconnect transmission project, which will deliver the output to the California ISO (Cal-ISO).
Pattern Energy expects Broadview to generate cash available for distribution (CAFD) of approximately $28m per year based on a five-year average run rate, before financing costs, which results in a pre-financing CAFD multiple of 9.6x for Pattern Energy’s owned capacity.
Pattern Energy has committed to acquire from Pattern Development an 84% initial cash flow interest in Broadview and a 99% ownership interest in the transmission line for a total cash purchase price of $269million, which will be funded at the commencement of commercial operations in less than a year.
Institutional equity investors have committed to acquire from Pattern Development a 16% initial cash flow interest in, and a 99% initial taxable income allocation from, Broadview, which will also be funded following the commencement of commercial operations.
Following the acquisition, based on its initial cash flow share, Pattern Energy will retain an owned interest of 272 MW in Broadview. Pattern Energy’s commitment to own and operate the facility was a core component of securing high-quality institutional equity investors for the project financing.
Pattern Energy will fund the cash purchase price for its interest in the project, including the associated transmission line, at the commencement of commercial operations in less than a year with currently available corporate liquidity and up to $160m of long-term project holding company debt financing commitments.