Innergex Renewable Energy Inc. has agreed to acquire three operating solar facilities from Fengate Asset Management, totalling 60 megawatt (MW) in Sault Ste. Marie, Ont. for $219.7 million (including debt).
"This is our first acquisition in Canada since 2018, and we are excited to add this collection of high-performing fully contracted solar assets to our portfolio for additional and reliable Canadian dollar cash flows," said Michel Letellier, president and CEO of Innergex (INE-T) in a statement.
"The portfolio adds to our geographical diversification and improves our asset mix by adding 60 MW of solar capacity to our existing fleet."
The purchase price is $50.2 million, plus the assumption of $169.5 million in existing debt.
The acquisition is expected to close in Q1 2023 dependent on “certain regulatory approvals in Canada, key third party consents and other customary closing conditions,” a release reads.
The Sault Ste. Marie solar facilities
The solar facilities, known as SSM1, SSM2 and SSM3, reached full commissioning between 2010 and 2011. All three are contracted under long-term Renewable Energy Standard Offer Program power purchase agreements (PPA) with Ontario's Independent Electricity System Operator.
The portfolio has an average remaining contract life of nearly nine years.
The 20 MW SSM1 was commissioned in October 2010, and has eight years remaining on its PPA. The 30 MW SSM2 was fully commissioned by July 2011 and has nine years remaining, while SSM3, commissioned in November that same year, totals 10 MW with nine years to run on its PPA.
The facilities are expected to generate annual revenues of approximately $33.1 million in 2023, while operating, general and administrative expenses are expected to reach approximately $3.1 million during the same period.
Over a historical four-year period, cash flow from operating activities of the portfolio has reached an average of $23 million on an annual basis, while free cash flow has averaged $7.5 million for the same period.
The acquisition will be financed via Innergex’s existing revolving credit facility. National Bank Financial Inc. acted as Innergex’s financial advisor.
In February 2017, Fengate Real Asset Investment purchased the holding companies representing the solar facilities from Canadian Solar Inc. for $257 million.
Longueuil, Que.-based Innergex is an independent renewable power producer which develops, acquires, owns and operates hydroelectric facilities, wind farms, solar farms and energy storage facilities.
Across Canada, the U.S., France and Chile, it operates 84 facilities with an aggregate net installed capacity of 3,634 MW and an energy storage capacity of 159 megawatt-hours (MW-h), including 40 hydroelectric facilities, 35 wind facilities, eight solar facilities and one battery energy storage facility.
The company also holds interests in 13 projects under development with a net installed capacity of 731 MW and an energy storage capacity of 745 MW-h, three of which are under construction, as well as prospective projects at different stages of development.
Innergex recently hit a milestone in the development of its 320 MW Boswell Springs wind project in eastern Wyoming, meeting all conditions for a 30-year PPA with Berkshire Hathaway subsidiary PacifiCorp to come into force.
Commercial operations at that project are expected to begin in Q4 2024. Total costs of the project are estimated at $728.2 million, of which $54.5 million has already been invested.
Innergex’s Q4 results will be released Feb. 22.
Fengate is an alternative investment manager focused on infrastructure, private equity and real estate, base in Toronto with other offices in Ontario and Texas and team members across North America.
It represents over 40 investors, has $7 billion in equity commitments and holds interests in over $35 billion worth of assets.