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Algonquin Power to acquire construction-stage 200 MW wind project in U.S.

Published: 00:00 06 Sep 2014 AEST

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Algonquin Power & Utilities (TSE:AQN), which operates utility assets in North America, fell in morning trades after saying it agreed to acquire a construction-stage 200 MW wind project in the U.S.

Shares declined 3 percent to C$8.80 at 9:33 a.m. in Toronto, paring this year's gains to 20 percent.

The Odell wind power project's construction costs are estimated to be approximately $313.5 million, the Oakville, Ontario-based company said in a statement today.

Algonquin also announced that in connection with the Odell project, Emera Inc. has agreed to subscribe to a private placement of subscription receipts convertible into 7.9 million Algonquin shares for C$70.0 million. 

Proceeds of the subscription receipts will be used to partially fund the acquisition and completion of Odell.

The Odell wind power project is located in Cottonwood, Jackson, Martin, and Watonwan Counties in Minnesota and is being constructed on approximately 23,000 acres of land leased from a wind power supportive land owner group. 

The project will utilize proven turbine technology comprised of 100 Vestas V110-2.0 wind turbines and is scheduled to be commissioned in the fourth quarter of 2015. 

Odell has a 20-year power purchase agreement with a subsidiary of Xcel Energy, a diversified utility operating in the Midwest with an investment grade credit rating (S&P: A-, Moodys: A3), and is estimated to generate 816.6 GW-hrs annually. 

The Odell project qualifies for U.S. renewable energy production tax credits and it is expected that tax equity investors will provide approximately U.S. $190.8 million of equity financing toward project costs. The balance of the permanent financing will be arranged through Algonquin's power generation subsidiary's investment grade bond platform.

"There is significant demand for renewable energy in the U.S. and the investment in Odell is one of several near term opportunities that we see for accretive growth," Ian Robertson, chief executive officer of Algonquin, said in the statement. "The project further strengthens and diversifies our renewable energy generation portfolio with a 20 year power purchase agreement and a strong wind regime in a new geographic region."

Algonquin operates a diversified $3.6 billion portfolio of regulated and non-regulated utilities in North America. The regulated utility business provides water, electricity and natural gas utility services to 485,000 customers. 

 

 

 

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