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Boralex acquires 50% stake in 5 U.S. wind farms for $339.7M

Boralex's logo
Boralex is finishing off the year with one of the largest Canadian renewables deals in 2022. Courtesy Boralex Inc.

Renewable energy facility operator Boralex Inc. has acquired EDF Renewables North America’s 50 per cent stake in five wind farms in Texas and New Mexico – representing 447 megawatts in installed capacity at its share.

Boralex cited the acquisition as a "significant step" toward accomplishing its 2025 strategic plan. The acquisition cost $339.7 million, to be funded from available cash resources.

The investment means Boralex (BLX-T) will be the managing partner for the facilities, which have a total capacity of 894 MW.

The Montreal-based company’s total global capacity is now 2,956 MW.

Part of Boralex’s 2025 plan involves avoiding 781,773 tonnes of carbon dioxide emissions through its renewable energy production.

"Located in one of the United States’ most robust wind resources areas, these wind farms will grow and diversify our presence in the United States. This acquisition represents Boralex's entry into the ERCOT (Electric Reliability Council of Texas) and SPP (Southwest Power Pool) markets,” Patrick Decostre, Boralex’s president and CEO, said in a statement on the acquisition.

These projects are forecast to contribute $39 million to its 2023 EBITDA.

Boralex was founded in 1990 in Kingsey Falls, Que. Aside from wind and solar power, it deals in hydroelectricity, energy storage and thermal energy. It also has operations in France – where it is the largest independent producer of onshore wind power.

It is developing a portfolio of close to 4 GW in wind and solar projects and close to 800 MW in storage projects.

By 2030, Boralex plans to have 15 per cent of its installed capacity in Canada, with wind and solar power each comprising about 45 per cent of that.

Boralex’s new wind farms

EDF Renewables, a subsidiary of French utility EDF Group, developed and built all five wind farms between 2014 and 2016. Three of the farms have long-term power purchase agreements (PPAs).

Prior to the acquisition, there were conversations with EDF Renewables for “some months.”

“We have chosen this because of its significant size, because its potential optimization . . . (and) because it will create a reputation in the U.S. we have already in Canada and in France of being a global operator,” Decostre explained in a Thursday morning conference call with analysts and investors.

According to a fact sheet accompanying the release, ERCOT is the fastest-growing electricity market with the highest projected peak load growth. The SPP covers 14 states: Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming, serving 19 million customers.

The sites have an average wind speed of 8.2 metres per second.

The newly acquired wind farms are:

  • The 200 MW Hereford wind farm in Deaf Smith County, Tex.
  • The 200 MW Longford farm in Texas’ Floyd and Briscoe counties. Its PPA with Exelon Corporation expires in April 2026.
  • Spinning Spur 3 farm in Oldham County, Tex., totalling 194 MW. Its PPA with the cities of Georgetown and Garland expires in September 2035.
  • The Milo and Roosevelt farms, both in Roosevelt County, N.M. The former has a 50 MW capacity and the latter has 250 MW. Its PPA with Southwest Public Service Co. expires in December 2035.

The remaining 50 per cent stake is owned by Montreal-based portfolio management firm Axium Infrastructure, which Decostre called “a great opportunity.”

“Considering EDF Renewables’ extensive development capabilities throughout North America, divestures provide an opportunity to rebalance our portfolio of owned assets," said Luis Silva, EDF Renewables’ CFO in a statement.

Decostre mentioned the possibility of further opportunities with Axium and EDF Renewables.

Boralex looking ahead

Boralex is also active in Canadian wind farm development. In April, SustainableBiz reported on a Boralex, Énergir L.P. and Hydro-Québec partnership to develop up to three wind farms, totalling 1.2 GW, in the Seigneurie de Beaupré area northeast of Quebec City.

Given the wind farms are a mix of contracted and merchant assets, the company did not rule out adding leverage in the future.

“We'll look at using leverage in the early part of the year, we'll look whether it makes sense. We've looked at it during the acquisition (and) decided not to leverage early on,” said Stéphane Milot, Boralex’s senior director of investor relations during the conference call.

“The position from a financing perspective (is that) we're fine with the resources we have on the balance sheet situation early in the year to see if that makes sense to add some leverage, but we don't want to over-leverage given that there are already taxed equity investors involved in these assets.”

In 2023, the company expects its renewable energy markets to be split 30 per cent merchant and 70 per cent contract.

Boralex expects continued growth in assets and construction for 2023, though it does not have any other significant acquisitions planned in the near-term.

“We've looked at many this year in 2022, and finally decided to do this fairly significant acquisition,” Decostre said. “It’s important to understand that we're always looking at potential opportunities. This one is at a very reasonable price . . . and it fits well with our with our ambition to grow in the U.S.”

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