In Short : American Electric Power (AEP) plans to sell a 50% stake in its renewable development project in New Mexico to Exus. This strategic move likely aligns with AEP’s business objectives and contributes to the growth of renewable energy projects in the region.
In Detail : American Electric Power has finalized an agreement to sell its 50 percent stake in New Mexico Renewable Development to Exus North America Holdings.
This strategic move, in partnership with PNM Resources, co-owner of NMRD, entails the sale of a portfolio comprising 15 solar projects totaling 625 megawatts (MW) to Exus for an estimated $230 million, subject to adjustments at close.
AEP’s stake in this sale amounts to approximately $115 million, and the company anticipates receiving roughly $104 million in cash post-tax, transaction fees, and other customary adjustments. Expected to conclude in February 2024, this transaction is forecasted to have no significant impact on AEP’s financial results.
“This divestment aligns with our strategy to streamline our business and concentrate on bolstering our core regulated operations, mitigating risk, and fortifying our financial position. Earlier this year, we concluded the $1.5 billion sale of segments within our contracted renewables business,” Julie Sloat, AEP’s chair, president, and chief executive officer, said.
The NMRD portfolio comprises nine operational solar developments totaling 185 MW and six projects in various stages of development, collectively estimated to generate 440 MW.
The sale remains contingent on regulatory approval from the Federal Energy Regulatory Commission, New Mexico regulatory nods pertaining to one of NMRD’s projects, and clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
KeyBanc Capital Markets is acting as the financial advisor, while Foley & Lardner is providing legal counsel to both AEP and PNM Resources in this transaction.
American Electric Power, headquartered in Columbus, Ohio, boasts nearly 29,000 megawatts of diverse generating capacity, including approximately 6,100 megawatts derived from renewable sources.
The company has committed $43 billion over the next five years to enhance the electric grid’s cleanliness and reliability, aiming for an 80 percent reduction in carbon dioxide emissions by 2030 and aiming for net zero emissions by 2045.