Duke Energy in $364M deal to sell unregulated distributed generation business to ArcLight affiliate

Source: By Ethan Howland, Utility Dive • Posted: Wednesday, July 5, 2023

As part of a shift towards its faster-growing regulated operations, Duke Energy plans to sell its commercial distributed generation business for an “enterprise value” of $364 million to an affiliate of private equity firm ArcLight Capital Partners, the utility company said Wednesday.

Duke said it expects about $259 million in proceeds from the deal, which is slated to close by the end of the year. The business for sale includes about 200 MW in assets, according to Jennifer Garber, a Duke spokeswoman.

The distributed generation business — part of Duke Energy Sustainable Solutions — includes REC Solar’s operating assets, development pipeline and its operations and maintenance portfolio, as well as distributed fuel cell projects managed by Bloom Energy, Duke said. Employees of the distributed generation business will transition to ArcLight, according to the utility company.

Duke Energy Sustainable Solutions has close to 1,000 distributed generation projects, ranging from less than 1 MW to nearly 40 MW, according to the company.

The sale is subject to customary closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Act, which is typically 30 days. The Federal Energy Regulatory Commission must approve the sale of the Bloom Energy fuel cell assets, Duke said.

Last month, Duke agreed to sell its 3.4-GW unregulated, utility-scale commercial renewables business to Brookfield Renewable Partners for $2.8 billion. The company expects to take a pre-tax impairment charge on the deal of about $800 million based on the transaction’s purchase price, the company said in a Securities and Exchange Commission filing. Duke expects the deal to close by the end of this year.

Duke said it plans to use the proceeds from the sales of the unregulated assets to strengthen its balance sheet and avoid additional holding company debt issuances associated with the assets.

“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,” said Lynn Good, Duke Energy chair, president and CEO. 

Duke expects to spend about $36 billion on its distribution and transmission systems over five years starting this year, according to the utility company’s most recent quarterly presentation.