Energy infrastructure investment group ArcLight Capital Partners is the buyer of Duke Energy’s commercial distributed generation business in unregulated markets.
North Carolina-based utility giant Duke Energy announced its intent to sell the businesses to exit the competitive marketplace for renewables and distributed generation. ArcLight is acquiring the commercial distributed generation segment for about $364 million, according to the company.
"Our investment in Duke Energy's commercial distributed generation business supports ArcLight's long-standing strategy of acquiring operating assets from leading strategics and creating strong stand-alone renewable platforms,” Marco Gatti, managing director at ArcLight, said in a statement. “We believe this is an attractive opportunity to acquire a first-rate commercial distributed generation portfolio, partner with a talented team and build upon longstanding, high quality customer relationships.”
Duke’s commercial distributed generation business includes REC Solar’s operating assets, project development pipeline and operations and maintenance portfolio. It also includes distributed fuel-cell projects managed by Bloom Energy.
“The sale of our commercial renewables businesses streamlines our portfolio and provides the resources to support the long-term needs of our customers in our growing regulated territories,” Duke Energy CEO Lynn Good said. “Over the next decade, we plan to invest significant amounts of capital to fund the critical energy infrastructure necessary to serve our customers and support our clean energy transition.
Indeed, only last month Duke announced it was selling the commercial, utility-scale renewables business to Brookfield Renewables, a division of Brookfield Corp., for $2.8 billion, 30 percent less than what company executives said the portfolio was worth at the time that particular deal was announced.
Duke’s plans to grow regulated renewable energy assets to more than 30,000 MW by 2035.
Last year, Barclay’s analysts anticipated that investor-owned utilities such as Duke and American Electric power might sell those non-regulated renewable businesses which are not integrated into rate bases.
In 2020, New Jersey-based utility holding giant Public Service Enterprise Group announced it would divest its 6.7-GW fossil and also solar power owned by the competitive generation business, PSEG Power. The buyer for that portfolio also was ArcLight.
Decentralized and renewable energy investments in competitive, non-regulated markets are often less as potentially more rewarding, but also riskier, according to various reports. Some say the risk factor is more appetizing to private equity and infrastructure firms than to investor-owned and regulated utilities.