Boralex Acquires Interest in Five EDF Renewables Wind Farms for $250 Million

Canada’s Boralex Inc. acquired a 50% interest in five operating wind farms in Texas and New Mexico from EDF Renewables North America in a deal valued at CA$339.7 million ($249.8 million), the company said in a Dec. 29 in a press release.  

The wind farms have a total installed capacity of 894 megawatts (MW) while Boralex’s interest represents 447 MW. The acquisition increases Boralex’s worldwide total installed capacity to 2,956 MW.

The other 50% interest in the five wind farms was acquired by Axium Infrastructure from Montreal about a year ago, Boralex external communications adviser Camille Laventure told Hart Energy.

The acquisition fits with Boralex’s strategic plan to make the U.S. one of its priority markets and to accelerate its growth through acquisitions, the company said. It also balances Boralex’s current U.S. mix of solar and hydropower generation capacity.

The deal also represents Boralex’s entry into the Electric Reliability Council of Texas (ERCOT) and Southwest Power Pool (SPP) energy markets, Boralex President and CEO Patrick Becostre said in the release.

“Considering EDF Renewables’ extensive development capabilities throughout North America, divestitures provide an opportunity to rebalance our portfolio of owned assets,” said EDF Renewables CFO Luis Silva.

Deal details

The company plans to fund the deal through available cash resources. “There is no existing project debt and the existing tax equity investors will continue to monetize the remaining production tax credits,” Boralex said. The acquisition is subject to post-closing adjustments, Boralex said in the release on its website.

The deal is expected to contribute approximately $28 million to Boralex’s combined EBITDA in 2023 and will be accounted for as an investment in a joint venture in consolidated financial statements.

The deal is “immediately accretive to discretionary cash flow” with a 2023 contribution of approximately $18 million, representing a 19% boost compared to 2021, the company said.

The investment “fits well within the expected return range that we’ve given to the market in the past, 8% to 10%, adjusted for risk,” Boralex VP and CFO Bruno Guilmette added during a Dec. 29  conference call with investors to discuss the acquisition.

Wind farm assets

EDF Renewables put into service all five projects totaling 894 MW with commissioning dates between 2014 and 2015, EDF announced Dec. 29 in a separate press release. Divestment of the assets “represents an integral part of EDF Renewables’ business model to facilitate a balanced portfolio and advance funding for new project development,” the company said.

Boralex will now be the managing member of the partnership as it plans to optimize the life cycle of the wind farms, the company said.

The five wind farm projects include two with 13-year busbar power purchase agreements (PPAs) and one with a 3-year hub-settled PPA; for a remaining weighted PPA average life of 10 years. Additionally, there are two fully merchant projects.

“Three of the wind farms have long-term PPAs that are well structured with well-established off-takers. The PPAs do not contain fixed shape hedges that have caused recent difficulties in these markets,” Boralex said. “The other two wind farms are in strong and stable merchant markets, and with [the] current condition of inflation, some merchant exposure will be complementary to the PPAs.”

The five wind farms are located in the southernmost part of the central U.S. Three of the wind farms are in Texas and two are in New Mexico:

• Hereford (installed capacity: 200 MW): The Deaf Smith County, Texas, farm was commissioned in 2014 with power sold merchant in ERCOT. The farm includes 50 Vestas V100/2MW and 54 GE 82.5 wind turbines of 1.85 MW;

• Longhorn (installed capacity: 200 MW): The farm, in Floyd and Briscoe counties, Texas, was commissioned in 2015. It has a PPA with Exelon expiring in April 2026. The farm includes 100 Vestas V100/2MW wind turbines;

• Spinning Spur 3 (installed capacity: 194 MW): The Oldham County, Texas farm was commissioned in 2015. It has a PPA with the cities of Georgetown and Garland expiring in September 2035. The farm includes 97 Vestas V100/2MW wind turbines;.

• Milo (installed capacity: 50 MW): The Roosevelt County, New Mexico, farm was commissioned in 2016 and power sold merchant in SPP. The farm includes 25 Vestas V100/2MW wind turbines; and

• Roosevelt (installed capacity: 250 MW): The Roosevelt County farm  was commissioned in 2015. It has a PPA with Southwest Public Service Co. expiring in December 2035. The farm includes 125 Vestas V100/2MW wind turbines.