Partners Group will purchase 11 natural gas-fired power plants in California from a fund managed by Avenue Capital Group for $2.2 billion, according to a March 18 press release.

The natural gas plants and associated assets, operated by Middle River, include nine simple-cycle peaking facilities and two combined-cycle gas turbine plants. The facility also uses battery energy storage systems (BESS) that are charged with surplus renewable energy from the grid, which can be discharged when needed. The hybrid energy centers have enabled Middle River to unlock longer-term contracts of up to 15 years with utilities.

The deal comes as natural gas power continues to be seen as a primary source for power, particularly as demand increases due to AI data centers. NextEra Energy CEO John Ketchum has said he expects load demand to increase 80% during the next five years and six fold during the next 20 years.

Middle River, which is included in the sale, also provides asset management services to third-party owners of power plants totaling around 4.8 gigawatts of capacity outside of California.

Avenue Golden Fund has worked with Middle River for the past nine years, said Avenue Golden Fund Senior Portfolio Manager Craig Hart.

“Over this time, we have repositioned the business from a collection of largely-merchant thermal assets to a highly-contracted energy transition business that is poised for future growth,” Hart said. “We wish the Middle River team continued success with Partners Group, as we at Avenue look forward to continuing to optimize and transition our existing and future power investments in the rapidly evolving U.S. power markets."

Marc Lasry, co-founder and CEO of Avenue Capital Group, said the sale of the Avenue Golden Fund-Middle River investment represents “a landmark transaction for the Avenue Energy team and a strong outcome for our fund investors.”

“We entered California in 2016 with the view that the core natural gas-fired generating fleet was fundamental to achieving the state's ambitious carbon goals. Our thesis then was the same as it is now: namely, that properly positioned, well-maintained natural gas-fired power plants would remain grid-critical throughout the energy transition," Lasry said.

Avenue Capital Group is a global investment firm with $11 billion in assets under management.

Guggenheim Securities and Morgan Stanley & Co. LLC acted as financial advisers on the transaction for Avenue, and Latham & Watkins served as legal counsel.

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